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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-12154
WASTE MANAGEMENT, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 73-1309529
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1001 FANNIN
SUITE 4000
HOUSTON, TEXAS 77002
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(713) 512-6200
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
The number of shares of Common Stock, $.01 par value, of the registrant
outstanding at August 3, 2001 was 626,300,880 (excluding treasury shares of
3,610,470).
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PART I.
ITEM 1. FINANCIAL STATEMENTS.
WASTE MANAGEMENT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT SHARE AND PAR VALUE AMOUNTS)
JUNE 30, DECEMBER 31,
2001 2000
----------- ------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents................................. $ 396 $ 94
Accounts receivable, net of allowance for doubtful
accounts of $92 and $128, respectively.................. 1,430 1,401
Notes and other receivables............................... 183 174
Parts and supplies........................................ 73 75
Deferred income taxes..................................... 299 312
Prepaid expenses and other................................ 104 112
Operations held-for-sale.................................. 222 289
------- -------
Total current assets.................................... 2,707 2,457
Property and equipment, net................................. 10,028 10,126
Goodwill, net............................................... 5,015 5,046
Other intangible assets, net................................ 135 147
Other assets................................................ 824 789
------- -------
Total assets............................................ $18,709 $18,565
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 712 $ 865
Accrued liabilities....................................... 1,321 1,419
Deferred revenues......................................... 382 389
Current maturities of long-term debt...................... 690 113
Operations held-for-sale.................................. 88 151
------- -------
Total current liabilities............................... 3,193 2,937
Long-term debt, less current maturities..................... 7,671 8,372
Deferred income taxes....................................... 1,004 879
Environmental liabilities................................... 839 809
Other liabilities........................................... 794 752
------- -------
Total liabilities....................................... 13,501 13,749
------- -------
Minority interest in subsidiaries........................... 17 15
------- -------
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value; 1,500,000,000 shares
authorized; 629,911,350 and 629,621,821 shares issued,
respectively............................................ 6 6
Additional paid-in capital................................ 4,499 4,497
Retained earnings......................................... 875 560
Accumulated other comprehensive income (loss)............. (111) (126)
Restricted stock unearned compensation.................... (2) (3)
Treasury stock at cost, 3,950,914 and 6,971,560 shares,
respectively............................................ (76) (133)
------- -------
Total stockholders' equity.............................. 5,191 4,801
------- -------
Total liabilities and stockholders' equity.............. $18,709 $18,565
======= =======
See notes to condensed consolidated financial statements.
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WASTE MANAGEMENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ----------------
2001 2000 2001 2000
------- ------- ------ ------
Operating revenues...................................... $2,915 $3,266 $5,634 $6,483
------ ------ ------ ------
Costs and expenses:
Operating (exclusive of depreciation and amortization
shown below)....................................... 1,732 1,949 3,378 3,905
General and administrative............................ 398 445 787 939
Depreciation and amortization......................... 341 362 676 712
Asset impairments and unusual items................... 3 217 8 309
------ ------ ------ ------
2,474 2,973 4,849 5,865
------ ------ ------ ------
Income from operations.................................. 441 293 785 618
------ ------ ------ ------
Other income (expense):
Interest expense...................................... (147) (201) (301) (411)
Interest income....................................... 10 6 27 15
Minority interest..................................... (2) (6) (3) (12)
Other income, net..................................... 2 13 8 15
------ ------ ------ ------
(137) (188) (269) (393)
------ ------ ------ ------
Income before income taxes.............................. 304 105 516 225
Provision for income taxes.............................. 113 105 202 170
------ ------ ------ ------
Income before extraordinary item and cumulative effect
of change in accounting principle..................... 191 -- 314 55
Extraordinary loss on early retirement of debt, net of
income tax benefit of $0.7 in 2001.................... -- -- (1) --
Cumulative effect of change in accounting principle, net
of income tax expense of $1.6 in 2001................. -- -- 2 --
------ ------ ------ ------
Net income.............................................. $ 191 $ -- $ 315 $ 55
====== ====== ====== ======
Basic earnings per common share:
Income before extraordinary item and cumulative effect
of change in accounting principle.................. $ 0.31 $ -- $ 0.50 $ 0.09
Extraordinary item.................................... -- -- -- --
Cumulative effect of change in accounting principle... -- -- -- --
------ ------ ------ ------
Net income............................................ $ 0.31 $ -- $ 0.50 $ 0.09
====== ====== ====== ======
Diluted earnings per common share:
Income before extraordinary item and cumulative effect
of change in accounting principle.................. $ 0.30 $ -- $ 0.50 $ 0.09
Extraordinary item.................................... -- -- -- --
Cumulative effect of change in accounting principle... -- -- -- --
------ ------ ------ ------
Net income............................................ $ 0.30 $ -- $ 0.50 $ 0.09
====== ====== ====== ======
See notes to condensed consolidated financial statements.
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WASTE MANAGEMENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
------------------
2001 2000
------- -------
Cash flows from operating activities:
Net income................................................ $ 315 $ 55
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for bad debts................................ 5 21
Depreciation and amortization.......................... 676 712
Deferred income tax provision.......................... 101 80
Minority interest in subsidiaries...................... 3 12
Net gain on disposal of assets......................... (12) (6)
Effect of asset impairments and unusual items.......... 8 309
Change in assets and liabilities, net of effects of
acquisitions and divestitures:
Receivables............................................ (36) 219
Prepaid expenses and other current assets.............. 3 (20)
Other assets........................................... (11) 7
Accounts payable and accrued liabilities............... (179) (260)
Deferred revenues and other liabilities................ (7) (25)
Other, net............................................. -- (2)
------- -------
Net cash provided by operating activities................... 866 1,102
------- -------
Cash flows from investing activities:
Short-term investments.................................... -- 54
Acquisitions of businesses, net of cash acquired.......... (65) (169)
Capital expenditures...................................... (474) (564)
Proceeds from divestitures of businesses, net of cash
divested, and other sales of assets.................... 26 1,083
Other..................................................... 64 (18)
------- -------
Net cash provided by (used in) investing activities......... (449) 386
------- -------
Cash flows from financing activities:
New borrowings............................................ 953 74
Debt repayments........................................... (1,086) (1,637)
Exercise of common stock options and warrants............. 38 1
Other..................................................... (19) --
------- -------
Net cash used in financing activities....................... (114) (1,562)
------- -------
Effect of exchange rate changes on cash and cash
equivalents............................................... (1) (4)
------- -------
Increase (decrease) in cash and cash equivalents............ 302 (78)
Cash and cash equivalents at beginning of period............ 94 181
------- -------
Cash and cash equivalents at end of period.................. $ 396 $ 103
======= =======
See notes to condensed consolidated financial statements.
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WASTE MANAGEMENT, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN MILLIONS, EXCEPT SHARES IN THOUSANDS)
(UNAUDITED)
ACCUMULATED RESTRICTED
COMMON STOCK ADDITIONAL OTHER STOCK TREASURY STOCK
---------------- PAID-IN RETAINED COMPREHENSIVE UNEARNED ----------------
SHARES AMOUNT CAPITAL EARNINGS INCOME(LOSS) COMPENSATION SHARES AMOUNTS
------- ------ ---------- -------- ------------- ------------ ------ -------
Balance, December 31, 2000........ 629,622 $ 6 $4,497 $560 $(126) $ (3) 6,972 $(133)
Net income...................... -- -- -- 315 -- -- -- --
Common stock issued upon
exercise of stock options and
warrants and grants of
restricted stock (including
tax benefit).................. -- -- (6) -- -- -- (2,681) 51
Common stock issued in
connection with lawsuit
settlements................... 289 -- 7 -- -- -- -- --
Earned compensation related to
restricted stock.............. -- -- -- -- -- 1 -- --
Adjustment for minimum pension
liability, net of taxes....... -- -- -- -- 3 -- -- --
Unrealized gain on derivative
instruments................... -- -- -- -- 7 -- -- --
Unrealized gain on marketable
securities.................... -- -- -- -- 8 -- -- --
Cumulative translation
adjustment of foreign currency
statements.................... -- -- -- -- (3) -- -- --
Other........................... -- -- 1 -- -- -- (340) 6
------- --- ------ ---- ----- ----- ------ -----
Balance, June 30, 2001............ 629,911 $ 6 $4,499 $875 $(111) $ (2) 3,951 $ (76)
======= === ====== ==== ===== ===== ====== =====
See notes to condensed consolidated financial statements.
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WASTE MANAGEMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
(UNAUDITED)
The condensed consolidated financial statements of Waste Management, Inc.
and subsidiaries (collectively referred to herein as the "Company," unless the
context indicates otherwise) presented herein are unaudited. In the opinion of
management, these financial statements include all adjustments necessary for a
fair presentation of the financial position, results of operations, and cash
flows for the periods presented. The results for interim periods are not
necessarily indicative of results for the entire year. The financial statements
presented herein should be read in connection with the financial statements
included in the Annual Report on Form 10-K for the year ended December 31, 2000.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect reported amounts of assets, liabilities,
income and expenses and disclosures of contingent assets and liabilities at the
date of the financial statements and during the reporting period. Specifically,
with regard to landfill accounting, the Company uses engineering and accounting
estimates when projecting future development and final closure and post-closure
costs, forecasting various engineering specifications (including the prediction
of waste settlement), and future operational plans and waste volumes. Actual
results could differ materially from those estimates. See "Management's
Discussion and Analysis" elsewhere herein.
1. LONG-TERM DEBT
Long-term debt consists of the following:
JUNE 30, DECEMBER 31,
2001 2000
-------- ------------
Bank credit facilities...................................... $ -- $ 120
Senior notes and debentures, interest of 6% to 8 3/4%
through 2029.............................................. 6,306 6,307
4% Convertible subordinated notes due 2002.................. 535 535
5.75% Convertible subordinated notes due 2005............... 30 31
Tax-exempt and project bonds, principal payable in periodic
installments, maturing through 2029, fixed and variable
interest rates ranging from 2.6% to 10% at June 30,
2001...................................................... 1,296 1,260
Installment loans, notes payable, and other, interest to
14.25%, maturing through 2015............................. 194 232
------ ------
8,361 8,485
Less current maturities..................................... 690 113
------ ------
$7,671 $8,372
====== ======
On June 29, 2001, the Company replaced its prior bank credit facilities
with a $750 syndicated line of credit (the "Line of Credit") and a $1,750
syndicated revolving credit facility (the "Revolver"). The Line of Credit
requires annual renewal by the lender and provides for a one-year term option at
the Company's request while the Revolver matures in June 2006. The Line of
Credit and the Revolver are available for borrowings, including letters of
credit, and for supporting the issuance of commercial paper. The covenant
restrictions for the Line of Credit and the Revolver include, among others,
interest coverage, debt to earnings ratio, minimum net worth, and limitations on
investments, additional indebtedness and liens.
At June 30, 2001, the Company had no borrowings outstanding under the Line
of Credit or the Revolver. The facility fees were 0.175% and 0.225% per annum
under the Line of Credit and Revolver, respectively, at
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WASTE MANAGEMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
June 30, 2001. The Company had issued letters of credit of approximately $1,474
under the Revolver, leaving unused and available aggregate credit capacity of
approximately $1,026 at June 30, 2001.
In February 2001, the Company issued $600 of 7 3/8% senior unsecured notes
due August 1, 2010. Interest is payable semi-annually on February 1 and August
1. The net proceeds from the offering of the notes were approximately $593,
after deducting discounts to the underwriters and expenses. The Company used the
net proceeds from this offering, together with cash from operations, to repay
$600 of senior notes which matured during the second quarter of 2001.
In March 2001, the Company, working with local governmental authorities,
refinanced $339 of fixed-rate tax-exempt bonds maturing through 2008 with $326
of variable-rate tax-exempt bonds maturing through 2011 and $17 of fixed-rate
bonds maturing through 2001. The new borrowings include $4 of related financing
costs. The Company recorded a net extraordinary loss of $1 in the first quarter
of 2001 for the remaining unamortized premium and issuance costs related to the
retired debt.
On July 17, 1998, the Company issued $600 of 6 1/8% mandatorily tendered
senior notes, due July 15, 2011. The notes were subject to certain mandatory
tender features as described in the indenture, which allowed the Company to
purchase all of the outstanding notes on July 15, 2001. The Company used
available cash on hand along with funds from the Company's Line of Credit to
purchase the notes in July 2001. The Company expects to repay during the
remainder of 2001 the amounts borrowed from its Line of Credit for this
transaction. Accordingly, the $600 of 6 1/8% senior notes have been classified
as current at June 30, 2001. During the third quarter of 2001, the Company
expects to record an extraordinary loss of approximately $1 for the early
extinguishment of its $600 of 6 1/8% manditorily tendered senior notes.
The Company's $535 of 4% convertible subordinated notes are due on February
1, 2002. The Company intends to refinance this amount with other long-term
financing. However, the Company has the intent and ability to utilize its Line
of Credit and/or Revolver to refinance these borrowings in the event other
long-term financing is not available. Therefore, the Company has classified
these borrowings as long-term at June 30, 2001.
2. INCOME TAXES
The difference in federal income taxes computed at the federal statutory
rate and reported income taxes for the three and six months ended June 30, 2001
and 2000 is primarily due to state and local income taxes, non-deductible costs
related to acquired intangibles, and non-deductible costs associated with the
impairment and divestiture of certain businesses. Additionally, in the second
quarter of 2001, the Company recorded a net tax benefit of $12. Scheduled
Canadian federal and provincial tax rate reductions resulted in a benefit of
$42, which was offset in part by an expense of $30 related to the Company's plan
to repatriate certain Canadian capital and earnings previously deemed
permanently invested in Canada.
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WASTE MANAGEMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3. EARNINGS PER SHARE
The following reconciles the number of common shares outstanding to the
weighted average number of common shares outstanding and the weighted average
number of common and dilutive potential common shares outstanding for the
purposes of calculating basic and diluted earnings per common share at June 30
of each period indicated (shares in thousands):
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ------------------
2001 2000 2001 2000
------- ------- ------- -------
Number of common shares outstanding at end
of period................................. 625,960 621,094 625,960 621,094
Effect of using weighted average common
shares outstanding........................ (588) (29) (1,334) (287)
------- ------- ------- -------
Basic common shares outstanding............. 625,372 621,065 624,626 620,807
Dilutive effect of common stock options and
warrants.................................. 4,262 1,795 4,068 1,191
Dilutive effect of convertible subordinated
notes..................................... 12,288 -- -- --
------- ------- ------- -------
Diluted common shares outstanding........... 641,922 622,860 628,694 621,998
======= ======= ======= =======
For the three months ended June 30, 2001, interest (net of taxes) of $3 has
been added to net income for the diluted earnings per share calculation. For the
six months ended June 30, 2001 and for the three and six months ended June 30,
2000, the effect of the Company's convertible subordinated notes are excluded
from the diluted earnings per share calculation since the inclusion of such
items would be antidilutive.
At June 30, 2001, there were approximately 56 million shares of common
stock potentially issuable with respect to stock options, warrants and
convertible debt, which could dilute basic earnings per share in the future.
4. COMPREHENSIVE INCOME (LOSS)
Comprehensive income (loss) represents the change in the Company's equity
from transactions and other events and circumstances from non-owner sources and
includes all changes in equity except those resulting from investments by owners
and distributions to owners.
Comprehensive income is as follows:
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
-------------- --------------
2001 2000 2001 2000
----- ----- ----- -----
Net income............................................ $191 $ -- $315 $ 55
---- ---- ---- ----
Other comprehensive income (loss):
Unrealized gain (loss) on derivative instruments.... (3) -- 7 --
Foreign currency translation adjustment............. 43 263 (3) 183
Minimum pension liability adjustment (net of
taxes)........................................... -- 8 3 57
Unrealized gain on marketable securities............ 4 -- 8 --
---- ---- ---- ----
Other comprehensive income............................ 44 271 15 240
---- ---- ---- ----
Comprehensive income.................................. $235 $271 $330 $295
==== ==== ==== ====
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WASTE MANAGEMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The components of accumulated other comprehensive loss were as follows:
JUNE 30, DECEMBER 31,
2001 2000
-------- ------------
Foreign currency translation adjustment..................... $(126) $(123)
Minimum pension liability adjustment (net of tax)........... -- (3)
Accumulated unrealized gain on derivative instruments....... 7 --
Accumulated unrealized gain on marketable securities........ 8 --
----- -----
$(111) $(126)
===== =====
5. ENVIRONMENTAL LIABILITIES
The Company has material financial commitments for the costs associated
with its future obligations for final closure and post-closure obligations with
respect to the landfills it owns or operates. Estimates for final closure and
post-closure costs are developed using input from the Company's engineers and
accountants and are reviewed by management, typically at least once per year.
The estimates are based on the Company's interpretation of current requirements
and proposed regulatory changes. For landfills, the present value of final
closure and post-closure liabilities is accrued using the calculated rate per
ton and charged to expense as airspace is consumed. The present value of total
estimated final closure and post-closure costs will be fully accrued for each
landfill at the time the site discontinues accepting waste and is closed. Final
closure and post-closure accruals consider estimates for the final cap and cover
for the site, methane gas control, leachate management and groundwater
monitoring, and other operational and maintenance costs to be incurred after the
site discontinues accepting waste, which is generally expected to be for a
period of up to thirty years after final site closure. For purchased disposal
sites, the Company assesses and records a present value-based final closure and
post-closure liability at the time the Company assumes closure responsibility.
This liability is based on the estimated final closure and post-closure costs
and the percentage of airspace used as of the date the Company has assumed the
closure responsibility. Thereafter, the difference between the final closure and
post-closure liability recorded at the time of acquisition and the present value
of total estimated final closure and post-closure costs to be incurred is
accrued using the calculated rate and charged to expense as airspace is
consumed.
In the United States, the final closure and post-closure requirements are
established by regulations issued by the EPA pursuant to the Solid Waste
Disposal Act, as implemented and applied on a state-by-state basis. The costs to
comply with these requirements could increase in the future as a result of
legislation or regulation.
The Company routinely reviews and evaluates sites that require remediation,
including sites listed on the EPA's National Priorities List ("NPL sites"). As
of June 30, 2001, the Company or its subsidiaries had been notified that they
are potentially responsible parties ("PRPs") in connection with 80 locations
listed on the NPL. Of these 80 NPL sites at which claims have been made against
the Company, 17 are sites which the Company has come to own over time. At some
of these sites, the Company's liability is well defined as a consequence of a
governmental decision as to the appropriate remedy and an agreement among liable
parties as to the share each will pay for implementing that remedy. At other
sites where no remedy has been selected or the liable parties have been unable
to agree on an appropriate allocation, the Company's future costs are uncertain.
As part of its review and evaluation of sites, the Company considers
whether the Company was an owner, operator, transporter, or generator at the
site, the amount and type of waste hauled to the site, and the number of years
the Company was connected with the site. The Company also reviews the same
information with respect to other named and unnamed PRPs. The Company then
reviews the estimated cost for the likely remedy, which is based on management's
judgment and experience in remediating such sites for the Company
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WASTE MANAGEMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
as well as for unrelated parties, information available from regulatory agencies
as to costs of remediation, and the number, financial resources and relative
degree of responsibility of other PRPs who may be liable for remediation of a
specific site, as well as the typical allocation of costs among PRPs. These
estimates are sometimes a range of possible outcomes. In those cases, the
Company provides for the amount within the range which constitutes its best
estimate. If no amount within the range appears to be a better estimate than any
other amount, the Company provides for the minimum amount within the range in
accordance with Statement of Financial Accounting Standards No. 5, Accounting
for Contingencies.
Estimates of the extent of the Company's degree of responsibility for
remediation of a particular site and the method and ultimate cost of remediation
require a number of assumptions and are inherently difficult, and the ultimate
outcome may differ from current estimates. However, the Company believes that
its extensive experience in the environmental services business, as well as its
involvement with a large number of sites, provides a reasonable basis for
estimating its aggregate liability. As additional information becomes available,
estimates are adjusted as necessary. While the Company does not anticipate that
any such adjustment would be material to its financial statements, it is
reasonably possible that technological, regulatory or enforcement developments,
the results of environmental studies, the non-existence or inability of other
PRPs to contribute to the settlements of such liabilities, or other factors
could necessitate the recording of additional liabilities which could be
material to the Company's financial statements.
As part of its ongoing operations, the Company reviews its reserve
requirements for remediation and other environmental matters based on an
analysis of, among other things, the regulatory context surrounding landfills
and remaining airspace capacity in light of changes to operational efficiencies.
Accordingly, revisions to remediation reserve requirements may result in upward
or downward adjustments to income from operations in any given period.
Adjustments for final closure and post-closure estimates are accounted for
prospectively over the remaining capacity of the landfill.
Where the Company believes that both the amount of a particular
environmental liability and the timing of the payments are reliably
determinable, the cost in current dollars is inflated (by 2.5% per annum at June
30, 2001 and December 31, 2000) until expected time of payment and then
discounted to present value (by 6.0% per annum at June 30, 2001 and December 31,
2000). The accretion of the interest related to the discounted environmental
liabilities is included in the annual calculation of the landfill's final
closure and post-closure cost per ton and is charged to operating expense as
landfill airspace is consumed. The current portion of the environmental
liabilities disclosed below are recorded in accrued liabilities on the balance
sheet.
Environmental liabilities consist of the following:
JUNE 30, 2001 DECEMBER 31, 2000
---------------------------------- ----------------------------------
CLOSURE/ CLOSURE/
POST-CLOSURE REMEDIATION TOTAL POST-CLOSURE REMEDIATION TOTAL
------------ ----------- ----- ------------ ----------- -----
Current..................... $ 53 $ 71 $124 $ 54 $ 99 $153
Non-current................. 568 271 839 559 250 809
---- ---- ---- ---- ---- ----
$621 $342 $963 $613 $349 $962
==== ==== ==== ==== ==== ====
The changes to environmental liabilities for the six months ended June 30,
2001 are as follows:
December 31, 2000........................................... $962
Expense................................................... 34
Spending.................................................. (42)
Acquisitions, divestitures and other adjustments.......... 9
----
June 30, 2001............................................... $963
====
9
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WASTE MANAGEMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. COMMITMENTS AND CONTINGENCIES
Financial instruments -- Letters of credit, performance bonds, and
insurance policies have been provided by the Company to support tax-exempt
bonds, contracts, performance of landfill final closure and post-closure
requirements, and other obligations. The Company uses captive insurance, or
insurance policies issued by a wholly-owned insurance company subsidiary, the
sole business of which is to issue such policies to the Company. In those
instances where the use of captive insurance is not acceptable, the Company has
available alternative bonding mechanisms. The Company has not experienced
difficulty in obtaining performance bonds or letters of credit for its current
operations. Because virtually no claims have been made against these financial
instruments in the past, management does not expect these instruments will have
a material adverse effect on the Company's consolidated financial statements.
For the 14 months ending January 1, 2000, the Company insured certain
risks, including auto, general and workers' compensation, with Reliance National
Insurance Company ("Reliance"). On May 29, 2001 a Pennsylvania Court entered an
order appointing the Pennsylvania Insurance Commissioner as Rehabilitator and
directing the Rehabilitator to take immediate possession of Reliance's assets
and business. On June 11, 2001, Reliance's ultimate parent, Reliance Group
Holdings, Inc., filed for bankruptcy under Chapter 11 of the United States
Bankruptcy Code of 1978, as amended (the "Bankruptcy Code"). As a result of
these developments, Reliance may not be able to honor all future claims against
the Company that it insured. It is not possible to predict the outcome of the
litigation that might be subject to this insurance coverage, nor is it possible
at this time to predict the outcome of Reliance's rehabilitation. At the present
time, Reliance continues to honor its obligations and continues to pay claims.
However, management is currently unable to predict the outcome of this
situation.
Credit risk -- During 2000, increases in wholesale power prices far
exceeded the retail prices that certain California utilities were able to charge
customers due to retail rate freezes, resulting in significant under recovery of
costs for those utilities. As a result the utilities have faced severe financial
drains. In April 2001, Pacific Gas and Electric Company ("PG&E") filed for
bankruptcy under Chapter 11 of the Bankruptcy Code, as amended. Certain of the
Company's independent power projects ("IPPs") sell power to PG&E under long-
term contracts and were owed $34 from PG&E as of June 30, 2001. On July 14,
2001, the bankruptcy court approved an agreement between these IPPs and PG&E
whereby PG&E agreed to assume the contracts and pay the Company in full the past
due amounts on the earlier of the effective date of PG&E's plan of
reorganization or July 15, 2005. The Company's IPPs also sell power to Southern
California Edison, Inc. ("SCE") under long-term contracts similar to those with
PG&E. Although SCE has not filed for bankruptcy, it has also faced severe
financial difficulties, and the Company's IPPs have a receivable from SCE of
approximately $13 as of June 30, 2001.
This credit risk is a contingency which is not probable of assertion or
susceptible to estimate at this time. Accordingly, the Company has not recorded
an allowance for doubtful accounts associated with these receivables as of June
30, 2001.
Environmental matters -- The business in which the Company is engaged is
intrinsically connected with the protection of the environment. As such, a
significant portion of the Company's operating costs and capital expenditures
could be characterized as costs of environmental protection. Such costs may
increase in the future as a result of legislation or regulation, however, the
Company believes that in general it tends to benefit when environmental
regulation increases, which may increase the demand for its services, and that
it has the resources and experience to manage environmental risk.
For more information regarding commitments and contingencies with respect
to environmental matters, see Note 5.
Litigation -- On July 16, 1998, the Company acquired Waste Management
Holdings, Inc. ("WM Holdings") which was then known as Waste Management, Inc.,
but whose name was changed at the time of
10
12
WASTE MANAGEMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
the merger ("WM Holdings Merger"). In July 1998, a seller of a business to WM
Holdings in exchange for WM Holdings common stock filed a class action alleging
breach of warranty. In October 1999, the court certified a class consisting of
all sellers of business assets to WM Holdings between January 1, 1990 and
February 24, 1998 whose agreements contained express warranties regarding the
accuracy of WM Holdings' financial statements. In March 2000, the certification
order was upheld by the court of appeals and the trial court granted summary
judgment on the breach of warranty claim in favor of all but certain members of
the class whose claims may have expired under applicable statutes of
limitations. The parties to the action have reached an agreement to settle these
claims by the Company's payment of approximately $25. The settlement is subject
to final non-appealable court approval.
In March 2000, a group of companies that sold assets to WM Holdings in
exchange for common stock in March 1996 brought a separate action against the
Company for breach of contract and fraud, among other things. The parties have
agreed to resolve this dispute either through mediation or arbitration. The
extent of damages, if any, in the dispute has not yet been determined.
In December 1999, an individual brought an action against the Company, five
former officers of WM Holdings, and WM Holdings' auditors in Illinois state
court on behalf of a proposed class of individuals who purchased WM Holdings
common stock before November 3, 1994, and who held that stock through February
24, 1998, for alleged acts of common law fraud, negligence, and breach of
fiduciary duty. In May 2001, the court granted in part and denied in part the
defendants' motion to dismiss. This action remains in its early stages and the
extent of possible damages, if any, has not yet been determined.
The Company is also aware that the SEC has commenced a formal investigation
with respect to WM Holdings' previously filed financial statements for the
calendar years in the period from 1993 through 1996 (which were subsequently
restated in 1998) and related accounting policies, procedures and system of
internal controls. The Company has cooperated fully with the investigation, and
does not believe that the SEC will seek any action against the Company in
connection with the investigation.
On July 6 and July 29, 1999, the Company announced that it had lowered its
expected earnings per share for the three months ended June 30, 1999. On August
3, 1999, the Company provided additional information regarding its expected
earnings for that period, including that its reported operating income for the
three months ended March 31, 1999 might have included certain unusual pretax
income items. More than 30 lawsuits based on one or more of these announcements
were filed against the Company and certain of its current and former officers
and directors. These lawsuits have been consolidated into a single action
pending in the United States District Court for the Southern District of Texas.
On May 8, 2000, the court entered an order appointing the Connecticut Retirement
Plan and Trust Funds as lead plaintiff and appointing the law firm of Goodkind
Labaton Rudoff & Suchrow LLP as lead plaintiff's counsel.
The lead plaintiff filed its Amended Consolidated Class Action Complaint
(the "Complaint") on July 14, 2000. The Complaint pleads claims on behalf of a
putative class consisting of all purchasers of Company securities (including
common stock, debentures and call options), and all sellers of put options, from
June 11, 1998 through November 9, 1999. The Complaint also pleads additional
claims on behalf of two putative subclasses: (i) the "Merger Subclass,"
consisting of all WM Holdings stockholders who received Company common stock
pursuant to the WM Holdings Merger, and (ii) the "Eastern Merger Subclass,"
consisting of all Eastern Environmental Services, Inc. ("Eastern") stockholders
who received Company common stock pursuant to the Company's acquisition of
Eastern on December 31, 1998.
Among other things, the plaintiff alleges that the Company and certain of
its current and former officers and directors (i) made misrepresentations in the
registration statement and prospectus filed with the SEC in connection with the
WM Holdings Merger, (ii) made knowingly false earnings projections for the three
months ended June 30, 1999, (iii) failed to adequately disclose facts relating
to its earnings projections that the plaintiff claims would have been material
to purchasers of the Company's common stock and (iv) made
11
13
WASTE MANAGEMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
separate and distinct misrepresentations about the Company's operations and
finances on and after July 29, 1999, culminating in the Company's pre-tax charge
of $1,763 in the third quarter of 1999. The plaintiff also alleges that certain
of the Company's current and former officers and directors sold common stock
between May 10, 1999 and June 9, 1999 at prices known to have been inflated by
material misstatements and omissions. The plaintiff in this action seeks damages
with interest, costs and such other relief as the court deems proper. Defendants
filed a motion to dismiss on October 3, 2000, which is pending. The Company
believes it has substantial defenses to the putative class action and continues
to assert these defenses in the court in which the action is pending. At the
same time, the Company has considered, and will continue to consider, potential
settlement options that are appropriate and in the Company's best interest. No
provision for any adverse determination in this pending litigation has been made
because the amount of the loss, if any, from this action cannot be reasonably
estimated at this time.
On June 29, 2000, a putative class action was filed against the Company in
Delaware state court by a class of former Eastern stockholders falling within
the scope of the Eastern Merger Subclass described above. The plaintiffs allege
that the Company stock they received in exchange for their Eastern shares was
overvalued for the same reasons alleged in the consolidated class actions in
Texas. On August 4, 2000, the Company removed the case from the state court to
federal court and asked to have the case transferred to the Texas federal court
where the consolidated Texas class action is pending. On September 1, 2000, the
plaintiffs asked to remand the case to the Delaware state court, which the
Company opposed. The plaintiffs also asked the Delaware federal court not to
consider the Company's motion to transfer the case to Texas until it rules on
the motion to remand. All motions currently are pending. The case is at an early
stage, and the extent of possible damages, if any, cannot yet be determined.
Two lawsuits are pending against the Company that were brought by
individuals who received common stock in the sales of their businesses to the
Company or to a company later acquired by the Company. For reasons similar to
those alleged in the class actions described above, the sellers of the
businesses allege that the stock they received was overvalued. One of these
cases is pending in the Virginia state court and one has been removed from the
Michigan state court and is now pending in federal court in Michigan. In the
latter, the plaintiffs have moved to remand the case to the Michigan state
court, and the Company has opposed the motion, which is pending. Each of these
cases is at an early stage and the extent of possible damages, if any, cannot
yet be determined.
On June 14, 2001, the Company filed a motion with the Judicial Panel on
Multidistrict Litigation (the "MDL Panel") to transfer certain cases to the
United States District Court for the Southern District of Texas for coordinated
or consolidated pre-trial proceedings. The transfer motion covers all cases that
are pending in or might later be filed in or removed to other federal courts and
that relate to the claims asserted against the Company in the consolidated
putative class actions pending in the Texas court that are described above. The
transfer motion therefore covers the Delaware putative class action and the
Michigan case, both described above. Immediately after filing its motion with
the MDL Panel, the Company moved to stay the Delaware and Michigan cases until
the MDL Panel rules on the transfer motion. The Delaware and Michigan plaintiffs
have opposed the Company's MDL transfer motion and the stay motions. All motions
are currently pending.
In addition, three derivative lawsuits have been filed against certain
current and former officers and directors of the Company alleging derivative
claims on behalf of the Company against these individuals for breaches of
fiduciary duty resulting from their common stock sales during the three months
ended June 30, 1999 and/or their oversight of the Company's affairs. Two of the
lawsuits, filed in the Chancery Court of the State of Delaware on July 16, 1999
and August 18, 1999, were consolidated into a single action. The third suit was
filed in the United States District Court for the Southern District of Texas on
July 27, 1999. Both of the lawsuits name the Company as a nominal defendant and
seek compensatory and punitive damages with interest, equitable and/or
injunctive relief, costs and such other relief as the courts deem proper. On
December 1, 2000, the Company moved to dismiss the consolidated derivative suit
in Delaware. The same
12
14
WASTE MANAGEMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
day, the Company asked the court in Texas to stay the Texas derivative suit
until the Delaware court acts on the motion to dismiss. The Company and
plaintiffs in the consolidated Delaware case have reached a settlement of the
claims made in that case. The settlement has been submitted to the Delaware
Chancery Court, which has issued a scheduling order and approved the mailing of
the notice of the proposed settlement to stockholders. The Court has scheduled a
hearing for September 2001 to consider whether to approve the settlement. If the
Court approves the settlement, the plaintiffs in the Texas action will join with
the Company in a motion to dismiss the Texas case. The Company is unable to
predict whether the Delaware Chancery Court will approve the settlement; nor can
the Company predict the outcome of the litigation if the settlement is not
approved.
A derivative lawsuit was filed on July 3, 2001 in Texas state court against
the Company's independent auditor alleging derivative claims on behalf of the
Company against the auditor for professional negligence, improper professional
conduct and breach of contract in connection with certain services that the
auditor performed for the Company. The Company, which is a nominal defendant in
the lawsuit, is neutral with respect to the merits of the claims made in the
suit. The Company's independent auditor has informed the Company that the
complaint will not affect its independence as the Company's auditor. This action
is in its early stages and the Company is unable to predict the outcome of the
action at this time.
Two groups of stockholders have filed separate lawsuits in state courts in
Texas against the Company and certain of its former officers. The petitions
allege that the plaintiffs are substantial shareholders of the Company's common
stock who intended to sell their stock in 1999, or otherwise protect against
loss, but that the individual defendants made false and misleading statements
regarding the Company's prospects that, along with public statements, induced
the plaintiffs to retain their stock. Plaintiffs assert that the value of their
retained stock declined dramatically. Plaintiffs asserted claims for fraud,
negligent misrepresentation, and conspiracy. The cases are in early stages and
the extent of damages, if any, cannot yet be determined.
The Company is engaged in a business that is intrinsically connected with
the protection of the environment and for which there is the potential for the
unintended or unpermitted discharge of materials into the environment. From time
to time, the Company pays fines or penalties in environmental proceedings
relating primarily to waste treatment, storage or disposal facilities. As of
June 30, 2001, there were four proceedings involving Company subsidiaries where
the sanctions involved could potentially exceed one hundred thousand dollars.
The matters involve allegations that subsidiaries (i) operated a hazardous waste
incinerator in such a way that its air emissions exceeded permit limits, (ii)
engaged in the importation and disposal of hazardous waste in contravention of
applicable federal regulations, (iii) disposed of waste outside of the disposal
area designated by the applicable permit, and (iv) violated state department of
environmental protection and state department of transportation laws, rules and
regulations relating to waste hauling vehicles.
On July 29, 1998, the EPA inspected one of the Company's subsidiaries'
operations, and notified the Company of alleged violations relating to the
disposal of chlorofluorocarbons ("CFCs"). In January 1999, the EPA issued an
Administrative Order requiring the Company's subsidiary to comply with the CFC
regulations. In June 1999, the Company was notified that the EPA is conducting a
civil investigation relating to the alleged CFC disposal violations to determine
whether further enforcement measures are warranted. The Company and its
subsidiary are cooperating with the investigation and the Company believes that
the ultimate outcome of this matter will not have a material adverse effect on
the Company's financial statements.
The Company has brought suit against numerous insurance carriers in an
action entitled Waste Management, Inc., et al. v. The Admiral Insurance Company,
et al., pending in the Superior Court in Hudson County, New Jersey. The Company
is seeking (i) a declaratory judgment that past and future environmental
liabilities asserted against it or its subsidiaries are covered by its insurance
policies and (ii) to recover defense and remediation costs and other damages
incurred as a result of the insurance carriers' denial of coverage of
environmental liabilities. The defendants have denied liability and are
contesting the claims vigorously. Discovery is complete as to 12 of
approximately 134 sites, but remaining discovery could go on for years. In
13
15
WASTE MANAGEMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
August 2000, the court denied the insurance carriers' motions for summary
judgment with respect to five of the sites where discovery is complete and at
the same time granted summary judgment in favor of the Company for defense and
indemnity with respect to one of the sites. A trial date has been set for
October 2001 with respect to five of the sites where discovery is complete, and
the court has ordered the parties to mediate prior to trial. The Company is
unable at this time to predict the outcome of this proceeding. No amounts have
been recognized in the Company's financial statements for potential recoveries.
It is not possible at this time to predict the impact that the above
lawsuits, proceedings, investigations and inquiries may have on the Company, nor
is it possible to predict whether any other suits or claims may arise out of
these matters in the future. The Company and each of its subsidiaries intend to
defend themselves vigorously in all the above matters. However, it is reasonably
possible that the outcome of any present or future litigation, proceedings,
investigations or inquiries may have a material adverse impact on their
respective financial conditions or results of operations in one or more future
periods.
The Company and certain of its subsidiaries are also currently involved in
other routine civil litigation and governmental proceedings relating to the
conduct of their business. The outcome of any particular lawsuit or governmental
investigation cannot be predicted with certainty and these matters could have a
material adverse impact on the Company's financial statements.
7. SEGMENT AND RELATED INFORMATION
The Company's North American solid waste, or "NASW," operations is the
Company's principal reportable segment. This segment provides integrated waste
management services consisting of collection, transfer, disposal (solid waste
landfill, hazardous waste landfill and waste-to-energy facilities), recycling,
and other related services to commercial, industrial, municipal and residential
customers in North America. The Company's other operating units consist of waste
management services in international markets outside of North America and
non-solid waste services. These operating units were disclosed separately in the
Company's Form 10-K for the year ended December 31, 2000. However, both are
aggregated in a single column ("Other") for this reporting presentation. During
2000, the Company sold substantially all of its waste management operations
outside of North America and many of its non-solid waste businesses. The
remaining waste management operations outside of North America and the remaining
non-solid waste businesses are actively being marketed for sale and are
classified as held-for-sale as of June 30, 2001 for financial reporting
purposes.
14
16
WASTE MANAGEMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Summarized financial information concerning the Company's reportable
segments is shown in the following table.
CORPORATE
NASW OTHER FUNCTIONS(A) TOTAL
------ ----- ------------ ------
THREE MONTHS ENDED:
June 30, 2001
Net operating revenues(b)............................. $2,819 $ 96 $ -- $2,915
EBIT(c), (d), (e), (f)................................ 575 14 (148) 441
June 30, 2000
Net operating revenues(b)............................. $2,912 $ 354 $ -- $3,266
EBIT(c), (d), (e), (f)................................ 599 (130) (176) 293
SIX MONTHS ENDED:
June 30, 2001
Net operating revenues(b)............................. $5,462 $ 172 $ -- $5,634
EBIT(c), (d), (e), (f)................................ 1,067 (1) (281) 785
June 30, 2000
Net operating revenues(b)............................. $5,622 $ 861 $ -- $6,483
EBIT(c), (d), (e), (f)................................ 1,141 (74) (449) 618
- ---------------
(a) Corporate functions include the corporate treasury function, legal function,
information technology function, administration of the corporate tax
function, the corporate insurance function, management of the closed
landfill and related insurance recovery functions, along with other typical
administrative functions.
(b) Other operations are net of intersegment revenue with NASW of $13 and $19
for the three and six months ended June 30, 2001 respectively and $12 and
$16 for the corresponding periods of 2000. There are no other significant
sales between segments.
(c) EBIT is defined as "Earnings Before Interest and Taxes." EBIT is the
earnings measurement used by management to evaluate operating performance.
(d) For those items included in the determination of EBIT, the accounting
policies of the segments are generally the same as those described in the
summary of significant accounting policies in the Company's Form 10-K for
the year ended December 31, 2000.
(e) There are no material asymmetrical allocations of EBIT versus assets between
segments or corporate.
(f) For operations classified as held-for-sale at the beginning of each quarter,
the Company suspends depreciation on fixed assets. Had the Company not
classified any operations as held-for-sale, depreciation expense would have
been greater by $4 and $7 for the three and six months ended June 30, 2001,
and $32 and $83 respectively for the corresponding periods of 2000.
15
17
WASTE MANAGEMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. OPERATIONS HELD-FOR-SALE
As of June 30, 2001, the primary components within operations held-for-sale
consisted of remaining international operations outside of North America and
non-solid waste operations, certain NASW operations and the Company's surplus
real estate portfolio. For operations classified as held-for-sale, the Company
suspends depreciation and amortization on the underlying assets. The amount of
depreciation suspended for the three and six months ended June 30, 2001 for
held-for-sale operations was $4 and $7, respectively and $32 and $83 for the
corresponding periods of 2000. The remaining international operations outside of
North America and non-solid waste operations have been aggregated as a single
column "Other" for this reporting presentation.
Operational information included in the condensed consolidated statements
of operations regarding the businesses classified as operations held-for-sale at
June 30, 2001, is as follows:
NASW OTHER TOTAL
---- ----- -----
SIX MONTHS ENDED:
June 30, 2001
Operating revenues........................................ $ 2 $168 $170
EBIT(a), (b).............................................. (1) -- (1)
June 30, 2000
Operating revenues........................................ $ 2 $127 $129
EBIT(a), (b).............................................. (1) (5) (6)
THREE MONTHS ENDED:
June 30, 2001
Operating revenues........................................ $ 1 $ 98 $ 99
EBIT(a), (b).............................................. -- 3 3
June 30, 2000
Operating revenues........................................ $ 1 $ 79 $ 80
EBIT(a), (b).............................................. -- (2) (2)
- ---------------
(a) EBIT is defined as "Earnings Before Interest and Taxes." EBIT is the
earnings measurement used by management to evaluate operating performance.
(b) For those items included in the determination of EBIT, the accounting
policies of the segments are generally the same as those described in the
summary of significant accounting policies in the Company's Form 10-K for
the year ended December 31, 2000.
16
18
WASTE MANAGEMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company has classified as current operations held-for-sale its
remaining international operations outside of North America and non-solid waste
operations, and select NASW operations, which management believes will be
divested prior to June 30, 2002. The Company has classified its surplus real
estate portfolio as non-current operations held-for-sale.
NASW OTHER TOTAL
---- ----- -----
As of June 30, 2001:
Accounts receivable, net.................................. $-- $ 70 $ 70
Other current assets...................................... 15 55 70
Property and equipment and other non-current assets....... 35 82 117
Other current liabilities................................. -- (48) (48)
Noncurrent liabilities.................................... (3) (41) (44)
Minority interest......................................... -- 4 4
--- ---- ----
Net operations held-for-sale......................... $47 $122 $169
=== ==== ====
Current assets:
Operations held-for-sale.................................. $15 $207 $222
Long-term assets:
Operations held-for-sale (included in other assets)....... 35 -- 35
Current liabilities:
Operations held-for-sale.................................. (3) (85) (88)
--- ---- ----
Net operations held-for-sale......................... $47 $122 $169
=== ==== ====
As of December 31, 2000, the primary components within operations
held-for-sale consisted of the Company's remaining international operations
outside of North America and non-solid waste operations, certain NASW operations
and the Company's surplus real estate portfolio.
NASW OTHER TOTAL
---- ----- -----
As of December 31, 2000:
Accounts receivable, net.................................. $-- $ 84 $ 84
Other current assets...................................... -- 71 71
Property and equipment and other non-current assets....... 53 123 176
Other current liabilities................................. -- (100) (100)
Noncurrent liabilities.................................... (3) (50) (53)
Minority interest......................................... -- 2 2
--- ----- -----
Net operations held-for-sale......................... $50 $ 130 $ 180
=== ===== =====
Current assets:
Operations held-for-sale.................................. $11 $ 278 $ 289
Long-term assets:
Operations held-for-sale (included in other assets)....... 42 -- 42
Current liabilities:
Operations held-for-sale.................................. (3) (148) (151)
--- ----- -----
Net operations held-for-sale......................... $50 $ 130 $ 180
=== ===== =====
9. DERIVATIVES AND HEDGING ACTIVITIES
Statement of Financial Accounting Standards 133, "Accounting for Derivative
Instruments and Hedging Activities," ("SFAS No. 133") as amended by SFAS No. 137
and 138, was effective for the Company on
17
19
WASTE MANAGEMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
January 1, 2001. These statements establish accounting and reporting standards
requiring that all derivative instruments, including certain derivative
instruments embedded in other contracts, be recorded as either assets or
liabilities measured at fair value. These statements also require that changes
in the derivative's fair value be recognized currently in earnings unless
specific hedge accounting criteria are met. The criteria for cash flow and fair
value hedges requires that hedging relationships must be designated and
documented upon inception. The documentation must include the consideration of
the hedged item, the specific risk being hedged, identification of the hedging
instrument, the Company's risk management strategy, and how effectiveness will
be assessed. The effectiveness assessment must have a historical basis that
supports the assertion that the hedge will be effective prospectively. Any
ineffectiveness in a hedging relationship is recognized currently in earnings.
When a termination of a cash flow hedge occurs, the Company continues to
include in accumulated other comprehensive income the deferred gain or deferred
loss that arose before the date the hedge was terminated only if it is still
probable that the forecasted transactions will occur. Prospectively the deferred
gain or deferred loss included in accumulated other comprehensive income is
amortized into earnings as the forecasted transactions occur. In a termination
of a fair value hedge the Company derecognizes any derivative assets or
liabilities previously recognized and recognizes a corresponding gain or loss
currently in earnings.
All of the Company's derivatives are utilized to manage specific economic
risks and not for speculative purposes. The Company currently engages in waste
paper hedges in order to secure margins on certain paper items to be sold from
its material recovery facilities. The objective is expected to be achieved by
entering into the hedges to mitigate the variability in cash flows from sales of
paper products at floating prices, resulting in a fixed price being received
from sales of such products. In addition, the Company engages in interest rate
swaps in order to maintain an optimal fixed-to-floating rate debt ratio. By
managing the fixed-to-floating rate ratio of the existing debt portfolio, the
Company is able to take advantage of lower interest rates on floating rate debt
while limiting interest rate exposure through the use of fixed rate debt
instruments. Also, prior to the issuance of debt instruments, the Company may
secure the current market interest rate in order to hedge the exposure of an
increase in interest rates.
The effect of adopting SFAS No. 133 on January 1, 2001 was a gain, net of
taxes, for waste paper hedges of $3 and a loss, net of taxes, of $1 for interest
rate swaps. The net gain of $2 is reflected as a cumulative effect of change in
accounting principle for the six months ended June 30, 2001. In addition, the
Company recorded a loss of approximately $1 and a gain of $5 for its hedging
activity for the three and six months ended June 30, 2001, respectively. Waste
paper swaps had a gain of $1 and $7 for the three and six months ended June 30,
2001 which is included as an offset to operating costs and expenses. Interest
rate swaps had a loss of $2 for the three and six months ended June 30, 2001
which is included as an offset to interest expense.
In addition, the Company recorded a deferred gain of $2 and $12 related to
its waste paper swaps for the three and six months ended June 30, 2001,
respectively, which is included in accumulated other comprehensive income.
Further, the estimated net amount of the existing gains for waste paper hedge
transactions, which are included in accumulated other comprehensive income as of
June 30, 2001, expected to be reclassified into earnings within the next 12
months is approximately $7. The Company's current waste paper swaps have an
average hedge exposure of approximately two years with the maximum exposure to
the variability of market prices of seven years. Also included in accumulated
other comprehensive income is a deferred loss of $5 for the three and six months
ended June 30, 2001 related to a financing transaction entered into by the
Company in January to secure the then current market interest rate in
anticipation of its February issuance of $600 of 7 3/8% senior unsecured notes
due August 1, 2010. Approximately $1 of this deferred loss, which is included in
accumulated other comprehensive income, is expected to be reclassified into
interest expense over the next 12 months.
18
20
WASTE MANAGEMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
10. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
WM Holdings ("Guarantor"), which is 100% owned by Waste Management, Inc.
("Parent"), has fully and unconditionally guaranteed all of the senior
indebtedness of the Parent, as well as the Parent's 4% convertible subordinated
notes due 2002. The Parent has fully and unconditionally guaranteed all of the
senior indebtedness of WM Holdings, as well as WM Holdings' 5.75% convertible
subordinated debentures due 2005. However, none of the Company's nor WM
Holdings' debt is guaranteed by any of the Parent's indirect subsidiaries or WM
Holdings' subsidiaries ("Non-Guarantors"). Accordingly, the following unaudited
condensed consolidating balance sheet as of June 30, 2001 and the condensed
consolidated balance sheet as of December 31, 2000, the unaudited condensed
consolidated statements of operations for the three and six months ended June
30, 2001 and 2000, along with the related unaudited statements of cash flows for
the six months ended June 30, 2001 and 2000, have been provided below.
19
21
WASTE MANAGEMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED CONSOLIDATING BALANCE SHEETS
JUNE 30, 2001
(UNAUDITED)
PARENT GUARANTOR NON-GUARANTORS ELIMINATIONS CONSOLIDATION
------ --------- -------------- ------------ -------------
ASSETS
Current assets:
Cash and cash equivalents................... $ 65 $ 6 $ 325 $ -- $ 396
Other current assets........................ -- -- 2,311 -- 2,311
------ ------ ------- ------- -------
65 6 2,636 -- 2,707
Property and equipment, net................... -- -- 10,028 -- 10,028
Intercompany and investment in subsidiaries... 9,557 5,216 (9,504) (5,269) --
Other assets.................................. 12 6 5,956 -- 5,974
------ ------ ------- ------- -------
Total assets......................... $9,634 $5,228 $ 9,116 $(5,269) $18,709
====== ====== ======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt........ $ 597 $ -- $ 93 $ -- $ 690
Accounts payable and other accrued
liabilities............................... 87 101 2,315 -- 2,503
------ ------ ------- ------- -------
684 101 2,408 -- 3,193
Long-term debt, less current maturities..... 3,759 2,515 1,397 -- 7,671
Other liabilities........................... -- -- 2,637 -- 2,637
------ ------ ------- ------- -------
Total liabilities.................... 4,443 2,616 6,442 -- 13,501
Minority interest in subsidiaries........... -- -- 17 -- 17
Stockholders' equity........................ 5,191 2,612 2,657 (5,269) 5,191
------ ------ ------- ------- -------
Total liabilities and stockholders'
equity............................. $9,634 $5,228 $ 9,116 $(5,269) $18,709
====== ====== ======= ======= =======
DECEMBER 31, 2000
PARENT GUARANTOR NON-GUARANTORS ELIMINATIONS CONSOLIDATION
------ --------- -------------- ------------ -------------
ASSETS
Current assets:
Cash and cash equivalents................... $ 72 $ 14 $ 8 $ -- $ 94
Other current assets........................ -- -- 2,363 -- 2,363
------ ------ ------- ------- -------
72 14 2,371 -- 2,457
Property and equipment, net................... -- -- 10,126 -- 10,126
Intercompany and investment in subsidiaries... 8,893 5,210 (9,716) (4,387) --
Other assets.................................. 6 7 5,969 -- 5,982
------ ------ ------- ------- -------
Total assets......................... $8,971 $5,231 $ 8,750 $(4,387) $18,565
====== ====== ======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt........ $ -- $ -- $ 113 $ -- $ 113
Accounts payable and other accrued
liabilities............................... 93 114 2,617 -- 2,824
------ ------ ------- ------- -------
93 114 2,730 -- 2,937
Long-term debt, less current maturities..... 4,077 2,916 1,379 -- 8,372
Other liabilities........................... -- -- 2,440 -- 2,440
------ ------ ------- ------- -------
Total liabilities.................... 4,170 3,030 6,549 -- 13,749
Minority interest in subsidiaries........... -- -- 15 -- 15
Stockholders' equity........................ 4,801 2,201 2,186 (4,387) 4,801
------ ------ ------- ------- -------
Total liabilities and stockholders'
equity............................. $8,971 $5,231 $ 8,750 $(4,387) $18,565
====== ====== ======= ======= =======
20
22
WASTE MANAGEMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2001
(UNAUDITED)
PARENT GUARANTOR NON-GUARANTORS ELIMINATIONS CONSOLIDATION
------ --------- -------------- ------------ -------------
Operating revenues...................... $ -- $ -- $2,915 $ -- $2,915
Costs and expenses...................... -- -- 2,474 -- 2,474
----- ---- ------ ----- ------
Income from operations.................. -- -- 441 -- 441
----- ---- ------ ----- ------
Other income (expense):
Interest income (expense), net........ (78) (47) (12) -- (137)
Equity in subsidiaries, net of
taxes.............................. 240 269 -- (509) --
Minority interest..................... -- -- (2) -- (2)
Other, net............................ -- -- 2 -- 2
----- ---- ------ ----- ------
162 222 (12) (509) (137)
----- ---- ------ ----- ------
Income before income taxes.............. 162 222 429 (509) 304
Provision for (benefit from) income
taxes................................. (29) (18) 160 -- 113
----- ---- ------ ----- ------
Net income.............................. $ 191 $240 $ 269 $(509) $ 191
===== ==== ====== ===== ======
THREE MONTHS ENDED JUNE 30, 2000
(UNAUDITED)
PARENT GUARANTOR NON-GUARANTORS ELIMINATIONS CONSOLIDATION
------ --------- -------------- ------------ -------------
Operating revenues...................... $ -- $ -- $3,266 $ -- $3,266
Costs and expenses...................... -- -- 2,973 -- 2,973
----- ---- ------ ----- ------
Income from operations.................. -- -- 293 -- 293
----- ---- ------ ----- ------
Other income (expense):
Interest income (expense), net........ (120) (59) (16) -- (195)
Equity in subsidiaries, net of
taxes.............................. 75 112 -- (187) --
Minority interest..................... -- -- (6) -- (6)
Other, net............................ -- -- 13 -- 13
----- ---- ------ ----- ------
(45) 53 (9) (187) (188)
----- ---- ------ ----- ------
Income (loss) before income taxes....... (45) 53 284 (187) 105
Provision for (benefit from) income
taxes................................. (45) (22) 172 -- 105
----- ---- ------ ----- ------
Net income.............................. $ -- $ 75 $ 112 $(187) $ --
===== ==== ====== ===== ======
21
23
WASTE MANAGEMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2001
(UNAUDITED)
PARENT GUARANTOR NON-GUARANTORS ELIMINATIONS CONSOLIDATION
------ --------- -------------- ------------ -------------
Operating revenues...................... $ -- $ -- $5,634 $ -- $5,634
Costs and expenses...................... -- -- 4,849 -- 4,849
----- ---- ------ ----- ------
Income from operations.................. -- -- 785 -- 785
----- ---- ------ ----- ------
Other income (expense):
Interest income (expense), net........ (158) (97) (19) -- (274)
Equity in subsidiaries, net of
taxes.............................. 414 475 -- (889) --
Minority interest..................... -- -- (3) -- (3)
Other, net............................ -- -- 8 -- 8
----- ---- ------ ----- ------
256 378 (14) (889) (269)
----- ---- ------ ----- ------
Income before income taxes.............. 256 378 771 (889) 516
Provision for (benefit from) income
taxes................................... (59) (36) 297 -- 202
----- ---- ------ ----- ------
Income before extraordinary item and
cumulative effect of change in
accounting principle.................. 315 414 474 (889) 314
Extraordinary item...................... -- -- (1) -- (1)
Cumulative effect of change in
accounting
principle............................. -- -- 2 -- 2
----- ---- ------ ----- ------
Net income.............................. $ 315 $414 $ 475 $(889) $ 315
===== ==== ====== ===== ======
SIX MONTHS ENDED JUNE 30, 2000
(UNAUDITED)
PARENT GUARANTOR NON-GUARANTORS ELIMINATIONS CONSOLIDATION
------ --------- -------------- ------------ -------------
Operating revenues...................... $ -- $ -- $6,483 $ -- $6,483
Costs and expenses...................... -- -- 5,865 -- 5,865
----- ----- ------ ----- ------
Income from operations.................. -- -- 618 -- 618
----- ----- ------ ----- ------
Other income (expense):
Interest income (expense), net........ (246) (121) (29) -- (396)
Equity in subsidiaries, net of
taxes.............................. 209 285 -- (494) --
Minority interest..................... -- -- (12) -- (12)
Other, net............................ -- -- 15 -- 15
----- ----- ------ ----- ------
(37) 164 (26) (494) (393)
----- ----- ------ ----- ------
Income (loss) before income taxes....... (37) 164 592 (494) 225
Provision for (benefit from) income
taxes................................... (92) (45) 307 -- 170
----- ----- ------ ----- ------
Net income.............................. $ 55 $ 209 $ 285 $(494) $ 55
===== ===== ====== ===== ======
22
24
WASTE MANAGEMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2001
(UNAUDITED)
PARENT GUARANTOR NON-GUARANTORS ELIMINATIONS CONSOLIDATION
------ --------- -------------- ------------ -------------
Cash flows from operating activities:
Net income............................................ $ 315 $ 414 $ 475 $(889) $ 315
Equity in earnings of subsidiaries, net of taxes...... (414) (475) -- 889 --
Other adjustments and charges......................... 26 2 523 -- 551
----- ----- ------- ----- -------
Net cash provided by (used in) operating activities..... (73) (59) 998 -- 866
----- ----- ------- ----- -------
Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired...... -- -- (65) -- (65)
Capital expenditures.................................. -- -- (474) -- (474)
Proceeds from divestitures of businesses, net of cash
divested, and other sales of assets................. -- -- 26 -- 26
Other................................................. -- -- 64 -- 64
----- ----- ------- ----- -------
Net cash used in investing activities................... -- -- (449) -- (449)
----- ----- ------- ----- -------
Cash flows from financing activities:
New borrowings........................................ 594 -- 359 -- 953
Debt repayments....................................... (320) (400) (366) -- (1,086)
Exercise of common stock options and warrants......... 38 -- -- -- 38
Other................................................. -- -- (19) -- (19)
(Increase) decrease in intercompany and investments,
net................................................. (246) 451 (205) -- --
----- ----- ------- ----- -------
Net cash provided by financing activities............... 66 51 (231) -- (114)
----- ----- ------- ----- -------
Effect of exchange rate changes on cash and cash
equivalents........................................... -- -- (1) -- (1)
----- ----- ------- ----- -------
Increase (decrease) in cash and cash equivalents........ (7) (8) 317 -- 302
Cash and cash equivalents at beginning of period........ 72 14 8 -- 94
----- ----- ------- ----- -------
Cash and cash equivalents at end of period.............. $ 65 $ 6 $ 325 $ -- $ 396
===== ===== ======= ===== =======
SIX MONTHS ENDED JUNE 30, 2000
(UNAUDITED)
PARENT GUARANTOR NON-GUARANTORS ELIMINATIONS CONSOLIDATION
------ --------- -------------- ------------ -------------
Cash flows from operating activities:
Net income............................................ $ 55 $ 209 $ 285 $(494) $ 55
Equity in earnings of subsidiaries, net of taxes...... (209) (285) -- 494 --
Other adjustments and changes......................... 30 (2) 1,019 -- 1,047
----- ----- ------- ----- -------
Net cash provided by (used in) operating activities..... (124) (78) 1,304 -- 1,102
----- ----- ------- ----- -------
Cash flows from investing activities:
Short-term investments................................ -- -- 54 -- 54
Acquisitions of businesses, net of cash acquired...... -- -- (169) -- (169)
Capital expenditures.................................. -- -- (564) -- (564)
Proceeds from divestitures of businesses, net of cash
divested, and other sales of assets................. -- -- 1,083 -- 1,083
Other................................................. -- -- (18) -- (18)
----- ----- ------- ----- -------
Net cash provided by investing activities............... -- -- 386 -- 386
----- ----- ------- ----- -------
Cash flows from financing activities:
New borrowings........................................ 40 -- 34 -- 74
Debt repayments....................................... (777) (594) (266) -- (1,637)
Exercise of common stock options and warrants......... 1 -- -- -- 1
(Increase) decrease in amounts due to and from
subsidiaries, net................................... 884 665 (1,549) -- --
----- ----- ------- ----- -------
Net cash provided by (used in) financing activities... 148 71 (1,781) -- (1,562)
----- ----- ------- ----- -------
Effect of exchange rate changes on cash and cash
equivalents......................................... -- -- (4) -- (4)
----- ----- ------- ----- -------
Increase (decrease) in cash and cash equivalents...... 24 (7) (95) -- (78)
Cash and cash equivalents at beginning of period...... 34 4 143 -- 181
----- ----- ------- ----- -------
Cash and cash equivalents at end of period............ $ 58 $ (3) $ 48 $ -- $ 103
===== ===== ======= ===== =======
23
25
WASTE MANAGEMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
11. NEW ACCOUNTING PRONOUNCEMENTS
In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141 Accounting for Business
Combinations("SFAS No. 141") and Statement of Financial Accounting Standards No.
142 Accounting for Goodwill and Other Intangible Assets ("SFAS No. 142"). SFAS
No. 141 requires that all business combinations be accounted for using the
purchase method of accounting and prohibits the pooling-of-interests method for
business combinations initiated after June 30, 2001. According to SFAS No. 142,
goodwill which arises from purchases after June 30, 2001 cannot be amortized. In
addition, SFAS No. 142 requires the continuation of the amortization of goodwill
and all intangible assets through December 31, 2001, but amortization of
existing goodwill will cease on January 1, 2002. Entities must use their current
goodwill impairment approach through December 31, 2001, and begin to apply the
new impairment approach on January 1, 2002. The Company has six months from the
date it initially applies SFAS No. 142 to test goodwill for impairment and any
impairment charge resulting from the initial application of the new rule must be
classified as the cumulative effect of a change in accounting principle.
Thereafter, goodwill should be tested for impairment annually and impairment
losses should be presented in the operating section of the income statement
unless they are associated with a discontinued operation. In those cases, any
impairment losses will be included, net of tax, within the results of
discontinued operations.
During the first half of 2001, all of the Company's business combinations
were accounted for by using the purchase method. The Company will continue to
use the purchase method of accounting for its business combinations in
accordance with its adoption of SFAS No. 141. Management is currently assessing
the impact that the adoption of SFAS No. 142 will have on the Company's
consolidated financial statements. See Management's Discussion and
Analysis -- New Accounting Pronouncements.
During the third quarter of 2001, the Financial Accounting Standards Board
voted unanimously to issue SFAS No. 143, Accounting for Asset Retirement
Obligations ("SFAS No. 143"). SFAS No. 143 covers all legally enforceable
obligations associated with the retirement of tangible long-lived assets and
provides the accounting and reporting requirements for such obligations. SFAS
No. 143, is effective for the Company beginning January 1, 2003. Management has
yet to determine the impact that the adoption of SFAS No. 143 will have on the
Company's consolidated financial statements.
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26
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The discussion below and elsewhere in this Form 10-Q includes statements
that are "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Exchange Act. When we use words
like "may," "should," "could," "will," "believe," "expect," "anticipate,"
"estimate," "project," "plan," "goal," "target," or "outlook," or references to
future time periods, strategies, designs, objectives, schedules, projections, or
intentions, desires, beliefs or feelings, their opposites and other similar
expressions, the Company is making forward-looking statements. These expressions
are most often used in statements relating to future events and anticipated
revenues, earnings or other aspects of our operating results. We make these
statements in an effort to keep stockholders and the public informed about our
business, and have based them on our current expectations about future events.
You should view such statements with caution. These statements are not
guarantees of future performance or events. All phases of our business are
subject to uncertainties, risks and other influences, many of which the Company
has no control over. Additionally, any of these factors, either alone or taken
together, could have a material adverse effect on the Company and could change
whether any forward-looking statement ultimately turns out to be true.
Outlined below are some of the risks that the Company faces and that could
affect our business and financial statements for the remainder of 2001 and
beyond. However, they are not the only risks that the Company faces. There may
be additional risks that we do not presently know or that we currently believe
are immaterial which could also impair our business.
- the outcome of litigation or investigations;
- possible changes in our estimates of site remediation requirements, final
closure and post-closure obligations, compliance and other audits and
regulatory developments;
- the possible impact of regulations on our business, including the cost to
comply with regulatory requirements and the potential liabilities
associated with disposal operations, as well as our ability to obtain and
maintain permits needed to operate our facilities;
- the effect of limitations or bans on disposal or transportation of
out-of-state waste or certain categories of waste;
- our ability to improve the productivity of acquired operations and use
our asset base and strategic position to operate more efficiently;
- our ability to accurately assess all of the pre-existing liabilities of
companies we have acquired and to successfully integrate the operations
of acquired companies with our existing operations;
- possible charges against earnings for certain shut down operations and
uncompleted acquisitions or development or expansion projects;
- possible charges to asset impairments or further impairments to
long-lived assets resulting from changes in circumstances or future
business events or decisions;
- the effects that trends toward requiring recycling, waste reduction at
the source and prohibiting the disposal of certain types of wastes could
have on volumes of waste going to landfills and waste-to-energy
facilities;
- the effect the weather has on our quarter to quarter results, as well as
the effect of extremely harsh weather on our operations;
- the effect of price fluctuations of recyclable materials processed by the
Company;
- the effect competition in our industry could have on our ability to
maintain margins, including uncertainty relating to competition with
governmental sources that enjoy competitive advantages from tax-exempt
financing and tax revenue subsidies;
25
27
- possible defaults under our credit agreements if we are not able to
satisfy certain financial ratios and covenants, and the possibility that
we can not obtain additional capital on acceptable terms if needed;
- possible diversions of management's attention and increases in operating
expenses due to efforts by labor unions to organize our employees;
- possible increases in operating expenses due to fuel price increases or
fuel supply shortages;
- the effects of general economic conditions;
- the ability of insurers to timely meet their contractual commitments; and
- our ability to successfully deploy our new enterprise-wide software
systems.
General
Waste Management, Inc. is its industry's leading provider of integrated
waste services in North America. Through our subsidiaries, we provide
collection, transfer, recycling and resource recovery, and disposal services. We
are also a leading developer, operator and owner of waste-to-energy facilities
in the United States.
During 2000, we divested nearly all of our operations outside of North
America. Our international operations outside of North America consisted of the
collection and transportation of solid, hazardous and medical wastes and
recyclable materials and the treatment and disposal of recyclable materials.
Also included were the operation of solid and hazardous waste landfills,
municipal and hazardous waste incinerators, water and waste-water treatment
facilities, hazardous waste treatment facilities, waste-fuel powered independent
power facilities, and the construction of treatment or disposal facilities for
third parties. Although substantially all of the international operations
outside of North America were divested in 2000 pursuant to our 1999 strategic
plan, we still have certain overseas interests which are currently being
marketed for sale and are classified as held-for-sale operations in the
financial statements.
The Company also divested most of its non-solid waste operations in 2000,
which include all hazardous waste management and other North American non-solid
waste services (except for hazardous waste landfills, which are included in NASW
operations). The Company's hazardous waste management services included the
collection, transfer and treatment of hazardous waste. The Company's low-level
and other radioactive waste services generally consisted of disposal, processing
and various other special services related to these types of waste.
Additionally, the Company provided hazardous, radioactive and mixed waste
program and facilities management services. The Company's remaining non-solid
waste operations consist of a geosynthetic manufacturing and installation
service, which generally involves the making and installing of landfill liners
and independent power projects, which include the operation and, in some cases,
the ownership of independent power projects that either cogenerate electricity
and thermal energy or generate electricity alone for sale to customers,
including public utilities and industrial customers. The Company's geosynthetic
manufacturing and installation service and independent power project operations
are currently being marketed for sale and the Company has classified them as
held-for-sale operations in its financial statements.
Major Initiatives
In the past, our primary growth strategy was to purchase revenue through
acquisitions. However, we are now working on becoming a company of operational
excellence by focusing on (i) providing excellent customer service, (ii)
improving the way we operate, (iii) increasing cash flow and (iv) generating
higher profit margins. To that end, we established four major company-wide
initiatives for 2001 which are as follows:
- converting our existing financial systems to PeopleSoft enterprise
financial systems;
- implementing a procurement strategy;
- conducting in-depth studies of our markets to determine the dynamics of
different markets, the way we serve those markets and the most profitable
way to operate in these markets; and
- implementing a strategy to improve customer focus and the way we service
our customers.
26
28
We are progressing with these initiatives in accordance with the timelines
that we had established for the Company.
RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000
The following table presents, for the periods indicated, the period to
period change in dollars (in millions) and percentages for the respective
condensed consolidated statements of operations line items.
PERIOD TO PERIOD
CHANGE FOR THE PERIOD TO PERIOD
THREE MONTHS CHANGE FOR THE
ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2001 AND 2000 2001 AND 2000
----------------- -----------------
STATEMENT OF OPERATIONS:
Operating revenues............................. $(351) (10.7)% $ (849) (13.1)%
----- -------
Costs and expenses:
Operating (exclusive of depreciation and
amortization shown below)................. (217) (11.1) (527) (13.5)
General and administrative................... (47) (10.6) (152) (16.2)
Depreciation and amortization................ (21) (5.8) (36) (5.1)
Asset impairments and unusual items.......... (214) (98.6) (301) (97.4)
----- -------
(499) (16.8) (1,016) (17.3)
----- -------
Income from operations......................... 148 50.5 167 27.0
----- -------
Other income (expense):
Interest expense............................. 54 26.9 110 26.8
Interest and other income, net............... (7) (36.8) 5 16.7
Minority interest............................ 4 66.7 9 75.0
----- -------
51 27.1 124 31.6
----- -------
Income before income taxes..................... 199 189.5 291 129.3
Provision for income taxes..................... 8 7.6 32 18.8
----- -------
Income before extraordinary item and cumulative
effect of change in accounting principle..... 191 259
Extraordinary loss............................. -- (1)
Cumulative effect of change in accounting
principle.................................... -- 2
----- -------
Net income..................................... $ 191 $ 260
===== =======
27
29
The following table presents, for the periods indicated, the percentage
relationship that the respective condensed consolidated statements of operations
line items bear to operating revenues:
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ----------------
2001 2000 2001 2000
------ ------ ----- -----
STATEMENT OF OPERATIONS:
Operating revenues............................ 100.0% 100.0% 100.0% 100.0%
----- ----- ----- -----
Costs and expenses:
Operating (exclusive of depreciation and
amortization shown below)................ 59.4 59.7 60.0 60.2
General and administrative.................. 13.7 13.6 14.0 14.5
Depreciation and amortization............... 11.7 11.1 12.0 11.0
Asset impairments and unusual items......... 0.1 6.6 0.1 4.8
----- ----- ----- -----
84.9 91.0 86.1 90.5
----- ----- ----- -----
Income from operations........................ 15.1 9.0 13.9 9.5
----- ----- ----- -----
Other income (expense):
Interest expense............................ (5.0) (6.2) (5.3) (6.3)
Interest and other income, net.............. 0.4 0.6 0.6 0.5
Minority interest........................... (0.1) (0.2) -- (0.2)
----- ----- ----- -----
(4.7) (5.8) (4.7) (6.0)
----- ----- ----- -----
Income before income taxes.................... 10.4 3.2 9.2 3.5
Provision for income taxes.................... 3.8 3.2 3.6 2.6
----- ----- ----- -----
Income before extraordinary item and
cumulative effect of change in accounting
principle................................... 6.6 -- 5.6 0.9
Extraordinary loss............................ -- -- -- --
Cumulative effect of change in accounting
principle................................... -- -- -- --
----- ----- ----- -----
Net income.................................... 6.6% --% 5.6% 0.9%
===== ===== ===== =====
28
30
Operating Revenues
Operating revenues by reportable segment (in millions):
OPERATING REVENUES FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000
(OPERATING REVENUES CHART)
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30, ENDED JUNE 30, ENDED JUNE 30,
2001 2000 2001 2000
-------------- -------------- -------------- --------------
NASW.................................. $2,819 $2,912 $5,462 $ 5,622
Other................................. $ 96 $ 354 $ 172 $ 861
Total....................... $2,915 $3,266 $5,634 $ 6,483
For the three and six months ended June 30, 2001, the Company's operating
revenues decreased $351 million, or 10.7% and $849 million or 13.1%,
respectively, as compared to the corresponding 2000 period. The decrease in the
Company's operating revenues is primarily due to the divestiture of
substantially all of the Company's international operations outside of North
America, the Company's non-solid waste businesses, which are aggregated as
"Other" in the table above, and certain non-integrated NASW operations. These
divestitures were part of the Company's strategic plan to focus on internal
growth and NASW operations.
NASW operating revenue mix (in millions):
OPERATING REVENUES FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000
(OPERATING REVENUES CHART)
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30, ENDED JUNE 30, ENDED JUNE 30,
2001 2000 2001 2000
-------------- -------------- -------------- --------------
Collection............................ $1,925 $1,964 $3,779 $ 3,826
Disposal.............................. $ 882 $ 870 $1,661 $ 1,674
Transfer.............................. $ 384 $ 371 $ 712 $ 693
Recycling and other................... $ 154 $ 248 $ 301 $ 452
Intercompany.......................... $ (526) $ (541) $ (991) $(1,023)
Total....................... $2,819 $2,912 $5,462 $ 5,622
29
31
For the three and six months ended June 30, 2001, NASW operating revenues
decreased as compared to the corresponding prior year periods by $93 million or
3.2% and $160 million or 2.8%, respectively. For both periods, the primary
reason for the decrease is the divestitures of non-integrated NASW operations
during 2000 and, to a lesser extent, in 2001, offset slightly by the acquisition
of certain NASW operations in 2001 and the full period effect of such
acquisitions in 2000. The Company experienced negative internal growth of 1.3%
and 1.0% for the three and six months ended June 30, 2001, respectively.
Internal revenue growth was negatively impacted by an overall price decrease in
the recyclable materials markets of 2.0% and 1.6% for the three and six months
ended June 30, 2001. However, partially offsetting the decline in commodity
prices were price increases of 1.5% for both the three and six months ended June
30, 2001. The negative volume of 0.8% and 0.9% for NASW operations for the three
and six months ended June 30, 2001 is primarily attributable to an overall
slowing of the economy in certain geographic areas of North America, the
Company's culling of unprofitable accounts, and the impact of the Company's
change in policy regarding third party waste brokers requiring them to sign
standardized service agreements that provide for timely payments for services
rendered.
Operating Costs and Expenses (Exclusive of Depreciation and Amortization Shown
Below)
Operating costs and expenses decreased $217 million or 11.1% and $527
million or 13.5% for the three and six months ended June 30, 2001 as compared to
the prior year periods. As a percentage of operating revenues, operating costs
and expenses were 59.4% and 60.0% for the three and six months ended June 30,
2001, respectively, and 59.7% and 60.2% for the corresponding prior year
periods. The decrease in operating costs and expenses is substantially
attributable to the divestiture during 2000 of the Company's international
operations outside of North America, the Company's non-solid waste businesses
and non-integrated NASW operations discussed above. In addition, operating costs
and expenses decreased for the second quarter of 2001 compared to the
corresponding prior year due to a decrease in repairs and maintenance costs as a
result of increased emphasis on preventative maintenance.
General and Administrative
General and administrative expenses decreased $47 million or 10.6% and $152
million or 16.2% for the three and six months ended June 30, 2001 as compared to
the prior year periods. Significantly contributing to the overall decrease in
general and administrative costs was the impact of the divestitures that the
Company completed throughout 2000. As a percentage of operating revenues,
general and administrative expenses were 13.7% and 14.0% for the three and six
months ended June 30, 2001, respectively, and 13.6% and 14.5% for the
corresponding prior year periods. The decrease for the six months ended June 30,
2001 compared to the corresponding prior year period is attributable to
significant costs that were incurred in the first half of 2000 for professional
accounting and consulting services for accounting and process improvement
initiatives that began as part of the Company's 1999 accounting review. These
costs were not incurred in 2001, as the Company was able to stabilize its
accounting systems and complete its process improvement initiatives in the
second half of 2000. In addition, the Company experienced a decline in its
provision for bad debts from $21 million for the six months ended June 30, 2000
to $5 million for the six months ended June 30, 2001 due to the Company's
overall improved collection efforts and assessments of required reserves for
uncollectible accounts, using a specific review process. Offsetting these
improvements, the Company experienced increased general and administrative
expenses for the three and six months ended June 30, 2001 compared to the
corresponding prior year period due to an increase in permanent staffing at the
corporate office.
Depreciation and Amortization
Depreciation and amortization expenses decreased $21 million or 5.8% and
$36 million or 5.1% for the three and six months ended June 30, 2001 as compared
to the prior year periods. This decrease in depreciation and amortization
expense is attributable to the amortization expense of goodwill on operations
that were divested throughout 2000, more cost-effective use of the Company's
landfill assets and a temporary increase of fully depreciated trucks and other
equipment associated with delays in receiving new equipment. As a percentage of
operating revenues, depreciation and amortization expense was 11.7% and 12.0%
for the three and six months ended June 30, 2001, respectively, and 11.1% and
11.0% for the corresponding prior year
30
32
periods. The increase in depreciation and amortization expense as a percentage
of operating revenues is substantially attributable to fixed asset depreciation
that was suspended on operations classified as held-for-sale. The amount of
depreciation suspended for operations classified as held-for-sale was $4 million
or 0.1% of operating revenues and $7 million or 0.1% of operating revenues for
the three and six months ended June 30, 2001. For the three and six months ended
June 30, 2000, the amount of depreciation suspended for operations classified as
held-for-sale was $32 million or 1.0% of operating revenues and $83 million or
1.3% of operating revenues, respectively. Offsetting this impact of suspended
depreciation due to assets held for sale is the impact of more cost-effective
use of the Company's landfill assets and a temporary increase of fully
depreciated trucks and other equipment associated with delays in receiving new
equipment.
Asset Impairments and Unusual Items
For the three and six months ended June 30, 2001, asset impairments and
unusual items of $3 million and $8 million, respectively, were primarily
attributable to the Company's divestiture activities, offset in part by
reversals of loss contract reserves that were determined to be in excess of
current requirements and other unusual items.
The Company completed the settlement of its obligations under the qualified
defined benefit plan for all eligible non-union domestic employees of Waste
Management Holdings, Inc. ("WM Holdings") in the first quarter of 2001. This
plan was terminated as of October 31, 1999 in connection with the merger between
the Company and WM Holdings (the "WM Holdings Merger") in July 1998. Costs
related to the termination of this plan resulted in a non-cash charge to asset
impairments and unusual items of approximately $14 million and $92 million for
the three and six months ended June 30, 2000.
The Company recorded a charge to asset impairments and unusual items of
approximately $125 million and $114 million for the three and six months ended
June 30, 2000 related to net gains and losses on operations divested during the
respective periods. Additionally, the Company recorded charges to asset
impairments and unusual items of approximately $78 million and $102 million for
the three and six months ended June 30, 2000, respectively, for operations
held-for-sale that had a carrying value greater than management's best estimate
of anticipated proceeds.
Interest (Expense) Income
The decrease in interest expense for the three and six months ended June
30, 2001, as compared to the corresponding periods of 2000, is primarily due to
the net debt reduction throughout 2000 and 2001 from proceeds related to the
Company's divestiture program and cash flow from operations. The increase in
interest income in 2001, as compared to 2000, is primarily due to temporarily
investing the proceeds from the Company's February 2001 issuance of $600 million
of senior unsecured notes as well as available cash resulting from delays in
capital expenditures. Such proceeds were used to repay senior notes which
matured during the second quarter of 2001.
Provision for Income Taxes
The Company recorded a provision for income taxes of $113 million and $202
million for the three and six months ended June 30, 2001, respectively and $105
million and $170 million for the corresponding periods of 2000. The difference
in federal income taxes computed at the federal statutory rate and reported
income taxes for the three and six months ended June 30, 2001 and 2000 is
primarily due to state and local income taxes, non-deductible costs related to
acquired intangibles, and non-deductible costs associated with the impairment
and divestiture of certain businesses. Additionally, in the second quarter of
2001, the Company recorded a net tax benefit of $12 million. Scheduled Canadian
federal and provincial tax rate reductions resulted in a benefit of $42 million,
which was offset in part by an expense of $30 million related to the Company's
plan to repatriate certain Canadian capital and earnings previously deemed
permanently invested in Canada.
31
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Extraordinary Loss
In March 2001, the Company, working with local governmental authorities,
refinanced $339 million of fixed-rate tax-exempt bonds maturing through 2008
with $326 million of variable-rate tax-exempt bonds maturing through 2011 and
$17 million of fixed-rate bonds maturing through 2001. The Company recorded a
net extraordinary loss of $1 million in the first quarter of 2001 for the
remaining unamortized premium and issuance costs related to the retired debt.
Cumulative Effect of Change in Accounting Principle
Statement of Financial Accounting Standards 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS No. 133") became effective for the
Company as of January 1, 2001. Adoption of SFAS No. 133 resulted in a gain, net
of tax, of approximately $2 million in the first quarter of 2001.
LIQUIDITY AND CAPITAL RESOURCES
The Company operates in an industry that requires a high level of capital
investment. The Company's capital requirements primarily stem from (i) its
working capital needs for its ongoing operations, (ii) capital expenditures for
construction and expansion of its landfill sites, as well as new trucks and
equipment for its collection operations, (iii) refurbishments and improvements
at its waste-to-energy facilities and (iv) business acquisitions. The Company's
strategy is to meet these capital needs first from internally generated funds.
Historically, the Company has also obtained financing from various financing
sources available at the time, including the incurrence of debt and the issuance
of its common stock. The Company believes that its current cash flows from
operations and its level of credit capacity is sufficient to meet its ongoing
operating requirements.
The following is a summary of the Company's cash flows statements for the
six months ended June 30, 2001 and 2000 (in millions):
SIX MONTHS ENDED
JUNE 30,
----------------
2001 2000
----- -------
Operating activities.............................. $ 866 $ 1,102
Investing activities.............................. (449) 386
Financing activities.............................. (114) (1,562)
For the six months ended June 30, 2001, the Company generated cash flows
from operations of approximately $866 million. Favorably impacting the Company's
cash flows from operations was an improvement in the Company's days sales
outstanding from approximately 50 days at December 31, 2000 to approximately 47
days at June 30, 2001. The Company used $449 million for its investing
activities during the six months ended June 30, 2001. Included in the Company's
investing activities for this period were capital expenditures of $474 million
and acquisitions of solid waste businesses of $65 million offset by proceeds
from sales of assets and other investing activities of $90 million. Capital
expenditures for the first half of 2001 were lower than the Company's budgeted
amounts for the period as well as lower than the corresponding period in 2000.
The Company, however, still expects to meet its full year 2001 budgeted
allocation for capital expenditures of approximately $1.4 billion. In addition,
the Company used $114 million for financing activities which is primarily
comprised of $133 million of net debt reductions offset by proceeds from
exercises of common stock options and warrants and other financing activities.
For the six months ended June 30, 2000, cash used to acquire businesses of
$169 million, capital expenditures of $564 million and net debt reductions of
approximately $1,563 million were primarily financed with cash flows from
operating activities of $1,102 million and proceeds from the sale of assets of
$1,083 million. Favorably impacting cash flows from operations for the six
months ended June 30, 2000 was a tax refund of approximately $200 million and
improvements in the Company's accounts receivable average days sales
outstanding.
32
34
The following summary of free cash flows has been prepared to highlight and
facilitate understanding of the primary cash flow elements. It is not intended
to replace the condensed consolidated statements of cash flows for the six
months ended June 30, 2001 and 2000, which were prepared in accordance with
generally accepted accounting principles. Adjusted free cash flow in the table
below, which is not a measure of financial performance in accordance with
generally accepted accounting principles, is defined as cash flows from
operations less capital expenditures and then adjusted for certain cash flow
activity that the Company considers as unusual for the respective periods.
The analysis of free cash flows for the six months ended June 30, 2001 and
2000 is as follows (in millions):
SIX MONTHS ENDED
JUNE 30,
------------------
2001 2000
------ ------
EBITDA(a)................................................... $1,469 $1,639
Interest paid............................................... (312) (411)
Taxes paid.................................................. (19) (73)
Change in assets and liabilities, net of effects of
acquisitions and divestitures, and other.................. (272) (53)
------ ------
Net cash provided by operating activities................... 866 1,102
Capital expenditures........................................ (474) (564)
------ ------
Free cash flow.............................................. 392 538
Adjustments:
Tax refund............................................. -- (199)
Payments for terminating the WM Holdings' defined
benefit pension plan................................. 13 8
Accounting and consulting services..................... 64 135
Litigation settlements................................. 38 29
Reimbursement for late allocation of employee stock
purchase plan shares................................. -- 8
Other.................................................. (1) 19
------ ------
Adjusted free cash flow..................................... $ 506 $ 538
====== ======
- ---------------
(a) EBITDA is defined herein as income from operations excluding depreciation
and amortization and asset impairments and unusual items. EBITDA, which is
not a measure of financial performance under generally accepted accounting
principles, is provided because the Company understands that such
information is used by certain investors when analyzing the financial
position and performance of the Company.
In February 2001, the Company issued $600 of 7 3/8% senior unsecured notes
due August 1, 2010. Interest is payable semi-annually on February 1 and August
1. The net proceeds from the offering of the notes were approximately $593
million, after deducting discounts to the underwriters and expenses. The Company
used the net proceeds from this offering, together with cash from operations, to
repay $600 million of senior notes which matured during the second quarter of
2001.
In March 2001, the Company, working with local governmental authorities,
refinanced $339 million of fixed-rate tax-exempt bonds maturing through 2008
with $326 million of variable-rate tax-exempt bonds maturing through 2011 and
$17 of fixed-rate bonds maturing through 2001. The new borrowings include $4
million of related financing costs. The Company recorded a net extraordinary
loss of $1 million in the first quarter of 2001 for the remaining unamortized
premium and issuance costs related to the retired debt.
On June 29, 2001, the Company replaced its prior bank credit facilities
with a $750 million syndicated line of credit (the "Line of Credit") and a
$1,750 million syndicated revolving credit facility (the "Revolver"). The Line
of Credit requires annual renewal by the lender and provides for a one-year term
option at the Company's request while the Revolver matures in June 2006. At June
30, 2001 and August 3,
33
35
2001, the Company has unused and available credit capacity under its bank credit
facilities of approximately $1.0 billion and $737 million, respectively.
On July 17, 1998, the Company issued $600 million of 6 1/8% mandatorily
tendered senior notes, due July 15, 2011. The notes were subject to certain
mandatory tender features as described in the indenture, which allowed the
Company to purchase all of the outstanding notes on July 15, 2001. The Company
used available cash on hand along with funds from the Company's Line of Credit
to purchase the notes in July 2001. The Company expects to repay during the
remainder of 2001 the amounts borrowed from its Line of Credit for this
transaction. Accordingly, the $600 million of 6 1/8% senior notes have been
classified as current at June 30, 2001. The Company expects to record an
extraordinary loss of approximately $1 million for the early extinguishment of
its $600 million of 6 1/8% manditorily tendered senior notes during the third
quarter of 2001.
The Company's $535 million of 4% convertible subordinated notes are due on
February 1, 2002. The Company intends to refinance this amount with other
long-term financing. However, the Company has the intent and ability to utilize
its Line of Credit and/or Revolver to refinance these borrowings in the event
other long-term financing is not available. Therefore, the Company has
classified these borrowings as long-term at June 30, 2001.
Estimates of the extent of the Company's degree of responsibility for
remediation of a particular site and the method and ultimate cost of remediation
require a number of assumptions and are inherently difficult, and the ultimate
outcome may differ from current estimates. However, the Company believes that
its extensive experience in the environmental services business, as well as its
involvement with a large number of sites, provides a reasonable basis for
estimating its aggregate liability. As additional information becomes available,
estimates are adjusted as necessary. While the Company does not anticipate that
any such adjustment would be material to its financial statements, it is
reasonably possible that technological, regulatory or enforcement developments,
the results of environmental studies, the non-existence or inability of other
potentially responsible third parties to contribute to the settlements of such
liabilities, or other factors could necessitate the recording of additional
liabilities which could have a material adverse impact on the Company's
financial statements.
SEASONALITY AND INFLATION
The Company's operating revenues are usually lower in the winter months,
primarily because the volume of waste relating to construction and demolition
activities usually increases in the spring and summer months, and the volume of
industrial and residential waste in certain regions where the Company operates
usually decreases during the winter months. The Company's first and fourth
quarter results of operations typically reflect this seasonality. In addition,
particularly harsh weather conditions may result in the temporary suspension of
certain of the Company's operations.
The Company believes that inflation has not had, and is not expected to
have in the near future, any material adverse effect on the results of
operations.
NEW ACCOUNTING PRONOUNCEMENTS
In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141 Accounting for Business
Combinations("SFAS No. 141") and Statement of Financial Accounting Standards No.
142 Accounting for Goodwill and Other Intangible Assets ("SFAS No. 142"). SFAS
No. 141 requires that all business combinations be accounted for using the
purchase method of accounting and prohibits the pooling-of-interests method for
business combinations initiated after June 30, 2001. According to SFAS No. 142,
goodwill which arises from purchases after June 30, 2001 cannot be amortized. In
addition, SFAS No. 142 requires the continuation of the amortization of goodwill
and all intangible assets through December 31, 2001, but amortization of
existing goodwill will cease on January 1, 2002. Entities must use their current
goodwill impairment approach through December 31, 2001, and begin to apply the
new impairment approach on January 1, 2002. The Company has six months from the
date it initially applies SFAS No. 142 to test goodwill for impairment and any
impairment charge resulting from the
34
36
initial application of the new rule must be classified as the cumulative effect
of a change in accounting principle. Thereafter, goodwill should be tested for
impairment annually and impairment losses should be presented in the operating
section of the income statement unless they are associated with a discontinued
operation. In those cases, any impairment losses will be included, net of tax,
within the results of discontinued operations.
During the first half of 2001, all of the Company's business combinations
were accounted for by using the purchase method. The Company will continue to
use the purchase method of accounting for its business combinations in
accordance with its adoption of SFAS No. 141. Management is currently assessing
the impact that the adoption of SFAS No. 142 will have on the Company's
consolidated financial statements. However, the Company has recalculated its
basic and diluted earnings per share for the three and six months ended June 30,
2001 and 2000 without the impact of goodwill amortization, as follows:
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
-------------- --------------
2001 2000 2001 2000
----- ----- ----- -----
Reported net income................................. $ 191 $ -- $ 315 $ 55
Add back: goodwill amortization, net of taxes....... 31 36 62 74
----- ----- ----- -----
Adjusted net income................................. $ 222 $ 36 $ 377 $ 129
===== ===== ===== =====
BASIC EARNINGS PER COMMON SHARE:
Reported net income................................. $0.31 $ -- $0.50 $0.09
Goodwill amortization, net of taxes................. 0.05 0.06 0.10 0.12
----- ----- ----- -----
Adjusted net income................................. $0.36 $0.06 $0.60 $0.21
===== ===== ===== =====
DILUTED EARNINGS PER COMMON SHARE:
Reported net income................................. $0.30 $ -- $0.50 $0.09
Goodwill amortization, net of taxes................. 0.05 0.06 0.10 0.12
----- ----- ----- -----
Adjusted net income................................. $0.35 $0.06 $0.60 $0.21
===== ===== ===== =====
During the third quarter of 2001, the Financial Accounting Standards Board
voted unanimously to issue SFAS No. 143, Accounting for Asset Retirement
Obligations ("SFAS No. 143"). SFAS No. 143 covers all legally enforceable
obligations associated with the retirement of tangible long-lived assets and
provides the accounting and reporting requirements for such obligations. SFAS
No. 143, is effective for the Company beginning January 1, 2003. Management has
yet to determine the impact that the adoption of SFAS No. 143 will have on the
Company's consolidated financial statements.
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37
PART II.
ITEM 1. LEGAL PROCEEDINGS.
Information regarding our legal proceedings can be found under the
"Litigation" section of Note 6, Commitments and Contingencies, to the condensed
consolidated financial statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
At the Company's Annual Meeting of Stockholders held on May 18, 2001, a
proposal to elect the nominees listed in the following table as directors of the
Company was submitted to a vote of the Company's stockholders. The following
table also shows the results of voting as to each nominee:
NOMINEE VOTES FOR VOTES WITHHELD
- ------- ----------- --------------
H. Jesse Arnelle.......................................... 554,704,763 3,316,753
John C. Pope.............................................. 554,847,269 3,174,247
Ralph V. Whitworth........................................ 554,481,094 3,540,422
At the same meeting, the following proposals were also adopted by the
Company's stockholders. The voting was as follows:
VOTES FOR VOTES AGAINST ABSTENTIONS
----------- ------------- -----------
Ratification of appointment of Arthur Andersen
LLP as the Company's independent auditors for
the fiscal year ending December 31, 2001...... 551,287,887 4,639,191 2,094,438
Approval of Performance-Based Incentive
Compensation Plan............................. 542,096,246 12,903,134 3,022,136
The following proposal was submitted to the Company's stockholders at the
meeting, but was not approved. The voting was as follows:
VOTES FOR VOTES AGAINST ABSTENTIONS
---------- ------------- -----------
Separation of the offices of Chairman of the
Board and Chief Executive Officer.............. 33,181,435 448,564,908 6,578,884
ITEM 5. OTHER INFORMATION
None.
36
38
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
EXHIBIT NO.* DESCRIPTION
- ------------ -----------
10.1 -- Revolving Credit Agreement dated June 29, 2001 by and
among the Company, Waste Management Holdings, Inc., the
banks signatory thereto, Fleet National Bank, as
administrative agent, Bank of America, N.A. and J.P.
Morgan Securities, Inc., as co-syndication agents, and
J.P. Morgan and Banc of America Securities LLC, as joint
lead arrangers and joint book managers.
10.2 -- 364-Day Loan Agreement dated June 29, 2001 by and among
the Company, Waste Management Holdings, Inc., the banks
signatory thereto, Fleet National Bank, as administrative
agent, Deutsche Bank AG, New York Branch and Citibank,
N.A., as co-documentation agent, Bank of America, N.A.
and J.P. Morgan Securities, Inc., as co-syndication
agents, and J.P. Morgan and Banc of America Securities
LLC, as joint lead arrangers and joint book managers.
10.3 -- Performance Based Compensation Plan.
10.4 -- Employment agreement dated April 1, 2001 between Waste
Management, Inc. and Domenic Pio.
10.5 -- Employment agreement dated May 14, 2001 between Waste
Management, Inc. and Richard Felago.
12 -- Computation of Ratio of Earnings to Fixed Charges.
- ---------------
* In the case of incorporation by reference to documents filed under the
Securities and Exchange Act of 1934, the Registrant's file number under that
Act is 1-12154.
(b) Reports on Form 8-K:
During the second quarter of 2001, the Company filed a Current Report on
Form 8-K, dated June 19, 2001, to comment on the announcement that its outside
auditor, Arthur Andersen LLP, had reached a settlement with the SEC regarding
audits done for Waste Management Holdings, Inc. (a wholly-owned subsidiary of
the Company that was known as Waste Management, Inc. before its acquisition by
the Company in July 1998) for the calendar years in the period from 1993 through
1996 and the 1998 restatement of such subsidiary's financial statements.
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39
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WASTE MANAGEMENT, INC.
By: /s/ WILLIAM L. TRUBECK
------------------------------------
William L. Trubeck
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
WASTE MANAGEMENT, INC.
By: /s/ BRUCE E. SNYDER
------------------------------------
Bruce E. Snyder
Vice President and
Chief Accounting Officer
(Principal Accounting Officer)
Date: August 9, 2001
38
40
INDEX TO EXHIBITS
EXHIBIT NO.* DESCRIPTION
- ------------ -----------
10.1 -- Revolving Credit Agreement dated June 29, 2001 by and
among the Company, Waste Management Holdings, Inc., the
banks signatory thereto, Fleet National Bank, as
administrative agent, Bank of America, N.A. and J.P.
Morgan Securities, Inc., as co-syndication agents, and
J.P. Morgan and Banc of America Securities LLC, as joint
lead arrangers and joint book managers.
10.2 -- 364-Day Loan Agreement dated June 29, 2001 by and among
the Company, Waste Management Holdings, Inc., the banks
signatory thereto, Fleet National Bank, as administrative
agent, Deutsche Bank AG, New York Branch and Citibank,
N.A., as co-documentation agent, Bank of America, N.A.
and J.P. Morgan Securities, Inc., as co-syndication
agents, and J.P. Morgan and Banc of America Securities
LLC, as joint lead arrangers and joint book managers.
10.3 -- Performance Based Compensation Plan.
10.4 -- Employment agreement dated April 1, 2001 between Waste
Management, Inc. and Domenic Pio.
10.5 -- Employment agreement dated May 14, 2001 between Waste
Management, Inc. and Richard Felago.
12 -- Computation of Ratio of Earnings to Fixed Charges.
- ---------------
* In the case of incorporation by reference to documents filed under the
Securities and Exchange Act of 1934, the Registrant's file number under that
Act is 1-12154.
1
EXHIBIT 10.1
REVOLVING CREDIT AGREEMENT
DATED AS OF JUNE 29, 2001
by and among
WASTE MANAGEMENT, INC.
(the "Borrower")
and
WASTE MANAGEMENT HOLDINGS, INC.
(the "Guarantor")
and
FLEET NATIONAL BANK ("Fleet")
BANK OF AMERICA, N.A. ("BOA")
THE CHASE MANHATTAN BANK ("Chase")
DEUTSCHE BANK AG, NEW YORK BRANCH ("Deutsche")
AND THE OTHER FINANCIAL INSTITUTIONS WHICH BECOME
A PARTY TO THIS AGREEMENT
(Collectively, the "Banks")
and
FLEET AS ADMINISTRATIVE AGENT (the "Administrative Agent")
and
DEUTSCHE AND CITIBANK, N.A., AS CO-DOCUMENTATION AGENTS
(the "Co-Documentation Agents")
and
BOA AND J.P. MORGAN SECURITIES INC. ("JPMORGAN") AS CO-SYNDICATION AGENTS
(the "Co-Syndication Agents")
and
JPMORGAN AND BANC OF AMERICA SECURITIES LLC
AS JOINT LEAD ARRANGERS AND JOINT BOOK MANAGERS
(the "Joint Lead Arrangers and Joint Book Managers")
2
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TABLE OF CONTENTS
SECTION 1. DEFINITIONS AND RULES OF INTERPRETATION..................................................1
Section 1.1. Definitions...................................................................1
Section 1.2. Rules of Interpretation.......................................................16
SECTION 2. THE LOAN FACILITIES......................................................................17
Section 2.1. Commitment to Lend............................................................17
Section 2.2. Facility Fee..................................................................17
Section 2.3. Reduction of Total Commitment.................................................18
Section 2.4. The Syndicated Notes..........................................................18
Section 2.5. Interest on Loans.............................................................19
Section 2.6. Requests for Syndicated Loans.................................................19
Section 2.7. Election of Eurodollar Rate; Notice of Election; Interest Periods; Minimum
Amounts.....................................................................................20
Section 2.8. Funds for Syndicated Loans....................................................21
Section 2.9. Maturity of the Loans and Reimbursement Obligations...........................21
Section 2.10. Optional Prepayments or Repayments of Loans..................................22
Section 2.11. Swing Line Loans; Settlements................................................22
SECTION 3. LETTERS OF CREDIT........................................................................24
Section 3.1. Letter of Credit Commitments..................................................24
Section 3.2. Reimbursement Obligation of the Borrower......................................25
Section 3.3. Obligations Absolute..........................................................25
Section 3.4. Reliance by the Issuing Banks.................................................26
Section 3.5. Notice Regarding Letters of Credit............................................26
Section 3.6. Letter of Credit Fee..........................................................26
SECTION 4. COMPETITIVE BID LOANS....................................................................26
Section 4.1. The Competitive Bid Option....................................................26
Section 4.2. Competitive Bid Loan Accounts; Competitive Bid Notes..........................26
Section 4.3. Competitive Bid Quote Request; Invitation for Competitive Bid Quotes..........27
Section 4.4. Alternative Manner of Procedure...............................................28
Section 4.5. Submission and Contents of Competitive Bid Quotes.............................29
Section 4.6. Notice to Borrower............................................................30
Section 4.7. Acceptance and Notice by Borrower and Administrative Agent....................30
Section 4.8. Allocation by Administrative Agent............................................31
Section 4.9. Funding of Competitive Bid Loans..............................................31
Section 4.10. Funding Losses...............................................................31
Section 4.11. Repayment of Competitive Bid Loans; Interest.................................31
SECTION 5. PROVISIONS RELATING TO ALL LOANS AND LETTERS OF CREDIT...................................32
Section 5.1. Payments......................................................................32
Section 5.2. Mandatory Repayments of the Loans.............................................34
Section 5.3. Computations..................................................................34
Section 5.4. Illegality; Inability to Determine Eurodollar Rate............................35
Section 5.5. Additional Costs, Etc.........................................................35
Section 5.6. Capital Adequacy..............................................................36
Section 5.7. Certificate...................................................................37
3
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Section 5.8. Eurodollar and Competitive Bid Indemnity......................................37
Section 5.9. Interest on Overdue Amounts...................................................38
Section 5.10. Interest Limitation..........................................................38
Section 5.11. Reasonable Efforts to Mitigate...............................................38
Section 5.12. Replacement of Banks.........................................................38
Section 5.13. Advances by Administrative Agent.............................................39
SECTION 6. REPRESENTATIONS AND WARRANTIES...........................................................40
Section 6.1. Corporate Authority...........................................................40
Section 6.2. Governmental and Other Approvals..............................................41
Section 6.3. Title to Properties; Leases...................................................41
Section 6.4. Financial Statements; Solvency................................................41
Section 6.5. No Material Changes, Etc......................................................42
Section 6.6. Franchises, Patents, Copyrights, Etc..........................................42
Section 6.7. Litigation....................................................................42
Section 6.8. No Materially Adverse Contracts, Etc..........................................42
Section 6.9. Compliance With Other Instruments, Laws, Etc..................................42
Section 6.10. Tax Status...................................................................42
Section 6.11. No Event of Default..........................................................43
Section 6.12. Holding Company and Investment Company Acts..................................43
Section 6.13. Absence of Financing Statements, Etc.........................................43
Section 6.14. Employee Benefit Plans.......................................................43
Section 6.14.1. In General........................................................43
Section 6.14.2. Terminability of Welfare Plans....................................43
Section 6.14.3. Guaranteed Pension Plans..........................................44
Section 6.14.4. Multiemployer Plans...............................................44
Section 6.15. Environmental Compliance.....................................................44
Section 6.16. Disclosure...................................................................46
Section 6.17. Permits and Governmental Authority...........................................46
SECTION 7. AFFIRMATIVE COVENANTS OF THE BORROWER....................................................46
Section 7.1. Punctual Payment..............................................................46
Section 7.2. Maintenance of U.S. Office....................................................46
Section 7.3. Records and Accounts..........................................................46
Section 7.4. Financial Statements, Certificates and Information............................47
Section 7.5. Existence and Conduct of Business.............................................48
Section 7.6. Maintenance of Properties.....................................................48
Section 7.7. Insurance.....................................................................49
Section 7.8. Taxes.........................................................................49
Section 7.9. Inspection of Properties, Books and Contracts.................................49
Section 7.10. Compliance with Laws, Contracts, Licenses and Permits; Maintenance of
Material Licenses and Permits...............................................................50
Section 7.11. Environmental Indemnification................................................50
Section 7.12. Further Assurances...........................................................50
Section 7.13. Notice of Potential Claims or Litigation.....................................50
Section 7.14. Notice of Certain Events Concerning Insurance and Environmental Claims.......51
4
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Section 7.15. Notice of Default............................................................52
Section 7.16. Use of Proceeds..............................................................52
Section 7.17. Certain Transactions.........................................................52
SECTION 8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER...............................................52
Section 8.1. Restrictions on Indebtedness..................................................52
Section 8.2. Restrictions on Liens.........................................................53
Section 8.3. Restrictions on Investments...................................................54
Section 8.4. Mergers, Consolidations, Sales................................................54
Section 8.5. Restricted Distributions and Redemptions......................................55
Section 8.6. Employee Benefit Plans........................................................55
SECTION 9. FINANCIAL COVENANTS OF THE BORROWER......................................................56
Section 9.1. Interest Coverage Ratio.......................................................56
Section 9.2. Total Debt to EBITDA..........................................................56
Section 9.3. Minimum Net Worth.............................................................56
SECTION 10. CONDITIONS PRECEDENT....................................................................57
Section 10.1. Conditions To Effectiveness..................................................57
Section 10.1.1. Corporate Action..................................................57
Section 10.1.2. Loan Documents, Etc...............................................57
Section 10.1.3. Certificate of No Change..........................................57
Section 10.1.4. Incumbency Certificate............................................57
Section 10.1.5. Certificates of Insurance.........................................57
Section 10.1.6. Opinion of Counsel................................................57
Section 10.1.7. Satisfactory Financial Condition..................................57
Section 10.1.8. Payment of Closing Fees...........................................58
Section 10.1.9. Payoff of Existing Debt...........................................58
Section 10.1.10. Closing Certificate..............................................58
SECTION 11. CONDITIONS TO ALL LOANS.................................................................58
Section 11.1. Representations True.........................................................58
Section 11.2. Performance; No Event of Default.............................................58
Section 11.3. No Legal Impediment..........................................................59
Section 11.4. Governmental Regulation......................................................59
Section 11.5. Proceedings and Documents....................................................59
SECTION 12. EVENTS OF DEFAULT; ACCELERATION; TERMINATION OF COMMITMENT..............................59
Section 12.1. Events of Default and Acceleration...........................................59
Section 12.2. Termination of Commitments...................................................61
Section 12.3. Remedies.....................................................................62
SECTION 13. SETOFF..................................................................................62
SECTION 14. EXPENSES................................................................................62
SECTION 15. THE AGENTS..............................................................................63
Section 15.1. Appointment, Powers and Immunities...........................................63
Section 15.2. Actions By Administrative Agent..............................................63
Section 15.3. Indemnification..............................................................64
Section 15.4. Reimbursement................................................................64
Section 15.5. Documents....................................................................65
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Section 15.6. Non-Reliance on Administrative Agent and Other Banks.........................65
Section 15.7. Resignation of Administrative Agent..........................................65
Section 15.8. Action by the Banks, Consents, Amendments, Waivers, Etc. ....................66
SECTION 16. INDEMNIFICATION.........................................................................67
SECTION 17. WITHHOLDING TAXES.......................................................................67
SECTION 18. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION...........................................69
Section 18.1. Confidentiality..............................................................69
Section 18.2. Prior Notification...........................................................69
Section 18.3. Other........................................................................70
Section 19. SURVIVAL OF COVENANTS, ETC. ............................................................70
SECTION 20. ASSIGNMENT AND PARTICIPATION............................................................70
SECTION 21. PARTIES IN INTEREST.....................................................................71
SECTION 22. NOTICES, ETC. ..........................................................................72
SECTION 23. MISCELLANEOUS...........................................................................72
SECTION 24. CONSENTS, ETC. .........................................................................72
SECTION 25. WAIVER OF JURY TRIAL....................................................................73
SECTION 26. GOVERNING LAW; SUBMISSION TO JURISDICTION...............................................73
SECTION 27. SEVERABILITY............................................................................74
SECTION 28. GUARANTY................................................................................74
Section 28.1. Guaranty.....................................................................74
Section 28.2. Guaranty Absolute............................................................74
Section 28.3. Effectiveness; Enforcement...................................................75
Section 28.4. Waiver.......................................................................75
Section 28.5. Expenses.....................................................................76
Section 28.6. Concerning Joint and Several Liability of the Guarantor......................76
Section 28.7. Waiver.......................................................................78
Section 28.8. Subrogation; Subordination...................................................78
SECTION 29. PARI PASSU TREATMENT....................................................................78
SECTION 30. FINAL AGREEMENT.........................................................................79
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Exhibits
Exhibit A Form of Syndicated Note
Exhibit B Form of Swing Line Note
Exhibit C Form of Competitive Bid Note
Exhibit D Form of Syndicated Loan Request
Exhibit E Form of Letter of Credit Request
Exhibit F Form of Compliance Certificate
Exhibit G Form of Assignment and Acceptance
Exhibit H Form of Competitive Bid Quote Request
Exhibit I Form of Invitation for Competitive Bid Quotes
Exhibit J Form of Competitive Bid Quote
Exhibit K Form of Notice of Acceptance/Rejection of
Competitive Bid Quote(s)
Exhibit L Form of Letter of Credit Application
Schedules
Schedule 1 Banks; Commitment Percentages
Schedule 1.1 Existing Liens
Schedule 3.1(a) Existing Letters of Credit
Schedule 6.7 Litigation
Schedule 6.15 Environmental Compliance
Schedule 8.1(e) Existing Indebtedness
7
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT is made as of the 29th day of June,
2001, by and among WASTE MANAGEMENT, INC., a Delaware corporation having its
chief executive office at 1001 Fannin Street, Suite 4000, Houston, Texas 77002
(the "Borrower"), WASTE MANAGEMENT HOLDINGS, INC., a wholly-owned Subsidiary of
the Borrower (the "Guarantor"), FLEET NATIONAL BANK, a national banking
association having a place of business at 100 Federal Street, Boston, MA 02110
("Fleet"), BANK OF AMERICA, N.A., a national banking association having a place
of business at 231 South LaSalle Street Chicago, IL 60697 ("BOA"), THE CHASE
MANHATTAN BANK, a national banking association having a place of business at 707
Travis Street, Houston, TX 77002 ("Chase"), DEUTSCHE BANK AG, NEW YORK BRANCH,
the duly licensed New York branch of a German corporation having its principal
place of business at 31 West 52nd Street, New York, NY 10019 ("Deutsche"), and
each of the other financial institutions party hereto (collectively, the
"Banks"), and Fleet as administrative agent (the "Administrative Agent"), J.P.
Morgan Securities Inc. ("JPMorgan") and Banc of America Securities LLC as joint
lead arrangers and joint book managers (the "Joint Lead Arrangers and Joint Book
Managers"), JPMorgan and BOA as co-syndication agents (the "Co-Syndication
Agents", and together with the Administrative Agent and the Joint Lead Arrangers
and Joint Book Managers, the "Agents"), and Deutsche and Citibank, N.A., as
co-documentation agent (the "Co-Documentation Agents").
WHEREAS, the Borrower has requested certain financing arrangements and
the Banks have agreed to provide such financing arrangements on the terms set
forth herein;
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and agreements set forth herein below, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties, this Agreement will take effect on the Effective Date, on the
following terms:
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:
Absolute Competitive Bid Loan(s). See Section 4.3(a).
Accountants. See Section 7.4(a).
Administrative Agent. See Preamble.
Affected Bank. See Section 5.12.
8
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Agents. See Preamble.
Agreement. This Revolving Credit Agreement, including the Schedules and
Exhibits hereto, as from time to time amended and supplemented in accordance
with the terms hereof.
Applicable Base Rate. The applicable rate per annum of interest on the
Base Rate Loans as set forth in the Pricing Table.
Applicable Eurodollar Rate. The applicable rate per annum of interest
on the Eurodollar Loans shall be as set forth in the Pricing Table.
Applicable Facility Rate. The applicable rate per annum with respect to
the Facility Fee shall be as set forth in the Pricing Table.
Applicable L/C Rate. The applicable rate per annum on the Maximum
Drawing Amount shall be as set forth in the Pricing Table.
Applicable Requirements. See Section 7.10.
Applicable Swing Line Rate. The annual rate of interest agreed upon
from time to time by the Administrative Agent and the Borrower with respect to
Swing Line Loans.
Assignment and Acceptance. See Section 20.
Balance Sheet Date. December 31, 2000.
Banks. See Preamble.
Base Rate. The higher of (a) the variable annual rate of interest so
designated from time to time by the Administrative Agent at its Loan Office as
its "prime rate," such rate being a reference rate and not necessarily
representing the lowest or best rate being charged to any customer by the
Administrative Agent, 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. Changes in the Base Rate
resulting from any changes in the Administrative Agent's "prime rate" shall take
place immediately without notice or demand of any kind on the effective day of
such change.
Base Rate Loans. Syndicated Loans bearing interest calculated by
reference to the Base Rate.
BOA. See Preamble.
Borrower. See Preamble.
Business Day. Any day, other than a Saturday, Sunday or any day on
which banking institutions in Boston, Massachusetts or New York, New York are
authorized by law to close, and, when used in connection with a Eurodollar Loan,
a Eurodollar Business Day.
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Capitalized Leases or Capital Leases. Leases under which the Borrower
or any of its Subsidiaries 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.
CERCLA. See Section 6.15(a).
Certified or 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, in all material respects, the financial position of
such Person.
CFO or the CAO. See Section 7.4(b).
Chase. See Preamble.
Code. The Internal Revenue Code of 1986, as amended and in effect from
time to time.
Co-Documentation Agent(s). See Preamble.
Commitment. With respect to each Bank, such Bank's commitment to make
Syndicated Loans to, and to participate in the issuance, extension and renewal
of Letters of Credit for the account of, the Borrower, determined by multiplying
such Bank's Commitment Percentage by the Total Commitment.
Commitment Percentage. With respect to each Bank, the percentage
initially set forth next to such Bank's name on Schedule 1 hereto, as the same
may be adjusted in accordance with Section 20.
Competitive Bid Loan(s). A borrowing hereunder consisting of one or
more loans made by any of the participating Banks whose offer to make a
Competitive Bid Loan as part of such borrowing has been accepted by the Borrower
under the auction bidding procedure described in Section 4 hereof.
Competitive Bid Loan Accounts. See Section 4.2(a).
Competitive Bid Margin. See Section 4.5(b)(iv).
Competitive Bid Notes. See Section 4.2(b).
Competitive Bid Quote. An offer by a Bank to make a Competitive Bid
Loan in accordance with Section 4.5 hereof.
Competitive Bid Quote Request. See Section 4.3.
Competitive Bid Rate. See Section 4.5(b)(v).
Compliance Certificate. See Section 7.4(c).
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Consolidated or consolidated. With reference to any term defined
herein, shall mean that term as applied to the accounts of the Borrower and its
Subsidiaries consolidated in accordance with GAAP.
Consolidated Earnings Before Interest and Taxes, or EBIT. For any
period, the Consolidated Net Income (or Deficit) of the Borrower and its
Subsidiaries on a consolidated basis plus, without duplication, the sum of (1)
interest expense, (2) income taxes, (3) one-time charges related to expenses in
connection with Terminated Plans not to exceed $80,231,000 for the fiscal
quarter ending September 30, 2000, and not to exceed $28,102,000 for the fiscal
quarter ending December 31, 2000, (4) non-cash extraordinary non-recurring
writedowns or write-offs of assets, including non-cash losses on the sale of
assets outside the ordinary course of business, (5) non-recurring extraordinary
charges for settlement or judgment costs with respect to the shareholder
lawsuits and actions brought against the Borrower or the Guarantor related to,
arising or resulting from, the restatements of financial statements or results,
lowered expected earnings announcements occurring in 1998 and 1999, alleged
misrepresentations, misstatements or omissions contained in, or the adequacy of,
any disclosure documents filed with the Securities and Exchange Commission in
1998 and 1999, as further described in the Borrower's 2000 Annual Report on Form
10-K (collectively, the "Shareholder Suits"), and (6) EBIT of the businesses
acquired by the Borrower or any of its Subsidiaries (through asset purchases or
otherwise) (each an "Acquired Business") or the Subsidiaries acquired or formed
since the beginning of such period (each a "New Subsidiary") provided that (i)
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, or (ii) 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
officer executing such certificate is correct in all material respects) are
provided to the Administrative Agent, to the extent that each of items (1)
through (5) was deducted in determining Consolidated Net Income (or Deficit) in
the relevant period, minus non-cash extraordinary gains on the sale of assets
outside the ordinary course of business to the extent included in Consolidated
Net Income (or Deficit).
Consolidated Earnings Before Interest, Taxes, Depreciation and
Amortization or EBITDA. For any period, EBIT plus (a) depreciation expense, and
(b) amortization expense to the extent the same would be included in the
calculation of Consolidated Net Income (or Deficit) for such period, determined
in accordance with GAAP.
Consolidated Net Income (or Deficit). The consolidated net income (or
deficit) of the Borrower and its Subsidiaries on a consolidated basis, after
deduction of all expenses, taxes, and other proper charges, determined in
accordance with GAAP.
Consolidated Net Worth. The sum of the par value of the capital stock
(excluding treasury stock), capital in excess of par or stated value of shares
of capital stock, retained earnings (minus accumulated deficit) and any other
account which, in accordance with GAAP, constitute stockholders' equity, of the
Borrower and its Subsidiaries determined on a consolidated
11
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basis, excluding the effect of any foreign currency transactions computed
pursuant to Financial Accounting Standards Board Statement No. 52, as amended,
supplemented or modified from time to time, or otherwise in accordance with
GAAP.
Consolidated Tangible Assets. Consolidated Total Assets less the sum
of:
(a) the total book value of all assets of the Borrower and its
Subsidiaries properly classified as intangible assets under generally
accepted accounting principles, including such items as goodwill, the
purchase price of acquired assets in excess of the fair market value
thereof, trademarks, trade names, service marks, customer lists, brand
names, copyrights, patents and licenses, and rights with respect to the
foregoing; plus
(b) all amounts representing any write-up in the book value of
any assets of the Borrower or its Subsidiaries resulting from a
revaluation thereof subsequent to the Balance Sheet Date.
Consolidated Total Assets. All assets of the Borrower and its
Subsidiaries determined on a consolidated basis in accordance with GAAP.
Consolidated Total Interest Expense. For any period, the aggregate
amount of interest expense required by GAAP to be paid or accrued during such
period on all Indebtedness of the Borrower and its Subsidiaries outstanding
during all or any part of such period, including capitalized interest expense
for such period.
Co-Syndication Agent(s). See Preamble.
364 Day Facility. That certain 364 Day Loan Agreement dated as of June
29, 2001 by and among the Borrower, the Guarantor, Fleet, BOA, Chase, Deutsche
and the other banks party thereto, and Fleet as administrative agent thereunder,
Banc of America Securities LLC and JPMorgan as joint lead arrangers and joint
book managers thereunder, BOA and JPMorgan as co-syndication agents thereunder
and Deutsche and Citibank, N.A., as co-documentation agents thereunder, as
amended from time to time.
Defaulting Bank. See Section 5.12.
Defaults. See Section 12.1.
Deutsche. See Preamble.
Disclosure Documents. The Borrower's financial statements referred to
in Section 6.4 and filings made by the Borrower or the Guarantor with the
Securities and Exchange Commission that were publicly available prior to the
Effective Date which were provided to the Banks.
Disposal. See "Release".
Distribution. The declaration or payment of any dividend or other
return on equity on or in respect of any shares of any class of capital stock,
any partnership interests or any membership
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interests of any Person (other than dividends or other such returns payable
solely in shares of capital stock, partnership interests or membership units of
such Person, as the case may be); the purchase, redemption, or other retirement
of any shares of any class of capital stock, partnership interests or membership
units of such Person, directly or indirectly through a Subsidiary or otherwise;
the return of equity capital by any Person to its shareholders, partners or
members as such; or any other distribution on or in respect of any shares of any
class of capital stock, partnership interest or membership unit of such Person.
Dollars or US$ or $ or U.S. Dollars. Dollars in lawful currency of the
United States of America.
Drawdown Date. The date on which any Loan is made or is to be made, or
any amount is paid by an Issuing Bank under a Letter of Credit.
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 10.1 hereof are satisfied.
Employee Benefit Plan. Any employee benefit plan within the meaning of
Section 3(3) of ERISA maintained or contributed to by the Borrower, any of its
Subsidiaries, or any ERISA Affiliate, other than a Multiemployer Plan.
Environmental Laws. See Section 6.15(a).
EPA. See Section 6.15(b).
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
the Borrower or any of its Subsidiaries under Section 414 of the Code.
ERISA Reportable Event. A reportable event within the meaning of
Section 4043 of ERISA and the regulations promulgated thereunder with respect to
a Guaranteed Pension Plan as to which the requirement of notice has not been
waived.
Eurocurrency Reserve Rate. For any day with respect to a Eurodollar
Loan, the maximum rate (expressed as a decimal) at which the Administrative
Agent 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.
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Eurodollar Business Day. Any day on which commercial banks are open for
international business (including dealings in Dollar deposits) in London or such
other eurodollar interbank market as may be selected by the Administrative Agent
in its sole discretion acting in good faith.
Eurodollar Competitive Bid Loan(s). See Section 4.3(a).
Eurodollar Lending Office. Initially, the office of each Bank set forth
in the administrative materials provided to the Administrative Agent;
thereafter, upon notice to the Administrative Agent, such other office of such
Bank that shall be making or maintaining Eurodollar Loans.
Eurodollar Loans. Syndicated Loans bearing interest calculated by
reference to the Eurodollar Rate.
Eurodollar Rate. For any Interest Period with respect to a Eurodollar
Loan, (a) the rate of interest equal to the rate determined by the
Administrative Agent at which Dollar deposits for such Interest Period are
offered based on information presented on Telerate Page 3750 as of 11:00 a.m.
(London time) two (2) Eurodollar Business Days prior to the first day of such
Interest Period, or (b) if such rate is not shown at such place, the rate of
interest equal to (i) the rate per annum at which the Administrative Agent's
Eurodollar Lending Office is offered Dollar deposits at approximately 10:00 a.m.
(New York time) two (2) Eurodollar Business Days prior to the beginning of such
Interest Period in the interbank eurodollar market where the eurodollar
operations of such Eurodollar Lending Office are customarily conducted, 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
Loan of the Administrative Agent to which such Interest Period applies, divided
by (ii) a number equal to 1.00 minus the Eurocurrency Reserve Rate, if
applicable.
Events of Default. See Section 12.1.
Facility Fee. See Section 2.2.
Financial Affiliate. A subsidiary of the bank holding company
controlling any Bank, which subsidiary is engaging in any of the activities
permitted by Section 4(e) of the Bank Holding Company Act of 1956 (12 U.S.C.
Section 1843).
Fleet. See Preamble.
generally accepted accounting principles or GAAP. (i) When used in
Section 9, whether directly or indirectly through reference to a capitalized
term used therein, means (A) 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, and
(B) to the extent consistent with such principles, the accounting practice of
the Borrower reflected in its financial statements for the year ended on the
Balance Sheet Date, and (ii) when used in general, other than as provided above,
means principles that are (A) consistent with the principles promulgated or
adopted by the Financial Accounting Standards Board and its predecessors, as in
effect from time to time, and (B) consistently applied with past financial
statements of the
14
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Borrower adopting the same principles, provided that in each case referred to in
this definition of "generally accepted accounting principles" a certified public
accountant would, insofar as the use of such accounting principles is pertinent,
be in a position to deliver an unqualified opinion (other than a qualification
regarding changes in generally accepted accounting principles) as to financial
statements in which such principles have been properly applied.
Guaranteed Obligations. See Section 28.1.
Guaranteed Pension Plan. Any employee pension benefit plan within the
meaning of Section 3(2) of ERISA maintained or contributed to by the Borrower,
its Subsidiaries 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.
Guarantor. See Preamble.
Guaranty. Any obligation, contingent or otherwise, of a Person
guaranteeing or having the economic effect of guaranteeing any Indebtedness or
other obligation of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, and including any obligation of the guarantor,
direct or indirect, (a) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other obligation or to purchase (or
to advance or supply funds for the purchase of) any security for the payment
thereof, (b) to purchase or lease property, securities or services for the
purpose of assuring the owner of such Indebtedness or other obligation of the
payment thereof, (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness or other obligation, or (d)
as an account party in respect of any letter of credit or letter of guaranty
issued to support such Indebtedness or obligation; provided, that the term
Guaranty shall not include endorsements for collection or deposit in the
ordinary course of business.
Hazardous Substances. See Section 6.15(b).
Indebtedness. Collectively, without duplication, whether classified as
Indebtedness, an Investment or otherwise on the obligor's balance sheet, (a) all
indebtedness for borrowed money, (b) all obligations for the deferred purchase
price of property or services (other than trade payables incurred in the
ordinary course of business which either (i) are not overdue by more than ninety
(90) days, or (ii) are being disputed in good faith and for which adequate
reserves have been established in accordance with GAAP), (c) all obligations
evidenced by notes, bonds, debentures or other similar debt instruments, (d) all
obligations created or arising under any conditional sale or other title
retention agreement with respect to property acquired (even though the rights
and remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property), (e) all
obligations, liabilities and indebtedness under Capitalized Leases, (f) all
obligations, liabilities or indebtedness (contingent or otherwise) under surety,
performance bonds, or any other bonding arrangement, (g) Guaranties with respect
to all Indebtedness of others referred to in clauses (a) through (f) above, and
(h) all Indebtedness of others referred to in clauses (a) through (f) above
secured or supported by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured or
15
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supported by) any Lien on the property or assets of the Borrower or any
Subsidiary, even though the owner of the property has not assumed or become
liable, contractually or otherwise, for the payment of such Indebtedness;
provided that if a Permitted Receivables Transaction is outstanding and is
accounted for as a sale of accounts receivable under generally accepted
accounting principles, Indebtedness shall also include the additional
Indebtedness, determined on a consolidated basis, which would have been
outstanding had such Permitted Receivables Transaction been accounted for as a
borrowing.
Interest Period. With respect to each Loan (a) initially, the period
commencing on the Drawdown Date of such Loan and ending on the last day of one
of the periods set forth below, as selected by the Borrower in accordance with
this Agreement (i) for any Base Rate Loan or Swing Line Loan, the first day of
the month; (ii) for any Eurodollar Loan, 1, 2, 3, or 6 months; (iii) for any
Absolute Competitive Bid Loan, from 7 through 180 days; and (iv) for any
Eurodollar Competitive Bid Loan, 1, 2, 3, 4, 5, or 6 months; and (b) thereafter,
each period commencing on the last day of the next preceding Interest Period
applicable to such Loan and ending on the last day of one of the periods set
forth above, as selected by the Borrower in accordance with this Agreement or if
such period has no numerically corresponding day, on the last Business Day of
such period; provided that any Interest Period which would otherwise end on a
day which is not a Business Day shall be deemed to end on the next succeeding
Business Day; provided further that for any Interest Period for any Eurodollar
Loan or Eurodollar Competitive Bid Loan, if such next succeeding Business Day
falls in the next succeeding calendar month, such Interest Period shall be
deemed to end on the next preceding Business Day; and provided further that no
Interest Period shall extend beyond the Maturity Date.
Interim Balance Sheet Date. March 31, 2001.
Investments. All expenditures made by a Person and all liabilities
incurred (contingently or otherwise) by a Person for the acquisition of stock
(other than the stock of Subsidiaries), or Indebtedness of, or for loans,
advances, capital contributions or transfers of property to, or in respect of
any Guaranties or other commitments as described under Indebtedness, or
obligations of, any other Person, including without limitation, the funding of
any captive insurance company (other than loans, advances, capital contributions
or transfers of property to any Subsidiaries or Guaranties with respect to
Indebtedness of any Subsidiary, limited to such Person's pro rata equity
interest in such Subsidiary). 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.
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Issuance Fee. See Section 3.6.
Issuing Banks. The Bank(s) issuing Letters of Credit, which shall be
(a) Morgan Guaranty Trust Company, Chase, BOA, Fleet, Bank One, N.A., BNP
Paribas, Wachovia Bank, N.A. and Westdeutsche Landesbank Girozentrale, New York
Branch and (b) such other Banks as agreed to by the Borrower and the
Administrative Agent.
Joint Lead Arrangers and Joint Book Managers. See Preamble.
JPMorgan. See Preamble.
Letter of Credit Applications. Letter of credit applications in the
form attached hereto as Exhibit L, unless otherwise agreed upon by the Borrower
and the Issuing Bank from time to time which are entered into pursuant to
Section 3 hereof, as such Letter of Credit Applications are amended, varied or
supplemented from time to time; provided, however, in the event of any conflict
or inconsistency between the terms of any Letter of Credit Application and this
Agreement, the terms of this Agreement shall control.
Letter of Credit Fee. See Section 3.6.
Letter of Credit Participation. See Section 3.1(b).
Letter of Credit Request. See Section 11.5.
Letters of Credit. Letters of credit issued or to be issued by the
Issuing Banks under Section 3 hereof for the account of the Borrower.
Lien. With respect to any asset, (a) any mortgage, deed of trust, lien
(statutory or otherwise), pledge, hypothecation, encumbrance, charge, security
interest, assignment, deposit arrangement or other restriction in, on or of such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.
Loan Documents. This Agreement, the Notes, the Letter of Credit
Applications, the Letters of Credit 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 Office. The Administrative Agent's office located in Boston,
Massachusetts, or at such other location as the Administrative Agent may
designate from time to time.
Loans. Collectively, the Syndicated Loans, the Swing Line Loans and the
Competitive Bid Loans.
Majority Banks. The Banks with greater than fifty percent (50%) of the
Total Commitment; provided that in the event that the Total Commitment has been
terminated, the
17
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Majority Banks shall be the Banks holding greater than fifty percent (50%) of
the aggregate outstanding principal amount of the Obligations on such date.
Material Adverse Effect. A material adverse effect on (a) the business,
assets, operations, or financial condition of the Borrower and the Subsidiaries
taken as a whole, (b) the ability of the Borrower or the Guarantor to perform
any of its obligations under any Loan Document to which it is a party, or (c)
the rights of, or remedies or benefits available to, the Administrative Agent or
any Bank under any Loan Document.
Material Subsidiary. Any Subsidiary which, at the time such
determination is made, has assets, revenues, or liabilities of at least
$20,000,000 or more.
Maturity Date. June 29, 2006.
Maximum Drawing Amount. The maximum aggregate amount from time to time
that the beneficiaries may draw under outstanding Letters of Credit.
Moody's. Moody's Investors Service, Inc.
Multiemployer Plan. Any multiemployer plan within the meaning of
Section 3(37) of ERISA maintained or contributed to by the Borrower, any of its
Subsidiaries, or any ERISA Affiliate.
New Lending Office. See Section 5.1(d).
Non-U.S. Bank. See Section 5.1(c).
Notes. Collectively, the Competitive Bid Notes, the Syndicated Notes,
and the Swing Line Note.
Obligations. All indebtedness, obligations and liabilities of the
Borrower to any of the Banks and the Administrative Agent 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,
the Notes, or any other instrument at any time evidencing any thereof,
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.
Overnight Federal Funds Effective Rate. 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, or if such rate is not published, the
average of the quotations at approximately 11:00 a.m. New York time for the day
of such transaction(s), received by the Administrative Agent from three Federal
Funds brokers of recognized standing selected by the Administrative Agent.
PBGC. The Pension Benefit Guaranty Corporation created by Section 4002
of ERISA and any successor entity or entities having similar responsibilities.
Permitted Liens. Any of the following Liens:
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(a) Liens for taxes not yet due or that are being contested in
compliance with Section 7.8;
(b) carriers', warehousemen's, maritime, mechanics, materialmen's,
repairmen's or other like Liens arising in the ordinary course of business that
are being contested in good faith by appropriate proceedings and for which
adequate reserves with respect thereto have been set aside as required by GAAP;
(c) pledges and deposits made in the ordinary course of business in
compliance with workmen's compensation, unemployment insurance and other social
security laws or regulations;
(d) Liens to secure the performance of bids, trade contracts (other
than for Indebtedness), leases (other than Capital Leases), statutory
obligations, surety and appeal bonds, suretyship, performance and landfill
closure bonds and other obligations of a like nature incurred in the ordinary
course of business;
(e) zoning restrictions, easements, rights-of-way, restrictions on use
of property and other similar encumbrances incurred in the ordinary course of
business which, in the aggregate, are not substantial in amount and do not
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the business of the Borrower or any of its
Subsidiaries;
(f) the Liens on Schedule 1.1 hereto securing the obligations listed on
such Schedule and any replacement Lien securing any renewal, extension or
refunding of such obligations if the amount secured by such renewal, extension
or refunding Lien shall not exceed the amount of the outstanding obligations
secured by the Lien being replaced at the time of such renewal, extension or
refunding (plus transaction costs, including premiums and fees, related to such
renewal, extension or refunding) and if such replacement Lien shall be limited
to the substantially the same property that secured the Lien so replaced;
(g) legal or equitable encumbrances deemed to exist by reason of the
existence of any litigation or other legal proceeding or arising out of a
judgment or award with respect to which an appeal is being prosecuted in good
faith by appropriate action and with respect to which adequate reserves are
being maintained and, in the case of judgment liens, execution thereon is
stayed;
(h) rights reserved or vested in any municipality or governmental,
statutory or public authority to control or regulate any property of the
Borrower or any Subsidiary, or to use such property in a manner that does not
materially impair the use of such property for the purposes for which it is held
by the Borrower or such Subsidiary;
(i) any obligations or duties affecting the property of the Borrower or
any of its Subsidiaries to any municipality, governmental, statutory or public
authority with respect to any franchise, grant, license or permit;
(j) Liens filed in connection with sales of receivables by any of the
Subsidiaries (other than the Guarantor) to a wholly-owned special purpose
financing Subsidiary for purposes of perfecting such sales, provided that no
third party has any rights with respect to such Liens or any assets subject
thereto;
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(k) any interest or title of a lessor under any sale lease-back
transaction entered into by the Borrower or any Subsidiary conveying only the
assets so leased back to the extent the related Indebtedness is permitted under
Section 8.1 hereof;
(l) Liens created or deemed to be created under Permitted Receivables
Transactions at any time provided such Liens do not extend to any property or
assets other than the trade receivables sold pursuant to such Permitted
Receivables Transactions, interests in the goods or products (including returned
goods and products), if any, relating to the sales giving rise to such trade
receivables; any security interests or other Liens and property subject thereto
(other than on any leases or related lease payment rights or receivables between
the Borrower and any of its Subsidiaries, as lessors or sublessors) from time to
time purporting to secure the payment by the obligors of such trade receivables
(together with any financing statements signed by such obligors describing the
collateral securing such trade receivables) pursuant to such Permitted
Receivables Transactions; and
(m) Liens securing other Indebtedness permitted under Sections 8.1(d)
and (e);
provided that the aggregate amount of all Indebtedness and liabilities
secured by all Liens permitted in subsections (k), (l) and (m) shall not exceed
15% of Consolidated Tangible Assets at any time.
Permitted Receivables Transaction. Any sale or sales of, and/or
securitization of, any accounts receivable of the Borrower and/or any of its
Subsidiaries (the "Receivables") pursuant to which (a) the Borrower and its
Subsidiaries realize aggregate net proceeds of not more than $750,000,000 at any
one time outstanding, including, without limitation, any revolving purchase(s)
of Receivables where the maximum aggregate uncollected purchase price (exclusive
of any deferred purchase price) for such Receivables at any time outstanding
does not exceed $750,000,000, and (b) which Receivables shall not be discounted
more than 25%.
Person. Any individual, corporation, partnership, joint venture,
limited liability company, trust, unincorporated association, business, or other
legal entity, and any government or any governmental agency or political
subdivision thereof.
20
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Pricing Table:
APPLICABLE
SENIOR PUBLIC APPLICABLE APPLICABLE APPLICABLE EURODOLLAR
LEVEL DEBT RATING FACILITY RATE L/C RATE BASE RATE RATE
----- ---------------------------- ------------- ---------- ---------- --------------------
1 Greater than or equal to 0.1250% 0.6250% Base Rate Eurodollar Rate plus
BBB+ by Standard & Poor's or per annum per annum 0.6250%
greater than or equal to per annum
Baa1 by Moody's
2 BBB by Standard & Poor's or 0.1500% 0.8500% Base Rate Eurodollar Rate plus
Baa2 by Moody's per annum per annum 0.8500%
per annum
3 BBB- by Standard & Poor's or 0.2250% 0.9000% Base Rate Eurodollar Rate plus
Baa3 by Moody's per annum per annum 0.9000%
per annum
4 BB+ by Standard & Poor's or 0.3000% 1.2000% Base Rate Eurodollar Rate plus
Ba1 by Moody's per annum per annum 1.2000%
per annum
5 Less than or equal to BB by 0.3500% 1.4000% Base Rate Eurodollar Rate plus
Standard & Poor's or less per annum per annum plus 0.1500% 1.4000%
than or equal to Ba2 by per annum per annum
Moody's
The applicable rates charged for any day shall be determined by the higher
Senior Public Debt Rating in effect as of that day, provided that if the higher
Senior Public Debt Rating is more than one level higher than the lower Senior
Public Debt Rating, the applicable rate shall be set at one level above the
lower Senior Public Debt Rating.
RCRA. See Section 6.15(a).
Real Property. All real property heretofore, now, or hereafter owned,
operated, or leased by the Borrower or any of its Subsidiaries.
Reimbursement Obligation. The Borrower's obligation to reimburse the
applicable Issuing Bank and the Banks on account of any drawing under any Letter
of Credit, all as provided in Section 3.2.
Release. Shall have the meaning specified in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
Sections 9601 et seq. ("CERCLA") and the term "Disposal" (or "Disposed") shall
have the meaning specified in the Resource Conservation and Recovery Act of
1976, 42 U.S.C. Sections 6901 et seq. ("RCRA") and regulations
21
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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, to the extent that the laws of Canada or a state, province, territory
or other political subdivision thereof wherein the property lies establish a
meaning for "Release" or "Disposal" which is broader than specified in either
CERCLA, or RCRA, such broader meaning shall apply to the Borrower's or any of
its Subsidiaries' activities in that state, province, territory or political
subdivision.
Replacement Bank. See Section 5.12.
Replacement Notice. See Section 5.12.
Senior Public Debt Rating. The ratings of the Borrower's public
unsecured long-term senior debt, without third party credit enhancement, issued
by Moody's and Standard & Poor's.
Shareholder Suits. See the definition of "Consolidated Earnings Before
Interest and Taxes, or EBIT".
Standard & Poor's. Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc.
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 and whose
financial results are required to be consolidated with the financial results of
the designated parent in accordance with GAAP.
Swap Contracts. All obligations in respect of interest rate, currency
or commodity exchange, forward, swap, or futures contracts or similar
transactions or arrangements entered into to protect or hedge the Borrower and
its Subsidiaries against interest rate, exchange rate or commodity price risks
or exposure, or to lower or diversify their funding costs.
Swap Obligations. The maximum amount of any termination or loss payment
required to be paid by the Borrower or any Subsidiary with respect to any Swap
Contract if such Swap 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, provided that, solely with respect to Swap Contracts which are
either (a) entered into between the Borrower or any of its Subsidiaries with an
investment grade company, or (b) entered into between the Borrower or any of its
Subsidiaries with third parties whose obligations thereunder are secured, such
maximum amount of termination or loss payment shall be net of any termination or
loss payment required to be paid to the Borrower or any Subsidiary by such
counterparty (other than the Borrower or another Subsidiary) with respect to any
Swap Contract if such Swap 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.
Swing Line Loans. See Section 2.11(a).
22
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Swing Line Note. See Section 2.11(a).
Swing Line Settlement. The making or receiving of payments, in
immediately available funds, by the Banks to or from the Administrative Agent in
accordance with Section 2.11 hereof to the extent necessary to cause each Bank's
actual share of the outstanding amount of the Syndicated Loans to be equal to
such Bank's Commitment Percentage of the outstanding amount of such Syndicated
Loans, in any case when, prior to such action, the actual share is not so equal.
Swing Line Settlement Amount. See Section 2.11(b).
Swing Line Settlement Date. See Section 2.11(b).
Swing Line Settling Bank. See Section 2.11(b).
Syndicated Loan Request. See Section 2.6(a).
Syndicated Loans. A borrowing hereunder consisting of one or more loans
made by the Banks to the Borrower under the procedure described in Section
2.1(a) and Section 2.11 hereof.
Syndicated Notes. See Section 2.4(a).
Terminated Plans. The Waste Management, Inc. Pension Plan and The Waste
Management of Alameda County, Inc. Retirement Plan.
Total Commitment. Up to $1,750,000,000, as such amount may be reduced
pursuant to Section 2.3 hereof, or, if such Total Commitment has been terminated
pursuant to Section 2.3 or Section 12.2 hereof, zero.
Total Debt. The sum, without duplication, of all (1) Indebtedness of
the Borrower and its Subsidiaries on a consolidated basis under subsections (a)
through (h) of the definition of "Indebtedness" (provided, however, that
Indebtedness (A) under subsection (f) of the definition of "Indebtedness" shall
be included in such calculation only to the extent that a surety has been called
upon to make payment on a bond, and (B) with respect to Permitted Receivables
Transactions shall not be included in such calculation), plus (2) Swap
Obligations, plus (3) non-contingent reimbursement obligations of the Borrower
and its Subsidiaries with respect to drawings under any letters of credit.
SECTION 1.2. RULES OF INTERPRETATION.
(a) Unless otherwise noted, a reference to any document or
agreement (including this 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.
23
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(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, 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 LOAN FACILITIES.
SECTION 2.1. COMMITMENT TO LEND.
(a) Subject to the terms and conditions set forth in this
Agreement, each of the Banks severally agrees to lend to the Borrower
and the Borrower may borrow, repay, and reborrow from time to time
between the Effective Date and the Maturity Date, upon notice by the
Borrower to the Administrative Agent given in accordance with this
Section 2, its Commitment Percentage of the Syndicated Loans as are
requested by the Borrower; provided that the sum of the outstanding
principal amount of the Syndicated Loans (including the Swing Line
Loans) and the Maximum Drawing Amount of outstanding Letters of Credit
shall not exceed the Total Commitment minus the aggregate amount of
Competitive Bid Loans outstanding at such time.
(b) On the date of each request for a Loan or Letter of Credit
hereunder, the Borrower shall be deemed to have made a representation
and warranty 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. Any unpaid Reimbursement Obligation shall be a Base Rate Loan,
as set forth in Section 3.2(a).
SECTION 2.2. FACILITY FEE. The Borrower agrees to pay to the
Administrative Agent for the account of the Banks a fee (the "Facility Fee") on
the Total Commitment equal to the Applicable
24
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Facility Rate multiplied by the Total Commitment. The Facility Fee shall be
payable for the period from and after the Effective Date quarterly in arrears on
the first day of each calendar quarter for the immediately preceding calendar
quarter with the first such payment commencing on October 1, 2001 and with a
final payment on the Maturity Date (or on the date of termination in full of the
Total Commitment, if earlier). The Facility Fee shall be distributed pro rata
among the Banks in accordance with each Bank's Commitment Percentage.
SECTION 2.3. REDUCTION OF TOTAL COMMITMENT.
(a) The Borrower shall have the right at any time and from
time to time upon three (3) Business Days' prior written notice to the
Administrative Agent to reduce by $25,000,000 or a greater amount or
terminate entirely, the Total Commitment, whereupon each Bank's
Commitment shall be reduced pro rata in accordance with such Bank's
Commitment Percentage of the amount specified in such notice or, as the
case may be, terminated provided that at no time may (i) the Total
Commitment be reduced to an amount less than the sum of (A) the Maximum
Drawing Amount of all Letters of Credit, and (B) all Loans then
outstanding.
(b) No reduction or termination of the Total Commitment once
made may be revoked; the portion of the Total 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 Banks promptly
after receiving any notice delivered by the Borrower pursuant to this
Section 2.3 and will distribute to each Bank a revised Schedule 1 to
this Agreement.
SECTION 2.4. THE SYNDICATED NOTES.
(a) The Syndicated Loans shall be evidenced by separate
promissory notes of the Borrower in substantially the form of Exhibit A
hereto (each, a "Syndicated Note"), dated as of the Effective Date (or
such later date at which a Bank becomes a party hereto pursuant to
Section 20) and completed with appropriate insertions. One Syndicated
Note shall be payable to the order of each Bank in an amount equal to
its maximum Commitment, and shall represent the obligation of the
Borrower to pay such Bank such principal amount or, if less, the
outstanding principal amount of all Syndicated Loans made by such Bank,
plus interest accrued thereon, as set forth herein.
(b) The Borrower irrevocably authorizes each Bank to make, or
cause to be made, in connection with a Drawdown Date of any Syndicated
Loan and at the time of receipt of any payment of principal on its
Syndicated Note, an appropriate notation on such Bank's records or on
the schedule attached to such Bank's Syndicated Note or a continuation
of such schedule attached thereto reflecting the making of such Loan,
or the
25
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receipt of such payment (as the case may be) and each Bank may, prior
to any transfer of its Syndicated Note endorse on the reverse side
thereof the outstanding principal amount of such Loans evidenced
thereby. The outstanding amount of the Loans set forth on such Bank's
records 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 Borrower hereunder or under such Notes to make
payments of principal of or interest on any such Notes when due.
SECTION 2.5. INTEREST ON LOANS.
(a) The outstanding principal amount of the Syndicated Loans
shall bear interest at the rate per annum equal to (i) the Applicable
Base Rate on Base Rate Loans, (ii) the Applicable Eurodollar Rate on
Eurodollar Loans and (iii) the Applicable Swing Line Rate on Swing Line
Loans.
(b) Interest shall be payable (i) quarterly in arrears on the
first Business Day of each quarter, with the first such payment
commencing October 1, 2001, on Base Rate Loans, (ii) on the last day of
the applicable Interest Period, and if such Interest Period is longer
than three months, also on the last day of each three month period
following the commencement of such Interest Period, on Eurodollar
Loans, and (iii) on the Maturity Date for all Loans.
SECTION 2.6. REQUESTS FOR SYNDICATED LOANS.
(a) The Borrower shall give to the Administrative Agent written notice
in the form of Exhibit D hereto (or telephonic notice confirmed in writing or a
facsimile in the form of Exhibit D hereto) of each Syndicated Loan requested
hereunder (a "Syndicated Loan Request") not later than (a) 11:00 a.m. (New York
time) on the proposed Drawdown Date of any Base Rate Loan, or (b) 11:00 a.m.
(New York time) three (3) Eurodollar Business Days prior to the proposed
Drawdown Date of any Eurodollar Loan. Each such Syndicated Loan Request shall
specify (A) the principal amount of the Syndicated Loan requested, (B) the
proposed Drawdown Date of such Syndicated Loan, (C) whether such Syndicated Loan
requested is to be a Base Rate Loan or a Eurodollar Loan, and (D) the Interest
Period for such Syndicated Loan, if a Eurodollar Loan. Each Syndicated Loan
requested shall be in a minimum amount of $10,000,000. Each such Syndicated Loan
Request shall reflect the Maximum Drawing Amount of all Letters of Credit
outstanding and the amount of all Loans outstanding (including Competitive Bid
Loans and Swing Line Loans). Syndicated Loan Requests made hereunder shall be
irrevocable and binding on the Borrower, and shall obligate the Borrower to
accept the Syndicated Loan requested from the Banks on the proposed Drawdown
Date.
26
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(b) Each of the representations and warranties made by the Borrower to
the Banks or the Administrative Agent in this Agreement or any other Loan
Document shall be true and correct in all material respects when made and shall,
for all purposes of this Agreement, be deemed to be repeated by the Borrower on
and as of the date of the submission of a Syndicated Loan Request, Competitive
Bid Quote Request, or Letter of Credit Application and on and as of the Drawdown
Date of any Loan or the date of issuance of any Letter of Credit (except to the
extent (i) of changes resulting from transactions contemplated or permitted by
this Agreement and the other Loan Documents, (ii) of changes occurring in the
ordinary course of business that either individually or in the aggregate do not
result in a Material Adverse Effect, or (iii) that such representations and
warranties expressly relate only to an earlier date).
(c) The Administrative Agent shall promptly notify each Bank of each
Syndicated Loan Request received by the Administrative Agent (i) on the proposed
Drawdown Date of any Base Rate Loan, or (ii) three (3) Eurodollar Business Days
prior to the proposed Drawdown Date of any Eurodollar Loan.
SECTION 2.7. ELECTION OF EURODOLLAR RATE; NOTICE OF ELECTION; INTEREST
PERIODS; MINIMUM AMOUNTS.
(a) At the Borrower's option, so long as no Default or Event
of Default has occurred and is then continuing, the Borrower may (i)
elect to convert any Base Rate Loan or a portion thereof to a
Eurodollar Loan, (ii) at the time of any Syndicated Loan Request,
specify that such requested Loan shall be a Eurodollar Loan, or (iii)
upon expiration of the applicable Interest Period, elect to maintain an
existing Eurodollar Loan as such, provided that the Borrower give
notice to the Administrative Agent pursuant to Section 2.7(b) hereof.
Upon determining any Eurodollar Rate, the Administrative Agent shall
forthwith provide notice thereof to the Borrower and the Banks, and
each such notice to the Borrower shall be considered prima facie
correct and binding, absent manifest error.
(b) Three (3) Eurodollar Business Days prior to the making of
any Eurodollar Loan or the conversion of any Base Rate Loan to a
Eurodollar Loan, or, in the case of an outstanding Eurodollar Loan, the
expiration date of the applicable Interest Period, the Borrower shall
give written, telex or facsimile notice (or telephonic notice promptly
confirmed in a writing or a facsimile) received by the Administrative
Agent not later than 11:00 a.m. (New York time) of its election
pursuant to Section 2.7(a). Each such notice delivered to the
Administrative Agent shall specify the aggregate principal amount of
the Syndicated Loans to be borrowed or maintained as or converted to
Eurodollar Loans and the requested duration of the Interest Period that
will be applicable to such Eurodollar Loan, and shall be irrevocable
and binding upon the Borrower. If the Borrower shall fail to give the
Administrative Agent notice of its election hereunder together with all
of the other information required by this Section 2.7(b) with respect
to any Syndicated Loan, whether at the end of an Interest Period or
otherwise, such Syndicated Loan shall be deemed a Base Rate Loan. The
Administrative Agent shall promptly notify the Banks in writing (or by
telephone confirmed in writing or by facsimile) of such election.
27
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(c) Notwithstanding anything herein to the contrary, the
Borrower may not specify an Interest Period that would extend beyond
the Maturity Date.
(d) No conversion of Loans pursuant to this Section 2.7 may
result in Eurodollar Loans that are less than $5,000,000. In no event
shall the Borrower have more than ten (10) different Interest Periods
for borrowings of Eurodollar Loans outstanding at any time.
(e) Subject to the terms and conditions of Section 5.8 hereof,
if any Affected Bank demands compensation under Section 5.5(c) or (d)
with respect to any Eurodollar Loan, the Borrower may at any time, upon
at least three (3) Business Days' prior written notice to the
applicable Administrative Agent, elect to convert such Eurodollar Loan
into a Base Rate Loan (on which interest and principal shall be payable
contemporaneously with the related Eurodollar Loans of the other
Banks). Thereafter, and until such time as the Affected Bank notifies
the Administrative Agent that the circumstances giving rise to the
demand for compensation under Section 5.5(c) or (d) no longer exist,
all requests for Eurodollar Loans from such Affected Bank shall be
deemed to be requests for Base Rate Loans. Once the Affected Bank
notifies the Administrative Agent that such circumstances no longer
exist, the Borrower may elect that the principal amount of each such
Loan converted hereunder shall again bear interest as Eurodollar Loans
beginning on the first day of the next succeeding Interest Period
applicable to the related Eurodollar Loans of the other Banks.
SECTION 2.8. FUNDS FOR SYNDICATED LOANS. Not later than 1:00 p.m. (New
York time) on the proposed Drawdown Date of Syndicated Loans, each of the Banks
will make available to the Administrative Agent at its Loan Office, in
immediately available funds, the amount of its Commitment Percentage of the
amount of the requested Loan. Upon receipt from each Bank of such amount, and
upon receipt of the documents required by Section 10 and Section 11 and the
satisfaction of the other conditions set forth therein, the Administrative Agent
will make available to the Borrower the aggregate amount of such Syndicated
Loans made available by the Banks. The failure or refusal of any Bank to make
available to the Administrative Agent at the aforesaid time and place on any
Drawdown Date the amount of its Commitment Percentage of the requested
Syndicated Loan shall not relieve any other Bank from its several obligations
hereunder to make available to the Administrative Agent the amount of such
Bank's Commitment Percentage of the requested Loan.
SECTION 2.9. MATURITY OF THE LOANS AND REIMBURSEMENT OBLIGATIONS. The
Borrower promises to pay on the Maturity Date, and there shall become absolutely
due and payable on the Maturity Date, all of the Loans and unpaid Reimbursement
Obligations outstanding on such date, together with any and all accrued and
unpaid interest thereon and any fees and other amounts owing hereunder.
28
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SECTION 2.10. OPTIONAL PREPAYMENTS OR REPAYMENTS OF LOANS. Subject to
the terms and conditions of Section 5.8, the Borrower shall have the right, at
its election, to repay or prepay the outstanding amount of the Loans, as a whole
or in part, at any time without penalty or premium. The Borrower shall give the
Administrative Agent no later than 11:00 a.m. (New York time) (a) on the
proposed date of prepayment or repayment of Base Rate Loans, and (b) three (3)
Eurodollar Business Day prior to the proposed date of prepayment or repayment of
all other Loans, written notice (or telephonic notice confirmed in writing or by
facsimile) of any proposed prepayment or repayment pursuant to this Section
2.10, specifying the proposed date of prepayment or repayment of Loans and the
principal amount to be paid. Notwithstanding the foregoing, the Borrower may not
prepay any Competitive Bid Loans without the consent of the applicable Bank. The
Administrative Agent shall promptly notify each Bank by written notice (or
telephonic notice confirmed in writing or by facsimile) of such notice of
payment.
SECTION 2.11. SWING LINE LOANS; SETTLEMENTS.
(a) Notwithstanding the notice and minimum amount requirements
set forth in Section 2.6 but otherwise in accordance with the terms and
conditions of this Agreement, and solely for ease of administration of
the Syndicated Loans, the Administrative Agent may, but shall not be
required to, fund Base Rate Loans made in accordance with the
provisions of this Agreement ("Swing Line Loans"). The Swing Line Loans
shall be evidenced by a promissory note of the Borrower in
substantially the form of Exhibit B hereto (the "Swing Line Note") and,
at the discretion of the Administrative Agent may be in amounts less
than $10,000,000 provided that the outstanding amount of Swing Line
Loans advanced by the Administrative Agent hereunder shall not exceed
$10,000,000 at any time. Each Bank shall remain severally and
unconditionally liable to fund its pro rata share (based upon each
Bank's Commitment Percentage) of such Swing Line Loans on each Swing
Line Settlement Date and, in the event the Administrative Agent chooses
not to fund all Base Rate Loans requested on any date, to fund its
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 Swing Line Settlement, all payments or
repayments of the principal of, and interest on, Swing Line Loans shall
be credited to the account of the Administrative Agent.
(b) The Banks shall effect Swing Line Settlements on (i) the
Business Day immediately following any day which the Administrative
Agent gives written notice to effect a Swing Line Settlement, (ii) the
Business Day immediately following the Administrative Agent's becoming
aware of the existence of any Default or Event of Default and (iii) the
Maturity Date (each such date, a "Swing Line Settlement Date"). One (1)
Business Day prior to each such Swing Line Settlement Date, the
Administrative Agent shall give telephonic notice to the Banks of (A)
the respective outstanding amount of Syndicated Loans made by each Bank
as at the close of business on the prior day, (B) the amount that any
Bank, as applicable (a "Swing Line Settling Bank"), shall pay to
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effect a Swing Line Settlement (a "Swing Line Settlement Amount") and
(C) the portion (if any) of the aggregate Swing Line Settlement Amount
to be paid to each Bank. A statement of the Administrative Agent
submitted to the Banks with respect to any amounts owing hereunder
shall be prima facie evidence of the amount due and owing. Each Swing
Line Settling Bank shall, not later than 1:00 p.m. (New York time) on
each Swing Line Settlement Date, effect a wire transfer of immediately
available funds to the Administrative Agent at its Loan Office in the
amount of such Bank's Swing Line Settlement Amount. The Administrative
Agent shall, as promptly as practicable during normal business hours on
each Swing Line Settlement Date, effect a wire transfer of immediately
available funds to each Bank of the Swing Line Settlement Amount to be
paid to such Bank. All funds advanced by any Bank as a Swing Line
Settling Bank pursuant to this Section 2.11(b) shall for all purposes
be treated as a Base Rate Loan made by such Swing Line Settling Bank to
the Borrower, and all funds received by any Bank pursuant to this
Section 2.11(b) shall for all purposes be treated as repayment of
amounts owed by the Borrower with respect to Base Rate Loans made by
such Bank.
(c) The Administrative Agent may (unless notified to the
contrary by any Swing Line Settling Bank by 12:00 noon (New York time)
one (1) Business Day prior to the Settlement Date) assume that each
Swing Line Settling Bank has made available (or will make available by
the time specified in Section 2.11(b)) to the Administrative Agent its
Swing Line Settlement Amount, and the Administrative Agent may (but
shall not be required to), in reliance upon such assumption, make
available to each applicable Bank its share (if any) of the aggregate
Swing Line Settlement Amount. If the Swing Line Settlement Amount of
such Swing Line Settling Bank is made available to the Administrative
Agent by such Swing Line Settling Bank on a date after such Swing Line
Settlement Date, such Swing Line 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 Swing Line Settlement
Amount times (iii) a fraction, the numerator of which is the number of
days that elapse from and including such Swing Line Settlement Date to
but not including the date on which such Swing Line Settlement Amount
shall become immediately available to the Administrative Agent, and the
denominator of which is 365. Upon payment of such amount such Swing
Line Settling Bank shall be deemed to have delivered its Swing Line
Settlement Amount on the Swing Line Settlement Date and shall become
entitled to interest payable by the Borrower with respect to such Swing
Line Settling Bank's Swing Line Settlement Amount as if such share were
delivered on the Swing Line Settlement Date. If such Swing Line
Settlement Amount is not in fact made available to the Administrative
Agent by such Swing Line Settling Bank within three (3) Business Days
of such Swing Line Settlement Date, the Administrative Agent shall be
entitled to recover such amount from the Borrower, with interest
thereon at the Applicable Base Rate.
(d) After any Swing Line Settlement Date, any payment by the
Borrower of Swing Line Loans hereunder shall be allocated among the
Banks, in amounts determined so as to provide that after such
application and the related Swing Line Settlement, the
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outstanding amount of Syndicated Loans of each Bank equals, as nearly
as practicable, such Bank's Commitment Percentage of the aggregate
amount of Syndicated Loans.
SECTION 3. LETTERS OF CREDIT.
SECTION 3.1. LETTER OF CREDIT COMMITMENTS.
(a) Subject to the terms and conditions hereof and the receipt
of a Letter of Credit Application by an Issuing Bank, with a copy to
the Administrative Agent reflecting the Maximum Drawing Amount of all
Letters of Credit (including the requested Letter of Credit), such
Issuing Bank, on behalf of the Banks and in reliance upon the
representations and warranties of the Borrower contained herein and the
agreement of the Banks contained in Section 3.1(b) hereof, agrees to
issue Letters of Credit for the account of the Borrower (which may,
with such Issuing Bank's consent, incorporate automatic renewals for
periods of up to twelve (12) months), in such form as may be requested
from time to time by the Borrower and agreed to by the Issuing Bank;
provided, however, that, after giving effect to such request, the
aggregate Maximum Drawing Amount of all Letters of Credit issued at any
time shall not exceed the Total Commitment minus the aggregate
outstanding amount of the Loans and provided further, that no Letter of
Credit shall have an expiration date later than the earlier of (i)
eighteen (18) months after the date of issuance (which may incorporate
automatic renewals for periods of up to twelve (12) months), or (ii)
five (5) Business Days prior to the Maturity Date. The letters of
credit listed in Schedule 3.1(a) issued by Issuing Banks under the
Existing Credit Agreement shall be Letters of Credit under this
Agreement.
(b) Each Letter of Credit shall be denominated in Dollars.
Each Bank severally agrees that it shall be absolutely liable, without
regard to the occurrence of any Default or Event of Default, the
termination of the Total Commitment pursuant to Section 12.2, or any
other condition precedent whatsoever, to the extent of such Bank's
Commitment Percentage to reimburse the Issuing Bank on demand for the
amount of each draft paid by the Issuing Bank under each Letter of
Credit to the extent that such amount is not reimbursed by the Borrower
pursuant to Section 3.2 (such agreement for a Bank being called herein
the "Letter of Credit Participation" of such Bank). Each Bank agrees
that its obligation to reimburse the Issuing Bank pursuant to this
Section 3.1(b) shall not be affected in any way by any circumstance
other than the gross negligence or willful misconduct of the Issuing
Bank.
(c) Each such reimbursement payment made by a Bank to the
Issuing Bank shall be treated as the purchase by such Bank of a
participating interest in the applicable Reimbursement Obligation under
Section 3.2 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 3.2.
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SECTION 3.2. REIMBURSEMENT OBLIGATION OF THE BORROWER. In order to
induce the Issuing Banks to issue, extend and renew each Letter of Credit, the
Borrower hereby agrees to reimburse or pay to each Issuing Bank, with respect to
each 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 such Issuing Bank or such 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 Borrower does not reimburse such
Issuing Bank on the Drawdown Date, such amount shall, provided that no
Event of Default under Sections 12.1(g) or 12.1(h) has occurred, become
automatically a Syndicated Loan which is a Base Rate Loan advanced
hereunder in an amount equal to such sum; and
(b) upon the Maturity Date or the acceleration of the
Reimbursement Obligations with respect to all Letters of Credit in
accordance with Section 12, an amount equal to the then Maximum Drawing
Amount of all Letters of Credit shall be paid by the Borrower to the
Administrative Agent to be held as cash collateral for the applicable
Reimbursement Obligations.
SECTION 3.3. OBLIGATIONS ABSOLUTE. The Borrower's respective
obligations under this Section 3 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 Borrower may have or have had against any Issuing
Bank, any Bank or any beneficiary of a Letter of Credit, and the Borrower
expressly waives any such rights that it may have with respect thereto. The
Borrower further agrees with each Issuing Bank and the Banks that such Issuing
Bank and the Banks (i) shall not be responsible for, and the Borrower's
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 (unless due to the willful misconduct of
such Issuing Bank or any other Bank), or any dispute between or among the
Borrower and 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 Borrower against the beneficiary of any
Letter of Credit or any such transferee, and (ii) 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 except to the extent of their own willful misconduct. The Borrower agrees
that any action taken or omitted by any Issuing Bank or any Bank in good faith
under or in connection with any Letter of Credit and the related drafts and
documents shall be binding upon the Borrower and shall not result in any
liability on the part of such Issuing Bank or any Bank (or their respective
affiliates) to the Borrower. Nothing herein shall constitute a waiver by the
Borrower of any of its rights against any beneficiary of a Letter of Credit.
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SECTION 3.4. RELIANCE BY THE ISSUING BANKS. To the extent not
inconsistent with Section 3.3, each Issuing Bank 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, facsimile, telex or teletype message, statement, order or other
document believed by such Issuing Bank in good faith 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 3.5. NOTICE REGARDING LETTERS OF CREDIT. One (1) Business Day
prior to the issuance of any Letter of Credit or amendments, extensions or
terminations thereof, the applicable Issuing Bank shall notify the
Administrative Agent of the terms of such Letter of Credit, amendment, extension
or termination. On the day of any drawing under any Letter of Credit, such
Issuing Bank shall notify the Administrative Agent of such drawing under any
Letter of Credit.
SECTION 3.6. LETTER OF CREDIT FEE. The Borrower shall pay a fee (the
"Letter of Credit Fee") equal to the Applicable L/C Rate on the Maximum Drawing
Amount of the Letters of Credit to the Administrative Agent for the account of
the Banks, to be shared pro rata by the Banks in accordance with their
respective Commitment Percentages. The Letter of Credit Fee shall be payable
quarterly in arrears on the first day of each calendar quarter for the quarter
just ended, with the first such payment commencing October 1, 2001, and on the
Maturity Date. In addition, an issuing fee (the "Issuance Fee") with respect to
each Letter of Credit to be agreed upon annually between the Borrower and each
Issuing Bank shall be payable by the Borrower to such Issuing Bank for its
account.
SECTION 4. COMPETITIVE BID LOANS.
SECTION 4.1. THE COMPETITIVE BID OPTION. In addition to the Syndicated
Loans made pursuant to Section 2 hereof, the Borrower may request Competitive
Bid Loans pursuant to the terms of this Section 4. The Banks may, but shall have
no obligation to, make such offers and the Borrower may, but shall have no
obligation to, accept such offers in the manner set forth in this Section 4.
Notwithstanding any other provision herein to the contrary, at no time shall the
aggregate principal amount of Competitive Bid Loans outstanding at any time
exceed the Total Commitment minus the sum of (a) the aggregate outstanding
principal amount of Syndicated Loans (including the Swing Loans), plus (b) the
Maximum Drawing Amount of Letters of Credit, outstanding at such time.
SECTION 4.2. COMPETITIVE BID LOAN ACCOUNTS; COMPETITIVE BID NOTES.
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(a) The obligation of the Borrower to repay the outstanding
principal amount of any and all Competitive Bid Loans, plus interest at
the applicable rate accrued thereon, shall be evidenced by this
Agreement and by individual loan accounts (the "Competitive Bid Loan
Accounts" and individually, a "Competitive Bid Loan Account")
maintained by the Administrative Agent on its books for each of the
Banks, it being the intention of the parties hereto that, except as
provided for in paragraph (b) of this Section 4.2, the Borrower's
obligations with respect to Competitive Bid Loans are to be evidenced
only as stated herein and not by separate promissory notes.
(b) Any Bank may at any time, and from time to time, request
that any Competitive Bid Loans outstanding to such Bank be evidenced by
a promissory note of the Borrower in substantially the form of Exhibit
C hereto (each, a "Competitive Bid Note"), dated as of the Effective
Date and completed with appropriate insertions. One Competitive Bid
Note shall be payable to the order of each Bank in an amount equal to
the Total Commitment, and representing the obligation of the Borrower
to pay such Bank such principal amount or, if less, the outstanding
principal amount of any and all Competitive Bid Loans made by such
Bank, plus interest at the applicable Competitive Bid Rate or
Competitive Bid Margin accrued thereon, as set forth herein. Upon
execution and delivery by the Borrower of a Competitive Bid Note, the
Borrower's obligation to repay any and all Competitive Bid Loans made
to it by such Bank and all interest thereon shall thereafter be
evidenced by such Competitive Bid Note.
(c) The Borrower irrevocably authorizes (i) each Bank to make
or cause to be made, in connection with a Drawdown Date of any
Competitive Bid Loan or at the time of receipt of any payment of
principal on such Bank's Competitive Bid Note in the case of a
Competitive Bid Note, and (ii) the Administrative Agent to make or
cause to be made, in connection with a Drawdown Date of any Competitive
Bid Loan or at the time of receipt of any payment of principal on such
Bank's Competitive Bid Loan Account in the case of a Competitive Bid
Loan Account, an appropriate notation on such Bank's records or on the
schedule attached to such Bank's Competitive Bid Note or a continuation
of such schedule attached thereto, or the Administrative Agent's
records, as applicable, reflecting the making of the Competitive Bid
Loan or the receipt of such payment (as the case may be) and such Bank
may, prior to any transfer of a Competitive Bid Note, endorse on the
reverse side thereof the outstanding principal amount of Competitive
Bid Loans evidenced thereby. The outstanding amount of the Competitive
Bid Loans set forth on such Bank's record or the Administrative Agent's
records, as applicable, 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 Borrower hereunder to make
payments of principal of or interest on any Competitive Bid Loan when
due.
SECTION 4.3. COMPETITIVE BID QUOTE REQUEST; INVITATION FOR COMPETITIVE
BID QUOTES.
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(a) When the Borrower wishes to request offers to make
Competitive Bid Loans under this Section 4, it shall transmit to the
Administrative Agent by telex or facsimile a Competitive Bid Quote
Request substantially in the form of Exhibit H hereto (a "Competitive
Bid Quote Request") so as to be received no later than 1:00 p.m. (New
York time) (x) five (5) Eurodollar Business Days prior to the requested
Drawdown Date in the case of a Eurodollar Competitive Bid Loan (a
"Eurodollar Competitive Bid Loan") or (y) one (1) Business Day prior to
the requested Drawdown Date in the case of an Absolute Competitive Bid
Loan (an "Absolute Competitive Bid Loan"), specifying:
(i) the requested Drawdown Date (which must be a
Eurodollar Business Day in the case of a Eurodollar
Competitive Bid Loan or a Business Day in the case of an
Absolute Competitive Bid Loan);
(ii) the aggregate amount of such Competitive Bid
Loans, which shall be $10,000,000 or larger multiple of
$1,000,000;
(iii) the duration of the Interest Period(s)
applicable thereto, subject to the provisions of the
definition of Interest Period; and
(iv) whether the Competitive Bid Quotes requested are
for Eurodollar Competitive Bid Loans or Absolute Competitive
Bid Loans.
The Borrower may request offers to make Competitive Bid Loans for more
than one Interest Period in a single Competitive Bid Quote Request. No
new Competitive Bid Quote Request shall be given until the Borrower has
notified the Administrative Agent of its acceptance or non-acceptance
of the Competitive Bid Quotes relating to any outstanding Competitive
Bid Quote Request.
(b) Promptly upon receipt of a Competitive Bid Quote Request,
the Administrative Agent shall send to the Banks by telecopy or
facsimile transmission an Invitation for Competitive Bid Quotes
substantially in the form of Exhibit I hereto, which shall constitute
an invitation by the Borrower to each Bank to submit Competitive Bid
Quotes in accordance with this Section 4.
SECTION 4.4. ALTERNATIVE MANNER OF PROCEDURE. If, after receipt by the
Administrative Agent and each of the Banks of a Competitive Bid Quote Request
from the Borrower in accordance with Section 4.3, the Administrative Agent or
any Bank shall be unable to complete any procedure of the auction process
described in Sections 4.5 through 4.6 (inclusive) due to the inability of such
Person to transmit or receive communications through the means specified
therein, such Person may rely on telephonic notice for the transmission or
receipt of such communications. In any case where such Person shall rely on
telephone transmission or receipt, any communication made by telephone shall, as
soon as possible thereafter, be followed by written confirmation thereof.
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SECTION 4.5. SUBMISSION AND CONTENTS OF COMPETITIVE BID QUOTES.
(a) Each Bank may, but shall be under no obligation to, submit
a Competitive Bid Quote containing an offer or offers to make
Competitive Bid Loans in response to any Competitive Bid Quote Request.
Each Competitive Bid Quote must comply with the requirements of this
Section 4.5 and must be submitted to the Administrative Agent by telex
or facsimile transmission at its offices as specified in or pursuant to
Section 22 not later than (x) 2:00 p.m. (New York time) on the fourth
Eurodollar Business Day prior to the proposed Drawdown Date, in the
case of a Eurodollar Competitive Bid Loan or (y) 10:00 a.m. (New York
time) on the proposed Drawdown Date, in the case of an Absolute
Competitive Bid Loan, provided that Competitive Bid Quotes may be
submitted by the Administrative Agent in its capacity as a Bank only if
it submits its Competitive Bid Quote to the Borrower not later than (x)
one hour prior to the deadline for the other Banks, in the case of a
Eurodollar Competitive Bid Loan or (y) 15 minutes prior to the deadline
for the other Banks, in the case of an Absolute Competitive Bid Loan.
Subject to the provisions of Sections 10 and 11 hereof, any Competitive
Bid Quote so made shall be irrevocable except with the written consent
of the Administrative Agent given on the instructions of the Borrower.
(b) Each Competitive Bid Quote shall be in substantially the
form of Exhibit J hereto and shall in any case specify:
(i) the proposed Drawdown Date;
(ii) the principal amount of the Competitive Bid Loan
for which each proposal is being made, which principal amount
(w) may be greater than or less than the Commitment of the
quoting Bank, (x) must be $5,000,000 or a larger multiple of
$1,000,000, (y) may not exceed the aggregate principal amount
of Competitive Bid Loans for which offers were requested and
(z) may be subject to an aggregate limitation as to the
principal amount of Competitive Bid Loans for which offers
being made by such quoting Bank may be accepted;
(iii) the Interest Period(s) for which Competitive
Bid Quotes are being submitted;
(iv) in the case of a Eurodollar Competitive Bid
Loan, the margin above or below the applicable Eurodollar Rate
(the "Competitive Bid Margin") offered for each such
Competitive Bid Loan, expressed as a percentage (specified to
the nearest 1/10,000th of 1%) to be added to or subtracted
from such Eurodollar Rate;
(v) in the case of an Absolute Competitive Bid Loan,
the rate of interest per annum (specified to the nearest
1/10,000th of 1%) (the "Competitive Bid Rate") offered for
each such Absolute Competitive Bid Loan; and
(vi) the identity of the quoting Bank.
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A Competitive Bid Quote may include up to five separate offers by the
quoting Bank with respect to each Interest Period specified in the
related Invitation for Competitive Bid Quotes.
(c) Any Competitive Bid Quote shall be disregarded if it:
(i) is not substantially in the form of Exhibit J
hereto;
(ii) contains qualifying, conditional or similar
language;
(iii) proposes terms other than or in addition to
those set forth in the applicable Invitation for Competitive
Bid Quotes; or
(iv) arrives after the time set forth in Section
4.5(a) hereof.
SECTION 4.6. NOTICE TO BORROWER. The Administrative Agent shall
promptly notify the Borrower of the terms (x) of any Competitive Bid Quote
submitted by a Bank that is in accordance with Section 4.5 and (y) of any
Competitive Bid Quote that amends, modifies or is otherwise inconsistent with a
previous Competitive Bid Quote submitted by such Bank with respect to the same
Competitive Bid Quote Request. Any such subsequent Competitive Bid Quote shall
be disregarded by the Administrative Agent unless such subsequent Competitive
Bid Quote is submitted solely to correct a manifest error in such former
Competitive Bid Quote. The Administrative Agent's notice to the Borrower shall
specify (A) the aggregate principal amount of Competitive Bid Loans for which
offers have been received for each Interest Period specified in the related
Competitive Bid Quote Request, (B) the respective principal amounts and
Competitive Bid Margins or Competitive Bid Rates, as the case may be, so
offered, and the identity of the respective Banks submitting such offers, and
(C) if applicable, limitations on the aggregate principal amount of Competitive
Bid Loans for which offers in any single Competitive Bid Quote may be accepted.
SECTION 4.7. ACCEPTANCE AND NOTICE BY BORROWER AND ADMINISTRATIVE
AGENT. Not later than 11:00 a.m. (New York time) on (x) the third Eurodollar
Business Day prior to the proposed Drawdown Date, in the case of a Eurodollar
Competitive Bid Loan or (y) the proposed Drawdown Date, in the case of an
Absolute Competitive Bid Loan, the Borrower shall notify the Administrative
Agent of its acceptance or non-acceptance of each Competitive Bid Quote in
substantially the form of Exhibit K hereto. The Borrower may accept any
Competitive Bid Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Competitive Bid
Loan may not exceed the applicable amount set forth in the related
Competitive Bid Quote Request;
(ii) acceptance of offers may only be made on the basis of
ascending Competitive Bid Margins or Competitive Bid Rates, as the case
may be, and
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(iii) the Borrower may not accept any offer that is described
in subsection 4.5(c) or that otherwise fails to comply with the
requirements of this Agreement.
The Administrative Agent shall promptly notify each Bank which submitted a
Competitive Bid Quote of the Borrower's acceptance or non-acceptance thereof. At
the request of any Bank which submitted a Competitive Bid Quote and with the
consent of the Borrower, the Administrative Agent will promptly notify all Banks
which submitted Competitive Bid Quotes of (a) the aggregate principal amount of,
and (b) the range of Competitive Bid Rates or Competitive Bid Margins of, the
accepted Competitive Bid Loans for each requested Interest Period.
SECTION 4.8. ALLOCATION BY ADMINISTRATIVE AGENT. If offers are made by
two or more Banks with the same Competitive Bid Margin or Competitive Bid Rate,
as the case may be, for a greater aggregate principal amount than the amount in
respect of which offers are accepted for the related Interest Period, the
principal amount of Competitive Bid Loans in respect of which such offers are
accepted shall be allocated by the Administrative Agent among such Banks as
nearly as possible (in such multiples, not less than $1,000,000, as the
Administrative Agent may deem appropriate) in proportion to the aggregate
principal amounts of such offers. Determination by the Administrative Agent of
the amounts of Competitive Bid Loans shall be conclusive in the absence of
manifest error.
SECTION 4.9. FUNDING OF COMPETITIVE BID LOANS. If, on or prior to the
Drawdown Date of any Competitive Bid Loan, the Total Commitment has not
terminated in full and if, on such Drawdown Date, the applicable conditions of
Sections 10 and 11 hereof are satisfied, the Bank or Banks whose offers the
Borrower has accepted will fund each Competitive Bid Loan so accepted. Such Bank
or Banks will make such Competitive Bid Loans by crediting the Administrative
Agent for further credit to the Borrower's specified account with the
Administrative Agent, in immediately available funds not later than 1:00 p.m.
(New York time) on such Drawdown Date.
SECTION 4.10. FUNDING LOSSES. If, after acceptance of any Competitive
Bid Quote pursuant to Section 4, the Borrower (i) fails to borrow any
Competitive Bid Loan so accepted on the date specified therefor, or (ii) repays
the outstanding amount of the Competitive Bid Loan prior to the last day of the
Interest Period relating thereto, the Borrower shall indemnify the Bank making
such Competitive Bid Quote or funding such Competitive Bid Loan against any loss
or expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Bank to fund or maintain such unborrowed
Competitive Bid Loans, including, without limitation compensation as provided in
Section 5.8.
SECTION 4.11. REPAYMENT OF COMPETITIVE BID LOANS; INTEREST. The
principal of each Competitive Bid Loan shall become absolutely due and payable
by the Borrower on the last day
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of the Interest Period relating thereto, and the Borrower hereby absolutely and
unconditionally promises to pay to the Administrative Agent for the account of
the relevant Banks at or before 1:00 p.m. (New York time) on the last day of the
Interest Periods relating thereto the principal amount of all such Competitive
Bid Loans, plus interest thereon at the applicable rates. The Competitive Bid
Loans shall bear interest at the rate per annum specified in the applicable
Competitive Bid Quotes. Interest on the Competitive Bid Loans shall be payable
(a) on the last day of the applicable Interest Periods, and if any such Interest
Period is longer than three months, also on the last day of the third month
following the commencement of such Interest Period, and (b) on the Maturity Date
for all Loans. Subject to the terms of this Agreement, the Borrower may make
Competitive Bid Quote Requests with respect to new borrowings of any amounts so
repaid prior to the Maturity Date.
SECTION 5. PROVISIONS RELATING TO ALL LOANS AND LETTERS OF CREDIT.
SECTION 5.1. PAYMENTS.
(a) All payments of principal, interest, Reimbursement
Obligations, fees (other than the Issuance Fee) and any other amounts
due hereunder or under any of the other Loan Documents shall be made to
the Administrative Agent at its Loan Office in immediately available
funds by 11:00 a.m. (New York time) on any due date. Subject to the
provisions of Section 29, if a payment is received by the
Administrative Agent at or before 1:00 p.m. (New York time) on any
Business Day, the Administrative Agent shall on the same Business Day
transfer in immediately available funds, as applicable, to (1) each of
the Banks, their pro rata portion of such payment in accordance with
their respective Commitment Percentages, in the case of payments with
respect to Syndicated Loans and Letters of Credit, (2) the
Administrative Agent in the case of payments with respect to Swing Line
Loans, and (3) the appropriate Bank(s), in the case of payments with
respect to Competitive Bid Loans. If such payment is received by the
Administrative Agent after 1:00 p.m. (New York time) on any Business
Day, such transfer shall be made by the Administrative Agent to the
applicable Bank(s) on the next Business Day. In the event that the
Administrative Agent fails to make such transfer to any Bank as set
forth above, the Administrative Agent shall pay to such Bank 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 such Bank for funds acquired by such Bank during
each day included in such period, times (ii) the amount (A) equal to
such Bank's Commitment Percentage of such payment in the case of
payments under clause (1) above, or (B) of such payment to which such
Bank is entitled in the case of payments with respect to Competitive
Bid Loans and Swing Line Loans, times (iii) a fraction, the numerator
of which is the number of days that elapse from and including the date
of payment to and including the date on which the amount due to such
Bank shall become immediately available to such Bank, and the
denominator of which is 365. A statement of such Bank submitted to the
applicable Administrative Agent with respect to any amounts owing under
this paragraph shall be prima facie evidence of the amount due and
owing to such Bank by the Administrative Agent.
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(b) All payments by the Borrower hereunder and under any of
the other Loan Documents shall be made without recoupment, 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
Borrower is compelled by law to make such deduction or withholding. If
any such obligation is imposed upon the Borrower with respect to any
amount payable by it hereunder or under any of the other Loan
Documents, the Borrower will pay to the Administrative Agent, for the
account of the Banks or (as the case may be) the Administrative Agent,
on the date on which such amount is due and payable hereunder or under
such other Loan Document, such additional amount in Dollars as shall be
necessary to enable the Banks or the Administrative Agent to receive
the same net amount which the Banks or the Administrative Agent would
have received on such due date had no such obligation been imposed upon
the Borrower. The Borrower will deliver promptly to the Administrative
Agent certificates or other valid vouchers for all taxes or other
charges deducted from or paid with respect to payments made by the
Borrower hereunder or under such other Loan Document.
(c) Each Bank that is not incorporated or organized under the
laws of the United States of America or a state thereof or the District
of Columbia (a "Non-U.S. Bank") agrees that, prior to the first date on
which any payment is due to it hereunder, it will deliver to the
Borrower and the Administrative Agent 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. Bank 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. Each Non-U.S. Bank that so
delivers a Form W-8BEN or W-8ECI pursuant to the preceding sentence
further undertakes to deliver to each of the Borrower and the
Administrative Agent two further copies of Form W-8BEN or W-8ECI 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
Borrower, and such extensions or renewals thereof as may reasonably be
requested by the Borrower, certifying in the case of a Form W-8BEN or
W-8ECI that such Non-U.S. Bank 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. Bank from duly completing and
delivering any such form with respect to it and such Non-U.S. Bank
advises the Borrower that it is not capable of receiving payments
without any deduction or withholding of United States federal income
tax.
(d) The Borrower shall not be required to pay any additional
amounts to any Non-U.S. Bank in respect of United States Federal
withholding tax pursuant to Section 17 to the extent that (i) the
obligation to withhold amounts with respect to United States Federal
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withholding tax existed on the date such Non-U.S. Bank became a party
to this Agreement or, with respect to payments to a different lending
office designated by the Non-U.S. Bank as its applicable lending office
(a "New Lending Office"), the date such Non-U.S. Bank designated such
New Lending Office with respect to a Loan; provided, however, that this
clause (i) shall not apply to any transferee or New Lending Office as a
result of an assignment, transfer or designation made at the request of
the Borrower; and provided further, however, that this clause (i) shall
not apply to the extent the indemnity payment or additional amounts any
transferee, or Bank through a New Lending Office, would be entitled to
receive without regard to this clause (i) do not exceed the indemnity
payment or additional amounts that the Person making the assignment or
transfer to such transferee, or Bank making the designation of such New
Lending Office, would have been entitled to receive in the absence of
such assignment, transfer or designation; or (ii) the obligation to pay
such additional amounts would not have arisen but for a failure by such
Non-U.S. Bank to comply with the provisions of paragraph (b) above.
(e) Notwithstanding the foregoing, each Bank agrees to use
reasonable efforts (consistent with legal and regulatory restrictions)
to change its lending office to avoid or to minimize any amounts
otherwise payable under Section 17 in each case solely if such change
can be made in a manner so that such Bank, in its sole determination,
suffers no legal, economic or regulatory disadvantage.
SECTION 5.2. MANDATORY REPAYMENTS OF THE LOANS. If at any time the sum
of the outstanding principal amount of the Loans plus the Maximum Drawing Amount
of all outstanding Letters of Credit exceeds the Total Commitment, whether by
reduction of the Total Commitment or otherwise, then the Borrower shall
immediately pay the amount of such excess to the Administrative Agent, (i) for
application to the Loans, first to Syndicated Loans, then to Competitive Bid
Loans, subject to Section 5.8, or (ii) if no Loans shall be outstanding, to be
held by the Administrative Agent for the benefit of the Banks as collateral
security for such excess Maximum Drawing Amount and the Borrower hereby grants a
security interest in such amount to the Administrative Agent for the benefit of
the Banks; provided, however, that if the amount of cash collateral held by the
Administrative Agent pursuant to this Section 5.2(a) exceeds the Maximum Drawing
Amount required to be collateralized from time to time, the Administrative Agent
shall return such excess to the Borrower.
SECTION 5.3. COMPUTATIONS. Except as otherwise expressly provided
herein, all computations of interest, Facility 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, except that computations based on the Base Rate 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
Loan if such next succeeding Business Day falls in the
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next succeeding calendar month or after the Maturity Date, it shall be deemed to
end on the next preceding Business Day.
SECTION 5.4. ILLEGALITY; INABILITY TO DETERMINE EURODOLLAR RATE.
Notwithstanding any other provision of this Agreement (other than Section 5.10),
if (a) the introduction of, any change in, or any change in the interpretation
of, any law or regulation applicable to any 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 Bank or
the Administrative Agent to perform its obligations in respect of any Eurodollar
Loans, or (b) if any Bank or the Administrative Agent, as applicable, shall
reasonably determine with respect to Eurodollar 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 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 the Bank or
the Administrative Agent of obtaining or maintaining the Eurodollar Loans during
any Interest Period, then such Bank or the Administrative Agent shall promptly
give telephonic, telex or cable notice of such determination to the Borrower
(which notice shall be conclusive and binding upon the Borrower). Upon such
notification by the Bank or the Administrative Agent, the obligation of the
Banks and the Administrative Agent to make Eurodollar Loans shall be suspended
until the 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 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 to such former Eurodollar Loans.
SECTION 5.5. 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:
(a) subject such Bank to any tax, levy, impost, duty, charge,
fee, deduction or withholding of any nature with respect to this
Agreement, the other Loan Documents, such Bank's Commitment or the
Loans (other than taxes based upon or measured by the income or profits
of such Bank imposed by the jurisdiction of its incorporation or
organization, or the location of its lending office); or
(b) materially change the basis of taxation (except for
changes in taxes on income or profits of such Bank imposed by the
jurisdiction of its incorporation or
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organization, or the location of its lending office) of payments to
such Bank of the principal or of the interest on any Loans or any other
amounts payable to such Bank under this Agreement or the other Loan
Documents; or
(c) except as provided in Section 5.6 or as otherwise
reflected in the Base Rate, the Eurodollar Rate, or the applicable rate
for Competitive Bid Loans, impose or increase or render applicable
(other than to the extent specifically provided for elsewhere in this
Agreement) any special deposit, reserve, assessment, liquidity, capital
adequacy or other similar requirements (whether or not having the force
of law) against assets held by, or deposits in or for the account of,
or loans by, or commitments of, an office of any Bank with respect to
this Agreement, the other Loan Documents, such Bank's Commitment or the
Loans; or
(d) impose on such Bank any other conditions or requirements
with respect to this Agreement, the other Loan Documents, the Loans,
such Bank's Commitment or any class of loans or commitments of which
any of the Loans or such Bank's Commitment 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
or such Bank's Commitment or issuing or participating in
Letters of Credit;
(ii) to reduce the amount of principal, interest or
other amount payable to such Bank hereunder on account of such
Bank's Commitment, the Loans or the Reimbursement Obligations;
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 Borrower
hereunder,
then, and in each such case, the Borrower will, upon demand
made by such Bank at any time and from time to time as often as the
occasion therefore may arise (which demand shall be accompanied by a
statement setting forth the basis of such demand which shall be
conclusive absent manifest error), pay such reasonable additional
amounts as will be sufficient to compensate such Bank for such
additional costs, reduction, payment or foregone interest or other sum.
SECTION 5.6. CAPITAL ADEQUACY. If any Bank shall have determined that,
after the date hereof, (a) 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 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
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agency, or (b) compliance by such Bank or the Administrative Agent or any
corporation controlling such Bank or the Administrative Agent with any law,
governmental rule, regulation, policy, guideline or directive (whether or not
having the force of law) of any such entity regarding capital adequacy, 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 15 days after demand by such Bank, the Borrower 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 5.7. CERTIFICATE. A certificate setting forth the additional
amounts payable pursuant to Section 5.5 or Section 5.6 and a reasonable
explanation of such amounts which are due, submitted by any Bank to the
Borrower, shall be conclusive, absent manifest error, that such amounts are due
and owing; provided that no Bank shall be entitled to additional amounts with
respect to events or circumstances occurring more than one hundred and twenty
(120) days prior to the delivery of such certificate..
SECTION 5.8. EURODOLLAR AND COMPETITIVE BID INDEMNITY. The Borrower
agrees to indemnify the Banks and the Administrative Agent and to hold them
harmless from and against any reasonable loss, cost or expense that any such
Bank and the Administrative Agent may sustain or incur as a consequence of (a)
the default by the Borrower in payment of the principal amount of or any
interest on any Eurodollar Loans or Competitive Bid Loans as and when due and
payable, including any such loss or expense arising from interest or fees
payable by any Bank or the Administrative Agent to lenders of funds obtained by
it in order to maintain its Eurodollar Loans or Competitive Bid Loans, (b) the
default by the Borrower in making a borrowing of a Eurodollar Loan or
Competitive Bid Loan or conversion of a Eurodollar Loan or a prepayment of a
Eurodollar or Competitive Bid Loan after the Borrower has given (or is deemed to
have given) a Syndicated Loan Request, a notice pursuant to Section 2.7 or a
Notice of Acceptance/Rejection of Competitive Bid Quote(s), or a notice pursuant
to Section 2.10, and (c) the making of any payment of a Eurodollar Loan or
Competitive Bid Loan, or the making of any conversion of any Eurodollar Loan to
a Base Rate Loan on a day that is not the last day of the applicable Interest
Period with respect thereto. Such loss, cost, or reasonable expense shall
include an amount equal to the excess, if any, as reasonably determined by each
Bank of (i) its cost of obtaining the funds for (A) the Eurodollar Loan being
paid, prepaid, converted, not converted, reallocated, or not borrowed, as the
case may be (based on the Eurodollar Rate), or (B) the Competitive Bid Loan
being paid, prepaid, or not borrowed, as the case may be (based on the
applicable interest rate) for the period from the date of such payment,
prepayment, conversion, or failure to borrow or convert, as the case may be, to
the last day of the Interest Period for such Loan (or, in the case of
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a failure to borrow, the Interest Period for the Loan which would have commenced
on the date of such failure to borrow) over (ii) the amount of interest (as
reasonably determined by such Bank) that would be realized by such Bank in
reemploying the funds so paid, prepaid, converted, or not borrowed, converted,
or prepaid for such period or Interest Period, as the case may be, which
determinations shall be conclusive absent manifest error.
SECTION 5.9. 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 Base Rate plus 2%, until such amount shall be paid in full (after
as well as before judgment).
SECTION 5.10. INTEREST LIMITATION. 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, and 12 U.S.C. Section 85, as amended).
SECTION 5.11. REASONABLE EFFORTS TO MITIGATE. Each Bank agrees that as
promptly as practicable after it becomes aware of the occurrence of an event or
the existence of a condition that would cause it to be affected under Sections
5.4, 5.5 or 5.6, such Bank will give notice thereof to the Borrower, with a copy
to the Administrative Agent and, to the extent so requested by the Borrower and
not inconsistent with such Bank's internal policies, such Bank shall use
reasonable efforts and take such actions as are reasonably appropriate if as a
result thereof the additional moneys which would otherwise be required to be
paid to such Bank pursuant to such sections would be materially reduced, or the
illegality or other adverse circumstances which would otherwise require a
conversion of such Loans or result in the inability to make such Loans pursuant
to such sections would cease to exist, and in each case if, as determined by
such Bank in its sole discretion, the taking of such actions would not adversely
affect such Loans or such Bank or otherwise be disadvantageous to such Bank.
SECTION 5.12. REPLACEMENT OF BANKS. If any Bank (an "Affected Bank")
(i) makes demand upon the Borrower for (or if the Borrower is otherwise required
to pay) amounts pursuant to Sections 5.5 or 5.6, (ii) is unable to make or
maintain Eurodollar Loans as a result of a condition described in Section 5.4 or
(iii) defaults in its obligation to make Loans or to participate in Letters of
Credit in accordance with the terms of this Agreement (such Bank being referred
to as a
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"Defaulting Bank"), the Borrower may, within 90 days of receipt of such demand,
notice (or the occurrence of such other event causing the Borrower to be
required to pay such compensation or causing Section 5.4 to be applicable), or
default, as the case may be, by notice (a "Replacement Notice") in writing to
the Administrative Agent and such Affected Bank (A) request the Affected Bank to
cooperate with the Borrower in obtaining a replacement bank satisfactory to the
Administrative Agent and the Borrower (the "Replacement Bank") as provided
herein, but none of such Banks shall be under an obligation to find a
Replacement Bank; (B) request the non-Affected Banks to acquire and assume all
of the Affected Bank's Loans and Commitment, and to participate in Letters of
Credit as provided herein, but none of such Banks shall be under an obligation
to do so; or (C) designate a Replacement Bank reasonably satisfactory to the
Administrative Agent. If any satisfactory Replacement Bank shall be obtained,
and/or any of the non-Affected Banks shall agree to acquire and assume all of
the Affected Bank's Loans and Commitment, and to participate in Letters of
Credit then such Affected Bank shall, so long as no Event of Default shall have
occurred and be continuing, assign, in accordance with Section 20, all of its
Commitment, Loans, Notes and other rights and obligations under this Agreement
and all other Loan Documents to such Replacement Bank or non-Affected Banks, as
the case may be, in exchange for payment of the principal amount so assigned and
all interest and fees accrued on the amount so assigned, plus all other
Obligations then due and payable to the Affected Bank; provided, however, that
(x) such assignment shall be without recourse, representation or warranty and
shall be on terms and conditions reasonably satisfactory to such Affected Bank
and such Replacement Bank and/or non-Affected Banks, as the case may be, and (y)
prior to any such assignment, the Borrower shall have paid to such Affected Bank
all amounts properly demanded and unreimbursed under Sections 5.5, 5.6 and 5.8.
Upon the effective date of such assignment, the Borrower shall issue replacement
Notes to such Replacement Bank and/or non-Affected Banks, as the case may be,
and such Replacement Bank shall become a "Bank" for all purposes under this
Agreement and the other Loan Documents.
SECTION 5.13. ADVANCES BY ADMINISTRATIVE AGENT. The Administrative
Agent may (unless earlier notified to the contrary by any Bank by 12:00 noon
(New York time) one (1) Business Day prior to any Drawdown Date) assume that
each Bank has made available (or will before the end of such Business Day make
available) to the Administrative Agent the amount of such Bank's Commitment
Percentage with respect to the Loans (or, in the case of Competitive Bid Loans,
the amount of such Bank's accepted offers of such Loans, if any) to be made on
such Drawdown Date, and the Administrative Agent may (but shall not be required
to), in reliance upon such assumption, make available to the Borrower a
corresponding amount. If any Bank makes such amount available to the
Administrative Agent on a date after such Drawdown Date, such 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) the amount equal to such Bank's Commitment Percentage of
such Syndicated Loan (or, in the case of Competitive Bid Loans and Swing Line
Loans, the amount of such Bank's accepted offer of such Competitive Bid Loans,
if any, and portion of such Swing Line Loans) times (iii) a fraction, the
numerator of which is the number of days that elapse from and including such
Drawdown Date to but not
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including the date on which the amount equal to such Bank's Commitment
Percentage of such Loans, or the amount of such Bank's accepted offers of such
Competitive Bid Loans, if any, and portion of Swing Line Loans, shall become
immediately available to the Administrative Agent, and the denominator of which
is 365. A statement of the Administrative Agent submitted to such Bank with
respect to any amounts owing under this paragraph shall be prima facie evidence
of the amount due and owing to the Administrative Agent by such Bank. If such
amount is not in fact made available to the Administrative Agent by such Bank
within three (3) Business Days of such Drawdown Date, the Administrative Agent
shall be entitled to recover such amount from such Borrower, with interest
thereon at the applicable rate per annum.
SECTION 6. REPRESENTATIONS AND WARRANTIES. The Borrower (and the
Guarantor, where applicable) represents and warrants to the Banks that:
SECTION 6.1. CORPORATE AUTHORITY.
(a) Incorporation; Good Standing. The Borrower and each of its
Material Subsidiaries (i) is duly organized, validly existing and in
good standing under the laws of its respective jurisdiction of
formation, (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 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 could not reasonably be
expected to have a Material Adverse Effect.
(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 the Borrower and the
Guarantor, (ii) have been duly authorized by all necessary corporate
proceedings on the part of each of the Borrower and the Guarantor,
(iii) do not conflict with or result in any breach or contravention of
any provision of law, statute, rule or regulation to which any of the
Borrower or the Guarantor or any of their Subsidiaries is subject or
any judgment, order, writ, injunction, license or permit applicable to
the Borrower, the Guarantor or any of their Subsidiaries so as to have
a Material Adverse Effect, and (iv) do not conflict with any provision
of the corporate charter or bylaws of the Borrower, the Guarantor or
any Material Subsidiary or any agreement or other instrument binding
upon the Borrower, the Guarantor or any of their Material Subsidiaries,
except for those conflicts with any such agreement or instrument which
could not reasonably be expected to have a Material Adverse Effect.
(c) Enforceability. The execution, delivery and performance of
the Loan Documents by the Borrower and the Guarantor will result in
valid and legally binding obligations of the Borrower and the Guarantor
enforceable against them 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
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affecting generally the enforcement of creditors' rights generally and
general principles of equity.
SECTION 6.2. GOVERNMENTAL AND OTHER APPROVALS. The execution, delivery
and performance of the Loan Documents by the Borrower and the Guarantor and the
consummation by the Borrower and the Guarantor of the transactions contemplated
hereby and thereby do not require any approval or consent of, or filing with,
any governmental agency or authority or other third party other than those
already obtained and those required after the date hereof in connection with the
Borrower's performance of their covenants contained in Sections 7, 8 and 9
hereof.
SECTION 6.3. TITLE TO PROPERTIES; LEASES. The Borrower and its
Subsidiaries own all of the assets reflected in the consolidated balance sheet
as at the Interim Balance Sheet Date or acquired since that date (except
property and assets operated under Capital Leases or sold or otherwise disposed
of in the ordinary course of business since that date), subject to no Liens
except Permitted Liens.
SECTION 6.4. FINANCIAL STATEMENTS; SOLVENCY.
(a) There have been furnished to the Banks consolidated
balance sheets of the Borrower and its Subsidiaries dated the Balance
Sheet Date and consolidated statements of operations for the fiscal
periods then ended, certified by the Accountants. In addition, there
have been furnished to the Banks consolidated balance sheets of the
Borrower and its Subsidiaries dated the Interim Balance Sheet Date and
the related consolidated statements of operation for the fiscal quarter
ending on the Interim Balance Sheet Date. All said balance sheets and
statements of operations have been prepared in accordance with GAAP
(but, in the case of any of such financial statements which are
unaudited, only to the extent GAAP is applicable to interim unaudited
reports), fairly present, in all material respects, the financial
condition of the Borrower 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, subject, in the case of
unaudited interim financial statements, to changes resulting from audit
and normal year-end adjustments and to the absence of complete
footnotes. There are no contingent liabilities of the Borrower and its
Subsidiaries involving material amounts, known to the officers of the
Borrower or the Guarantor which have not been disclosed in said balance
sheets and the related notes thereto or otherwise in writing to the
Banks.
(b) The Borrower and its Subsidiaries on a consolidated basis
(both before and after giving effect to the transactions contemplated
by this Agreement) are 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
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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. Since the Balance Sheet Date,
there have been no material adverse changes in the consolidated financial
condition, business, assets or liabilities (contingent or otherwise) of the
Borrower and its Subsidiaries, taken as a whole, other than the Shareholder
Suits and changes in the ordinary course of business which have not had a
Material Adverse Effect.
SECTION 6.6. FRANCHISES, PATENTS, COPYRIGHTS, ETC. The Borrower and
each of its Subsidiaries possess all franchises, patents, copyrights,
trademarks, trade names, licenses and permits, and rights in respect of the
foregoing, adequate for the conduct of their business substantially as now
conducted (other than those the absence of which would not have a Material
Adverse Effect) without known conflict with any rights of others other than a
conflict which would not have a Material Adverse Effect.
SECTION 6.7. LITIGATION. Except as set forth on Schedule 6.7 or in the
Disclosure Documents, there are no actions, suits, proceedings or investigations
of any kind pending or, to the knowledge of the Borrower, threatened against the
Borrower or any of its Subsidiaries before any court, tribunal or administrative
agency or board which, either in any case or in the aggregate, could reasonably
be expected to have a Material Adverse Effect.
SECTION 6.8. NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Borrower
nor any of its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the
judgment of the Borrower's or such Subsidiary's officers has or could reasonably
be expected in the future to have a Material Adverse Effect. Neither the
Borrower nor any of its Subsidiaries is a party to any contract or agreement
which in the judgment of the Borrower's or its Subsidiary's officers has or
could reasonably be expected to have any Material Adverse Effect, except as
otherwise reflected in adequate reserves as required by GAAP.
SECTION 6.9. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. Neither the
Borrower nor any of its Subsidiaries is (a) violating any provision of its
charter documents or by-laws or (b) violating any agreement or instrument to
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 (in the case of such agreements or
such instruments) reasonably be expected to result in a Material Adverse Effect.
SECTION 6.10. TAX STATUS. The Borrower and its Subsidiaries have filed
all federal, state, provincial and territorial income and all other tax returns,
reports and declarations (or obtained extensions with respect thereto) required
by applicable law to be filed by them (unless and only to the extent that the
Borrower or such Subsidiary has set aside on its books provisions reasonably
adequate for the payment of all unpaid and unreported taxes as required by
GAAP); and have paid all taxes and other governmental assessments and charges
(other than taxes, assessments and other governmental charges imposed by
jurisdictions other than the United States, Canada or any political subdivision
thereof which in the aggregate are not material to the
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financial condition, business or assets of the Borrower or such Subsidiary on an
individual basis or of the Borrower and its Subsidiaries on a consolidated
basis) 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, as required by GAAP, 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. Except to the extent
contested in the manner permitted in the preceding sentence, there are no unpaid
taxes in any material amount claimed by the taxing authority of any jurisdiction
to be due and owing by the Borrower or any Subsidiary, nor do the officers of
the Borrower or any of its Subsidiaries know of any basis for any such claim.
SECTION 6.11. NO EVENT OF DEFAULT. No Default or Event of Default has
occurred hereunder and is continuing.
SECTION 6.12. HOLDING COMPANY AND INVESTMENT COMPANY ACTS. Neither the
Borrower nor any of its Subsidiaries 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 a "registered investment company", or an "affiliated company" or a
"principal underwriter" of a "registered investment company", as such terms are
defined in the Investment Company Act of 1940.
SECTION 6.13. ABSENCE OF FINANCING STATEMENTS, ETC. Except as permitted
by Section 8.1 of this Agreement, there is no Indebtedness senior to the
Obligations, and except for Permitted Liens, there are no Liens, or any
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 purports to cover, affect or give notice of any
present or possible future Lien on any assets or property of the Borrower or any
of its Subsidiaries or right thereunder.
SECTION 6.14. EMPLOYEE BENEFIT PLANS.
SECTION 6.14.1. IN GENERAL. Each Employee Benefit Plan has
been maintained and operated in compliance with the provisions of ERISA
and, to the extent applicable, the Code, including but not limited to
the provisions thereunder respecting prohibited transactions. Promptly
upon the request of any Bank or the Administrative Agent, the Borrower
will furnish 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.
SECTION 6.14.2. TERMINABILITY OF WELFARE PLANS. Under each
Employee Benefit Plan which is an employee welfare benefit plan within
the meaning of Section 3(1) or Section 3(2)(B) of ERISA, no benefits
are due unless the event giving rise to the benefit entitlement occurs
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prior to plan termination (except as required by Title I, Part 6 of
ERISA). The Borrower or an ERISA Affiliate, as appropriate, 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
the Borrower or such ERISA Affiliate without material liability to any
Person.
SECTION 6.14.3. GUARANTEED PENSION PLANS. 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. No liability to the PBGC (other than required
insurance premiums, all of which have been paid) has been incurred by
the Borrower or any ERISA Affiliate with respect to any Guaranteed
Pension Plan (other than Terminated Plans) and there has not been any
ERISA Reportable Event, or any other event or condition which presents
a material risk of termination of any Guaranteed Pension Plan by the
PBGC. Other than with respect to the Terminated Plans, 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.
SECTION 6.14.4. MULTIEMPLOYER PLANS. Neither the 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. Neither the 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 that any Multiemployer Plan intends to terminate or has
been terminated under Section 4041A of ERISA.
SECTION 6.15. ENVIRONMENTAL COMPLIANCE. The Borrower and its
Subsidiaries have taken all steps that they have deemed reasonably necessary to
investigate the past and present condition and usage of the Real Property and
the operations conducted by the Borrower and its Subsidiaries and, based upon
such diligent investigation, have determined that, except as set forth on
Schedule 6.15 or in the Disclosure Documents:
(a) Neither the Borrower, its Material Subsidiaries, nor any
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 the Resource Conservation and Recovery Act
("RCRA"), the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 as
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amended ("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 applicable international,
federal, state, provincial, territorial or local statute, regulation,
ordinance, order or decree relating to health, safety, waste
transportation or disposal, or the environment (the "Environmental
Laws"), which violation, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
(b) Except with respect to any such matters that could not
reasonably be expected to have a Material Adverse Effect, neither the
Borrower nor any of its Material Subsidiaries has received notice from
any third party including, without limitation: any federal, state,
provincial, territorial or local governmental authority, (i) that any
one of them has been identified by the United States Environmental
Protection Agency ("EPA") as a potentially responsible party under
CERCLA with respect to a site listed on the National Priorities List,
40 C.F.R. Part 300 Appendix B; (ii) that any hazardous waste, as
defined by 42 U.S.C. 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) or any toxic substance, oil or
hazardous materials or other chemicals or substances regulated by any
Environmental Laws, excluding household hazardous waste ("Hazardous
Substances"), which any one of them has generated, transported or
disposed of, has been found at any site at which a federal, state,
provincial, territorial or local agency or other third party has
conducted or has ordered that the Borrower or any of its Material
Subsidiaries conduct a remedial investigation, removal or other
response action pursuant to any Environmental Law; or (iii) that it is
or shall be a named party to any claim, action, cause of action,
complaint, legal or administrative proceeding arising out of any third
party's incurrence of costs, expenses, losses or damages of any kind
whatsoever in connection with the Release of Hazardous Substances.
(c) Except for those occurrences or situations that could not
reasonably be expected to have a Material Adverse Effect, (i) no
portion of the Real Property or other assets of the Borrower and its
Material Subsidiaries has been used for the handling, processing,
storage or disposal of Hazardous Substances except in accordance with
applicable Environmental Laws; (ii) in the course of any activities
conducted by the Borrower, its Material Subsidiaries, or operators of
the Real Property or other assets of the Borrower and its Material
Subsidiaries, no Hazardous Substances have been generated or are being
used on such properties except in accordance with applicable
Environmental Laws; (iii) there have been no unpermitted Releases or
threatened Releases of Hazardous Substances on, upon, into or from the
Real Property or other assets of the Borrower or its Material
Subsidiaries; and (iv) any Hazardous Substances that have been
generated on the Real Property or other assets of the Borrower or its
Material Subsidiaries have been transported offsite only by carriers
having an identification number issued by the EPA, treated or disposed
of only by treatment or disposal facilities maintaining valid permits
as required under applicable Environmental Laws, which transporters and
facilities have been and are, to the Borrower's knowledge, operating in
compliance with such permits and applicable Environmental Laws.
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SECTION 6.16. DISCLOSURE. No representation or warranty made by the
Borrower or the Guarantor in this Agreement or in any agreement, instrument,
document, certificate, or financial statement furnished to the Banks or the
Administrative Agent by or on behalf of or at the request of the Borrower and
the Guarantor 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, taken as a whole, not misleading in light of the circumstances in which
they are made.
SECTION 6.17. PERMITS AND GOVERNMENTAL AUTHORITY. All permits (other
than those the absence of which could not reasonably be expected to have a
Material Adverse Effect) required for the construction and operation of all
landfills currently owned or operated by the Borrower or any of its Material
Subsidiaries have been obtained and remain in full force and effect and are not
subject to any appeals or further proceedings or to any unsatisfied conditions
that may allow material modification or revocation. Neither the Borrower nor any
of its Subsidiaries, nor, to the knowledge of the Borrower, the holder of such
permits is in violation of any such permits, except for any violation which
could not reasonably be expected to have a Material Adverse Effect.
SECTION 7. AFFIRMATIVE COVENANTS OF THE BORROWER. The Borrower agrees
that, so long as any Obligation or any Letter of Credit is outstanding or the
Banks have any obligation to make Loans, 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, it shall, and shall cause its Subsidiaries to, comply with the
following covenants:
SECTION 7.1. PUNCTUAL PAYMENT. The 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, all in accordance with the terms of this Agreement
and such other Loan Documents.
SECTION 7.2. MAINTENANCE OF U.S. OFFICE. The Borrower will maintain its
chief executive offices at Houston, Texas, or at such other place in the United
States of America as the Borrower shall designate upon 30 days' prior written
notice to the Administrative Agent.
SECTION 7.3. RECORDS AND ACCOUNTS. The Borrower will, and will cause
each of its Subsidiaries to, keep true and accurate records and books of account
in which full, true and correct entries will
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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
Borrower will deliver to the Banks:
(a) as soon as practicable, but, in any event not later than
100 days after the end of each fiscal year of the Borrower, the
consolidated balance sheet of the Borrower and its Subsidiaries as at
the end of such year, consolidated statements of cash flows, and the
related consolidated statements of operations, each setting forth in
comparative form the figures for the previous fiscal year, all such
consolidated financial statements to be in reasonable detail, prepared,
in accordance with GAAP and, with respect to the consolidated financial
statements, certified by PricewaterhouseCoopers LLP or Arthur Andersen
LLP or by other nationally recognized independent auditors selected by
the Borrower and reasonably satisfactory to the Administrative Agent
(the "Accountants"). In addition, simultaneously therewith, the
Borrower shall provide the Banks with a written statement from such
Accountants to the effect that they have read a copy of this Agreement,
and that, in making the examination necessary to said certification,
they have obtained no knowledge of any Default or Event of Default, 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;
(b) as soon as practicable, but in any event not later than 60
days after the end of each of the first three fiscal quarters of each
fiscal year of the Borrower, copies of the consolidated balance sheet
and statement of operations of the Borrower and its Subsidiaries as at
the end of such quarter, subject to year-end adjustments, and the
related consolidated statement of cash flows, all in reasonable detail
and prepared in accordance with GAAP (to the extent GAAP is applicable
to interim unaudited financial statements) with a certification by the
principal financial or accounting officer of the Borrower (the "CFO or
the CAO") that the consolidated financial statements are prepared in
accordance with GAAP (to the extent GAAP is applicable to interim
unaudited financial statements) and fairly present, in all material
respects, the consolidated financial condition of the Borrower and its
Subsidiaries on a consolidated basis as at the close of business on the
date thereof and the results of operations for the period then ended,
subject to year-end adjustments and the exclusion of detailed
footnotes;
(c) simultaneously with the delivery of the financial
statements referred to in (a) and (b) above, a certificate in the form
of Exhibit F hereto (the "Compliance Certificate") signed by the CFO or
the CAO or the Borrower's corporate treasurer, stating that the
Borrower and its Subsidiaries are in compliance with the covenants
contained in Sections 7, 8 and 9 hereof as of the end of the applicable
period and setting forth in reasonable detail computations evidencing
such compliance with respect to the covenants contained
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in Section 9 hereof and that no Default or Event of Default exists,
provided that if the Borrower shall at the time of issuance of such
Compliance Certificate or at any other time obtain knowledge of any
Default or Event of Default, the Borrower shall 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 Borrower proposes to take with respect thereto;
(d) 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 Borrower's and its Subsidiaries'
stockholders generally; and
(e) from time to time such other financial data and other
information as the Banks may reasonably request.
The Borrower hereby authorizes each Bank to disclose any information
obtained pursuant to this Agreement to all appropriate governmental regulatory
authorities where required by law; provided, however, 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 the Borrower has or may have under the
federal Right to Financial Privacy Act of 1978, as in effect from time to time,
except as to matters specifically permitted therein.
SECTION 7.5. EXISTENCE AND CONDUCT OF BUSINESS. The Borrower will, and
will cause each Material Subsidiary, to do or cause to be done all things
necessary to preserve and keep in full force and effect its existence, rights
and franchises; and effect and maintain its foreign qualifications (except where
the failure of the Borrower or any Material Subsidiary to remain so qualified
could not reasonably be expected to have a Material Adverse Effect), licensing,
domestication or authorization, except as any of the foregoing may be terminated
by its Board of Directors in the exercise of its reasonable judgment; provided
that such termination could not reasonably be expected to have a Material
Adverse Effect. The Borrower will not, and will cause its Subsidiaries not to,
become obligated under any contract or binding arrangement which, at the time it
was entered into, could reasonably be expected to have a Material Adverse
Effect. The Borrower will, and will cause each Subsidiary to, continue to engage
primarily in any of the businesses now conducted by the Borrower and its
Subsidiaries and in related businesses, and any additional businesses acquired
pursuant to the terms of Section 8.4(a) hereunder.
SECTION 7.6. MAINTENANCE OF PROPERTIES. The Borrower will, and will
cause its Material Subsidiaries to, 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 (ordinary wear and tear excepted) and supplied with all
necessary equipment and cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Borrower and its Material Subsidiaries may be necessary so that the
businesses carried on in connection therewith may be properly and advantageously
conducted at all times; provided,
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however, that nothing in this section shall prevent the Borrower or any of its
Subsidiaries from discontinuing the operation and maintenance of any of its
properties if such discontinuance is, in the judgment of the Borrower or such
Subsidiary, desirable in the conduct of its or their business and which could
not reasonably be expected to have a Material Adverse Effect.
SECTION 7.7. INSURANCE. The Borrower will, and will cause its
Subsidiaries to, maintain with financially sound and reputable insurance
companies (including captive insurance companies), funds or underwriters,
insurance of the kinds, covering the risks (other than risks arising out of or
in any way connected with personal liability of any officers and directors
thereof) and in the relative proportionate amounts usually carried by reasonable
and prudent companies conducting businesses similar to that of the Borrower and
its Subsidiaries, in amounts substantially similar to the existing coverage
policies maintained by the Borrower and its Subsidiaries, copies of which have
been provided to the Administrative Agent. In addition, the Borrower will
furnish from time to time, upon the Administrative Agent's request, a summary of
the insurance coverage of the Borrower and its Subsidiaries, 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.
SECTION 7.8. TAXES. The Borrower will, and will cause its Subsidiaries
to, duly pay and discharge, or cause to be paid and discharged, before the same
shall become overdue, all taxes, assessments and other governmental charges
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 upon
any of its property; provided, however, that any such tax, assessment, charge,
levy or claim need not be paid if the failure to do so (either individually, or
in the aggregate for all such failures) could not reasonably be expected to have
a Material Adverse Effect and the validity or amount thereof shall currently be
contested in good faith by appropriate proceedings and if the Borrower or such
Subsidiary shall have set aside on its books adequate reserves with respect
thereto as required by GAAP; and provided, further, that the Borrower or such
Subsidiary will pay all such taxes, assessments, charges, levies or claims prior
to the foreclosure on any Lien which may have attached as security therefor.
SECTION 7.9. INSPECTION OF PROPERTIES, BOOKS AND CONTRACTS. The
Borrower will, and will cause its Material Subsidiaries to, permit the
Administrative Agent or any Bank or any of their designated representatives,
upon reasonable notice, to visit and inspect any of the properties of the
Borrower and its Material Subsidiaries, to examine the books of account of the
Borrower and its Material Subsidiaries, or contracts (and to make copies thereof
and extracts therefrom), and to discuss the affairs, finances and accounts of
the Borrower and its Material Subsidiaries with, and to be advised as to the
same by, their officers, all at such times and intervals as may be reasonably
requested.
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SECTION 7.10. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES AND PERMITS;
MAINTENANCE OF MATERIAL LICENSES AND PERMITS. The Borrower will, and will cause
each Subsidiary to, (i) comply with the provisions of its charter documents and
by-laws; (ii) comply with all agreements and instruments by which it or any of
its properties may be bound except where noncompliance could not reasonably be
expected to have a Material Adverse Effect; (iii) comply with all applicable
laws and regulations (including Environmental Laws), decrees, orders, judgments,
licenses and permits, including, without limitation, all environmental permits
("Applicable Requirements"), except where noncompliance with such Applicable
Requirements could not reasonably be expected to have a Material Adverse Effect;
(iv) maintain all operating permits for all landfills now owned or hereafter
acquired, except where the failure to do so could not reasonably be expected to
have a Material Adverse Effect; and (v) dispose of hazardous waste only at
licensed disposal facilities operating, to the Borrower's knowledge, in
compliance with Environmental Laws, except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect. If at any time any
authorization, consent, approval, permit or license from any officer, agency or
instrumentality of any government shall become necessary or required in order
that the Borrower or any Material Subsidiary may fulfill any of its obligations
hereunder or under any other Loan Document, the Borrower will immediately take
or cause to be taken all reasonable steps within the power of the Borrower or
such Material Subsidiary to obtain such authorization, consent, approval, permit
or license and furnish the Banks with evidence thereof.
SECTION 7.11. ENVIRONMENTAL INDEMNIFICATION. The Borrower covenants and
agrees that it will indemnify and hold the Banks, the Issuing Banks and the
Administrative Agent and their respective affiliates, and each of the
representatives, agents and officers of each of the foregoing, harmless from and
against any and all claims, expense, damage, loss or liability incurred by the
Banks, the Issuing Banks or the Administrative Agent (including all reasonable
costs of legal representation incurred by the Banks, the Issuing Banks or the
Administrative Agent) relating to (a) any Release or threatened Release of
Hazardous Substances on the Real Property; (b) any violation of any
Environmental Laws or Applicable Requirements with respect to conditions at the
Real Property or other assets of the Borrower or its Subsidiaries, or the
operations conducted thereon; or (c) the investigation or remediation of offsite
locations at which the Borrower, any of its Subsidiaries, or their predecessors
are alleged to have directly or indirectly Disposed of Hazardous Substances. It
is expressly acknowledged by the Borrower that this covenant of indemnification
shall survive the payment of the Loans and Reimbursement Obligations and
satisfaction of all other Obligations hereunder and shall inure to the benefit
of the Banks, the Issuing Banks, the Administrative Agent and their affiliates,
successors and assigns.
SECTION 7.12. FURTHER ASSURANCES. The Borrower and the Guarantor will
cooperate with the Administrative Agent and execute such further instruments and
documents as the Administrative Agent shall reasonably request to carry out to
the Majority Banks' satisfaction the transactions contemplated by this
Agreement.
SECTION 7.13. NOTICE OF POTENTIAL CLAIMS OR LITIGATION. The Borrower
shall deliver to the Banks, within 30 days of receipt thereof, written notice of
the initiation of any action, claim,
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complaint, or any other notice of dispute or litigation against the Borrower or
any of its Subsidiaries wherein the asserted, demanded or alleged liability is
in excess of $25,000,000 or which questions the validity or enforceability of
any Loan Document, together with a copy of each such complaint or other notice
received by the Borrower or any of its Subsidiaries if requested by the
Administrative Agent.
SECTION 7.14. NOTICE OF CERTAIN EVENTS CONCERNING INSURANCE AND
ENVIRONMENTAL CLAIMS.
(a) The Borrower will provide the Banks with written notice as
to any material cancellation or material adverse change in any
insurance of the Borrower or any of its Material Subsidiaries within
ten (10) Business Days after the Borrower's or any of its Material
Subsidiary's receipt of any notice (whether formal or informal) of such
material cancellation or material change by any of its insurers.
(b) The Borrower will promptly, and in any event within ten
(10) Business Days of the Borrower's obtaining knowledge thereof,
notify the Banks in writing of any of the following events:
(i) upon the Borrower's or any Material Subsidiary's
obtaining knowledge of any violation of any Environmental Law
regarding the Real Property or the Borrower's or any
Subsidiary's operations which violation could reasonably be
expected to have a Material Adverse Effect;
(ii) upon the Borrower's or any Material Subsidiary'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 reasonably be expected to
have a Material Adverse Effect;
(iii) upon the Borrower's or any Material
Subsidiary'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 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) the Borrower's, any Material
Subsidiary's or any Person's operation of the Real Property,
(B) contamination on, from, or into the Real Property, or (C)
investigation or remediation of offsite locations at which the
Borrower, any Material Subsidiary, or its predecessors are
alleged to have directly or indirectly Disposed of Hazardous
Substances, and with respect to which the asserted, demanded
or alleged liability associated therewith exceeds $35,000,000;
or
(iv) upon the Borrower's or any Material Subsidiary's
obtaining knowledge that any expense or loss which
individually or in the aggregate exceeds $35,000,000 has been
incurred by such governmental authority in connection with the
assessment, containment, removal or remediation of any
Hazardous Substances with respect to which the Borrower or any
Material Subsidiary has
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been alleged to be liable by such governmental authority or
for which a Lien may be imposed on the Real Property by such
governmental authority.
SECTION 7.15. NOTICE OF DEFAULT. The Borrower 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 $25,000,000 as to which the Borrower or any
of its Material Subsidiaries is a party or obligor, whether as principal or
surety, the Borrower shall promptly upon obtaining actual knowledge thereof give
written notice thereof to the Banks, describing the notice of action and the
nature of the claimed default.
SECTION 7.16. USE OF PROCEEDS. The proceeds of the Loans shall be used
for general corporate purposes, to provide working capital, to provide letters
of credit and to refinance existing Indebtedness of the Borrower and its
Subsidiaries. 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 7.17. CERTAIN TRANSACTIONS. Except as disclosed in the
Disclosure Documents prior to the Effective Date, and except for arm's length
transactions pursuant to which the Borrower or any Subsidiary makes payments in
the ordinary course of business upon terms no less favorable than the Borrower
or such Subsidiary could obtain from third parties, none of the officers,
directors, or employees or any other affiliate of the Borrower or any Subsidiary
are presently or shall be a party to any transaction with the Borrower or any
Subsidiary (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 Borrower or any
Subsidiary, 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.
SECTION 8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER. The Borrower
agrees that, so long as any Obligation or Letter of Credit is outstanding or the
Banks have any obligation to make Loans or any Issuing Bank has any obligation
to issue, extend or renew any Letters of Credit hereunder, or the Banks have any
obligation to reimburse any Issuing Bank for drawings honored under any Letter
of Credit, it shall, and shall cause its Subsidiaries to, comply with the
following covenants:
SECTION 8.1. RESTRICTIONS ON INDEBTEDNESS. Neither the Borrower nor any
of its 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 Indebtedness of any other Person (other than the Borrower or any
of its Subsidiaries), or incur any Indebtedness other than:
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(a) Indebtedness arising under this Agreement or the other
Loan Documents;
(b) (i) Indebtedness incurred by the Borrower or any
Subsidiary with respect to any suretyship or performance bond incurred
in the ordinary course of its business and undrawn landfill closure
bonds;
(ii) Guarantees of any of its Subsidiaries' obligations to
governmental authorities in lieu of the posting of any landfill closure
bonds;
(c) Unsecured Indebtedness of the Borrower (and any guarantee
thereof by the Guarantor), including commercial paper and the 364 Day
Facility, which is pari passu or subordinated to the Obligations;
provided that there does not exist a Default or Event of Default at the
time of the incurrence of such Indebtedness and no Default or Event of
Default would be created by the incurrence of such Indebtedness;
(d) Indebtedness of the Guarantor and the Borrower's
Subsidiaries listed in Schedule 8.1(d) and any extension, renewal or
refinancing by the Guarantor or such Subsidiary of such Indebtedness,
provided that the terms and conditions of any such extension, renewal
or refinancing are substantially the same as the terms and conditions
in effect on the Effective Date, or are more favorable to the Guarantor
or such Subsidiary; and
(e) (i) Other Indebtedness of the Borrower's Subsidiaries
(other than of the Guarantor), (ii) secured Indebtedness of the
Borrower, (iii) Indebtedness with respect to drawn landfill closure
bonds, and (iv) Indebtedness with respect to Permitted Receivables
Transactions; provided that the aggregate amount of all such
Indebtedness in this Section 8.1(e) shall not exceed 15% of
Consolidated Tangible Assets at any time.
SECTION 8.2. RESTRICTIONS ON LIENS. The Borrower will not, and will
cause its Subsidiaries not to, create or incur or suffer to be created or
incurred or to exist any Lien of any kind upon any property or assets of any
character, whether now owned or 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
for Permitted Liens.
The Borrower and the Guarantor covenant and agree that if either of
them or any of their Subsidiaries shall create or assume any Lien upon any of
their respective properties or assets, whether now owned or hereafter acquired,
other than Permitted Liens (unless prior written consent shall have been
obtained from the Banks), the Borrower and the Guarantor will make or cause to
be made effective provision whereby the Obligations and the Guaranteed
Obligations
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will be secured by such Lien equally and ratably with any and all other
Indebtedness thereby secured so long as such other Indebtedness shall be so
secured; provided, that the covenants of the Borrower and the Guarantor
contained in this sentence shall only be in effect for so long as the Borrower
or the Guarantor shall be similarly obligated under any other Indebtedness;
provided, further, that an Event of Default shall occur for so long as such
other Indebtedness becomes secured notwithstanding any actions taken by the
Borrower or the Guarantor to ratably secure the Obligations and the Guaranteed
Obligations hereunder.
SECTION 8.3. RESTRICTIONS ON INVESTMENTS. Except to the extent provided
in Section 8.4, neither the Borrower nor any Subsidiary may make or permit to
exist or to remain outstanding any Investment, unless both before and after
giving effect thereto (i) the Borrower and its Subsidiaries are in compliance
with the covenants set forth in Sections 7, 8 and 9 hereof; (ii) 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; and (iii) the aggregate amount of all
Investments (excluding Investments in (A) direct obligations of the United
States of America or any agency thereof having maturities of less than one (1)
year, (B) certificates of deposit having maturities of less than one (1) year,
issued by commercial banks in the United States or Canada having capital and
surplus of not less than $100,000,000, and (C) Subsidiaries), does not exceed
15% of Consolidated Tangible Assets; provided, that the ability of the Borrower
and its Subsidiaries to incur any Indebtedness in connection with any Investment
permitted by this Section 8.3 shall be governed by Section 8.1.
SECTION 8.4. MERGERS, CONSOLIDATIONS, SALES.
(a) Neither the Borrower nor any Subsidiary shall be a party
to any merger, consolidation or exchange of stock unless the Borrower
shall be the surviving entity with respect to any such transaction to
which the Borrower is a party and the Guarantor shall be the survivor
of any merger with any other Subsidiary or a Subsidiary shall be the
surviving entity (and continue to be a Subsidiary) with respect to any
such transactions to which one or more Subsidiaries is a party (and the
conditions set forth below are satisfied), or purchase or otherwise
acquire all or substantially all of the assets or stock of any class
of, or any partnership, membership or joint venture or other interest
in, any other Person except as otherwise provided in Section 8.3 or
this Section 8.4. Notwithstanding the foregoing, the Borrower and its
Subsidiaries may purchase or otherwise acquire all or substantially all
of the assets or stock of any class of, or joint venture or other
interest in, any Person if the following conditions have been met: (i)
the proposed transaction will not otherwise create a Default or an
Event of Default hereunder; and (ii) the business to be acquired
predominantly involves (A) the collection, transfer, hauling, disposal
or recycling of solid waste or thermal soil remediation, or (B) other
lines of businesses currently engaged in, or related, associated,
complementary or supplementary thereto, whether from an operational,
business, financial, technical or administrative standpoint; provided
that the Borrower or its Subsidiaries may purchase or otherwise acquire
all or
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substantially all of the assets or stock of any class of, or any
partnership, membership or joint venture or other interest in, any
Persons in unrelated businesses, not to exceed an aggregate amount of
$100,000,000 during the first year following the Effective Date, and
not to exceed a total aggregate amount of $200,000,000 during the term
of this Agreement. Notwithstanding anything herein to the contrary, the
ability of the Borrower and its Subsidiaries to incur any Indebtedness
in connection with any transaction permitted pursuant to this Section
8.4 shall be governed by Section 8.1.
(b) Neither the Borrower nor any Subsidiary shall sell,
transfer, convey or lease any assets or group of assets, including the
sale or transfer of any property owned by the Borrower or any
Subsidiary in order then or thereafter to lease such property or lease
other property which the Borrower or such Subsidiary intends to use for
substantially the same purpose as the property being sold or
transferred, or sell or assign, with or without recourse, any
receivables, except (i) transfers of real or personal property among
Subsidiaries of the Borrower, (ii) so long as no Default or Event of
Default has occurred and is continuing, or would result therefrom,
sales of assets or pursuant to a sale-leaseback transaction, provided
that any net cash proceeds from any such sale or sale-leaseback shall,
within 180 days, either be used to pay down outstanding Loans under
this Agreement and outstanding loans under the 364 Day Facility pro
rata, or be reinvested by such Person in assets of the business of the
Borrower and its Subsidiaries, used for working capital, invested in
Investments in accordance with the provisions of Section 8.3 or used
for other general corporate purposes, (iii) sales of accounts
receivable (and contract rights, general intangibles or chattel paper
related thereto) more than sixty (60) days past due sold or assigned in
the ordinary course of collecting past due accounts, or (iv) pursuant
to a Permitted Receivables Transaction.
SECTION 8.5. RESTRICTED DISTRIBUTIONS AND REDEMPTIONS. Neither the
Borrower nor any of its Subsidiaries will (a) declare or pay any Distributions,
or (b) redeem, convert, retire or otherwise acquire shares of any class of its
capital stock (other than in connection with a merger permitted by Section 8.4
hereof or conversion into another form of equity of any preferred shares of the
Borrower existing as of the Effective Date pursuant to the terms thereof);
unless at the time of such Distribution or redemption no Default or Event of
Default exists or would be created hereunder. Notwithstanding the above, any
Subsidiary may make Distributions to the Borrower and the Borrower agrees that
neither the Borrower nor any Material Subsidiary will enter into any agreement
restricting Distributions from such Material Subsidiary to the Borrower.
SECTION 8.6. EMPLOYEE BENEFIT PLANS. None of the Borrower, any of its
Subsidiaries, or 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 the Borrower on a consolidated basis; 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
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(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 the Borrower or the Guarantor 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 (within the meaning of Section 4001 of
ERISA), other than with respect to the Terminated Plans, 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 Borrower and its Subsidiaries will (i) promptly upon the request of
any Bank or the Administrative Agent, 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 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, 4242 or 4245 of ERISA.
SECTION 9. FINANCIAL COVENANTS OF THE BORROWER. The Borrower agrees
that, so long as any Obligation or Letter of Credit is outstanding or the Banks
have any obligation to make Loans, or any Issuing Bank has any obligation to
issue, extend or renew any Letter of Credit hereunder, or the Banks have any
obligation to reimburse any Issuing Bank for drawings honored under any Letter
of Credit, it shall comply with the following covenants:
SECTION 9.1. INTEREST COVERAGE RATIO. As of the end of any fiscal
quarter of the Borrower, the Borrower will not permit the ratio of (a) EBIT for
the four fiscal quarters then ending to (b) Consolidated Total Interest Expense
for such period to be less than the applicable ratio set forth in the table
below:
FISCAL QUARTER(S) ENDING: RATIO:
------------------------- ---------
6/30/01 - 12/31/01 2.25:1.00
3/31/02 - 12/31/02 2.50:1.00
3/31/03 and thereafter 3.00:1.00
SECTION 9.2. TOTAL DEBT TO EBITDA. As of the end of any fiscal quarter
of the Borrower, the Borrower will not permit the ratio of (a) Total Debt to (b)
EBITDA for the four fiscal quarters then ending to exceed 3.00:1.00.
SECTION 9.3. MINIMUM NET WORTH. The Borrower will not permit
Consolidated Net Worth at any time to be less than $3,500,000,000, plus 75% of
cumulative positive Consolidated Net Income for each fiscal quarter, beginning
with the fiscal quarter ending March 31, 2001.
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SECTION 10. CONDITIONS PRECEDENT.
SECTION 10.1. CONDITIONS TO EFFECTIVENESS. The effectiveness of this
Agreement and the obligations of the Banks to make any Loans and of any Issuing
Bank to issue Letters of Credit and of the Banks to participate in Letters of
Credit and otherwise be bound by the terms of this Agreement shall be subject to
the satisfaction of each of the following conditions precedent:
SECTION 10.1.1. CORPORATE ACTION. All corporate action
necessary for the valid execution, delivery and performance by the
Borrower and the Guarantor of the Loan Documents shall have been duly
and effectively taken, and evidence thereof certified by authorized
officers of the Borrower and the Guarantor and satisfactory to the
Administrative Agent shall have been provided to the Banks.
SECTION 10.1.2. LOAN DOCUMENTS, ETC. Each of the Loan
Documents and other documents listed on the closing agenda 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 Majority Banks.
SECTION 10.1.3. CERTIFICATE OF NO CHANGE. The Banks shall have
received from each of the Borrower and the Guarantor a certificate,
certified by a duly authorized officer of such Person to be true and
complete on the Effective Date, of (a) no changes (other than those
attached thereto) to its charter or other incorporation documents since
last delivered to the Administrative Agent, and (b) no changes to its
by-laws (other than those attached thereto) since last delivered to the
Administrative Agent.
SECTION 10.1.4. INCUMBENCY CERTIFICATE. The Banks shall have
received an incumbency certificate, dated as of the Effective Date,
signed by duly authorized officers of the Borrower and the Guarantor
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
Borrower and the Guarantor; (b) to make Syndicated Loan Requests and
Letter of Credit Requests; (c) to make Competitive Bid Quote Requests;
and (d) to give notices and to take other action on the Borrower's or
the Guarantor's behalf under the Loan Documents.
SECTION 10.1.5. CERTIFICATES OF INSURANCE. The Administrative
Agent shall have received 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 coverage of the Borrower and its Subsidiaries.
SECTION 10.1.6. OPINION OF COUNSEL. The Banks shall have
received a favorable legal opinion from the deputy general counsel to
the Borrower and the Guarantor addressed to the Banks, dated the
Effective Date, in form and substance satisfactory to the
Administrative Agent.
SECTION 10.1.7. SATISFACTORY FINANCIAL CONDITION. Other than
as disclosed in the Disclosure Documents, no material adverse change
shall have occurred in the financial
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condition, results of operations, business, properties or prospects of
the Borrower and its Subsidiaries, taken as a whole, since the Interim
Balance Sheet Date.
SECTION 10.1.8. PAYMENT OF CLOSING FEES. The Borrower shall
have paid the agreed upon closing fees to the Administrative Agent for
the account of the Banks
SECTION 10.1.9. PAYOFF OF EXISTING DEBT. The Administrative
Agent shall have received evidence, in form and substance satisfactory
to the Administrative Agent, that (a) the Fourth Amended and Restated
Revolving Credit Agreement, dated as of July 10, 2000, among the
Borrower, the Guarantor and certain of the Banks has been paid in full
and terminated, (b) the 364 Day Loan Agreement, dated as of July 10,
2000, among the Borrower, the Guarantor and certain of the Banks has
been paid in full and terminated, and (c) the new 364 Day Facility is
effective.
SECTION 10.1.10. CLOSING CERTIFICATE. The Borrower shall have
delivered to the Administrative Agent a certificate, dated as of the
Effective Date, stating that, as of such date (a) the representations
and warranties set forth herein or in any other Loan Document are true
and correct, and (b) no Default or Event of Default has occurred and is
continuing.
SECTION 11. CONDITIONS TO ALL LOANS. The obligations of the Banks to
make or continue for an additional Interest Period in accordance with Section
2.7 any Loan and the obligation of any Issuing Bank to issue, extend, or renew
any Letter of Credit at the time of and subsequent to the Effective Date is
subject to the following conditions precedent:
SECTION 11.1. REPRESENTATIONS TRUE. Each of the representations and
warranties of the Borrower and the Guarantor (as applicable) 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 such
Loan or the issuance, extension, or renewal of any Letter of Credit, as
applicable, 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
either individually or in the aggregate do not result in a Material Adverse
Effect, and to the extent that such representations and warranties relate
expressly and solely to an earlier date).
SECTION 11.2. PERFORMANCE; NO EVENT OF DEFAULT. The Borrower shall have
performed and complied with all terms and conditions herein required to be
performed or complied with by it prior to or at the time of the making of any
Loan the issuance, extension or renewal of any Letter of Credit, and at the time
of the making of any Loan or the issuance, renewal or extension of any Letter of
Credit, there shall exist no Default or Event of Default or condition which
would result in a Default or an Event of Default upon consummation of such Loan
or issuance, extension, or renewal of any Letter of Credit, as applicable. Each
request for a Loan, or for issuance, extension or renewal of a Letter of Credit
shall constitute certification by the Borrower that the conditions specified in
Sections 11.1 and 11.2 will be duly satisfied on the date of such Loan or Letter
of Credit issuance, extension or renewal.
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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, for any
Issuing Bank to issue, extend or renew, or the Banks to participate in, Letters
of Credit hereunder.
SECTION 11.4. GOVERNMENTAL REGULATION. The Banks shall have received
from the Borrower and its Subsidiaries 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 Banks as of the date of the making of
any extension of credit in substance and in form satisfactory to the Banks,
including without limitation a Syndicated Loan Request in the form attached
hereto as Exhibit D or a Letter of Credit Request in the form attached hereto as
Exhibit E 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 12. EVENTS OF DEFAULT; ACCELERATION; TERMINATION OF COMMITMENT.
SECTION 12.1. 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 Borrower shall fail to pay any principal of the
Loans when the same shall become due and payable, whether at the stated
date of maturity or any accelerated date of maturity or at any other
date fixed for payment;
(b) if the Borrower shall fail to pay any interest or fees or
other amounts owing hereunder (other than those specified in subsection
(a) above) within five (5) Business Days after the same shall become
due and payable whether at the Maturity Date or any accelerated date of
maturity or at any other date fixed for payment;
(c) if the Borrower shall fail to comply with any of the
covenants contained in Sections 7.4, 7.5, 7.15, 7.16, 8 and 9 hereof;
(d) if the Borrower 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) and
such failure shall not be remedied within 30 days after written notice
of such failure shall have been given to the Borrower by the
Administrative Agent or any of 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;
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(f) if the Borrower or any of its Subsidiaries shall fail to
pay when due, or within any applicable period of grace, any
Indebtedness or Swap Obligation in an aggregate amount greater than
$50,000,000, or fail to observe or perform any material term, covenant
or agreement contained in any one or more agreements by which it is
bound, evidencing or securing any Indebtedness or Swap Obligation in an
aggregate amount greater than $50,000,000 for such period of time as
would permit, 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
terminate its commitment with respect thereto;
(g) if the Borrower, the Guarantor or any Material 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 or receiver of the Borrower, the
Guarantor or any Material Subsidiary, or of any substantial part of the
assets of the Borrower, the Guarantor or any Material Subsidiary or
commences any case or other proceeding relating to the Borrower, the
Guarantor or any Material 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 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 the
Borrower, the Guarantor or any Material Subsidiary or the Borrower, the
Guarantor or any Material Subsidiary indicates its approval thereof,
consent thereto or acquiescence therein;
(h) if a decree or order is entered appointing any such
trustee, custodian, liquidator or receiver or adjudicating the Borrower
or the Guarantor or any Material 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 the Borrower or the
Guarantor or any Material Subsidiary in an involuntary case under
federal bankruptcy laws of any jurisdiction as now or hereafter
constituted, and such decree or order remains in effect for more than
45 days, whether or not consecutive;
(i) if there shall remain in force, undischarged, unsatisfied
and unstayed, for more than thirty days, whether or not consecutive,
any final judgment against the Borrower or any Subsidiary which, with
other outstanding final judgments against the Borrower and its
Subsidiaries exceeds in the aggregate $25,000,000 after taking into
account any undisputed insurance coverage;
(j) if, with respect to any Guaranteed Pension Plan, an ERISA
Reportable Event shall have occurred and the Banks shall have
determined in their reasonable discretion that such event reasonably
could be expected to result in liability of the Borrower or any
Subsidiary to the PBGC or the Plan in an aggregate amount exceeding
$25,000,000 and such event in the circumstances occurring reasonably
could constitute grounds for the partial or complete termination of
such Plan by the PBGC or for the appointment by the appropriate United
States District Court of a trustee to administer
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such Plan; or a trustee shall have been appointed by the appropriate
United States District Court to administer such Plan; or the PBGC shall
have instituted proceedings to terminate such Plan;
(k) 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 Borrower, the Guarantor, 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; or
(l) if 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 voting stock of
the Borrower; or during any period of twelve consecutive calendar
months, individuals who were directors of the Borrower on the first day
of such period (together with any new directors whose election by such
board or whose nomination for election by the shareholders of the
Borrower was approved by a vote of a majority of the directors still in
office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved)
shall cease to constitute a majority of the board of directors of the
Borrower;
then, and in any such event, so long as the same may be continuing, the
Administrative Agent may, and upon the request of the Majority Banks shall, by
notice in writing to the Borrower, 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, notice of intent to
accelerate, notice of acceleration to the extent permitted by law or other
notice of any kind, all of which are hereby expressly waived by the Borrower;
provided that in the event of any Event of Default specified in Section 12.1(g)
or 12.1(h) with respect to the Borrower or the Guarantor, all such amounts shall
become immediately due and payable automatically and without any requirement of
notice from the Administrative Agent or any Bank. Upon demand by the Majority
Banks after the occurrence of any Event of Default, the Borrower shall
immediately provide to the Administrative Agent cash in an amount equal to the
aggregate Maximum Drawing Amount to be held by the Administrative Agent as
collateral security for the Reimbursement Obligations.
SECTION 12.2. TERMINATION OF COMMITMENTS. If any Event of Default
pursuant to Sections 12.1(g) or 12.1(h) hereof shall occur with respect to the
Borrower or the Guarantor, any unused portion of the Total Commitment hereunder
shall forthwith terminate and the Banks and the Issuing Banks shall be relieved
of all obligations to make Loans or to issue, extend or renew Letters of Credit
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hereunder; or if any other Event of Default shall occur, the Majority Banks may
by notice to the Borrower 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 and the Issuing
Banks shall be relieved of all further obligations to make Loans or to issue,
extend or renew Letters of Credit hereunder. No termination of any portion of
the Total Commitment hereunder shall relieve the Borrower of any of its existing
Obligations to the Banks, the Issuing Banks or the Administrative Agent
hereunder or elsewhere.
SECTION 12.3. REMEDIES. 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 and other Obligations pursuant
to Section 12.1, each Bank, upon notice to the other Banks, if owed any amount
with respect to the Loans 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, any recovery being subject to the terms
of Section 29 hereof. No remedy herein conferred upon any Bank or the
Administrative Agent or the holder of any Note 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 now or hereafter existing at
law or in equity or by statute or any other provision of law.
SECTION 13. 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 to the Borrower and any securities or other
property of the Borrower in the possession of such Bank may be applied to or set
off against the payment of 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 Borrower to the Banks or the Administrative Agent.
Any amounts set off pursuant to this Section 13 shall be distributed ratably in
accordance with Section 29 among all of the Banks by the Bank setting off such
amounts. If any Bank fails to share such setoff ratably, the Administrative
Agent shall have the right to withhold such Bank's share of the Borrower's
payments until each of the Banks shall have, in the aggregate, received a pro
rata repayment.
SECTION 14. EXPENSES. Whether or not the transactions contemplated
herein shall be consummated, the Borrower hereby promises to reimburse the
Administrative Agent and the Joint Lead Arrangers and Joint Book Managers for
all reasonable out-of-pocket fees and disbursements (including all reasonable
attorneys' fees) incurred or expended in connection with the syndication,
preparation, filing or recording, or interpretation of this Agreement, the other
Loan Documents, or any amendment, modification, approval, consent or waiver
hereof or thereof. The Borrower further promises to reimburse the Administrative
Agent and the Banks for all reasonable out-of-pocket fees and disbursements
(including all reasonable legal fees and the allocable cost of in-house
attorneys' fees) incurred or expended in connection with the
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enforcement of any Obligations or the satisfaction of any indebtedness of the
Borrower hereunder or under any other Loan Document, or in connection with any
litigation, proceeding or dispute hereunder in any way related to the credit
hereunder. The Borrower also promises to pay the Administrative Agent all
reasonable out-of-pocket fees and disbursements, incurred or expended in
connection with the Competitive Bid Loan procedure under Section 4 hereof.
SECTION 15. THE AGENTS.
SECTION 15.1. APPOINTMENT, POWERS AND IMMUNITIES. Each Bank hereby
irrevocably appoints and authorizes Fleet to act as Administrative Agent,
provided, however, the Administrative Agent is hereby authorized to serve only
as administrative agent for the Banks and to exercise such powers as are
reasonably incidental thereto and as are set forth in this Agreement and the
other Loan Documents. The Administrative Agent hereby acknowledges that it does
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 Agreement, and in the other Loan Documents, the
Administrative Agent shall take action or refrain from acting only upon
instructions of the Banks. It is agreed that the duties, rights, privileges and
immunities of the Issuing Banks, in their capacity as issuers of Letters of
Credit hereunder, shall be identical to the duties, rights, privileges and
immunities of the Administrative Agent as provided in this Section 15. The
Administrative Agent shall not have any duties or responsibilities or any
fiduciary relationship with any Bank except those expressly set forth in this
Agreement and the other Loan Documents. Neither the Administrative Agent nor any
of its affiliates shall be responsible to the Banks for any recitals,
statements, representations or warranties made by the Borrower 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 Borrower or any other Person to perform its
obligations hereunder or thereunder or in respect of the Notes. The
Administrative Agent 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. The Administrative Agent,
the Agents and any of their directors, officers, employees or agents shall not
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 Administrative Agent in its separate
capacity as a Bank shall have the same rights and powers hereunder as any other
Bank. The Co-Documentation Agents and the Co-Syndication Agents shall not have
any right, power, obligation, liability, responsibility or duty under this
Credit Agreement in such capacity, other than, with respect to the
Co-Documentation Agents and BOA, those applicable to all Banks as Banks.
SECTION 15.2. ACTIONS BY ADMINISTRATIVE AGENT. The Administrative Agent
shall be fully justified in failing or refusing to take any action under this
Agreement as reasonably deemed appropriate unless it shall first have received
the consent of the Majority Banks (or, when
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expressly required hereby, all 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. The Administrative 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 the instruction of the Majority Banks (or, when
expressly required hereby or thereby, all of the Banks), and such instruction
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
Borrower hereunder or under any other Loan Document, the Banks agree to
indemnify the Administrative Agent, its affiliates and its respective directors,
officers, agents and employees (to the extent not reimbursed by the Borrower)
ratably in accordance with their respective Commitment Percentages for any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may at any time be imposed on, incurred by or asserted against the
Administrative 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 Administrative Agent (or
any agent thereof), IT BEING THE INTENT OF THE PARTIES HERETO THAT ALL SUCH
INDEMNIFIED PARTIES SHALL BE INDEMNIFIED FOR THEIR ORDINARY SOLE OR CONTRIBUTORY
NEGLIGENCE.
SECTION 15.4. REIMBURSEMENT. Without limiting the provisions of
Sections 5.1(a), 5.13, and 13, the Administrative Agent shall not be obliged to
make available to any Person any sum which the Administrative Agent is expecting
to receive for the account of that Person until the Administrative Agent has
determined that it has received that sum. The Administrative Agent may, however,
disburse funds prior to determining that the sums which the Administrative Agent
expects to receive have been finally and unconditionally paid to the
Administrative Agent, if the Administrative Agent wishes to do so. If and to the
extent that the Administrative Agent does disburse funds and it later becomes
apparent that the Administrative Agent did not then receive a payment in an
amount equal to the sum paid out, then any Person to whom the Administrative
Agent made the funds available shall, on demand from the Administrative Agent,
refund to the Administrative Agent the sum paid to that Person. If, in the
opinion of the Administrative Agent, the distribution of any amount received by
it in such capacity hereunder or under the other 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 the Administrative Agent is to be repaid, each Person to whom any
such distribution shall have been made shall either repay to the Administrative
Agent its proportionate share of the amount so
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adjudged to be repaid or shall pay over the same in such manner and to such
Persons as shall be determined by such court.
SECTION 15.5. DOCUMENTS. The Administrative Agent will forward to each
Bank, promptly after receipt thereof, a copy of each notice or other document
furnished to the Administrative Agent for such Bank hereunder; provided,
however, that, notwithstanding the foregoing, the Administrative 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 ADMINISTRATIVE AGENT AND OTHER BANKS.
Each Bank represents that it has, independently and without reliance on the
Administrative Agent, the 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 Borrower and the Guarantor and the
decision to enter into this Agreement and the other Loan Documents and agrees
that it will, independently and without reliance upon the Administrative Agent,
the Agents 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. Except as herein expressly provided to the contrary, the
Administrative Agent shall not be required to keep informed as to the
performance or observance by the Borrower and the Guarantor 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 Administrative Agent hereunder, the Administrative
Agent 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 the Administrative Agent or any of their affiliates. Each Bank
shall have access to all documents relating to the Administrative Agent's
performance of their duties hereunder at such Bank's request. Unless any Bank
shall promptly object to any action taken by the Administrative Agent hereunder
of which such Bank has actual knowledge (other than actions which require the
prior consent of such Bank in accordance with the terms hereof or to which the
provisions of Section 15.8 are applicable and other than actions which
constitute gross negligence or willful misconduct by the Administrative Agent),
such Bank shall be presumed to have approved the same.
SECTION 15.7. RESIGNATION OF ADMINISTRATIVE AGENT. The Administrative
Agent may resign at any time by giving 60 days' prior written notice thereof to
the Banks and the Borrower. Upon any such resignation, the Majority Banks (other
than the resigning Administrative Agent) shall have the right to appoint a
successor Administrative Agent from among the Banks, subject to the consent of
the Borrower. If no successor to the Administrative Agent shall have been so
appointed by the Majority Banks and approved by the Borrower and shall have
accepted such
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appointment within 30 days after the retiring Administrative Agent's giving of
notice of resignation, then the retiring Administrative Agent may, on behalf of
the Banks, appoint a successor Administrative Agent from among the remaining
Banks, which shall be a financial institution having a combined capital and
surplus in excess of $1,000,000,000. Upon the acceptance of any appointment as
the Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its duties
and obligations hereunder. After the retiring Administrative 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 the Administrative Agent. Any new Issuing Bank appointed pursuant
to this Section 15.7 shall immediately issue new Letters of Credit in place of
Letters of Credit previously issued or, if acceptable to the resigning Issuing
Bank, issue letters of credit in favor of the resigning Issuing Bank as security
for the outstanding Letters of Credit and shall in due course replace all
Letters of Credit previously issued by the resigning Issuing Bank.
SECTION 15.8. ACTION BY THE BANKS, CONSENTS, AMENDMENTS, WAIVERS, ETC.
(a) No failure or delay by the Administrative Agent, any Issuing Bank or any
Bank in exercising any right or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent, the Issuing
Banks and the Banks hereunder are cumulative and are not exclusive of any rights
or remedies that they would otherwise have. No waiver of any provision of this
Agreement or consent to any departure by the Borrower therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of this
section, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. Without limiting the generality of
the foregoing, the making of a Loan or issuance of a Letter of Credit shall not
be construed as a waiver of any Default or Event of Default, regardless of
whether the Administrative Agent, any Lender or the Issuing Bank may have had
notice or knowledge of such Default or Event of Default at the time.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower and the Majority Banks or by the Borrower and the
Administrative Agent with the consent of the Majority Banks; provided that no
such agreement shall (i) increase the Commitment of any Bank without the written
consent of such Bank, (ii) reduce the principal amount of any Loan or
Reimbursement Obligations, or reduce the rate of interest thereon or on the
Notes, or reduce any fees payable hereunder, without the written consent of each
Bank affected thereby, (iii) postpone the scheduled date of payment of the
principal amount of any Loan, or any interest thereon, or any fees payable
hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment, without the written
consent of each Bank affected thereby; (iv) release the Borrower from its
Obligations or the Guarantor from its Guaranteed Obligations hereunder without
the written consent of each Bank, or (v) change any of the provisions of this
Section 15.8 or the definition of "Majority Banks", without the written
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consent of each Bank; provided further that no such agreement shall amend,
modify or otherwise affect the rights or duties of the Administrative Agent or
any Issuing Bank hereunder without the prior written consent of the
Administrative Agent or the Issuing Banks, as the case may be.
SECTION 16. INDEMNIFICATION. The Borrower agrees to indemnify and hold
harmless the Banks, the Agents, the Issuing Banks, the Joint Lead Arrangers and
Joint Book Managers and the Administrative Agent and their affiliates, as well
as the Banks' and the Administrative Agent's and their affiliates' 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 statutorily 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
negligence or willful misconduct of such indemnified party. In any
investigation, enforcement matter, proceeding or litigation, or the preparation
therefor, the Banks and the Administrative Agent shall be entitled to select
their own counsel and, in addition to the foregoing indemnity, the Borrower
agrees to pay promptly the reasonable fees and expenses of such counsel
(including the non-duplicative allocated cost of internal counsel), and
settlement costs. In the event of the commencement of any such proceeding or
litigation against the Banks or Administrative Agent by third parties, the
Borrower shall be entitled to participate in such proceeding or litigation with
counsel of their choice at their expense. The covenants of this Section 16 shall
survive payment or satisfaction of payment of amounts owing with respect to any
Note or any other Loan Document and satisfaction of all the Obligations
hereunder, IT BEING THE INTENT OF THE PARTIES HERETO THAT ALL SUCH INDEMNIFIED
PARTIES SHALL BE INDEMNIFIED FOR THEIR ORDINARY SOLE OR CONTRIBUTORY NEGLIGENCE.
SECTION 17. WITHHOLDING TAXES. The Borrower hereby agrees that:
(a) Any and all payments made by the Borrower hereunder shall
be made free and clear of, and without deduction for, any and all
present or future taxes, levies, fees, duties, imposts, deductions,
charges or withholdings of any nature whatsoever, excluding, in the
case of the Administrative Agent or the Banks or any holder of the
Notes, (i) taxes imposed on, or measured by, its net income or profits,
(ii) franchise taxes imposed on it, (iii) taxes imposed by any
jurisdiction as a direct consequence of it, or any of its affiliates,
having a present or former connection with such jurisdiction,
including, without limitation, being organized, existing or qualified
to do business, doing business or maintaining a permanent establishment
or office in such jurisdiction, and (iv) taxes imposed by reason of its
failure to comply with any applicable certification, identification,
information, documentation or other reporting requirement (all such
non-excluded taxes being hereinafter referred to as "Indemnifiable
Taxes"). In the event that any withholding or deduction from any
payment to be made by the Borrower hereunder is required in respect of
any Indemnifiable Taxes pursuant to any applicable law, or governmental
rule or regulation, then the Borrower will (i) direct to the relevant
taxing authority the full amount required to be so withheld or
deducted, (ii) forward to the Administrative Agent for delivery to the
applicable Bank an official receipt or other documentation satisfactory
to the Administrative Agent and the applicable Bank
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evidencing such payment to such taxing authority, and (iii) direct to
the Administrative Agent for the account of the relevant Banks such
additional amount or amounts as is necessary to ensure that the net
amount actually received by each relevant Bank will equal the full
amount such Bank would have received had no such withholding or
deduction (including any Indemnifiable Taxes on such additional
amounts) been required. Moreover, if any Indemnifiable Taxes are
directly asserted against the Administrative Agent or any Bank with
respect to any payment received by the Administrative Agent or such
Bank by reason of the Borrower's failure to properly deduct and
withhold such Indemnifiable Taxes from such payment, the Administrative
Agent or such Bank may pay such Indemnifiable Taxes and the Borrower
will promptly pay all such additional amounts (including any penalties,
interest or reasonable expenses) as is necessary in order that the net
amount received by such Person after the payment of such Indemnifiable
Taxes (including any Indemnifiable Taxes on such additional amount)
shall equal the amount such Person would have received had not such
Indemnifiable Taxes been asserted. Any such payment shall be made
promptly after the receipt by the Borrower from the Administrative
Agent or such Bank, as the case may be, of a written statement setting
forth in reasonable detail the amount of the Indemnifiable Taxes and
the basis of the claim.
(b) The Borrower shall pay any present or future stamp or
documentary taxes or any other excise or any other similar levies which
arise from any payment made hereunder or from the execution, delivery
or registration of, or otherwise with respect to, this Agreement or any
other Loan Document ("Other Taxes").
(c) The Borrower hereby indemnifies and holds harmless the
Administrative Agent and each Bank for the full amount of Indemnifiable
Taxes or Other Taxes (including, without limitation, any Indemnifiable
Taxes or Other Taxes imposed on amounts payable under this Section 17)
paid by the Administrative Agent or such Bank, as the case may be, and
any liability (including penalties, interest and reasonable expenses)
arising therefrom or with respect thereto, by reason of the Borrower's
failure to properly deduct and withhold Indemnifiable Taxes pursuant to
paragraph (a) above or to properly pay Other Taxes pursuant to
paragraph (b) above. Any indemnification payment from the Borrower
under the preceding sentence shall be made promptly after receipt by
the Borrower from the Administrative Agent or Bank of a written
statement setting forth in reasonable detail the amount of such
Indemnifiable Taxes or such Other Taxes, as the case may be, and the
basis of the claim.
(d) If the Borrower pays any amount under this Section 17 to
the Administrative Agent or any Bank and such payee knowingly receives
a refund of any taxes with respect to which such amount was paid, the
Administrative Agent or such Bank, as the case may be, shall pay to the
Borrower the amount of such refund promptly following the receipt
thereof by such payee.
(e) In the event any taxing authority notifies the Borrower or
the Guarantor that any of them has improperly failed to deduct or
withhold any taxes (other than
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Indemnifiable Taxes) from a payment made hereunder to the
Administrative Agent or any Bank, the Borrower shall timely and fully
pay such taxes to such taxing authority.
(f) The Administrative Agent or the Banks shall, upon the
request of the Borrower, take reasonable measures to avoid or mitigate
the amount of Indemnifiable Taxes required to be deducted or withheld
from any payment made hereunder if such measures can be taken without
such Person in its sole judgment suffering any legal, regulatory or
economic disadvantage.
(g) Without prejudice to the survival of any other agreement
of the parties hereunder, the agreements and obligations of the
Borrower contained in this Section 17 shall survive the payment in full
of the Obligations.
SECTION 18. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.
SECTION 18.1. CONFIDENTIALITY. Each of the Banks and the Administrative
Agent agrees, on behalf of itself and each of its affiliates, directors,
officers, employees and representatives, to use reasonable precautions to keep
confidential, in accordance with their customary procedures for handling
confidential information of the same nature and in accordance with safe and
sound banking practices, any non-public information supplied to it by the
Borrower or any of its Subsidiaries pursuant to this Agreement that is
identified by such Person as being confidential at the time the same is
delivered to the Banks or the Administrative Agent, provided that nothing herein
shall limit the disclosure of any such information (a) after such information
shall have become public other than through a violation of this Section 18, or
becomes available to any of the Banks or the Administrative Agent on a
nonconfidential basis from a source other than the Borrower, (b) to the extent
required by statute, rule, regulation or judicial process, (c) to counsel for
any of the Banks or the Administrative Agent, (d) to bank examiners or any other
regulatory authority having jurisdiction over any Bank or the Administrative
Agent, or to auditors or accountants, (e) to the Administrative Agent, any Bank
or any Financial Affiliate, (f) in connection with any litigation to which any
one or more of the Banks, the Administrative Agent or any Financial Affiliate is
a party, or in connection with the enforcement of rights or remedies hereunder
or under any other Loan Document, (g) to an affiliate of any Bank or the
Administrative Agent, (h) to any actual or prospective assignee or participant
or any actual or prospective counterparty (or its advisors) to any swap or
derivative transactions referenced to credit or other risks or events arising
under this Agreement or any other Loan Document so long as such assignee,
participant or counterparty, as the case may be, agrees to be bound by the
provisions of Section 18.1, or (i) with the consent of the Borrower.
SECTION 18.2. PRIOR NOTIFICATION. Unless specifically prohibited by
applicable law or court order, each of the Banks and the Administrative Agent
shall, prior to disclosure thereof, notify the Borrower of any request for
disclosure of any such non-public information by any governmental agency or
representative thereof (other than any such request in connection with an
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examination of the financial condition of such Bank by such governmental agency)
or pursuant to legal process.
SECTION 18.3. OTHER. In no event shall any Bank or the Administrative
Agent be obligated or required to return any materials furnished to it or any
Financial Affiliate by the Borrower or any of its Subsidiaries. The obligations
of each Bank under this Section 18 shall supersede and replace the obligations
of such Bank under any confidentiality letter in respect of this financing
signed and delivered by such Bank to the Borrower prior to the date hereof and
shall be binding upon any assignee of, or purchaser of any participation in, any
interest in any of the Loans or Reimbursement Obligations from any Bank.
SECTION 19. 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 Borrower or the Guarantor pursuant hereto shall be deemed to have
been relied upon by the Banks, the Issuing Banks and the Administrative Agent,
notwithstanding any investigation heretofore or hereafter made by them, and
shall survive the making by the Banks of the Loans and the issuance, extension
or renewal of any Letters of Credit by any Issuing Bank, as herein contemplated,
and shall continue in full force and effect so long as any amount due under this
Agreement, any Obligation, any Letter of Credit or any Note remains outstanding
and unpaid or any Bank has any obligation to make any Loans or any Issuing Bank
has any obligation to issue, extend, or renew any Letters of Credit hereunder.
All statements contained in any certificate or other paper delivered by or on
behalf of the Borrower pursuant hereto or in connection with the transactions
contemplated hereby shall constitute representations and warranties by the
Borrower hereunder.
SECTION 20. ASSIGNMENT AND PARTICIPATION. It is understood and agreed
that each Bank shall have the right to assign at any time all or a portion of
its Commitment Percentage and interests in the risk relating to the Loans,
outstanding Letters of Credit and its Commitment hereunder in an amount equal to
or greater than $5,000,000 (or, if a Bank's Commitment is less than $5,000,000,
in a minimum amount equal to such Bank's Commitment, provided that prior to any
Commitment reductions pursuant to Section 2.3, such Bank's Commitment was at
least $10,000,000) to additional banks or other financial institutions with the
prior written approval of the Administrative Agent and, so long as no Event of
Default has occurred and is continuing, the Borrower, which approvals shall not
be unreasonably withheld. Any Bank may at any time, and from time to time,
assign to any branch, lending office, or affiliate or such Bank all or any part
of its rights and obligations under the Loan Documents by notice to the
Administrative Agent and the Borrower. It is further agreed that each bank or
other financial institution which executes and delivers to the Administrative
Agent and the Borrower hereunder an Assignment and Acceptance substantially in
the form of Exhibit G hereto (an "Assignment and Acceptance") together with an
assignment fee in the amount of $3,500 payable by the assigning Bank to the
Administrative Agent, shall, on the date specified in such Assignment and
Acceptance, become a party to this Agreement and the other Loan Documents for
all purposes of this Agreement and the other Loan Documents, and its portion of
the Commitment, the Loans and Letters of Credit shall be as set forth in such
Assignment and Acceptance. The Bank assignor thereunder shall, to the extent
that
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rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights (except for indemnity rights
arising out of the period prior to such assignment) and be released from its
obligations under this Agreement and the other Loan Documents. Upon the
execution and delivery of such Assignment and Acceptance, (a) the Borrower shall
issue to the assignee bank or other financial institution Notes in the amount of
such bank's or other financial institution's Commitment dated the date of the
assignment or such other date as may be specified by the Administrative Agent,
and otherwise completed in substantially the form of Exhibits A or B, and to the
extent any assigning Bank has retained a portion of its obligations hereunder, a
replacement Syndicated Note, to the assigning Bank reflecting its assignment;
(b) to the extent applicable, the Borrower shall issue a Competitive Bid Note in
substantially the form of Exhibit C (and a replacement Competitive Bid Note) or
the Administrative Agent shall make appropriate entries on the Competitive Bid
Loan Accounts to reflect such assignment of Competitive Bid Loan(s); and (c)
this Agreement and Schedule 1 shall be deemed to be appropriately amended to
reflect (i) the status of the bank or financial institution as a party hereto
and (ii) the status and rights of the Banks hereunder.
Each Bank shall also have the right to grant participations to one or
more banks or other financial institutions in its Commitment, the Loans and
outstanding Letters of Credit. The documents evidencing any such participation
shall limit such participating bank's or financial institution's voting rights
with respect to this Agreement to the matters set forth in Section 15.8(b)(i) -
(v).
Notwithstanding the foregoing, no assignment or participation shall
operate to increase the Total Commitment hereunder or otherwise alter the
substantive terms of this Agreement, and no Bank which retains a Commitment
hereunder shall have a Commitment of less than $10,000,000, except as a result
of reductions in the Total Commitment pursuant to Section 2.3 hereof.
Anything contained in this Section 20 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 enforcement thereof shall
release the pledgor Bank from its obligations hereunder or under any of the
other Loan Documents.
The Borrower agrees that in addition to disclosures made in accordance
with standard and customary banking practices any Bank may disclose information
obtained by such Bank pursuant to this Agreement to assignees or participants
and potential assignees or participants hereunder; provided that such assignees
or participants or potential assignees or participants shall agree to be bound
by Section 18 hereof.
SECTION 21. 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 assigns of the parties hereto
and thereto; provided, that the Borrower shall not assign or transfer its rights
or obligations hereunder or thereunder without the prior written consent of each
of the Banks.
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SECTION 22. 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 first class mail,
postage prepaid, or sent by telegraph, telex or facsimile and confirmed by
letter, addressed as follows:
(a) if to the Borrower or the Guarantor, at 1001 Fannin
Street, Suite 4000, Houston, Texas 77002, Attention: Ronald H. Jones,
Treasurer, facsimile number (713) 209-9710, with a copy to Lawrence
O'Donnell, Executive Vice President, General Counsel and Secretary,
facsimile number (713) 512-6325; or
(b) if to the Administrative Agent at Fleet National Bank, 100
Federal Street, Boston, Massachusetts 02110, Attention: H. Louis
Bailey, Managing Director, facsimile number (617) 434-2160; or
(c) if to any Bank, at the last address provided to the
Administrative Agent;
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, facsimile, 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 23. MISCELLANEOUS. The rights and remedies herein expressed are
cumulative and not exclusive of any other rights which the Banks, the Issuing
Banks or the Administrative Agent 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. This Agreement, to the extent
signed and delivered by means of a facsimile machine, shall be treated in all
manner and respects as an original agreement or instrument and shall be
considered to have the same binding legal effect as if it were the original
signed version thereof delivered in person. At the request of any party hereto,
each other party hereto shall re-execute original forms thereof and deliver them
to all other parties. No party hereto shall raise the use of a facsimile machine
to deliver a signature or the fact that any signature or agreement or instrument
was transmitted or communicated through the use of a facsimile machine as a
defense to the formation of a contract and each party forever waives such
defense.
SECTION 24. CONSENTS, ETC. Neither this Agreement nor any term hereof
may be changed, waived, discharged or terminated, except as provided in this
Section 24, subject to the provisions of
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Section 15.8. No waiver shall extend to or affect any obligation not expressly
waived or impair any right consequent thereon. Except as otherwise expressly
provided in this Agreement, any consent or approval required or permitted by
this Agreement to be given by the Banks may be given, and any term of this
Agreement or of any other instrument related hereto or mentioned herein may be
amended, and the performance or observance by the Borrower of any terms of this
Agreement or such other instrument or the continuance of any Default or Event of
Default may be waived (either generally or in a particular instance and either
retroactively or prospectively) with, but only with, the written consent of the
Borrower and the Majority Banks. To the extent permitted by law, no course of
dealing or delay or omission on the part of any of the Banks, the Issuing Banks
or the Administrative Agent in exercising any right shall operate as a waiver
thereof or otherwise be prejudicial thereto. No notice to or demand upon the
Borrower shall entitle the Borrower to other or further notice or demand in
similar or other circumstances.
SECTION 25. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL 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, THE BORROWER AND THE
GUARANTOR HEREBY WAIVE ANY RIGHT EITHER OF THEM 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 BORROWER AND THE GUARANTOR EACH (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY BANK, ANY ISSUING BANK, THE
ADMINISTRATIVE AGENT OR ANY AGENT HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH BANK, SUCH ISSUING BANK, THE ADMINISTRATIVE AGENT OR SUCH AGENT WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (B)
ACKNOWLEDGES THAT THE ADMINISTRATIVE AGENT, THE BANKS, AND THE ISSUING BANKS
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
BECAUSE OF, AMONG OTHER THINGS, THE BORROWER'S AND THE GUARANTOR'S WAIVERS AND
CERTIFICATIONS CONTAINED HEREIN.
SECTION 26. GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS AGREEMENT
AND 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 BORROWER AND THE GUARANTOR CONSENT AND AGREE THAT ANY SUIT FOR THE
ENFORCEMENT OF THIS 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
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PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER IN ACCORDANCE WITH LAW AT
THE ADDRESS SPECIFIED IN SECTION 22. THE BORROWER AND THE GUARANTOR 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 27. 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 28. GUARANTY.
SECTION 28.1. GUARANTY. For value received and hereby acknowledged and
as an inducement to the Banks and the Issuing Banks to make the Loans available
to the Borrower, and issue, extend or renew Letters of Credit for the account of
the Borrower, the Guarantor hereby unconditionally and irrevocably guarantees
(a) the full punctual payment when due, whether at stated maturity, by
acceleration or otherwise, of all Obligations of the Borrower now or hereafter
existing whether for principal, interest, fees, expenses or otherwise, and (b)
the strict performance and observance by the Borrower of all agreements,
warranties and covenants applicable to the Borrower in the Loan Documents and
(c) the obligations of the Borrower under the Loan Documents (such Obligations
collectively being hereafter referred to as the "Guaranteed Obligations").
SECTION 28.2. GUARANTY ABSOLUTE. The Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms
hereof, regardless of any law, regulation or order now or hereafter in effect in
any jurisdiction affecting any of such terms or the rights of any Bank, any
Issuing Bank or the Administrative Agent with respect thereto. The liability of
the Guarantor under the guaranty granted under this Agreement with regard to the
Guaranteed Obligations shall be absolute and unconditional irrespective of:
(a) any change in the time, manner or place of payment of, or
in any other term of, all or any of its Guaranteed Obligations or any
other amendment or waiver of or any consent to departure from this
Agreement or any other Loan Document (with regard to such Guaranteed
Obligations);
(b) any release or amendment or waiver of or consent to
departure from any other guaranty for all or any of its Guaranteed
Obligations;
(c) any change in ownership of the Borrower;
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(d) any acceptance of any partial payment(s) from the Borrower
or the Guarantor; or
(e) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Borrower in respect of its
Obligations under any Loan Document.
The guaranty under this Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any Guaranteed
Obligation is rescinded or must otherwise be returned by the Banks, the Issuing
Banks or the Administrative Agent upon the insolvency, bankruptcy or
reorganization of the Borrower or otherwise, all as though such payment had not
been made.
SECTION 28.3. EFFECTIVENESS; ENFORCEMENT. The guaranty under this
Agreement shall be effective and shall be deemed to be made with respect to each
Loan and each Letter of Credit as of the time it is made, issued or extended, or
becomes a Letter of Credit under this Agreement, as applicable. No invalidity,
irregularity or unenforceability by reason of any bankruptcy or similar law, or
any law or order of any government or agency thereof purporting to reduce, amend
or otherwise affect any liability of the Borrower, and no defect in or
insufficiency or want of powers of the Borrower or irregular or improperly
recorded exercise thereof, shall impair, affect, be a defense to or claim
against such guaranty. The guaranty under this Agreement is a continuing
guaranty and shall (a) survive any termination of this Agreement, and (b) remain
in full force and effect until payment in full of, and performance of, all
Guaranteed Obligations and all other amounts payable under this Agreement. The
guaranty under this Agreement is made for the benefit of the Administrative
Agent, the Issuing Banks and the Banks and their successors and assigns, and may
be enforced from time to time as often as occasion therefor may arise and
without requirement on the part of the Administrative Agent, the Issuing Banks
or the Banks first to exercise any rights against the Borrower, or to resort to
any other source or means of obtaining payment of any of the said obligations or
to elect any other remedy.
SECTION 28.4. WAIVER. Except as otherwise specifically provided in any
of the Loan Documents, the Guarantor hereby waives promptness, diligence,
protest, notice of protest, all suretyship defenses, notice of acceptance and
any other notice with respect to any of its Guaranteed Obligations and the
guaranty under this Agreement and any requirement that the Banks, the Issuing
Banks or the Administrative Agent protect, secure, perfect any security interest
or Lien or any property subject thereto or exhaust any right or take any action
against the Borrower or any other Person. The Guarantor also irrevocably waives,
to the fullest extent permitted by law, all defenses which at any time may be
available to it in respect of its Guaranteed Obligations by virtue of any
statute of limitations, valuation, stay, moratorium law or other similar law now
or hereafter in effect.
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SECTION 28.5. EXPENSES. The Guarantor hereby promises to reimburse (a)
the Administrative Agent for all reasonable out-of-pocket fees and disbursements
(including all reasonable attorneys' fees), incurred or expended in connection
with the preparation, filing or recording, or interpretation of the guaranty
under this Agreement, the other Loan Documents to which the Guarantor is a
party, or any amendment, modification, approval, consent or waiver hereof or
thereof, and (b) the Administrative Agent, the Issuing Banks and the Banks and
their respective affiliates for all reasonable out-of-pocket fees and
disbursements (including reasonable attorneys' fees), incurred or expended in
connection with the enforcement of its Guaranteed Obligations (whether or not
legal proceedings are instituted). The Guarantor will pay any taxes (including
any interest and penalties in respect thereof) other than the Banks' taxes based
on overall income or profits, payable on or with respect to the transactions
contemplated by the guaranty under this Agreement, the Guarantor hereby agreeing
jointly and severally to indemnify each Bank with respect thereto.
SECTION 28.6. CONCERNING JOINT AND SEVERAL LIABILITY OF THE GUARANTOR.
(a) The Guarantor hereby irrevocably and unconditionally
accepts, not merely as a surety but also as a co-debtor, joint and
several liability with the Borrower, with respect to the payment and
performance of all of its Guaranteed Obligations (including, without
limitation, any Guaranteed Obligations arising under this Section 28),
it being the intention of the parties hereto that all such Guaranteed
Obligations shall be the joint and several Guaranteed Obligations of
the Guarantor and the Borrower without preferences or distinction among
them.
(b) If and to the extent that the Borrower shall fail to make
any payment with respect to any of its Obligations as and when due or
to perform any of its Guaranteed Obligations in accordance with the
terms thereof, then in each such event the Guarantor will make such
payment with respect to, or perform, such Guaranteed Obligation.
(c) The Guaranteed Obligations of the Guarantor under the
provisions of this Section 28 constitute full recourse obligations of
the Guarantor enforceable against the Guarantor to the full extent of
its properties and assets, irrespective of the validity, regularity or
enforceability of this Agreement or any other circumstance whatsoever.
(d) Except as otherwise expressly provided in this Agreement,
the Guarantor hereby waives notice of acceptance of its joint and
several liability, notice of any Loans made, or Letters of Credit
issued under this Agreement, notice of any action at any time taken or
omitted by the Administrative Agent, the Issuing Banks or the Banks
under or in respect of any of the Guaranteed Obligations, and,
generally, to the extent permitted by applicable law, all demands,
notices and other formalities of every kind in connection with this
Agreement. The Guarantor hereby assents to, and waives notice of, any
extension or postponement of the time for the payment of any of the
Guaranteed Obligations, the acceptance of any payment of any of the
Guaranteed Obligations, the acceptance of any partial payment thereon,
any waiver, consent or other action or
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acquiescence by the Administrative Agent, the Issuing Banks or the
Banks at any time or times in respect of any Default or Event of
Default by the Borrower or the Guarantor in the performance or
satisfaction of any term, covenant, condition or provision of this
Agreement or any other Loan Document, any and all other indulgences
whatsoever by the Administrative Agent, the Issuing Banks or the Banks
in respect of any of the Guaranteed 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 Guaranteed Obligations or the
addition, substitution or release, in whole or in part, of the Borrower
or the Guarantor. Without limiting the generality of the foregoing, the
Guarantor assents to any other action or delay in acting or failure to
act on the part of the Banks, the Issuing Banks or the Administrative
Agent with respect to the failure by the Borrower or the Guarantor to
comply with its respective Obligations or Guaranteed Obligations,
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 28, afford grounds for terminating,
discharging or relieving the Guarantor, in whole or in part, from any
of the Guaranteed Obligations under this Section 28, it being the
intention of the Guarantor that, so long as any of the Guaranteed
Obligations hereunder remain unsatisfied, the Guaranteed Obligations of
the Guarantor under this Section 28 shall not be discharged except by
performance and then only to the extent of such performance. The
Guaranteed Obligations of the Guarantor under this Section 28 shall not
be diminished or rendered unenforceable by any winding up,
reorganization, arrangement, liquidation, reconstruction or similar
proceeding with respect to the Borrower or the Guarantor or the Banks,
the Issuing Banks or the Administrative Agent. The joint and several
liability of the Guarantor hereunder shall continue in full force and
effect notwithstanding any absorption, merger, consolidation,
amalgamation or any other change whatsoever in the name, membership,
constitution or place of formation of the Borrower or the Guarantor,
the Banks, the Issuing Banks or the Administrative Agent.
(e) The Guarantor shall be liable under this Section 28 only
for the maximum amount of such liabilities that can be incurred under
applicable law without rendering this Section 28 voidable under
applicable law relating to fraudulent conveyance and fraudulent
transfer, and not for any greater amount. Accordingly, if any
obligation under any provision under this Section 28 shall be declared
to be invalid or unenforceable in any respect or to any extent, it is
the stated intention and agreement of the Guarantor, the Administrative
Agent, the Issuing Banks and the Banks that any balance of the
obligation created by such provision and all other obligations of the
Guarantor under this Section 28 to the Banks, the Issuing Banks or the
Administrative Agent shall remain valid and enforceable, and that all
sums not in excess of those permitted under applicable law shall remain
fully collectible by the Banks, the Issuing Banks and the
Administrative Agent from the Borrower or the Guarantor, as the case
may be.
(f) The provisions of this Section 28 are made for the benefit
of the Administrative Agent, the Issuing Banks and the Banks and their
successors and assigns, and may be enforced in good faith by them from
time to time against the Guarantor as often as occasion therefor may
arise and without requirement on the part of the Administrative Agent,
the Issuing Banks or the Banks first to marshal any of their claims or
to exercise
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any of their rights against the Borrower or the Guarantor or to exhaust
any remedies available to them against the Borrower or the Guarantor 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 28 shall remain in effect until all of the Guaranteed
Obligations shall have been paid in full or otherwise fully satisfied
and the Commitments have expired and all outstanding Letters of Credit
have expired, matured or otherwise been terminated. If at any time, any
payment, or any part thereof, made in respect of any of the Guaranteed
Obligations, is rescinded or must otherwise be restored or returned by
the Banks, the Issuing Banks or the Administrative Agent upon the
insolvency, bankruptcy or reorganization of the Borrower or the
Guarantor, or otherwise, the provisions of this Section 28 will
forthwith be reinstated in effect, as though such payment had not been
made.
SECTION 28.7. WAIVER. Until the final payment and performance in full
of all of the Obligations, the Guarantor shall not exercise and the Guarantor
hereby waives any rights the Guarantor may have against the Borrower arising as
a result of payment by the Guarantor hereunder, by way of subrogation,
reimbursement, restitution, contribution or otherwise, and will not prove any
claim in competition with the Administrative Agent, the Issuing Banks or any
Bank in respect of any payment hereunder in any bankruptcy, insolvency or
reorganization case or proceedings of any nature; the Guarantor will not claim
any setoff, recoupment or counterclaim against the Borrower in respect of any
liability of the Borrower to the Guarantor; and the Guarantor waives any benefit
of and any right to participate in any collateral security which may be held by
the Administrative Agent, the Issuing Banks or any Bank.
SECTION 28.8. SUBROGATION; SUBORDINATION. The payment of any amounts
due with respect to any indebtedness of the Borrower for money borrowed or
credit received now or hereafter owed to the Guarantor is hereby subordinated to
the prior payment in full of all of the Obligations. The Guarantor agrees that,
after the occurrence of any default in the payment or performance of any of the
Obligations, the Guarantor will not demand, sue for or otherwise attempt to
collect any such indebtedness of the Borrower to the Guarantor until all of the
Obligations shall have been paid in full. If, notwithstanding the foregoing
sentence, the Guarantor shall collect, enforce or receive any amounts in respect
of such indebtedness while any Obligations are still outstanding, such amounts
shall be collected, enforced and received by the Guarantor as trustee for the
Banks, the Issuing Banks and the Administrative Agent and be paid over to the
Administrative Agent at Default, for the benefit of the Banks, the Issuing
Banks, and the Administrative Agent on account of the Obligations without
affecting in any manner the liability of the Guarantor under the other
provisions hereof.
SECTION 29. 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
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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 or otherwise), including a secured
claim under Section 506 of the 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, Reimbursement Obligations and other Obligations
held by it (other than pursuant to Section 5.5, Section 5.6 or Section
5.8) as a result of which the unpaid principal portion of the Notes and
the Obligations held by it shall be proportionately less than the
unpaid principal portion of the Notes and Obligations held by any other
Bank, it shall be deemed to have simultaneously purchased from such
other Bank a participation in the Notes and Obligations held by such
other Bank, so that the aggregate unpaid principal amount of the Notes,
Obligations and participations in Notes and Obligations held by each
Bank shall be in the same proportion to the aggregate unpaid principal
amount of the Notes and Obligations then outstanding as the principal
amount of the Notes 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 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 29 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. The Borrower
expressly consents to the foregoing arrangements and agrees that any
Person holding such a participation in the Notes 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 the Borrower to such Person as fully as if such Person
had made a Loan directly to the Borrower in the amount of such
participation.
SECTION 30. FINAL AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
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IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as of the date first set forth above.
THE BORROWER AND GUARANTOR:
WASTE MANAGEMENT, INC.
By: /s/ Ronald H. Jones
--------------------------------------------
Title: Vice President and Treasurer
WASTE MANAGEMENT HOLDINGS, INC.
By: /s/ William L. Trubeck
--------------------------------------------
Title: Executive Vice President and Chief
Financial Officer
By: /s/ Ronald H. Jones
--------------------------------------------
Title: Vice President and Treasurer
THE BANKS AND AGENTS:
FLEET NATIONAL BANK, individually and as
Administrative Agent
By:/s/ H. Louis Bailey
--------------------------------------------
Title: Managing Director
BANK OF AMERICA, N.A.
By:/s/ Dan M. Killian
--------------------------------------------
Title: Managing Director
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THE CHASE MANHATTAN BANK
By: /s/ James R. Dolphin
------------------------------------
Title: Senior Vice President
DEUTSCHE BANK AG, NEW YORK BRANCH
AND/OR CAYMAN ISLANDS BRANCH
By: /s/ Jean M. Hannigan
------------------------------------
Title: Director
CITIBANK, N.A.
By: /s/ David L. Harris
------------------------------------
Title: Vice President
ABN AMRO BANK N.V.
By: /s/ Judy C. Chiang
------------------------------------
Title: Senior Vice President
By: /s/ C. David Allman
------------------------------------
Title: Vice President
THE BANK OF NOVA SCOTIA
By: /s/ N. Bell
------------------------------------
Title: Assistant Agent
BARCLAYS BANK PLC
By: /s/ L. Peter Yetman
------------------------------------
Title: Director
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BNP PARIBAS
By:/s/ Mike Shyrock
---------------------------------------------
Title: Vice President
By:/s/ John Stacy
---------------------------------------------
Title: Managing Director
CREDIT LYONNAIS NEW YORK BRANCH
By:/s/ Attila Koc
---------------------------------------------
Title: Senior Vice President
PNC BANK, NATIONAL ASSOCIATION
By:/s/ Philip K. Liebscher
---------------------------------------------
Title: Managing Director
ROYAL BANK OF CANADA
By:/s/ Ritta Lee
---------------------------------------------
Title: Senior Manager
BANK ONE, N.A.
By:/s/ John J. Zollinger, IV
---------------------------------------------
Title: Associate Director
WACHOVIA BANK, N.A.
By:/s/ Bradford L. Watkins
---------------------------------------------
Title: Vice President
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TORONTO DOMINION (TEXAS), INC.
By:/s/ Alva J. Jones
---------------------------------------------
Title: Vice President
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK BRANCH
By:/s/ Walter T. Duffy III
---------------------------------------------
Title: Associate Director
By:/s/ Anthony Alessandro
---------------------------------------------
Title: Manager
THE FUJI BANK, LIMITED
By:/s/ Raymond Ventura
---------------------------------------------
Title: Senior Vice President
THE INDUSTRIAL BANK OF JAPAN,
LIMITED NEW YORK BRANCH
By:/s/ Michael N. Oakes
---------------------------------------------
Title: Senior Vice President,
Houston Office
THE DAI-ICHI KANGYO BANK, LTD.,
NY BRANCH.
By:/s/ Robert P. Gallagher
---------------------------------------------
Title: Vice President
COMERICA BANK
By:/s/ Carol S. Geraghty
---------------------------------------------
Title: Vice President
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THE BANK OF NEW YORK
By:/s/ David Sunderwirth
---------------------------------------------
Title: Vice President
CREDIT SUISSE FIRST BOSTON
By:/s/ Robert N. Finney
---------------------------------------------
Title: Managing Director
By:/s/ Mark Heron
---------------------------------------------
Title: Asst. Vice President
LEHMAN COMMERCIAL PAPER INC
By:/s/ Michael E. O'Brien
---------------------------------------------
Title: Authorized Signatory
MELLON BANK, N.A.
By:/s/ Louis E. Flori
---------------------------------------------
Title: Vice President
MERRILL LYNCH BANK USA
By:/s/ D. Kevin Imlay
---------------------------------------------
Title: Senior Lending Officer
SUNTRUST BANK
By:/s/ Frank A. Coe
---------------------------------------------
Title: Vice President
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THE MITSUBISHI TRUST AND BANKING CORPORATION
By:/s/ Toshihiro Hayashi
---------------------------------------------
Title: Senior Vice President
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EXHIBIT A
FORM OF
SYNDICATED NOTE
$________________ as of June 29, 2001
FOR VALUE RECEIVED, the undersigned, WASTE MANAGEMENT, INC., a Delaware
corporation (the "Borrower"), hereby absolutely and unconditionally promises to
pay to the order of [INSERT NAME OF PAYEE BANK] (the "Bank") at the office of
Fleet National Bank, as Administrative Agent for the Banks, at 100 Federal
Street, Boston, Massachusetts 02110:
(a) on the Maturity Date, the principal amount of ___________________
DOLLARS ($_________) or, if less, the then outstanding aggregate unpaid
principal amount of Syndicated Loans made by the Bank to the Borrower pursuant
to the Revolving Credit Agreement, dated as of June 29, 2001 (as amended,
modified, supplemented or restated and in effect from time to time, the "Credit
Agreement"), by and among the Borrower, the Guarantor, the Bank, the
Administrative Agent, and such other banks or financial institutions that are or
may become parties to the Credit Agreement from time to time in accordance with
the provisions thereof; and
(b) interest on the principal balance hereof from time to time
outstanding from the date hereof through and including the date on which such
principal amount is paid in full, at the times and at the rates provided in the
Credit Agreement, subject however to the provisions of Section 5.10 of the
Credit Agreement.
This Syndicated Note evidences borrowings under, is subject to the
terms and conditions of, and has been issued by the Borrower in accordance with,
the Credit Agreement and is one of the Syndicated Notes referred to therein. The
Bank and any holder hereof are entitled to the benefits of the Credit Agreement
and may enforce the agreements of the Borrower contained therein, and any holder
hereof may exercise the respective remedies provided for thereby or otherwise
available in respect thereof, all in accordance with the respective terms
thereof. All capitalized terms used in this Syndicated Note and not otherwise
defined herein shall have the same meanings herein as in the Credit Agreement.
The Bank shall endorse, and is hereby irrevocably authorized by the
Borrower to endorse, on the schedule attached to this Syndicated Note or a
continuation of such schedule attached hereto and made a part hereof, an
appropriate notation evidencing advances and repayments of principal of this
Syndicated Note, provided that failure by the Bank to make any such notations
shall not affect any of the Borrower's obligations or the validity of any
repayments made by the Borrower in respect of this Syndicated Note.
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The Borrower has the right in certain circumstances and the obligation
in certain other circumstances to prepay the whole or part of the principal of
this Syndicated Note on the terms and conditions specified in the Credit
Agreement.
If any one or more Events of Default shall occur, the entire unpaid
principal amount of this Syndicated Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Credit Agreement.
The Borrower and every endorser of this Syndicated Note or the
obligation represented hereby waive presentment, demand, notice, protest, notice
of intent to accelerate, notice of acceleration and all other demands and
notices in connection with the delivery, acceptance, performance, default or
enforcement of this Syndicated Note, assent to any extension or postponement of
the time of payment or any other indulgence, to any substitution, exchange or
release of collateral and to the addition or release of any other party or
person primarily or secondarily liable.
This Syndicated Note shall be deemed to take effect as an instrument
under the internal laws of the State of New York, without regard to principles
of conflicts-of-laws or choice of law doctrines, and for all purposes shall be
construed in accordance with such laws.
IN WITNESS WHEREOF, the Borrower has caused this Syndicated Note to be
signed on its behalf by its duly authorized officer as of the day and year first
above written.
WASTE MANAGEMENT, INC.
By:
----------------------------------------------
Title:
94
-88-
Amount of
Principal Balance of
Amount of Paid or Principal Notation
Date Loan Type Loan Prepaid Unpaid Made By
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95
EXHIBIT B
FORM OF
SWING LINE NOTE
$10,000,000 as of June 29, 2001
FOR VALUE RECEIVED, the undersigned, WASTE MANAGEMENT, INC., a Delaware
corporation (the "Borrower"), hereby absolutely and unconditionally promises to
pay to the order of FLEET NATIONAL BANK (the "Bank") at the office of Fleet
National Bank, as Administrative Agent for the Banks, at 100 Federal Street,
Boston, Massachusetts 02110:
(a) on the Maturity Date, the principal amount of TEN MILLION DOLLARS
($10,000,000) or, if less, the then outstanding aggregate unpaid principal
amount of Swing Line Loans made by the Bank to the Borrower pursuant to the
Revolving Credit Agreement, dated as of June 29, 2001 (as amended, modified,
supplemented or restated and in effect from time to time, the "Credit
Agreement"), by and among the Borrower, the Guarantor, the Bank, the
Administrative Agent, and such other banks or financial institutions that are or
may become parties to the Credit Agreement from time to time in accordance with
the provisions thereof; and
(b) interest on the principal balance hereof from time to time
outstanding from the date hereof through and including the date on which such
principal amount is paid in full, at the times and at the rates provided in the
Credit Agreement, subject however to the provisions of Section 5.10 of the
Credit Agreement.
This Swing Line Note evidences borrowings under, is subject to the
terms and conditions of, and has been issued by the Borrower in accordance with
the Credit Agreement and is the Swing Line Note referred to therein. The Bank
and any holder hereof are entitled to the benefits of the Credit Agreement and
may enforce the agreements of the Borrower contained therein, and any holder
hereof may exercise the respective remedies provided for thereby or otherwise
available in respect thereof, all in accordance with the respective terms
thereof. All capitalized terms used in this Swing Line Note and not otherwise
defined herein shall have the same meanings herein as in the Credit Agreement.
The Bank shall endorse, and is hereby irrevocably authorized by the
Borrower to endorse, on the schedule attached to this Swing Line Note or a
continuation of such schedule attached hereto and made a part hereof, an
appropriate notation evidencing advances and repayments of principal of this
Swing Line Note, provided that failure by the Bank to make any such notations
shall not affect any of the Borrower's obligations or the validity of any
repayments made by the Borrower in respect of this Swing Line Note.
96
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The Borrower has the right in certain circumstances and the obligation
in certain other circumstances to prepay the whole or part of the principal of
this Swing Line Note on the terms and conditions specified in the Credit
Agreement.
If any one or more Events of Default shall occur, the entire unpaid
principal amount of this Swing Line Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Credit Agreement.
The Borrower and every endorser of this Swing Line Note or the
obligation represented hereby waive presentment, demand, notice, protest, notice
of intent to accelerate, notice of acceleration and all other demands and
notices in connection with the delivery, acceptance, performance, default or
enforcement of this Swing Line Note, assent to any extension or postponement of
the time of payment or any other indulgence, to any substitution, exchange or
release of collateral and to the addition or release of any other party or
person primarily or secondarily liable.
This Swing Line Note shall be deemed to take effect as an instrument
under the internal laws of the State of New York, without regard to principles
of conflicts-of-laws or choice of law doctrines, and for all purposes shall be
construed in accordance with such laws.
IN WITNESS WHEREOF, the Borrower has caused this Swing Line Note to be
signed on its behalf by its duly authorized officer as of the day and year first
above written.
WASTE MANAGEMENT, INC.
By:
----------------------------------------------
Title:
97
-3-
Amount of
Principal Balance of
Amount of Paid or Principal Notation
Date Loan Prepaid Unpaid Made By
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98
EXHIBIT C
FORM OF
COMPETITIVE BID NOTE
$1,750,000,000 as of June 29, 2001
FOR VALUE RECEIVED, the undersigned, WASTE MANAGEMENT, INC., a Delaware
corporation (the "Borrower"), hereby absolutely and unconditionally promises to
pay to the order of [BANK NAME] (the "Bank") at the office of Fleet National
Bank, as Administrative Agent for the Banks, at 100 Federal Street, Boston,
Massachusetts 02110:
(a) on the last date of the relevant Interest Period(s), and on the
Maturity Date, the principal amount of ONE BILLION SEVEN HUNDRED FIFTY MILLION
DOLLARS ($1,750,000,000) or, if less, the aggregate unpaid principal amount of
Competitive Bid Loans made by the Bank to the Borrower pursuant to the Revolving
Credit Agreement, dated as of June 29, 2001 (as amended, modified, supplemented
or restated and in effect from time to time, the "Credit Agreement"), by and
among the Borrower, the Guarantor, the Bank, the Administrative Agent, and such
other banks or financial institutions that are or may become parties to the
Credit Agreement from time to time in accordance with the provisions thereof;
and
(b) interest on the principal balance hereof from time to time
outstanding from the date hereof through and including the date on which such
principal amount is paid in full, at the times and at the rates provided in the
Credit Agreement, subject however to the provisions of Section 5.10 of the
Credit Agreement.
This Competitive Bid Note evidences borrowings under, is subject to the
terms and conditions of, and has been issued by the Borrower in accordance with
the terms of the Credit Agreement and is one of the Competitive Bid Notes
referred to therein. The Bank and any holder hereof are entitled to the benefits
of the Credit Agreement and may enforce the agreements of the Borrower contained
therein, and any holder hereof may exercise the respective remedies provided for
thereby or otherwise available in respect thereof, all in accordance with the
respective terms thereof. All capitalized terms used in this Competitive Bid
Note and not otherwise defined herein shall have the same meanings herein as in
the Credit Agreement.
The Bank shall endorse, and is hereby irrevocably authorized by the
Borrower to endorse, on the schedule attached to this Competitive Bid Note or a
continuation of such schedule attached hereto and made a part hereof, an
appropriate notation evidencing advances and repayments of principal of this
Competitive Bid Note, provided that failure by the Bank to make any such
notations shall not affect any of the Borrower's obligations or the validity of
any repayments made by the Borrower in respect of this Competitive Bid Note.
99
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The Borrower has the obligation in certain circumstances to prepay the
whole or part of the principal of this Competitive Bid Note on the terms and
conditions specified in the Credit Agreement.
If any one or more Events of Default shall occur, the entire unpaid
principal amount of this Competitive Bid Note and all of the unpaid interest
accrued thereon may become or be declared due and payable in the manner and with
the effect provided in the Credit Agreement.
The Borrower and every endorser of this Competitive Bid Note or the
obligation represented hereby waive presentment, demand, notice, protest, notice
of intent to accelerate, notice of acceleration and all other demands and
notices in connection with the delivery, acceptance, performance, default or
enforcement of this Competitive Bid Note, assent to any extension or
postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
This Competitive Bid Note shall be deemed to take effect as an
instrument under the internal laws of the State of New York, without regard to
principles of conflicts-of-laws or choice of law doctrines, and for all purposes
shall be construed in accordance with such laws.
IN WITNESS WHEREOF, the Borrower has caused this Competitive Bid Note
to be signed on its behalf by its duly authorized officer as of the day and year
first above written.
WASTE MANAGEMENT, INC.
By:
--------------------------------------------
Title:
100
-3-
Amount of
Principal Balance of
Amount of Paid or Principal Notation
Date Loan Type Loan Prepaid Unpaid Made By
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101
EXHIBIT D
FORM OF SYNDICATED LOAN REQUEST
WASTE MANAGEMENT, INC.
Revolving Credit Agreement
(the "Credit Agreement") dated as of June 29, 2001
Syndicated Loan Request under Section 2.6(a)
Total Commitment
-------------------------
Loans outstanding
-------------------------
Amount of this Request
-------------------------
Maximum Drawing Amount of
outstanding Letters of Credit
-------------------------
Total of all outstanding and requested
-------------------------
Loans plus Maximum Drawing
Amount of all outstanding Letters
of Credit plus Amount of this Request
(must not exceed Total Commitment)
Proposed Drawdown Date
-------------------------
Interest Rate Option (Base Rate or Eurodollar)
-------------------------
Interest Period (if Eurodollar)
-------------------------
Conversion under Section 2.7
Amount to be converted from
Eurodollar to Base Rate:
-------------------------
Amount to be converted from
Base Rate to Eurodollar:
-------------------------
Amount to be maintained as
Eurodollar Loan
-------------------------
Conversion Date
-------------------------
Interest Period (if Eurodollar)
-------------------------
I certify that the above is true and correct, and that all of the
conditions set forth in Section 11 of the Credit Agreement have been satisfied
as of the date hereof.
WASTE MANAGEMENT, INC.
By:
---------------------------------------------
Name:
Title:
-------------------------------------------------
Date
102
EXHIBIT E
FORM OF LETTER OF CREDIT REQUEST
WASTE MANAGEMENT, INC.
Revolving Credit Agreement
(the "Credit Agreement") dated as of June 29, 2001
Letter of Credit Request Under Section 3.1
Total Commitment
-------------------------
Maximum Drawing Amount of
Letters of Credit outstanding
-------------------------
Amount of this Request from Letter of Credit
Application (attached)
-------------------------
Loans outstanding
-------------------------
Maximum Drawing Amount of all outstanding
and Requested Letters of Credit -------------------------
(must not exceed the Total Commitment
minus Total of all Loans outstanding)
I certify that the above is true and correct, and that all of the
conditions set forth in Section 11 of the Credit Agreement have been satisfied
as of the date hereof.
WASTE MANAGEMENT, INC.
By:
---------------------------------------------
Name:
Title:
-------------------------------------------------
Date
cc: [ ]
103
EXHIBIT F
FORM OF COMPLIANCE CERTIFICATE
WASTE MANAGEMENT, INC.
Compliance Certificate dated ______________________
I, ____________________________, [Chief Financial Officer][Chief Accounting
Officer][Corporate Treasurer] of WASTE MANAGEMENT, INC. (the "Borrower") certify
that no Default or Event of Default exists and that the Borrower is in
compliance with Sections 7, 8 & 9 of the Revolving Credit Agreement dated as of
June 29, 2001 (as amended, modified, supplemented, restated and in effect from
time to time, the "Credit Agreement"), [as of the end of the quarter ended
__________]. Computations to evidence compliance with Section 9 of the Credit
Agreement are detailed below. Capitalized terms used herein without definition
shall have the meanings assigned to such terms in the Credit Agreement.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
SECTION 9.1 INTEREST COVERAGE RATIO
Consolidated Net Income $___________ (i)
Plus (without duplication):
interest expense $___________ (ii)
income tax expense $___________ (iii)
one-time charges related to Terminated
Plans taken in the fiscal quarter ending
September 30, 2000 (maximum $80,231,000) $___________ (iv)
one-time charges related to Terminated
Plans taken in the fiscal quarter ending
December 31, 2000 (maximum $28,102,000) $___________ (v)
non-cash extraordinary non-recurring
writedowns or writeoffs of assets $___________ (vi)
non-recurring extraordinary charges for
settlements or judgement costs with respect
to Shareholder Suits $___________ (vii)
Minus non-cash extraordinary gains on the
sale of assets $___________ (viii)
104
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EBIT (sum of (i) through (viii)) $___________ (a)
Consolidated Net Income of Acquired Businesses $___________ (i)
Plus (without duplication):
interest expense $___________ (ii)
income tax expense $___________ (iii)
EBIT of Acquired Businesses (sum of (i) through (iii)) $___________ (b)
Sum of (a) plus (b) $___________ (c)
Consolidated Total Interest Expense $___________ (d)
Ratio of (c) to (d) ______:______
Minimum ratio for the fiscal quarters ending:
6/30/01 - 12/31/01 2.25:1
3/31/02 - 12/31/02 2.50:1
3/31/03 and thereafter 3.00:1
SECTION 9.2 TOTAL DEBT TO EBITDA
EBIT (from Section 9.1 item (c) above) $___________ (i)
Plus:
Depreciation expense $___________ (ii)
Amortization expense $___________ (iii)
EBITDA (sum of (i) through (iii)) $___________ (iv)
The sum of the following (calculated on a
consolidated basis for the Borrower and
its Subsidiaries):
Indebtedness for borrowed money $___________ (v)
Obligations for deferred purchase price of
property or services (other than trade payables) $___________ (vi)
Obligations evidenced by debt instruments $___________ (vii)
105
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Obligations under conditional sales $___________ (viii)
Obligations, liabilities and indebtedness
under Capitalized Leases $___________ (ix)
Obligations, liabilities and indebtedness
under bonding arrangements $___________ (x)
(to the extent that a surety has been called upon
to make payment on a bond)
Guaranties of the Indebtedness of others $___________ (xi)
Indebtedness secured by liens or
encumbrances on property $___________ (xii)
Swap Obligations $___________ (xiii)
Reimbursement obligations
with respect to letters of credit $___________ (xiv)
Total Debt (sum of v - xiv) $___________ (xv)
Ratio of (xv) to (iv) ____:____
Maximum ratio: 3.00:1.00
SECTION 9.3 MINIMUM NET WORTH
Consolidated Net Worth $___________ (a)
Cumulative positive quarterly Consolidated Net
Income (commencing with the fiscal quarter ending
March 31, 2001) $___________ (b)
Item (b) multiplied by 0.75 $___________ (c)
Sum of $3,500,000,000 plus item (c) $___________ (d)
Difference of (d) minus (a) $___________
(not to exceed zero at any time)
106
EXHIBIT G
FORM OF ASSIGNMENT AND ACCEPTANCE
Dated as of _______ ___, ____
Reference is made to the REVOLVING CREDIT AGREEMENT dated as of June
29, 2001 (as amended and in effect from time to time, the "Credit Agreement"),
by and among WASTE MANAGEMENT, INC., a Delaware corporation (the "Borrower"),
WASTE MANAGEMENT HOLDINGS, INC., a wholly-owned Subsidiary of the Borrower (the
"Guarantor"), FLEET NATIONAL BANK, a national banking association ("Fleet"),
BANK OF AMERICA, N.A., a national banking association, THE CHASE MANHATTAN BANK,
a national banking association, DEUTSCHE BANK AG, NEW YORK BRANCH, the duly
licensed New York branch of a German corporation, CITIBANK, N.A., a national
banking association, and the other financial institutions which become lenders
thereunder (collectively, the "Banks"), and Fleet as administrative agent (the
"Administrative Agent"). Capitalized terms used herein and not otherwise defined
shall have the meanings assigned to such terms in the Credit Agreement.
[___________________] (the "Assignor") and [_____________________] (the
"Assignee") hereby agree as follows:
31. ASSIGNMENT. Subject to the terms and conditions of this Assignment
and Acceptance, the Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes without recourse to the Assignor, the
rights, benefits, indemnities and obligations of the Assignor under the Credit
Agreement equal to ________________% of its Commitment Percentage and
___________% of its interest in and under the Loans and the risk relating to
outstanding Letters of Credit, each as in effect immediately prior to the
Effective Date (as hereinafter defined).
32. ASSIGNOR'S REPRESENTATIONS. The Assignor (i) represents and
warrants that (A) it is legally authorized to enter into this Assignment and
Acceptance, (B) as of the date hereof, its Commitment is $_______________, its
Commitment Percentage is ________________%, the aggregate outstanding principal
balance of its Loans equals $_______________, and the aggregate outstanding
amount of its participations in Letters of Credit equals $_______________ (in
each case before giving effect to the assignment contemplated hereby or any
contemplated assignments which have not yet become effective), and (C)
immediately after giving effect to all assignments which have not yet
107
-2-
become effective, the Assignor's Commitment Percentage will be sufficient to
give effect to this Assignment and Acceptance, (ii) makes no representation or
warranty, express or implied, and assumes and shall have no responsibility with
respect to any statements, warranties or representations made in or in
connection with the Credit Agreement or any of the other Loan Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit Agreement, the other Loan Documents or any other instrument or
document furnished pursuant thereto or the attachment, perfection or priority of
any security interest or mortgage, other than that it is the legal and
beneficial owner of the interest being assigned by it hereunder free and clear
of any claim or encumbrance; (iii) makes no representation or warranty and
assumes and shall have no responsibility with respect to the financial condition
of the Borrower or any of its Subsidiaries or any other Person primarily or
secondarily liable in respect of any of the Obligations, or the performance or
observance by the Borrower or any of its Subsidiaries or any other Person
primarily or secondarily liable in respect of any of the Obligations of any of
its obligations under the Credit Agreement or any of the other Loan Documents or
any other instrument or document delivered or executed pursuant thereto; and
(iv) attaches hereto the Notes delivered to it under the Credit Agreement.
The Assignor requests that the Borrower exchange the Assignor's Notes
for new Notes payable to the Assignor and the Assignee as follows:
Payable to the Order of: Type of Note Amount of Note:
------------------------ ------------ ---------------
[Assignor Syndicated $____________________]
[Assignee Syndicated $____________________]
[Assignor Swing Line $____________________]
[Assignee Swing Line $____________________]
The Assignor requests that [the Borrower issue [a] new Competitive Bid
Note[s] payable to the Assignee and/or Assignor] or [the Administrative Agent
make the appropriate entries on the Competitive Bid Loan Accounts] to reflect
the assignment of Competitive Bid Loans.(1)
33. ASSIGNEE'S REPRESENTATIONS. The Assignee (i) represents and
warrants that (A) it is duly and legally authorized to enter into this
Assignment and Acceptance, (B) the execution, delivery and performance of this
Assignment and Acceptance do not conflict with any provision of law or of the
charter or by-laws of the Assignee, or of any
- ----------
(1) Elect applicable option.
108
-3-
agreement binding on the Assignee, (C) all acts, conditions and things required
to be done and performed and to have occurred prior to the execution, delivery
and performance of this Assignment and Acceptance, and to render the same the
legal, valid and binding obligation of the Assignee, enforceable against it in
accordance with its terms, have been done and performed and have occurred in due
and strict compliance with all applicable laws, (ii) confirms that it has
received a copy of the Credit Agreement and each of the other Loan Documents,
together with copies of the most recent financial statements delivered pursuant
to Sections 6.4 and 7.4 of the Credit Agreement and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance; (iii) agrees that it
will, independently and without reliance upon the Assignor, the Administrative
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 credit decisions in
taking or not taking action under the Credit Agreement and the other Loan
Documents; (iv) appoints and authorizes the Administrative Agent to take such
action as agent on its behalf and to exercise such powers under the Credit
Agreement and the other Loan Documents as are delegated to the Administrative
Agent by the terms thereof, together with such powers as are reasonably
incidental thereto; (v) agrees that it will perform in accordance with their
terms all the obligations which by the terms of the Credit Agreement are
required to be performed by it as a Bank; and (vi) acknowledges that it has made
arrangements with the Assignor satisfactory to the Assignee with respect to its
pro rata share of Letter of Credit Fees in respect of outstanding Letters of
Credit.
34. EFFECTIVE DATE. The effective date for this Assignment and
Acceptance shall be _____________________ (the "Effective Date"). Following the
execution of this Assignment and Acceptance, each party hereto shall deliver its
duly executed counterpart hereof to the Administrative Agent for acceptance by
the Administrative Agent. The Credit Agreement shall thereupon be amended to
reflect the status and rights of the Banks thereunder.
35. RIGHTS UNDER CREDIT AGREEMENT. Upon such acceptance and amendment,
from and after the Effective Date, (i) the Assignee shall be a party to the
Credit Agreement and, to the extent provided in this Assignment and Acceptance,
have the rights and obligations of a Bank thereunder, and (ii) the Assignor
shall, with respect to that portion of its interest under the Credit Agreement
assigned hereunder, relinquish its rights and be released from its obligations
under the Credit Agreement; provided, however, that the Assignor shall retain
its rights to be indemnified pursuant to Section 16 of the Credit Agreement with
respect to any claims or actions with reference to matters arising prior to the
Effective Date.
36. PAYMENTS. Upon such acceptance and amendment, from and after the
Effective Date, the Administrative Agent shall make all payments in respect of
the rights and interests assigned hereby (including payments of principal,
interest, fees and other amounts) to the Assignee. The Assignor and the Assignee
shall make any appropriate adjustments in payments for periods prior to the
Effective Date by the Administrative Agent or with respect to the making of this
assignment directly between themselves.
109
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37. GOVERNING LAW. THIS ASSIGNMENT AND ACCEPTANCE IS A CONTRACT 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 (WITHOUT REFERENCE TO CONFLICT OF LAWS OR
CHOICE OF LAW DOCTRINES).
38. COUNTERPARTS. This Assignment and Acceptance may be executed in any
number of counterparts which shall together constitute but one and the same
agreement.
110
-5-
IN WITNESS WHEREOF, intending to be legally bound, each of the
undersigned has caused this Assignment and Acceptance to be executed on its
behalf by its officer thereunto duly authorized, as of the date first above
written.
[ASSIGNOR]
By:
----------------------------------------
Name:
Title:
[ASSIGNEE]
By:
----------------------------------------
Name:
Title:
CONSENTED TO:
FLEET NATIONAL BANK,
as Administrative Agent
By:
-------------------------------
Name:
Title:
WASTE MANAGEMENT, INC.
By:
-------------------------------
Name:
Title:
Waste Management Holdings, Inc. executes this Assignment and Acceptance
solely for purposes of ratifying their guaranty under Section 28 of the Credit
Agreement.
WASTE MANAGEMENT HOLDINGS, INC.
By:
-------------------------------
Name:
111
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EXHIBIT H
FORM OF COMPETITIVE BID QUOTE REQUEST
WASTE MANAGEMENT, INC.
Revolving Credit Agreement
(the "Credit Agreement") dated as of June 29, 2001
Competitive Bid Quote Request under Section 4.3
Total Commitment
-----------------
Competitive Bid Loans outstanding
-----------------
Competitive Bid Loans Requested
-----------------
Maximum Drawing Amount of
outstanding Letters of Credit
-----------------
Syndicated Loans (including Swing Line Loans) outstanding
-----------------
Total of all outstanding and Requested
------------------
Competitive Bid Loans
(must not exceed the lesser of the Total Commitment
minus Total of all Syndicated Loans outstanding
(including Swing Line Loans) and Maximum
Drawing Amount of outstanding Letters of Credit)
Type of Competitive Bid Loans Requested Eurodollar / Absolute
Requested Drawdown Date
-----------------
Principal Amount of Requested
Competitive Bid Loan Requested Interest Period(s)
------------------------------ ------------------
I certify that the above is true and correct, and that all of the conditions set
forth in Section 11 of the Credit Agreement have been satisfied as of the date
hereof.
WASTE MANAGEMENT, INC.
By:
---------------------------------------------
Name:
Title:
-------------------------------------------------
Date
112
EXHIBIT I
WASTE MANAGEMENT, INC.
(the "Borrower")
Revolving Credit Agreement
(the "Credit Agreement") dated as of June 29, 2001
FORM OF INVITATION FOR COMPETITIVE BID QUOTES
ATTN:
REF:
RE: INVITATION FOR COMPETITIVE BID QUOTES
AGT DTD / /
FLEET NATIONAL BANK AS ADMINISTRATIVE AGENT
INVITATION FOR COMPETITIVE BID QUOTES DATED / /
PURSUANT TO SECTION 4.3 OF THE ABOVE REFERENCED CREDIT AGREEMENT, YOU ARE
INVITED TO SUBMIT A COMPETITIVE BID QUOTE TO THE BORROWER FOR THE FOLLOWING
PROPOSED COMPETITIVE BID LOAN(S):
DATE OF BORROWING: / /
AGGREGATE AMOUNT REQUESTED:
PRINCIPAL AMOUNT INTEREST PERIOD
- ---------------- ---------------
SUCH COMPETITIVE BID QUOTES SHOULD OFFER COMPETITIVE BID RATE(S)/MARGIN(S).
PLEASE RESPOND IN WRITING TO THIS INVITATION BY NO LATER THAN A.M./P.M. (NEW
YORK TIME ON / / TO ONE OF THE FOLLOWING:
PRIMARY FAX NO. 212-819-5897 (Attn: Ellie Awad)
ALTERNATE FAX NO. 212-819-5898 (Attn: DawnMarie Matos)
NOTE: PLEASE FOLLOW-UP YOUR SUBMITTED WRITTEN BID(S) WITH PHONE VERIFICATION TO
CONFIRM. IF YOU ARE UNABLE TO SEND YOUR FAX DUE TO AN OCCUPIED FAX LINE, PLEASE
CALL BY A.M./P.M. IN ADDITION, PLEASE SUBMIT YOUR BID(S) IN SUBSTANTIALLY
THE FORM OF "EXHIBIT J" TO THE CREDIT AGREEMENT.
QUOTES RECEIVED AFTER A.M./P.M. (NEW YORK TIME) WILL NOT BE FORWARDED TO
THE BORROWER.
113
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SUBMITTED BIDS MUST BE TEN MILLION DOLLARS OR LARGER MULTIPLE OF ONE MILLION
DOLLARS. ALSO, PLEASE SPECIFY LIMITATION AMOUNTS, IF APPLICABLE.
FLEET NATIONAL BANK,
as Administrative Agent
By:
--------------------------------------------
Name:
-----------------------------------------
Title:
-----------------------------------------
Date:
------------------------------------------
114
EXHIBIT J
FORM OF COMPETITIVE BID QUOTE
WASTE MANAGEMENT, INC.
Revolving Credit Agreement
(the "Credit Agreement") dated as of June 29, 2001
Competitive Bid Quote under Section 4.5
Bank
---------------------
Person to Contact
---------------------
Date of Competitive Bid Quote Request
---------------------
Type of Competitive Bid Loans Requested Eurodollar / Absolute
Requested Drawdown Date
---------------------
Principal Amount Proposed Competitive
of Competitive Requested Bid Rate/Competitive
Bid Loan Offered Interest Period(s) Bid Margin
- ---------------- ------------------ --------------------
I certify that the above is true and correct, and that the offer(s) set forth
above irrevocably obligates us to make such Competitive Bid Loan(s) if such
offer(s) is/are accepted by the Borrower and all of the conditions set forth in
Section 11 of the Credit Agreement have been satisfied as of the requested
Drawdown Date.
[NAME OF BANK]
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
--------------------------------------------
Date
115
EXHIBIT K
FORM OF NOTICE
OF ACCEPTANCE / REJECTION
OF COMPETITIVE BID QUOTE(S)
WASTE MANAGEMENT, INC.
Revolving Credit Agreement
(the "Credit Agreement") dated as of June 29, 2001
Notice of Competitive Bid Quote(s) under Section 4.7
Date of Competitive Bid Quote(s)
-------------------------
Type of Competitive Bid Loans Requested Eurodollar / Absolute
Requested Drawdown Date
-------------------------
We hereby ACCEPT the following Competitive Bid Quote(s):
Competitive Bid
Principal Rate/Competitive
Amount of Quote Interest Period(s) Bid Margin Bank
- --------------- ------------------ ---------------- ----
We hereby REJECT the following Competitive Bid Quote(s):
Competitive Bid
Principal Rate/Competitive
Amount of Quote Interest Period(s) Bid Margin Bank
- --------------- ------------------ ---------------- ----
The accepted and rejected Competitive Bid Quotes described above
constitute all Competitive Bid Quotes submitted by the Banks in accordance with
Section 4.5 of the Credit Agreement.
WASTE MANAGEMENT, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
--------------------------------------------
Date
116
APPLICATION AND AGREEMENT
FOR STANDBY LETTER OF CREDIT
- ------------------------------------------------------------------ ------------------------------------------
To: (Please Check One Issuing "Bank.
Please issue an irrevocable Standby Letter of Credit substantially in accordance
with this application.
- ------------------------------------------------------------------ ---------- ------------------------
Deliver the Letter of Credit: (For Bank Use Only)
Directly to the beneficiary by courier, Attn: _____________________ L/C No.
----------------
Through your correspondent by courier, Swift/Telex D/T No.
for delivery to the beneficiary ----------------
- ----------------------------------------------------------------------------- ------------------------
- -------------------------------------------------------------------------------------------------------------
Advising Bank (Name and Address) Applicant (Name and Address)
- -------------------------------------------------------------------------------------------------------------
Beneficiary (Name and Address: Amount
------------------------------------
INCLUDE CURRENCY IN NOT U.S. DOLLARS
Amount in Words:
--------------------------
------------------------------------------
- -------------------------------------------------------------------------------------------------------------
This Letter of Credit is transferable. Partial drawings are Permitted Prohibited
- -------------------------------------------------------------------------------------------------------------
All bank charges, other than Bank's, are for Expiry Date:
beneficiary's account.
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Available by beneficiary's drafts at sight accompanied by the following:
A statement purportedly signed by an authorized officer of the beneficiary reading as follows: (Please use
concise terms).
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Attached is a format which is an integral part of this application.
Special Instructions:
- ------------------------------------------------------------------ ------------------------------------------
- ------------------------------------------------------------------ ------------------------------------------
- ------------------------------------------------------------------ ------------------------------------------
We hereby certify that the transactions covered by this Application and
Agreement are not prohibited under any existing Laws and regulations of the
United States, including the Foreign Assets Control Regulations of the United
States Treasury Department and that any transaction covered by this Application
and Agreement complies in every respect with all existing United States
Government Laws and Regulations.
Reference to any document, instrument or agreement is for identification
purposes only and such document, instrument or agreement will not be
incorporated into the terms of the Letter of Credit.
This credit will be subject to the Uniform Customs and Practice for Documentary
Credits of the International Chamber of Commerce Currently in effect.
- ----------------------------------------- ---------------------------------------------------------------
(FOR BANK USE ONLY) WE AGREE TO ALL THE TERMS AND CONDITIONS ON THE FACE AND
Relationship Manager approval REVERSE HEREOF.*
(also indicate approval of applicant's
authority)
- ---------------------------------------
AUTHORIZED SIGNATURE COMPANY/
BANK NAME:
- ----------------------------------------- ---------------------------------------------------------------
DATE
Internal Form #13429 "Standby LC
Set-Up/Change" is required with each BY:
application. ---------------------------------------------------------------
AUTHORIZED SIGNATURE - TITLE DATE
- ----------------------------------------- ---------------------------------------------------------------
13423 7/00 PKG 25 EA
117
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* The terms and conditions of this Application and Agreement for Standby Letter
of Credit ("LC Agreement") are superceded by that certain Revolving Credit
Agreement dated June 29, 2001 by and among Waste Management, Inc., Waste
Management Holdings, Inc., Fleet National Bank, as Administrative Agent, and
other financial institutions (the "Credit Agreement"), and to the extent of any
conflict or inconsistency between the terms and conditions of the LC Agreement
and the Credit Agreement, the Credit Agreement shall control and prevail.
For good and valuable consideration, the receipt and adequacy of which
is hereby acknowledged, the Bank and the customer agrees as follows:
1. Each reference hereinafter contained to: (a) "Bank", "Bank's
Address", "Customer", "Customer's Address", and "Expiry Date" shall be deemed to
refer to the defined terms on Page 1 of this Agreement; (b) "Agreement" shall be
deemed to refer to this Application and Agreement for Standby Letter of Credit,
including without limitation the application portion on Page 1 hereof; (c)
"Business Day" shall be deemed to refer to any day on which commercial banks
located in the state of the Bank's Address are not required or authorized to
remain closed and which is not a Saturday, Sunday or legal holiday; (d) "Credit"
shall be deemed to refer to the letter of credit to be issued by the Bank
substantially in the form set forth in the application portion of this
Agreement, all amendments thereto, and any substitutions or replacements
thereof; (e) "Events of Default" shall be deemed to refer to one or more of the
events of default or defaults specified in Paragraph 6 of this Agreement; (f)
"Prime Rate" shall be deemed to refer to the rate of interest designated by the
Bank from time to time as being its prime rate of interest.
2. As to instruments payable in U.S. Dollars, the Customer will: (a)
pay the Bank in U.S. Dollars the amount paid on any sight draft or, at the
Bank's option, pay the Bank in advance the amount required to pay such draft;
and (b) pay the Bank in U.S. Dollars the amount of each acceptance on demand,
but in any event not later than one Business Day prior to maturity.
3. As to instruments payable in a foreign currency, the Customer will:
(a) pay the bank in U.S. Dollars, the equivalent of the amount paid on any sight
draft, immediately upon such payment being made, at the Bank's then selling rate
for cable transfers to the place of payment in the currency in which the draft
is drawn; and (b) in the case of each acceptance pay the Bank in U.S. Dollars,
on demand, but in any event in time to reach the place of payment by mail not
later than one Business Day prior to maturity, the equivalent thereof at the
Bank's then selling rate for the currency in which the acceptance is payable, or
at the Bank's option pay the Bank on demand the equivalent of the acceptance in
U.S. Dollars at the Bank's then selling rate for cable transfers to the place of
payment in such currency. If for any reason there should exist at the time in
question no rate of exchange generally current in the sate of the Bank's Address
for effective cable transfers of the sort provided for, the Customer will pay
the Bank on demand an amount in U.S. Dollars equivalent to the actual cost to
the Bank of settlement of the Bank's obligations to the payor of the draft or
acceptance or any holder thereof, as the case may be, however and whenever such
settlement is made by the Bank.
4. The Customer will pay the Bank on demand a commission at such rate
as the Bank may determine, plus interest where chargeable, and all fees, charges
and expenses, including reasonable counsel fees, incurred or paid by the Bank in
protecting or enforcing its rights under this Agreement, or in connection with
the Credit issued pursuant hereto and any confirmation thereof, or arising or
caused in any manner whatsoever in connection therewith, including without
limitation reasonable counsel fees and expenses incurred in connection with the
defense of all actions seeking to restrain or enjoin payment of the credit or
any draft accepted under the Credit or attachment or garnishment proceedings
involving any of the proceeds of the Credit or any such draft. In addition to
commissions, fees, charges, expenses and amounts otherwise payable with respect
to the issuance of the Credit, the customer shall pay to the Bank on demand such
amounts as the Bank in its sole discretion determines are necessary to
compensate the Bank for any costs attributable to the Bank's issuing or having
outstanding or making payment under the Credit resulting from the application or
any domestic or foreign law or regulation or the interpretation or
administration thereof applicable to the Bank regarding any reserve, assessment,
capitalization (including the cost of maintaining capital sufficient to permit
issuance of the Credit, provided the cost attributed to the Credit is determined
in good faith by any reasonable method) or similar requirement whether existing
at the time of issuance of the Credit or adopted thereafter. All amounts not
paid when due in accordance with this Agreement (including without limitation
those set forth in paragraph 2, 3 and 4 hereof) shall bear interest until paid
in full at a rate per annum equal to six percent (6%) above the Prime Rate, not
to exceed the maximum rate of interest permitted by applicable law. Each change
in such interest rate shall take effect simultaneously with the corresponding
change in the Prime Rate. The bank is hereby irrevocably authorized to charge
any one or more of the Customer's accounts with the Bank for payment in full or
in part of any of the Customer's obligations to the Bank under this Agreement.
At the option of the Bank, if there is a separate revolving line of credit, line
or credit, or other credit facility existing between the Bank and the customer,
the Bank is irrevocably authorized to satisfy the Customer's reimbursement
obligation to the Bank, in whole or in part, by making an advance under such
facility.
5. The users of the Credit shall be deemed the Customer's agents, and
the customer assumes all risks of their acts or omissions. The Customer's
obligation to pay the Bank for all amounts due under this Agreement is absolute
and unconditional. Such obligation of the Customer shall not be affected by, and
the Bank shall not be responsible for, the validity, sufficiency, correctness or
genuineness of documents, even if such documents should in fact prove to be in
any or all respects incorrect, defective, invalid, insufficient, fraudulent or
forged; any breach of contract or dispute between any beneficiary of the Credit
and the Customer; the existence of any claim, setoff, defense or other right
which the Customer may have at any time against the beneficiary or any other
person or entity, whether in connection with this Agreement, the transaction
contemplated herein or any unrelated transaction; the failure of any draft or
certificate to bear reference or adequate reference to the Credit; errors,
omissions, interruptions or delays in transmission or delivery of any messages
by mail, telex, telecopy, or otherwise; the exchange, release or non-perfection
of any collateral or the release of any guarantor; or any consequences arising
from causes beyond the Bank's control; and none of the above shall affect,
impair or prevent the fixing of any of the Bank's rights or powers hereunder.
Any provision with respect to any of the foregoing matters which is contained in
the Credit itself may be waived by the Bank. The Customer will hold the Bank
harmless from all loss or damage in respect of any of the foregoing matters
which is contained in the Credit itself may be waived by the Bank. The Customer
will hold the Bank harmless from all loss or damage in respect of any of the
foregoing matters, and from any and all damage and loss whatsoever suffered by
the Bank by reason of any and all action taken by the Bank in good faith.
6. The Customer will deliver to the Bank on demand such additional
security (including cash) as the Bank may from time to time require, to be held
as general collateral for all the customer's liabilities to the Bank hereunder
and for all other liabilities, absolute or contingent due or to become due,
which may be at any time owing to Bank by the Customer. All property belonging
to the Customer, including any collection items, now or hereafter handed to the
Bank or for any purpose left in the Bank's possession by the Customer for the
Customer's account, or in transit to or from the Bank, by mail or carriers, and
all balances of any deposit accounts the customer may have with the Bank, are
hereby made security, and the Bank is hereby granted a security interest
therein, for all such liabilities and may be held or disposed of as the Bank may
see fit, and applied toward any payment of any and all such liabilities, all of
which shall become immediately due and payable upon an Event of Default. Each of
the following events or actions by or affecting the Customer shall constitute an
Event of Default; default in the performance of any undertaking to the Bank
under this Agreement, any trust receipt, or under any other obligation to the
Bank or agreement with the Bank; insolvency, or the filing by or against the
Customer of any petition under the Bankruptcy Code or any similar Federal or
state statute; the filing by or against the Customer of a petition for the
appointment of a receiver; the making of an assignment for the benefit of
creditors; the Customer's death, failure in business, dissolution, suspension or
termination of existence; any seizure, vesting or intervention by or under
authority in the conduct of its business is curtailed; or the attachment or
distraint of any of the Customer's funds or other property which may be in, or
come into, the Bank's possession or under the Bank's control, or that of any
third party acting for the Bank, or of the same becoming subject at any time to
any mandatory order of court or other legal process. The Bank may at any time
transfer into the Bank's or its nominee's name all or any part of such security,
before or after maturity of any of the customer's obligations and without any
notice to the Customer or any other person. Whenever the Bank deems it necessary
for the Bank's or the Customer's protection, or after an Event of Default
specified herein, or other default, the Bank shall have the right to accelerate
and make immediately due and payable all of the Customer's obligations to the
Bank under the Credit and this Agreement and under any other document or
agreement (including without limitation the obligations evidenced by the
outstanding (but undrawn upon) Credit and/or by acceptances which have not
matured). The Bank shall have, in addition to all other rights and remedies
under applicable law, the rights and remedies of a secured party under the
Uniform Commercial Code, and the Bank may, without regard to such maturity,
realize upon (by sale, assignment, setoff, application or otherwise) all or any
part of such security, in each case without advertisement, notice to, tender,
demand or call of any kind upon the Customer or any other person, except that,
unless such security is perishable or threatens to decline speedily in value or
is of a type customarily sold on a recognized market, the Bank shall give the
Customer three Business Days prior written notice of the time and place of any
public sale thereof or of the time after which any private sale or other
intended disposition thereof is to be made. Any such sale or assignment may be
public, private or upon any broker's board or exchange, for cash, on credit or
for future delivery, and as such price and upon such terms and conditions, as
the Bank deems appropriate. For this purpose, the Bank may, so far as the
Customer can give authority therefor, enter upon any premises on which such
security or any proceeds thereof may be situated and remove the same therefrom,
or require that such security or proceeds be made available tot he Bank at a
place or places reasonably convenient to both the Bank and the Customer. The
Bank may acquire all or any part of such security and any purchaser shall hold
same free from any equity of redemption or other claim or right on the
Customer's part, which are hereby specifically waiver specifically waived and
released. The Bank may discount, settle compromise, or extend any obligations
constituting such security, and sue thereon in the Bank's or the Customer's
name. However, the Banks shall not be liable for failure to collect or demand
payment of, or protest or give notice of non-payment of, any obligation included
in such security or part thereof, or for any delay in so doing, nor shall the
Bank be under any obligation to take any action whatever in respect to such
security or any part thereof. No advertising, notice, tender, demand, or call at
any time given or made shall be a waiver of the Bank's right to proceed in the
same or other instances without any further action.
7. The receipt by the Bank at any time or other collateral shall not be
deemed a waiver of any of the Bank's rights or powers relating to any collateral
which the Bank may hold at the time of such receipt.
8. No failure on the part of the Bank to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereto; nor shall any
single or partial exercise of any right hereunder preclude any other further
exercise thereof or the exercise of any right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law. No amendment or
waiver of any provision of this Agreement nor consent to any departure by the
parties hereto shall in any event be effective unless the same shall be in
writing and signed by such party, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
9. This Agreement shall continue in force notwithstanding any change in
the composition of firm or firms parties hereto, or drawers of drafts hereunder,
or in the incorporation of any such firm.
10. The Customer authorizes the Bank, without reference to or approval
by the Customer, to set forth the terms of this Agreement in the Credit in such
language as the Bank may deem appropriate with such variations from such terms
as the Bank may in its discretion determine (which determination shall be
conclusive and binding upon the Customer) are necessary and are not materially
inconsistent with this Agreement.
11. All rights under the Credit and this Agreement (whether or not the
Credit is documentary or non-documentary in nature) shall be determined by the
Uniform Customs and Practice for Documentary Credits of the International
Chamber of Commerce in effect (International Chamber of Commerce Publication No.
500 or the most recent revision or successor thereto which shall be in effect
from time to time), the terms of which are known to the Customer and which are
incorporated by reference herein, and all rights under the Credit and this
Agreement, to the extent not inconsistent with said Uniform Customs and
Practices, shall be construed in accordance with the local laws of the State of
the Bank's Address.
12. The Customer represents, warrants and covenants to the Bank that
(a) if a partnership or a corporation, it is duly organized, validly existing
and in good standing; (b) it has the power to execute, deliver and perform this
Agreement; (c) the execution, delivery and performance of this Agreement have
been duly authorized by all requisite action; (d) the execution delivery and
performance of this Agreement and the issuance of the Credit will not violate
any provision of law, any order of any court or other agency of government, the
Articles of Incorporation or By-Laws of a corporate Customer or the Partnership
Agreement of a partnership Customer, or any indenture, agreement or other
instrument of which it is a party, or by which it is bound, or be in conflict
with result in a breach of or constitute (with the due notice or lapse of time
or both) a default under any such indenture, agreement or other instrument, or
result in the creation or imposition of any lien, charge or encumbrance of any
nature whatsoever upon any of the property or assets of the Customer (other than
in favor of the Bank) or the acceleration of any of the Customer's outstanding
indebtedness; (e) the Customer has heretofore furnished to the Bank accurate and
complete financial data and other information based on its operations in
previous years, and said financial data furnished to the Bank is accurate and
complete and fairly presents the financial position and the results of
operations for the periods indicated therein; (f) there has been no material
adverse change in the condition, financial or otherwise, of the Customer since
the date of the most recent financial statement; and (g) the Customer shall
furnish to the Bank periodically such financial statements, balance sheets and
profit and loss statements, together with supporting schedules, tax returns, and
such other information regarding the operations, assets, business, affairs and
financial conditions of the Customer, as the Bank shall from time to time
request.
13. If this Agreement is signed by two or more Customers, it shall be
the joint and several agreement and obligation of such Customers.
14. The customer agrees that in the event of any extension of the
maturity or time for presentation of drafts, acceptances or documents, or any
other amendments or modification of the terms of the Credit, at the request of
any single Customer, with or without notification to the others, or in the event
of any increase in the amount of the Credit at any single
118
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Customer's request, with or without notification to the others, this amount
shall be binding upon the Customer with regard to the Credit so increased or
otherwise amended or modified, to drafts, documents and property covered
thereby, and to any action taken by the Bank or any of its corespondents in
accordance with such extension, increase or other modification.
15. The Bank is authorized to interpret the Credit in accordance with
rules, regulations, and customs prevailing at the place and time during which
the Credit is available or the drafts are drawn or negotiated.
16. The Bank is authorized to pay conforming drawings submitted by an
administrator, trustee in bankruptcy, debtor-in-possession, assignee for the
benefit of creditors, liquidator, receiver or other legal representative of the
party who is authorized to draw.
17. The available amount of the Credit shall be reduced by the amount
of any conforming drawing made thereunder.
18. All notices and other communications provided hereunder shall be in
writing and shall be personally delivered or sent by certified first class mail,
return receipt requested, or by telex or telecopy. Unless otherwise specified in
this Agreement, all such notices and other communications to the Bank shall be
mailed, telexed, telecopied or delivered to it, addressed to the Bank, c/o
____________________________________________________________________, and all
such notices and other communications to the Customer shall be mailed, telexed,
telecopied or delivered to the Customer, at the Customer's Address. The Bank and
the Customer reserve the right to change such address, telex number and/or
telecopy number in a written notice to the other party. All such notices and
other communications shall, when mailed certified or registered mail, be
effective three days after the date of deposit in the mails, addressed as
aforesaid; when personally delivered, when received a the address aforesaid;
and, when sent by telex or telecopy when received at the then current telex or
telecopy number.
19. Any provision of this Agreement which is prohibited, unenforceable
or not authorized in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition, unenforceability or
non-authorization without invalidating the remaining provisions hereof or
affecting the validity, enforceability or legality of such provision in any
other jurisdiction.
20. This Agreement may be executed in tow or more counterparts, each of
which shall constitute an original, but both or all of which, when taken
together, shall constitute but one instrument, and shall become effective when
copies hereof which, when taken together, bear the signatures of each of the
parties, hereto shall be delivered to the Bank.
21. The Customer hereby expressly submits to the non-exclusive
jurisdiction of all federal and state courts sitting in the state of the Bank's
Address, and agrees that any processor notice of motion or other application to
any of said courts or a judge thereof may be served upon the Customer within or
without such court's jurisdiction by registered or certified mail, return
receipt requested, or by personal service, at the Customer's Address (or at such
other address as the Customer shall specify by a prior notice in writing to the
Bank), provided reasonable time for appearance is allowed. The Customer hereby
irrevocably waives any objection which it may now or hereafter have to the
laying of venue to any suit, action or proceeding arising out of or relating to
this Agreement brought in any federal or state courts sitting in the Bank's
location and hereby further irrevocably waives any claim that any such suit,
action or proceeding brought in any such court has been brought in any
inconvenient forum. Notwithstanding the foregoing, the Bank may sue the Customer
in any jurisdiction where the Customer or any of its assets may be found and may
serve legal process upon the Customer in any other manner permitted by law.
22. THE CUSTOMER HEREBY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY
JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS AGREEMENT OR THE CREDIT,
AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A
JURY.
23. The Bank reserves the right to sell or assign all or any portion of
the Bank's right, title and interest in and to the Agreement and all related
documents, and to participate all or any portion of the aforesaid. In connection
therewith, the Customer authorizes the Bank to deliver to any such purchaser or
participant and any prospective purchaser or participant the originals and/or
copies of the Agreement, financial statements relating to the Customer and any
guarantors, and any and all other credit or other information from time to time
in the Bank's possession.
24. The issuance of the Credit by the Bank constitutes the Bank's
adoption, authentication, signature, and agreement to be bound by the terms and
provisions of this Agreement.
25. This Agreement shall be binding upon the Customer's respective
executors, administrators, successors and assigns and shall inure to the benefit
of the Bank and its successors and assigns.
1
EXHIBIT 10.2
364-DAY LOAN AGREEMENT
DATED AS OF JUNE 29, 2001
by and among
WASTE MANAGEMENT, INC.
(the "Borrower")
and
WASTE MANAGEMENT HOLDINGS, INC.
(the "Guarantor")
and
FLEET NATIONAL BANK ("Fleet")
BANK OF AMERICA, N.A. ("BOA")
THE CHASE MANHATTAN BANK ("Chase")
DEUTSCHE BANK AG, NEW YORK BRANCH ("Deutsche")
AND THE OTHER FINANCIAL INSTITUTIONS WHICH BECOME
A PARTY TO THIS AGREEMENT
(Collectively, the "Banks")
and
FLEET AS ADMINISTRATIVE AGENT (the "Administrative Agent")
and
DEUTSCHE AND CITIBANK, N.A., as co-documentation agents
(the "Co-Documentation Agents")
and
BOA AND J.P. MORGAN SECURITIES INC. ("JPMORGAN") AS CO-SYNDICATION AGENTS
(the "Co-Syndication Agents")
and
JPMORGAN AND BANC OF AMERICA SECURITIES LLC
AS JOINT LEAD ARRANGERS AND JOINT BOOK MANAGERS
(the "Joint Lead Arrangers and Joint Book Managers")
2
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TABLE OF CONTENTS
SECTION 1. DEFINITIONS AND RULES OF INTERPRETATION.......................................................1
Section 1.1. Definitions..........................................................................1
Section 1.2. Rules of Interpretation.............................................................17
SECTION 2. THE SYNDICATED LOAN FACILITIES...............................................................17
Section 2.1. Commitment to Lend..................................................................17
Section 2.2. Facility Fee........................................................................18
Section 2.3. Reduction of Total Commitment.......................................................18
Section 2.4. The Syndicated Notes................................................................19
Section 2.5. Interest on Syndicated Loans........................................................19
Section 2.6. Requests for Syndicated Loans.......................................................20
Section 2.7. Election of Eurodollar Rate; Notice of Election; Interest Periods; Minimum Amounts..20
Section 2.8. Funds for Syndicated Loans..........................................................21
Section 2.9. Maturity of the Revolving Credit Loans and Reimbursement Obligations................22
Section 2.10. Prepayments or Repayments of Revolving Credit Loans.................................22
Section 2.11. Swing Line Loans; Settlements.......................................................23
SECTION 3. LETTERS OF CREDIT............................................................................24
Section 3.1. Letter of Credit Commitments........................................................24
Section 3.2. Reimbursement Obligation of the Borrower............................................25
Section 3.3. Obligations Absolute................................................................25
Section 3.4. Reliance by the Issuing Banks.......................................................26
Section 3.5. Notice Regarding Letters of Credit..................................................26
Section 3.6. Letter of Credit Fee................................................................26
SECTION 4. COMPETITIVE BID LOANS........................................................................27
Section 4.1. The Competitive Bid Option..........................................................27
Section 4.2. Competitive Bid Loan Accounts; Competitive Bid Notes................................27
Section 4.3. Competitive Bid Quote Request; Invitation for Competitive Bid Quotes................28
Section 4.4. Alternative Manner of Procedure.....................................................28
Section 4.5. Submission and Contents of Competitive Bid Quotes...................................29
Section 4.6. Notice to Borrower..................................................................30
Section 4.7. Acceptance and Notice by Borrower and Administrative Agent..........................30
Section 4.8. Allocation by Administrative Agent..................................................31
Section 4.9. Funding of Competitive Bid Loans....................................................31
Section 4.10. Funding Losses......................................................................31
Section 4.11. Repayment of Competitive Bid Loans; Interest........................................31
SECTION 5. THE TERM LOAN................................................................................32
Section 5.1. Conversion of Revolving Credit Loans; the Term Loan.................................32
Section 5.2. The Term Notes......................................................................32
Section 5.3. Repayments of the Term Loan.........................................................32
Section 5.4. Optional Prepayment of Term Loan....................................................33
Section 5.5. Interest on Term Loan...............................................................33
Section 5.5.1. Notification by Borrower.................................................33
Section 5.5.2. Amounts, etc. ...........................................................33
3
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SECTION 6. PROVISIONS RELATING TO ALL LOANS AND LETTERS OF CREDIT.......................................33
Section 6.1. Payments............................................................................33
Section 6.2. Computations........................................................................35
Section 6.3. Illegality; Inability to Determine Eurodollar Rate..................................36
Section 6.4. Additional Costs, Etc. .............................................................36
Section 6.5. Capital Adequacy....................................................................37
Section 6.6. Certificate.........................................................................38
Section 6.7. Eurodollar and Competitive Bid Indemnity............................................38
Section 6.8. Interest on Overdue Amounts.........................................................38
Section 6.9. Interest Limitation.................................................................39
Section 6.10. Reasonable Efforts to Mitigate......................................................39
Section 6.11. Replacement of Banks................................................................39
Section 6.12. Advances by Administrative Agent....................................................40
SECTION 7. REPRESENTATIONS AND WARRANTIES...............................................................40
Section 7.1. Corporate Authority.................................................................40
Section 7.2. Governmental and Other Approvals....................................................41
Section 7.3. Title to Properties; Leases.........................................................41
Section 7.4. Financial Statements; Solvency......................................................41
Section 7.5. No Material Changes, Etc. ..........................................................42
Section 7.6. Franchises, Patents, Copyrights, Etc. ..............................................42
Section 7.7. Litigation..........................................................................42
Section 7.8. No Materially Adverse Contracts, Etc. ..............................................42
Section 7.9. Compliance With Other Instruments, Laws, Etc. ......................................43
Section 7.10. Tax Status..........................................................................43
Section 7.11. No Event of Default.................................................................43
Section 7.12. Holding Company and Investment Company Acts.........................................43
Section 7.13. Absence of Financing Statements, Etc. ..............................................43
Section 7.14. Employee Benefit Plans..............................................................44
Section 7.14.1. In General..............................................................44
Section 7.14.2. Terminability of Welfare Plans..........................................44
Section 7.14.3. Guaranteed Pension Plans................................................44
Section 7.14.4. Multiemployer Plans.....................................................44
Section 7.15. Environmental Compliance............................................................45
Section 7.16. Disclosure..........................................................................46
Section 7.17. Permits and Governmental Authority..................................................46
SECTION 8. AFFIRMATIVE COVENANTS OF THE BORROWER........................................................46
Section 8.1. Punctual Payment....................................................................46
Section 8.2. Maintenance of U.S. Office..........................................................46
Section 8.3. Records and Accounts................................................................47
Section 8.4. Financial Statements, Certificates and Information..................................47
Section 8.5. Existence and Conduct of Business...................................................48
Section 8.6. Maintenance of Properties...........................................................48
Section 8.7. Insurance...........................................................................49
Section 8.8. Taxes...............................................................................49
Section 8.9. Inspection of Properties, Books and Contracts.......................................49
4
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Section 8.10. Compliance with Laws, Contracts, Licenses and Permits; Maintenance of Material
Licenses and Permits.............................................................................49
Section 8.11. Environmental Indemnification........................................................50
Section 8.12. Further Assurances...................................................................50
Section 8.13. Notice of Potential Claims or Litigation.............................................50
Section 8.14. Notice of Certain Events Concerning Insurance and Environmental Claims...............50
Section 8.15. Notice of Default....................................................................51
Section 8.16. Use of Proceeds. ...................................................................52
Section 8.17. Certain Transactions.................................................................52
SECTION 9. CERTAIN NEGATIVE COVENANTS OF THE BORROWER....................................................52
Section 9.1. Restrictions on Indebtedness.........................................................52
Section 9.2. Restrictions on Liens................................................................53
Section 9.3. Restrictions on Investments..........................................................53
Section 9.4. Mergers, Consolidations, Sales.......................................................54
Section 9.5. Restricted Distributions and Redemptions.............................................55
Section 9.6. Employee Benefit Plans...............................................................55
SECTION 10. FINANCIAL COVENANTS OF THE BORROWER..........................................................56
Section 10.1. Interest Coverage Ratio..............................................................56
Section 10.2. Total Debt to EBITDA.................................................................56
Section 10.3. Minimum Net Worth....................................................................56
SECTION 11. CONDITIONS PRECEDENT.........................................................................56
Section 11.1. Conditions To Effectiveness.........................................................56
Section 11.1.1. Corporate Action.........................................................56
Section 11.1.2. Loan Documents, Etc......................................................57
Section 11.1.3. Certificate of No Change.................................................57
Section 11.1.4. Incumbency Certificate...................................................57
Section 11.1.5. Certificates of Insurance................................................57
Section 11.1.6. Opinion of Counsel.......................................................57
Section 11.1.7. Satisfactory Financial Condition.........................................57
Section 11.1.8. Payment of Closing Fees..................................................57
Section 11.1.9. Payoff of Existing Debt..................................................57
Section 11.1.10. Closing Certificate......................................................58
SECTION 12. CONDITIONS TO ALL LOANS......................................................................58
Section 12.1. Representations True.................................................................58
Section 12.2. Performance; No Event of Default.....................................................58
Section 12.3. No Legal Impediment..................................................................58
Section 12.4. Governmental Regulation..............................................................58
Section 12.5. Proceedings and Documents............................................................58
SECTION 13. EVENTS OF DEFAULT; ACCELERATION; TERMINATION OF COMMITMENT...................................59
Section 13.1. Events of Default and Acceleration...................................................59
Section 13.2. Termination of Commitments...........................................................61
Section 13.3. Remedies.............................................................................61
SECTION 14. SETOFF.......................................................................................62
SECTION 15. EXPENSES.....................................................................................62
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SECTION 16. THE AGENTS...................................................................................62
Section 16.1. Appointment, Powers and Immunities...................................................62
Section 16.2. Actions By Administrative Agent......................................................63
Section 16.3. Indemnification......................................................................63
Section 16.4. Reimbursement........................................................................64
Section 16.5. Documents............................................................................64
Section 16.6. Non-Reliance on Administrative Agent and Other Banks.................................64
Section 16.7. Resignation of Administrative Agent..................................................65
Section 16.8. Action by the Banks, Consents, Amendments, Waivers, Etc. ............................65
SECTION 17. INDEMNIFICATION..............................................................................66
SECTION 18. WITHHOLDING TAXES............................................................................66
SECTION 19. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION................................................68
Section 19.1. Confidentiality......................................................................68
Section 19.2. Prior Notification...................................................................69
Section 19.3. Other................................................................................69
SECTION 20. SURVIVAL OF COVENANTS, ETC. .................................................................69
SECTION 21. ASSIGNMENT AND PARTICIPATION.................................................................69
SECTION 22. PARTIES IN INTEREST..........................................................................71
SECTION 23. NOTICES, ETC. ...............................................................................71
SECTION 24. MISCELLANEOUS................................................................................71
SECTION 25. CONSENTS, ETC. ..............................................................................72
SECTION 26. WAIVER OF JURY TRIAL.........................................................................72
SECTION 27. GOVERNING LAW; SUBMISSION TO JURISDICTION....................................................73
SECTION 28. SEVERABILITY.................................................................................73
SECTION 29. GUARANTY.....................................................................................73
Section 29.1. Guaranty.............................................................................73
Section 29.2. Guaranty Absolute....................................................................73
Section 29.3. Effectiveness; Enforcement...........................................................74
Section 29.4. Waiver...............................................................................74
Section 29.5. Expenses.............................................................................75
Section 29.6. Concerning Joint and Several Liability of the Guarantor..............................75
Section 29.7. Waiver...............................................................................77
Section 29.8. Subrogation; Subordination...........................................................77
SECTION 30. PARI PASSU TREATMENT.........................................................................77
SECTION 31. FINAL AGREEMENT..............................................................................78
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Exhibits
Exhibit A Form of Syndicated Note
Exhibit B Form of Swing Line Note
Exhibit C Form of Competitive Bid Note
Exhibit D Form of Syndicated Loan Request
Exhibit E Form of Letter of Credit Request
Exhibit F Form of Compliance Certificate
Exhibit G Form of Assignment and Acceptance
Exhibit H Form of Competitive Bid Quote Request
Exhibit I Form of Invitation for Competitive Bid Quotes
Exhibit J Form of Competitive Bid Quote
Exhibit K Form of Notice of Acceptance/Rejection of
Competitive Bid Quote(s)
Exhibit L Form of Term Note
Exhibit M Form of Letter of Credit Application
Schedules
Schedule 1 Banks; Commitment Percentages
Schedule 1.1 Existing Liens
Schedule 7.7 Litigation
Schedule 7.15 Environmental Compliance
Schedule 9.1(d) Existing Indebtedness
7
364-DAY LOAN AGREEMENT
This 364-DAY LOAN AGREEMENT is made as of the 29th day of June, 2001,
by and among WASTE MANAGEMENT, INC., a Delaware corporation having its chief
executive office at 1001 Fannin Street, Suite 4000, Houston, Texas 77002 (the
"Borrower"), WASTE MANAGEMENT HOLDINGS, INC., a wholly-owned Subsidiary of the
Borrower (the "Guarantor"), FLEET NATIONAL BANK, a national banking association
having a place of business at 100 Federal Street, Boston, MA 02110 ("Fleet"),
BANK OF AMERICA, N.A., a national banking association having a place of business
at 231 South LaSalle Street Chicago, IL 60697 ("BOA"), THE CHASE MANHATTAN BANK,
a national banking association having a place of business at 707 Travis Street,
Houston, TX 77002 ("Chase"), DEUTSCHE BANK AG, NEW YORK BRANCH, the duly
licensed New York branch of a German corporation having its principal place of
business at 31 West 52nd Street, New York, NY 10019 ("Deutsche"), and each of
the other financial institutions party hereto (collectively, the "Banks"), and
Fleet as administrative agent (the "Administrative Agent"), J.P. Morgan
Securities Inc. ("JPMorgan") and Banc of America Securities LLC as joint lead
arrangers and joint book managers (the "Joint Lead Arrangers and Joint Book
Managers"), JPMorgan and BOA as co-syndication agents (the "Co-Syndication
Agents", and together with the Administrative Agent and the Joint Lead Arrangers
and Joint Book Managers, the "Agents"), and Deutsche and Citibank, N.A., as
co-documentation agent (the "Co-Documentation Agents").
WHEREAS, the Borrower has requested certain financing arrangements and
the Banks have agreed to provide such financing arrangements on the terms set
forth herein;
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and agreements set forth herein below, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties, this Agreement will take effect on the Effective Date, on the
following terms:
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:
Absolute Competitive Bid Loan(s). See Section 4.3(a).
Accountants. See Section 8.4(a).
Administrative Agent. See Preamble.
Affected Bank. See Section 6.11.
Agents. See Preamble.
8
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Agreement. This 364-Day Loan Agreement, including the Schedules and
Exhibits hereto, as from time to time amended and supplemented in accordance
with the terms hereof.
Applicable Base Rate. The applicable rate per annum of interest on the
Base Rate Loans as set forth in the Pricing Table.
Applicable Eurodollar Rate. The applicable rate per annum of interest
on the Eurodollar Loans as set forth in the Pricing Table.
Applicable Facility Rate. The applicable rate per annum with respect to
the Facility Fee as set forth in the Pricing Table.
Applicable L/C Rate. The applicable rate per annum on the Maximum
Drawing Amount as set forth in the Pricing Table.
Applicable Requirements. See Section 8.10.
Applicable Swing Line Rate. The annual rate of interest agreed upon
from time to time by the Administrative Agent and the Borrower with respect to
Swing Line Loans.
Assignment and Acceptance. See Section 21.
Balance Sheet Date. December 31, 2000.
Banks. See Preamble.
Base Rate. The higher of (a) the variable annual rate of interest so
designated from time to time by the Administrative Agent at its Loan Office as
its "prime rate," such rate being a reference rate and not necessarily
representing the lowest or best rate being charged to any customer by the
Administrative Agent, 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. Changes in the Base Rate
resulting from any changes in the Administrative Agent's "prime rate" shall take
place immediately without notice or demand of any kind on the effective day of
such change.
Base Rate Loans. Syndicated Loans bearing interest calculated by
reference to the Base Rate.
BOA. See Preamble.
Borrower. See Preamble.
Business Day. Any day, other than a Saturday, Sunday or any day on
which banking institutions in Boston, Massachusetts or New York, New York are
authorized by law to close, and, when used in connection with a Eurodollar Loan,
a Eurodollar Business Day.
Capitalized Leases or Capital Leases. Leases under which the Borrower
or any of its Subsidiaries is the lessee or obligor, the discounted future
rental payment obligations under
9
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which are required to be capitalized on the balance sheet of the lessee or
obligor in accordance with GAAP.
CERCLA. See Section 7.15(a).
Certified or 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, in all material respects, the financial position of
such Person.
CFO or the CAO. See Section 8.4(b).
Chase. See Preamble.
Code. The Internal Revenue Code of 1986, as amended and in effect from
time to time.
Co-Documentation Agent(s). See Preamble.
Commitment. With respect to each Bank, such Bank's commitment to make
Syndicated Loans to, and to participate in the issuance, extension and renewal
of Letters of Credit for the account of, the Borrower, determined by multiplying
such Bank's Commitment Percentage by the Total Commitment.
Commitment Percentage. With respect to each Bank, the percentage
initially set forth next to such Bank's name on Schedule 1 hereto, as the same
may be adjusted in accordance with Section 21.
Competitive Bid Loan(s). A borrowing hereunder consisting of one or
more loans made by any of the participating Banks whose offer to make a
Competitive Bid Loan as part of such borrowing has been accepted by the Borrower
under the auction bidding procedure described in Section 4 hereof.
Competitive Bid Loan Accounts. See Section 4.2(a).
Competitive Bid Margin. See Section 4.5(b)(iv).
Competitive Bid Notes. See Section 4.2(b).
Competitive Bid Quote. An offer by a Bank to make a Competitive Bid
Loan in accordance with Section 4.5 hereof.
Competitive Bid Quote Request. See Section 4.3.
Competitive Bid Rate. See Section 4.5(b)(v).
Compliance Certificate. See Section 8.4(c).
10
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Consolidated or consolidated. With reference to any term defined
herein, shall mean that term as applied to the accounts of the Borrower and its
Subsidiaries consolidated in accordance with GAAP.
Consolidated Earnings Before Interest and Taxes, or EBIT. For any
period, the Consolidated Net Income (or Deficit) of the Borrower and its
Subsidiaries on a consolidated basis plus, without duplication, the sum of (1)
interest expense, (2) income taxes, (3) one-time charges related to expenses in
connection with Terminated Plans not to exceed $80,231,000 for the fiscal
quarter ending September 30, 2000, and not to exceed $28,102,000 for the fiscal
quarter ending December 31, 2000, (4) non-cash extraordinary non-recurring
writedowns or write-offs of assets, including non-cash losses on the sale of
assets outside the ordinary course of business, (5) non-recurring extraordinary
charges for settlement or judgment costs with respect to the shareholder
lawsuits and actions brought against the Borrower or the Guarantor related to,
arising or resulting from, the restatements of financial statements or results,
lowered expected earnings announcements occurring in 1998 and 1999, alleged
misrepresentations, misstatements or omissions contained in, or the adequacy of,
any disclosure documents filed with the Securities and Exchange Commission in
1998 and 1999, as further described in the Borrower's 2000 Annual Report on Form
10-K (collectively, the "Shareholder Suits"), and (6) EBIT of the businesses
acquired by the Borrower or any of its Subsidiaries (through asset purchases or
otherwise) (each an "Acquired Business") or the Subsidiaries acquired or formed
since the beginning of such period (each a "New Subsidiary") provided that (i)
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, or (ii) 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
officer executing such certificate is correct in all material respects) are
provided to the Administrative Agent, to the extent that each of items (1)
through (5) was deducted in determining Consolidated Net Income (or Deficit) in
the relevant period, minus non-cash extraordinary gains on the sale of assets
outside the ordinary course of business to the extent included in Consolidated
Net Income (or Deficit).
Consolidated Earnings Before Interest, Taxes, Depreciation and
Amortization or EBITDA. For any period, EBIT plus (a) depreciation expense, and
(b) amortization expense to the extent the same would be included in the
calculation of Consolidated Net Income (or Deficit) for such period, determined
in accordance with GAAP.
Consolidated Net Income (or Deficit). The consolidated net income (or
deficit) of the Borrower and its Subsidiaries on a consolidated basis, after
deduction of all expenses, taxes, and other proper charges, determined in
accordance with GAAP.
Consolidated Net Worth. The sum of the par value of the capital stock
(excluding treasury stock), capital in excess of par or stated value of shares
of capital stock, retained earnings (minus accumulated deficit) and any other
account which, in accordance with GAAP, constitute stockholders' equity, of the
Borrower and its Subsidiaries determined on a consolidated
11
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basis, excluding the effect of any foreign currency transactions computed
pursuant to Financial Accounting Standards Board Statement No. 52, as amended,
supplemented or modified from time to time, or otherwise in accordance with
GAAP.
Consolidated Tangible Assets. Consolidated Total Assets less the sum
of:
(a) the total book value of all assets of the Borrower and its
Subsidiaries properly classified as intangible assets under generally
accepted accounting principles, including such items as goodwill, the
purchase price of acquired assets in excess of the fair market value
thereof, trademarks, trade names, service marks, customer lists, brand
names, copyrights, patents and licenses, and rights with respect to the
foregoing; plus
(b) all amounts representing any write-up in the book value of
any assets of the Borrower or its Subsidiaries resulting from a
revaluation thereof subsequent to the Balance Sheet Date.
Consolidated Total Assets. All assets of the Borrower and its
Subsidiaries determined on a consolidated basis in accordance with GAAP.
Consolidated Total Interest Expense. For any period, the aggregate
amount of interest expense required by GAAP to be paid or accrued during such
period on all Indebtedness of the Borrower and its Subsidiaries outstanding
during all or any part of such period, including capitalized interest expense
for such period.
Co-Syndication Agent(s). See Preamble.
Defaulting Bank. See Section 6.11.
Defaults. See Section 13.1.
Deutsche. See Preamble.
Disclosure Documents. The Borrower's financial statements referred to
in Section 7.4 and filings made by the Borrower or the Guarantor with the
Securities and Exchange Commission that were publicly available prior to the
Effective Date which were provided to the Banks.
Disposal. See "Release".
Distribution. The declaration or payment of any dividend or other
return on equity on or in respect of any shares of any class of capital stock,
any partnership interests or any membership interests of any Person (other than
dividends or other such returns payable solely in shares of capital stock,
partnership interests or membership units of such Person, as the case may be);
the purchase, redemption, or other retirement of any shares of any class of
capital stock, partnership interests or membership units of such Person,
directly or indirectly through a Subsidiary or otherwise; the return of equity
capital by any Person to its shareholders, partners or members as such; or any
other distribution on or in respect of any shares of any class of capital stock,
partnership interest or membership unit of such Person.
12
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Dollars or US$ or $ or U.S. Dollars. Dollars in lawful currency of the
United States of America.
Drawdown Date. The date on which any Loan is made or is to be made, or
any amount is paid by an Issuing Bank under a Letter of Credit.
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 11.1 hereof are satisfied.
Employee Benefit Plan. Any employee benefit plan within the meaning of
Section 3(3) of ERISA maintained or contributed to by the Borrower, any of its
Subsidiaries, or any ERISA Affiliate, other than a Multiemployer Plan.
Environmental Laws. See Section 7.15(a).
EPA. See Section 7.15(b).
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
the Borrower or any of its Subsidiaries under Section 414 of the Code.
ERISA Reportable Event. A reportable event within the meaning of
Section 4043 of ERISA and the regulations promulgated thereunder with respect to
a Guaranteed Pension Plan as to which the requirement of notice has not been
waived.
Eurocurrency Reserve Rate. For any day with respect to a Eurodollar
Loan, the maximum rate (expressed as a decimal) at which the Administrative
Agent 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 eurodollar interbank market as may be selected by the Administrative Agent
in its sole discretion acting in good faith.
Eurodollar Competitive Bid Loan(s). See Section 4.3(a).
13
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Eurodollar Lending Office. Initially, the office of each Bank set forth
in the administrative materials provided to the Administrative Agent;
thereafter, upon notice to the Administrative Agent, such other office of such
Bank that shall be making or maintaining Eurodollar Loans.
Eurodollar Loans. Syndicated Loans bearing interest calculated by
reference to the Eurodollar Rate.
Eurodollar Rate. For any Interest Period with respect to a Eurodollar
Loan, (a) the rate of interest equal to the rate determined by the
Administrative Agent at which Dollar deposits for such Interest Period are
offered based on information presented on Telerate Page 3750 as of 11:00 a.m.
(London time) two (2) Eurodollar Business Days prior to the first day of such
Interest Period, or (b) if such rate is not shown at such place, the rate of
interest equal to (i) the rate per annum at which the Administrative Agent's
Eurodollar Lending Office is offered Dollar deposits at approximately 10:00 a.m.
(New York time) two (2) Eurodollar Business Days prior to the beginning of such
Interest Period in the interbank eurodollar market where the eurodollar
operations of such Eurodollar Lending Office are customarily conducted, 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
Loan of the Administrative Agent to which such Interest Period applies, divided
by (ii) a number equal to 1.00 minus the Eurocurrency Reserve Rate, if
applicable.
Events of Default. See Section 13.1.
Facility Fee. See Section 2.2.
Financial Affiliate. A subsidiary of the bank holding company
controlling any Bank, which subsidiary is engaging in any of the activities
permitted by Section 4(e) of the Bank Holding Company Act of 1956 (12
U.S.C. Section 1843).
Five Year Revolving Credit Facility. That certain Revolving Credit
Agreement dated as of June 29, 2001 by and among the Borrower, the Guarantor,
BOA, Chase, Deutsche and the other banks party thereto, and Fleet as
administrative agent thereunder, Banc of America Securities LLC and JPMorgan as
joint lead arrangers and joint book managers thereunder, BOA and JPMorgan as
co-syndication agents thereunder and Deutsche and Citibank, N.A., as
co-documentation agents thereunder, as amended from time to time.
Fleet. See Preamble.
generally accepted accounting principles or GAAP. (i) When used in
Section 10, whether directly or indirectly through reference to a capitalized
term used therein, means (A) 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, and
(B) to the extent consistent with such principles, the accounting practice of
the Borrower reflected in its financial statements for the year ended on the
Balance Sheet Date, and (ii) when used in general, other than as provided above,
means principles that are (A) consistent
14
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with the principles promulgated or adopted by the Financial Accounting Standards
Board and its predecessors, as in effect from time to time, and (B) consistently
applied with past financial statements of the Borrower adopting the same
principles, provided that in each case referred to in this definition of
"generally accepted accounting principles" a certified public accountant would,
insofar as the use of such accounting principles is pertinent, be in a position
to deliver an unqualified opinion (other than a qualification regarding changes
in generally accepted accounting principles) as to financial statements in which
such principles have been properly applied.
Guaranteed Obligations. See Section 29.1.
Guaranteed Pension Plan. Any employee pension benefit plan within the
meaning of Section 3(2) of ERISA maintained or contributed to by the Borrower,
its Subsidiaries 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.
Guarantor. See Preamble.
Guaranty. Any obligation, contingent or otherwise, of a Person
guaranteeing or having the economic effect of guaranteeing any Indebtedness or
other obligation of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, and including any obligation of the guarantor,
direct or indirect, (a) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other obligation or to purchase (or
to advance or supply funds for the purchase of) any security for the payment
thereof, (b) to purchase or lease property, securities or services for the
purpose of assuring the owner of such Indebtedness or other obligation of the
payment thereof, (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness or other obligation or (d)
as an account party in respect of any letter of credit or letter of guaranty
issued to support such Indebtedness or obligation; provided, that the term
Guaranty shall not include endorsements for collection or deposit in the
ordinary course of business.
Hazardous Substances. See Section 7.15(b).
Indebtedness. Collectively, without duplication, whether classified
as Indebtedness, an Investment or otherwise on the obligor's balance sheet, (a)
all indebtedness for borrowed money, (b) all obligations for the deferred
purchase price of property or services (other than trade payables incurred in
the ordinary course of business which either (i) are not overdue by more than
ninety (90) days, or (ii) are being disputed in good faith and for which
adequate reserves have been established in accordance with GAAP), (c) all
obligations evidenced by notes, bonds, debentures or other similar debt
instruments, (d) all obligations created or arising under any conditional sale
or other title retention agreement with respect to property acquired (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (e)
all obligations, liabilities and indebtedness under Capitalized Leases, (f) all
obligations, liabilities or indebtedness (contingent or otherwise) under surety,
performance bonds, or any other bonding arrangement, (g) Guaranties with respect
15
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to all Indebtedness of others referred to in clauses (a) through (f) above, and
(h) all Indebtedness of others referred to in clauses (a) through (f) above
secured or supported by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured or supported by) any Lien
on the property or assets of the Borrower or any Subsidiary, even though the
owner of the property has not assumed or become liable, contractually or
otherwise, for the payment of such Indebtedness; provided that if a Permitted
Receivables Transaction is outstanding and is accounted for as a sale of
accounts receivable under generally accepted accounting principles, Indebtedness
shall also include the additional Indebtedness, determined on a consolidated
basis, which would have been outstanding had such Permitted Receivables
Transaction been accounted for as a borrowing.
Interest Period. With respect to each Loan (a) initially, the period
commencing on the Drawdown Date of such Loan and ending on the last day of one
of the periods set forth below, as selected by the Borrower in accordance with
this Agreement (i) for any Base Rate Loan or Swing Line Loan, the first day of
the month; (ii) for any Eurodollar Loan, 1, 2, 3, or 6 months; (iii) for any
Absolute Competitive Bid Loan, from 7 through 180 days; and (iv) for any
Eurodollar Competitive Bid Loan, 1, 2, 3, 4, 5, or 6 months; and (b) thereafter,
each period commencing on the last day of the next preceding Interest Period
applicable to such Loan and ending on the last day of one of the periods set
forth above, as selected by the Borrower in accordance with this Agreement or if
such period has no numerically corresponding day, on the last Business Day of
such period; provided that any Interest Period which would otherwise end on a
day which is not a Business Day shall be deemed to end on the next succeeding
Business Day; provided further that for any Interest Period for any Eurodollar
Loan or Eurodollar Competitive Bid Loan, if such next succeeding Business Day
falls in the next succeeding calendar month, such Interest Period shall be
deemed to end on the next preceding Business Day; and provided further that no
Interest Period shall extend beyond the Revolving Credit Maturity Date or Term
Loan Maturity Date, as applicable.
Interim Balance Sheet Date. March 31, 2001.
Investments. All expenditures made by a Person and all liabilities
incurred (contingently or otherwise) by a Person for the acquisition of stock
(other than the stock of Subsidiaries), or Indebtedness of, or for loans,
advances, capital contributions or transfers of property to, or in respect of
any Guaranties or other commitments as described under Indebtedness, or
obligations of, any other Person, including without limitation, the funding of
any captive insurance company (other than loans, advances, capital contributions
or transfers of property to any Subsidiaries or Guaranties with respect to
Indebtedness of any Subsidiary, limited to such Person's pro rata equity
interest in such Subsidiary). 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
16
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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 3.6.
Issuing Banks. The Bank(s) issuing Letters of Credit, which shall be
(a) Morgan Guaranty Trust Company, Chase, BOA, Fleet, Bank One, N.A., BNP
Paribas, Wachovia Bank, N.A. and Westdeutsche Landesbank Girozentrale, New York
Branch, and (b) such other Banks as agreed to by the Borrower and the
Administrative Agent.
Joint Lead Arrangers and Joint Book Managers. See Preamble.
JPMorgan. See Preamble.
Letter of Credit Applications. Letter of credit applications in the
form attached hereto as Exhibit M, unless otherwise agreed upon by the Borrower
and the Issuing Bank from time to time which are entered into pursuant to
Section 3 hereof, as such Letter of Credit Applications are amended, varied or
supplemented from time to time; provided, however, in the event of any conflict
or inconsistency between the terms of any Letter of Credit Application and this
Agreement, the terms of this Agreement shall control.
Letter of Credit Fee. See Section 3.6.
Letter of Credit Participation. See Section 3.1(b).
Letter of Credit Request. See Section 12.5.
Letters of Credit. Letters of credit issued or to be issued by the
Issuing Banks underSection 3 hereof for the account of the Borrower.
Lien. With respect to any asset, (a) any mortgage, deed of trust, lien
(statutory or otherwise), pledge, hypothecation, encumbrance, charge, security
interest, assignment, deposit arrangement or other restriction in, on or of such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.
Loan Documents. This Agreement, the Notes, the Letter of Credit
Applications, the Letters of Credit, 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 Office. The Administrative Agent's office located in Boston,
Massachusetts, or at such other location as the Administrative Agent may
designate from time to time.
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Loans. Collectively, the Syndicated Loans, the Swing Line Loans, the
Competitive Bid Loans and the Term Loan.
Majority Banks. The Banks with greater than fifty percent (50%) of the
Total Commitment; provided that in the event that the Total Commitment has been
terminated, the Majority Banks shall be the Banks holding greater than fifty
percent (50%) of the aggregate outstanding principal amount of the Obligations
on such date.
Material Adverse Effect. A material adverse effect on (a) the business,
assets, operations, or financial condition, of the Borrower and the Subsidiaries
taken as a whole, (b) the ability of the Borrower or the Guarantor to perform
any of its obligations under any Loan Document to which it is a party, or (c)
the rights of, or remedies or benefits available to, the Administrative Agent or
any Bank under any Loan Document.
Material Subsidiary. Any Subsidiary which, at the time such
determination is made, has assets, revenues, or liabilities of at least
$20,000,000 or more.
Maximum Drawing Amount. The maximum aggregate amount from time to time
that the beneficiaries may draw under outstanding Letters of Credit.
Moody's. Moody's Investors Service, Inc.
Multiemployer Plan. Any multiemployer plan within the meaning of
Section 3(37) of ERISA maintained or contributed to by the Borrower, any of its
Subsidiaries, or any ERISA Affiliate.
New Lending Office. See Section 6.1(d).
Non-U.S. Bank. See Section 6.1(c).
Notes. Collectively, the Competitive Bid Notes, the Syndicated Notes,
the Swing Line Note and the Term Notes.
Obligations. All indebtedness, obligations and liabilities of the
Borrower to any of the Banks and the Administrative Agent 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,
the Notes, or any other instrument at any time evidencing any thereof,
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.
Overnight Federal Funds Effective Rate. 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, or if such rate is not published, the
average of the quotations at approximately 11:00 a.m. New York time for the day
of such transaction(s), received by the Administrative Agent from three Federal
Funds brokers of recognized standing selected by the Administrative Agent.
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PBGC. The Pension Benefit Guaranty Corporation created by Section 4002
of ERISA and any successor entity or entities having similar responsibilities.
Permitted Liens. Any of the following Liens:
(a) Liens for taxes not yet due or that are being contested in
compliance with Section 8.8;
(b) carriers', warehousemen's, maritime, mechanics, materialmen's,
repairmen's or other like Liens arising in the ordinary course of business that
are being contested in good faith by appropriate proceedings and for which
adequate reserves with respect thereto have been set aside as required by GAAP;
(c) pledges and deposits made in the ordinary course of business in
compliance with workmen's compensation, unemployment insurance and other social
security laws or regulations;
(d) Liens to secure the performance of bids, trade contracts (other
than for Indebtedness), leases (other than Capital Leases), statutory
obligations, surety and appeal bonds, suretyship, performance and landfill
closure bonds and other obligations of a like nature incurred in the ordinary
course of business;
(e) zoning restrictions, easements, rights-of-way, restrictions on use
of property and other similar encumbrances incurred in the ordinary course of
business which, in the aggregate, are not substantial in amount and do not
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the business of the Borrower or any of its
Subsidiaries;
(f) the Liens on Schedule 1.1 hereto securing the obligations listed on
such Schedule and any replacement Lien securing any renewal, extension or
refunding of such obligations if the amount secured by such renewal, extension
or refunding Lien shall not exceed the amount of the outstanding obligations
secured by the Lien being replaced at the time of such renewal, extension or
refunding (plus transaction costs, including premiums and fees, related to such
renewal, extension or refunding) and if such replacement Lien shall be limited
to substantially the same property that secured the Lien so replaced;
(g) legal or equitable encumbrances deemed to exist by reason of the
existence of any litigation or other legal proceeding or arising out of a
judgment or award with respect to which an appeal is being prosecuted in good
faith by appropriate action and with respect to which adequate reserves are
being maintained and, in the case of judgment liens, execution thereon is
stayed;
(h) rights reserved or vested in any municipality or governmental,
statutory or public authority to control or regulate any property of the
Borrower or any Subsidiary, or to use such property in a manner that does not
materially impair the use of such property for the purposes for which it is held
by the Borrower or such Subsidiary;
(i) any obligations or duties affecting the property of the Borrower or
any of its Subsidiaries to any municipality, governmental, statutory or public
authority with respect to any franchise, grant, license or permit;
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(j) Liens filed in connection with sales of receivables by any of the
Subsidiaries (other than the Guarantor) to a wholly-owned special purpose
financing Subsidiary for purposes of perfecting such sales, provided that no
third party has any rights with respect to such Liens or any assets subject
thereto;
(k) any interest or title of a lessor under any sale lease-back
transaction entered into by the Borrower or any Subsidiary conveying only the
assets so leased back to the extent the related Indebtedness is permitted under
Section 9.1 hereof;
(l) Liens created or deemed to be created under Permitted Receivables
Transactions at any time provided such Liens do not extend to any property or
assets other than the trade receivables sold pursuant to such Permitted
Receivables Transactions, interests in the goods or products (including returned
goods and products), if any, relating to the sales giving rise to such trade
receivables; any security interests or other Liens and property subject thereto
(other than on any leases or related lease payment rights or receivables between
the Borrower and any of its Subsidiaries, as lessors or sublessors) from time to
time purporting to secure the payment by the obligors of such trade receivables
(together with any financing statements signed by such obligors describing the
collateral securing such trade receivables) pursuant to such Permitted
Receivables Transactions; and
(m) Liens securing other Indebtedness permitted under Sections 9.1(d)
and (e);
provided that the aggregate amount of all Indebtedness and liabilities secured
by all Liens permitted in subsections (k), (l) and (m) shall not exceed 15% of
Consolidated Tangible Assets at any time.
Permitted Receivables Transaction. Any sale or sales of, and/or
securitization of, any accounts receivable of the Borrower and/or any of its
Subsidiaries (the "Receivables") pursuant to which (a) the Borrower and its
Subsidiaries realize aggregate net proceeds of not more than $750,000,000 at any
one time outstanding, including, without limitation, any revolving purchase(s)
of Receivables where the maximum aggregate uncollected purchase price (exclusive
of any deferred purchase price) for such Receivables at any time outstanding
does not exceed $750,000,000, and (b) which Receivables shall not be discounted
more than 25%.
Person. Any individual, corporation, partnership, joint venture,
limited liability company, trust, unincorporated association, business, or other
legal entity, and any government or any governmental agency or political
subdivision thereof.
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Pricing Table:
APPLICABLE
SENIOR PUBLIC APPLICABLE APPLICABLE APPLICABLE BASE EURODOLLAR
LEVEL DEBT RATING FACILITY RATE L/C RATE RATE RATE
- --------------- --------------------------------- ----------------- -------------------- ----------------- ---------------------
1 Greater than or equal to BBB+ 0.1000% 0.6500% Base Rate Eurodollar Rate
by Standard & Poor's or greater per annum per annum plus 0.6500%
than or equal to Baa1 by Moody's per annum
2 BBB by Standard & Poor's or 0.1250% 0.8750% Base Rate Eurodollar Rate
Baa2 by Moody's per annum per annum plus 0.8750%
per annum
3 BBB- by Standard & Poor's or 0.1750% 0.9500% Base Rate Eurodollar Rate
Baa3 by Moody's per annum per annum plus 0.9500%
per annum
4 BB+ by Standard & Poor's or Ba1 0.2500% 1.2500% Base Rate Eurodollar Rate
by Moody's per annum per annum plus 1.2500%
per annum
5 Less than or equal to BB by 0.3000% 1.4500% Base Rate plus Eurodollar Rate
Standard & Poor's or less than per annum per annum 0.2000% per plus 1.4500%
or equal to Ba2 by Moody's annum per annum
The applicable rates charged for any day shall be determined by the higher
Senior Public Debt Rating in effect as of that day, provided that if the higher
Senior Public Debt Rating is more than one level higher than the lower Senior
Public Debt Rating, the applicable rate shall be set at one level above the
lower Senior Public Debt Rating.
RCRA. See Section 7.15(a).
Real Property. All real property heretofore, now, or hereafter owned,
operated, or leased by the Borrower or any of its Subsidiaries.
Reimbursement Obligation. The Borrower's obligation to reimburse the
applicable Issuing Bank and the Banks on account of any drawing under any Letter
of Credit, all as provided in Section 3.2.
Release. Shall have the meaning specified in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
Sections 9601 et seq. ("CERCLA") and the term "Disposal" (or "Disposed") shall
have the meaning specified 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
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effective date of such amendment and provided further, to the extent that the
laws of Canada or a state, province, territory or other political subdivision
thereof wherein the property lies establish a meaning for "Release" or
"Disposal" which is broader than specified in either CERCLA, or RCRA, such
broader meaning shall apply to the Borrower's or any of its Subsidiaries'
activities in that state, province, territory or political subdivision.
Replacement Bank. See Section 6.11.
Replacement Notice. See Section 6.11.
Revolving Credit Loans. Collectively, the Syndicated Loans, the Swing
Line Loans and the Competitive Bid Loans.
Revolving Credit Maturity Date. June 28, 2002.
Revolving Credit Notes. Collectively, the Competitive Bid Notes, the
Syndicated Notes and the Swing Line Note.
Senior Public Debt Rating. The ratings of the Borrower's public
unsecured long-term senior debt, without third party credit enhancement, issued
by Moody's and Standard & Poor's.
Shareholder Suits. See the definition of "Consolidated Earnings Before
Interest and Taxes, or EBIT".
Standard & Poor's. Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc.
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 and whose
financial results are required to be consolidated with the financial results of
the designated parent in accordance with GAAP.
Swap Contracts. All obligations in respect of interest rate, currency
or commodity exchange, forward, swap, or futures contracts or similar
transactions or arrangements entered into to protect or hedge the Borrower and
its Subsidiaries against interest rate, exchange rate or commodity price risks
or exposure, or to lower or diversify their funding costs.
Swap Obligations. The maximum amount of any termination or loss payment
required to be paid by the Borrower or any Subsidiary with respect to any Swap
Contract if such Swap 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, provided that, solely with respect to Swap Contracts which are
either (a) entered into between the Borrower or any of its Subsidiaries with an
investment grade company, or (b) entered into between the Borrower or any of its
Subsidiaries with third parties whose obligations thereunder are secured, such
maximum amount of termination or loss payment shall be net of any termination or
loss payment required to be paid to the Borrower or any
22
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Subsidiary by such counterparty (other than the Borrower or another Subsidiary)
with respect to any Swap Contract if such Swap 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.
Swing Line Loans. See Section 2.11(a).
Swing Line Note. See Section 2.11(a).
Swing Line Settlement. The making or receiving of payments, in
immediately available funds, by the Banks to or from the Administrative Agent in
accordance with Section 2.11 hereof to the extent necessary to cause each Bank's
actual share of the outstanding amount of the Syndicated Loans to be equal to
such Bank's Commitment Percentage of the outstanding amount of such Syndicated
Loans, in any case when, prior to such action, the actual share is not so equal.
Swing Line Settlement Amount. See Section 2.11(b).
Swing Line Settlement Date. See Section 2.11(b).
Swing Line Settling Bank. See Section 2.11(b).
Syndicated Loan Request. See Section 2.6(a).
Syndicated Loans. A borrowing hereunder consisting of one or more loans
made by the Banks to the Borrower under the procedure described in Section
2.1(a) and Section 2.11 hereof.
Syndicated Notes. See Section 2.4(a).
Term Loan. The term loan made or to be made by the Banks to the
Borrower on the Revolving Credit Maturity Date as contemplated by Section 5.
Term Loan Maturity Date. The date 364 days after the Revolving Credit
Maturity Date, or if such date is not a Business Day, then the last Business Day
immediately preceding such date, or such earlier date as the Term Loan is paid
in full.
Term Notes. See Section 5.1.
Terminated Plans. The Waste Management, Inc. Pension Plan and The Waste
Management of Alameda County, Inc. Retirement Plan.
Total Commitment. Up to $750,000,000, as such amount may be reduced
pursuant to Section 2.3 hereof, or, if such Total Commitment has been terminated
pursuant to Section 2.3 or Section 13.2 hereof, zero.
Total Debt. The sum, without duplication, of all (1) Indebtedness of
the Borrower and its Subsidiaries on a consolidated basis under subsections (a)
through (h) of the definition of "Indebtedness" (provided, however, that
Indebtedness (A) under subsection (f) of the definition
23
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of "Indebtedness" shall be included in such calculation only to the extent that
a surety has been called upon to make payment on a bond, and (B) with respect to
Permitted Receivables Transactions shall not be included in such calculation),
plus (2) Swap Obligations, plus (3) reimbursement obligations of the Borrower
and its Subsidiaries with respect to drawings under any letters of credit.
SECTION 1.2. RULES OF INTERPRETATION.
(a) Unless otherwise noted, a reference to any document or
agreement (including this 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, 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 SYNDICATED LOAN FACILITIES.
SECTION 2.1. COMMITMENT TO LEND.
(a) Subject to the terms and conditions set forth in this
Agreement, each of the Banks severally agrees to lend to the Borrower
and the Borrower may borrow, repay, and reborrow from time to time
between the Effective Date and the Revolving Credit Maturity Date, upon
notice by the Borrower to the Administrative Agent given in accordance
with this Section 2, its Commitment Percentage of the Syndicated Loans
as are
24
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requested by the Borrower; provided that the sum of the outstanding
principal amount of the Syndicated Loans (including the Swing Line
Loans) and the Maximum Drawing Amount of outstanding Letters of Credit
shall not exceed the Total Commitment minus the aggregate amount of
Competitive Bid Loans outstanding at such time.
(b) On the date of each request for a Loan or Letter of Credit
hereunder, the Borrower shall be deemed to have made a representation
and warranty that the conditions set forth in Section 11 and Section
12, as the case may be, have been satisfied on the date of such
request. Any unpaid Reimbursement Obligation shall be a Base Rate Loan,
as set forth in Section 3.2(a).
SECTION 2.2. FACILITY FEE. The Borrower agrees to pay to the
Administrative Agent for the account of the Banks a fee (the "Facility Fee") on
the Total Commitment equal to the Applicable Facility Rate multiplied by the
Total Commitment, provided that in the event that the Borrower exercises its
option under Section 5 to convert the outstanding Revolving Credit Loans into a
Term Loan, the Facility Fee will be equal to the aggregate principal amount of
the Term Loan multiplied by the Applicable Facility Rate. The Facility Fee shall
be payable for the period from and after the Effective Date quarterly in arrears
on the first day of each calendar quarter for the immediately preceding calendar
quarter with the first such payment commencing on October 1, 2001 and with a
final payment on the Revolving Credit Maturity Date (or on the date of
termination in full of the Total Commitment, if earlier), provided that in the
event the Borrower opts to convert its outstanding Revolving Credit Loans into a
Term Loan, the final payment shall be on the Term Loan Maturity Date (or on the
date the Term Loan is paid in full, if earlier). The Facility Fee shall be
distributed pro rata among the Banks in accordance with each Bank's Commitment
Percentage (as determined prior to the date the Borrower converts the
outstanding Revolving Credit Loans into a Term Loan, with respect to the
Facility Fee payable on the Term Loan).
SECTION 2.3. REDUCTION OF TOTAL COMMITMENT.
(a) The Borrower shall have the right at any time and from
time to time upon three (3) Business Days' prior written notice to the
Administrative Agent to reduce by $25,000,000 or a greater amount or
terminate entirely, the Total Commitment, whereupon each Bank's
Commitment shall be reduced pro rata in accordance with such Bank's
Commitment Percentage of the amount specified in such notice or, as the
case may be, terminated provided that at no time may (i) the Total
Commitment be reduced to an amount less than the sum of (A) the Maximum
Drawing Amount of all Letters of Credit, and (B) all Revolving Credit
Loans then outstanding.
(b) No reduction or termination of the Total Commitment once
made may be revoked; the portion of the Total Commitment reduced or
terminated may not be reinstated; and amounts in respect of such
reduced or terminated portion may not be reborrowed.
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(c) The Administrative Agent will notify the Banks promptly
after receiving any notice delivered by the Borrower pursuant to this
Section 2.3 and will distribute to each Bank a revised Schedule 1 to
this Agreement.
SECTION 2.4. THE SYNDICATED NOTES.
(a) The Syndicated Loans shall be evidenced by separate
promissory notes of the Borrower in substantially the form of Exhibit A
hereto (each, a "Syndicated Note"), dated as of the Effective Date (or
such later date at which a Bank becomes a party hereto pursuant to
Section 21) and completed with appropriate insertions. One Syndicated
Note shall be payable to the order of each Bank in an amount equal to
its maximum Commitment, and shall represent the obligation of the
Borrower to pay such Bank such principal amount or, if less, the
outstanding principal amount of all Syndicated Loans made by such Bank,
plus interest accrued thereon, as set forth herein.
(b) The Borrower irrevocably authorizes each Bank to make, or
cause to be made, in connection with a Drawdown Date of any Syndicated
Loan and at the time of receipt of any payment of principal on its
Syndicated Note, an appropriate notation on such Bank's records or on
the schedule attached to such Bank's Syndicated 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 each Bank may,
prior to any transfer of its Syndicated Note endorse on the reverse
side thereof the outstanding principal amount of such Loans evidenced
thereby. The outstanding amount of the Syndicated Loans set forth on
such Bank's records 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 Borrower hereunder or under
such Notes to make payments of principal of or interest on any such
Notes when due.
SECTION 2.5. INTEREST ON SYNDICATED LOANS.
(a) The outstanding principal amount of the Syndicated Loans
shall bear interest at the rate per annum equal to (i) the Applicable
Base Rate on Base Rate Loans, (ii) the Applicable Eurodollar Rate on
Eurodollar Loans and (iii) the Applicable Swing Line Rate on Swing Line
Loans.
(b) Interest shall be payable (i) quarterly in arrears on the
first Business Day of each quarter, with the first such payment
commencing October 1, 2001, on Base Rate Loans, (ii) on the last day of
the applicable Interest Period, and if such Interest Period is longer
than three months, also on the last day of each three month period
following the commencement of such Interest Period, on Eurodollar
Loans, (iii) on the Revolving Credit Maturity Date for all Revolving
Credit Loans, and (iv) on the Term Loan Maturity Date for the Term
Loan.
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SECTION 2.6. REQUESTS FOR SYNDICATED LOANS.
(a) The Borrower shall give to the Administrative Agent
written notice in the form of Exhibit D hereto (or telephonic notice
confirmed in writing or a facsimile in the form of Exhibit D hereto) of
each Syndicated Loan requested hereunder (a "Syndicated Loan Request")
not later than (a) 11:00 a.m. (New York time) on the proposed Drawdown
Date of any Base Rate Loan, or (b) 11:00 a.m. (New York time) three (3)
Eurodollar Business Days prior to the proposed Drawdown Date of any
Eurodollar Loan. Each such Syndicated Loan Request shall specify (A)
the principal amount of the Syndicated Loan requested, (B) the proposed
Drawdown Date of such Syndicated Loan, (C) whether such Syndicated Loan
requested is to be a Base Rate Loan or a Eurodollar Loan, and (D) the
Interest Period for such Syndicated Loan, if a Eurodollar Loan. Each
Syndicated Loan requested shall be in a minimum amount of $10,000,000.
Each such Syndicated Loan Request shall reflect the Maximum Drawing
Amount of all Letters of Credit outstanding and the amount of all
Revolving Credit Loans outstanding (including Competitive Bid Loans and
Swing Line Loans). Syndicated Loan Requests made hereunder shall be
irrevocable and binding on the Borrower, and shall obligate the
Borrower to accept the Syndicated Loan requested from the Banks on the
proposed Drawdown Date.
(b) Each of the representations and warranties made by the
Borrower to the Banks or the Administrative Agent in this Agreement or
any other Loan Document shall be true and correct in all material
respects when made and shall, for all purposes of this Agreement, be
deemed to be repeated by the Borrower on and as of the date of the
submission of a Syndicated Loan Request, Competitive Bid Quote Request,
or Letter of Credit Application and on and as of the Drawdown Date of
any Revolving Credit Loan or the date of issuance of any Letter of
Credit (except to the extent (i) of changes resulting from transactions
contemplated or permitted by this Agreement and the other Loan
Documents, (ii) of changes occurring in the ordinary course of business
that either individually or in the aggregate do not result in a
Material Adverse Effect, or (iii) that such representations and
warranties expressly relate only to an earlier date).
(c) The Administrative Agent shall promptly notify each Bank
of each Syndicated Loan Request received by the Administrative Agent
(i) on the proposed Drawdown Date of any Base Rate Loan, or (ii) three
(3) Eurodollar Business Days prior to the proposed Drawdown Date of any
Eurodollar Loan.
SECTION 2.7. ELECTION OF EURODOLLAR RATE; NOTICE OF ELECTION; INTEREST
PERIODS; MINIMUM AMOUNTS.
(a) At the Borrower's option, so long as no Default or Event
of Default has occurred and is then continuing, the Borrower may (i)
elect to convert any Base Rate Loan or a portion thereof to a
Eurodollar Loan, (ii) at the time of any Syndicated Loan Request,
specify that such requested Loan shall be a Eurodollar Loan, or (iii)
upon expiration of the applicable Interest Period, elect to maintain an
existing Eurodollar Loan as such, provided that the Borrower give
notice to the Administrative Agent pursuant to Section 2.7(b) hereof.
Upon determining any Eurodollar Rate, the Administrative Agent shall
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forthwith provide notice thereof to the Borrower and the Banks, and
each such notice to the Borrower shall be considered prima facie
correct and binding, absent manifest error.
(b) Three (3) Eurodollar Business Days prior to the making of
any Eurodollar Loan or the conversion of any Base Rate Loan to a
Eurodollar Loan, or, in the case of an outstanding Eurodollar Loan, the
expiration date of the applicable Interest Period, the Borrower shall
give written, telex or facsimile notice (or telephonic notice promptly
confirmed in a writing or a facsimile) received by the Administrative
Agent not later than 11:00 a.m. (New York time) of its election
pursuant to Section 2.7(a). Each such notice delivered to the
Administrative Agent shall specify the aggregate principal amount of
the Syndicated Loans to be borrowed or maintained as or converted to
Eurodollar Loans and the requested duration of the Interest Period that
will be applicable to such Eurodollar Loan, and shall be irrevocable
and binding upon the Borrower. If the Borrower shall fail to give the
Administrative Agent notice of its election hereunder together with all
of the other information required by this Section 2.7(b) with respect
to any Syndicated Loan, whether at the end of an Interest Period or
otherwise, such Syndicated Loan shall be deemed a Base Rate Loan. The
Administrative Agent shall promptly notify the Banks in writing (or by
telephone confirmed in writing or by facsimile) of such election.
(c) Notwithstanding anything herein to the contrary, the
Borrower may not specify an Interest Period that would extend beyond
the Revolving Credit Maturity Date.
(d) No conversion of Loans pursuant to this Section 2.7 may
result in Eurodollar Loans that are less than $5,000,000. In no event
shall the Borrower have more than ten (10) different Interest Periods
for borrowings of Eurodollar Loans outstanding at any time.
(e) Subject to the terms and conditions of Section 6.7 hereof,
if any Affected Bank demands compensation under Section 6.4(c) or (d)
with respect to any Eurodollar Loan, the Borrower may at any time, upon
at least three (3) Business Days' prior written notice to the
applicable Administrative Agent, elect to convert such Eurodollar Loan
into a Base Rate Loan (on which interest and principal shall be payable
contemporaneously with the related Eurodollar Loans of the other
Banks). Thereafter, and until such time as the Affected Bank notifies
the Administrative Agent that the circumstances giving rise to the
demand for compensation under Section 6.4(c) or (d) no longer exist,
all requests for Eurodollar Loans from such Affected Bank shall be
deemed to be requests for Base Rate Loans. Once the Affected Bank
notifies the Administrative Agent that such circumstances no longer
exist, the Borrower may elect that the principal amount of each such
Loan converted hereunder shall again bear interest as Eurodollar Loans
beginning on the first day of the next succeeding Interest Period
applicable to the related Eurodollar Loans of the other Banks.
SECTION 2.8. FUNDS FOR SYNDICATED LOANS. Not later than 1:00 p.m. (New
York time) on the proposed Drawdown Date of Syndicated Loans, each of the Banks
will make available to the Administrative Agent at its Loan Office, in
immediately available funds, the amount of its Commitment Percentage of the
amount of the requested Loan. Upon receipt from each Bank of
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such amount, and upon receipt of the documents required by Section 11 and
Section 12 and the satisfaction of the other conditions set forth therein, the
Administrative Agent will make available to the Borrower the aggregate amount of
such Syndicated Loans made available by the Banks. The failure or refusal of any
Bank to make available to the Administrative Agent at the aforesaid time and
place on any Drawdown Date the amount of its Commitment Percentage of the
requested Syndicated Loan shall not relieve any other Bank from its several
obligations hereunder to make available to the Administrative Agent the amount
of such Bank's Commitment Percentage of the requested Loan.
SECTION 2.9. MATURITY OF THE REVOLVING CREDIT LOANS AND REIMBURSEMENT
OBLIGATIONS. The Borrower promises to pay on the Revolving Credit Maturity Date,
and there shall become absolutely due and payable on the Revolving Credit
Maturity Date, all of the Revolving Credit Loans and unpaid Reimbursement
Obligations outstanding on such date, together with any and all accrued and
unpaid interest thereon and any fees and other amounts owing hereunder.
SECTION 2.10. PREPAYMENTS OR REPAYMENTS OF REVOLVING CREDIT LOANS.
(a) Optional Prepayments: Subject to the terms and conditions
of Section 6.7, the Borrower shall have the right, at its 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. The
Borrower shall give the Administrative Agent no later than 11:00 a.m.
(New York time) (i) on the proposed date of prepayment or repayment of
Base Rate Loans, and (ii) three (3) Eurodollar Business Day prior to
the proposed date of prepayment or repayment of Eurodollar Loans,
written notice (or telephonic notice confirmed in writing or by
facsimile) of any proposed prepayment or repayment pursuant to this
Section 2.10, specifying the proposed date of prepayment or repayment
of such Loans and the principal amount to be paid. Notwithstanding the
foregoing, the Borrower may not prepay any Competitive Bid Loans
without the consent of the applicable Bank. The Administrative Agent
shall promptly notify each Bank by written notice (or telephonic notice
confirmed in writing or by facsimile) of such notice of payment.
(b) Mandatory Repayments: If at any time the sum of the
outstanding principal amount of the Revolving Credit Loans plus the
Maximum Drawing Amount of all outstanding Letters of Credit exceeds the
Total Commitment, whether by reduction of the Total Commitment or
otherwise, then the Borrower shall immediately pay the amount of such
excess to the Administrative Agent, (i) for application to the
Revolving Credit Loans, first to Syndicated Loans, then to Competitive
Bid Loans, subject to Section 6.7, or (ii) if no Revolving Credit Loans
shall be outstanding, to be held by the Administrative Agent for the
benefit of the Banks as collateral security for such excess Maximum
Drawing Amount and the Borrower hereby grants a security interest in
such amount to the Administrative Agent for the benefit of the Banks;
provided, however, that if the amount of cash collateral held by the
Administrative Agent pursuant to this Section 2.10(b) exceeds the
Maximum Drawing Amount required to be collateralized from time to time,
the Administrative Agent shall return such excess to the Borrower.
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SECTION 2.11. SWING LINE LOANS; SETTLEMENTS.
(a) Notwithstanding the notice and minimum amount requirements
set forth in Section 2.6 but otherwise in accordance with the terms and
conditions of this Agreement, and solely for ease of administration of
the Syndicated Loans, the Administrative Agent may, but shall not be
required to, fund Base Rate Loans made in accordance with the
provisions of this Agreement ("Swing Line Loans"). The Swing Line Loans
shall be evidenced by a promissory note of the Borrower in
substantially the form of Exhibit B hereto (the "Swing Line Note") and,
at the discretion of the Administrative Agent may be in amounts less
than $10,000,000 provided that the outstanding amount of Swing Line
Loans advanced by the Administrative Agent hereunder shall not exceed
$10,000,000 at any time. Each Bank shall remain severally and
unconditionally liable to fund its pro rata share (based upon each
Bank's Commitment Percentage) of such Swing Line Loans on each Swing
Line Settlement Date and, in the event the Administrative Agent chooses
not to fund all Base Rate Loans requested on any date, to fund its
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 Swing Line Settlement, all payments or
repayments of the principal of, and interest on, Swing Line Loans shall
be credited to the account of the Administrative Agent.
(b) The Banks shall effect Swing Line Settlements on (i) the
Business Day immediately following any day which the Administrative
Agent gives written notice to effect a Swing Line Settlement, (ii) the
Business Day immediately following the Administrative Agent's becoming
aware of the existence of any Default or Event of Default, and (iii)
the Revolving Credit Maturity Date (each such date, a "Swing Line
Settlement Date"). One (1) Business Day prior to each such Swing Line
Settlement Date, the Administrative Agent shall give telephonic notice
to the Banks of (A) the respective outstanding amount of Syndicated
Loans made by each Bank as at the close of business on the prior day,
(B) the amount that any Bank, as applicable (a "Swing Line Settling
Bank"), shall pay to effect a Swing Line Settlement (a "Swing Line
Settlement Amount") and (C) the portion (if any) of the aggregate Swing
Line Settlement Amount to be paid to each Bank. A statement of the
Administrative Agent submitted to the Banks with respect to any amounts
owing hereunder shall be prima facie evidence of the amount due and
owing. Each Swing Line Settling Bank shall, not later than 1:00 p.m.
(New York time) on each Swing Line Settlement Date, effect a wire
transfer of immediately available funds to the Administrative Agent at
its Loan Office in the amount of such Bank's Swing Line Settlement
Amount. The Administrative Agent shall, as promptly as practicable
during normal business hours on each Swing Line Settlement Date, effect
a wire transfer of immediately available funds to each Bank of the
Swing Line Settlement Amount to be paid to such Bank. All funds
advanced by any Bank as a Swing Line Settling Bank pursuant to this
Section 2.11(b) shall for all purposes be treated as a Base Rate Loan
made by such Swing Line Settling Bank to the Borrower, and all funds
received by any Bank pursuant to this Section 2.11(b) shall for all
purposes be treated as repayment of amounts owed by the Borrower with
respect to Base Rate Loans made by such Bank.
(c) The Administrative Agent may (unless notified to the
contrary by any Swing Line Settling Bank by 12:00 noon (New York time)
one (1) Business Day prior to the Settlement Date) assume that each
Swing Line Settling Bank has made available (or
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will make available by the time specified in Section 2.11(b)) to the
Administrative Agent its Swing Line Settlement Amount, and the
Administrative Agent may (but shall not be required to), in reliance
upon such assumption, make available to each applicable Bank its share
(if any) of the aggregate Swing Line Settlement Amount. If the Swing
Line Settlement Amount of such Swing Line Settling Bank is made
available to the Administrative Agent by such Swing Line Settling Bank
on a date after such Swing Line Settlement Date, such Swing Line
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 Swing Line Settlement Amount times (iii) a
fraction, the numerator of which is the number of days that elapse from
and including such Swing Line Settlement Date to but not including the
date on which such Swing Line Settlement Amount shall become
immediately available to the Administrative Agent, and the denominator
of which is 365. Upon payment of such amount such Swing Line Settling
Bank shall be deemed to have delivered its Swing Line Settlement Amount
on the Swing Line Settlement Date and shall become entitled to interest
payable by the Borrower with respect to such Swing Line Settling Bank's
Swing Line Settlement Amount as if such share were delivered on the
Swing Line Settlement Date. If such Swing Line Settlement Amount is not
in fact made available to the Administrative Agent by such Swing Line
Settling Bank within three (3) Business Days of such Swing Line
Settlement Date, the Administrative Agent shall be entitled to recover
such amount from the Borrower, with interest thereon at the Applicable
Base Rate.
(d) After any Swing Line Settlement Date, any payment by the
Borrower of Swing Line Loans hereunder shall be allocated among the
Banks, in amounts determined so as to provide that after such
application and the related Swing Line Settlement, the outstanding
amount of Syndicated Loans of each Bank equals, as nearly as
practicable, such Bank's Commitment Percentage of the aggregate amount
of Syndicated Loans.
SECTION 3. LETTERS OF CREDIT.
SECTION 3.1. LETTER OF CREDIT COMMITMENTS.
(a) Subject to the terms and conditions hereof and the receipt
of a Letter of Credit Application by an Issuing Bank, with a copy to
the Administrative Agent reflecting the Maximum Drawing Amount of all
Letters of Credit (including the requested Letter of Credit), such
Issuing Bank, on behalf of the Banks and in reliance upon the
representations and warranties of the Borrower contained herein and the
agreement of the Banks contained in Section 3.1(b) hereof, agrees to
issue Letters of Credit for the account of the Borrower (which may,
with such Issuing Bank's consent, incorporate automatic renewals for
periods of up to twelve (12) months), in such form as may be requested
from time to time by the Borrower and agreed to by the Issuing Bank;
provided, however, that, after giving effect to such request, the
aggregate Maximum Drawing Amount of all Letters of Credit issued at any
time shall not exceed the Total Commitment minus the aggregate
outstanding amount of the Revolving Credit Loans. No Letter of Credit
shall have an
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expiration date later than five (5) Business Days prior to the
Revolving Credit Maturity Date.
(b) Each Letter of Credit shall be denominated in Dollars.
Each Bank severally agrees that it shall be absolutely liable, without
regard to the occurrence of any Default or Event of Default, the
termination of the Total Commitment pursuant to Section 13.2, or any
other condition precedent whatsoever, to the extent of such Bank's
Commitment Percentage to reimburse the Issuing Bank on demand for the
amount of each draft paid by the Issuing Bank under each Letter of
Credit to the extent that such amount is not reimbursed by the Borrower
pursuant to Section 3.2 (such agreement for a Bank being called herein
the "Letter of Credit Participation" of such Bank). Each Bank agrees
that its obligation to reimburse the Issuing Bank pursuant to this
Section 3.1(b) shall not be affected in any way by any circumstance
other than the gross negligence or willful misconduct of the Issuing
Bank.
(c) Each such reimbursement payment made by a Bank to the
Issuing Bank shall be treated as the purchase by such Bank of a
participating interest in the applicable Reimbursement Obligation under
Section 3.2 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 3.2.
SECTION 3.2. REIMBURSEMENT OBLIGATION OF THE BORROWER. In order to
induce the Issuing Banks to issue, extend and renew each Letter of Credit, the
Borrower hereby agrees to reimburse or pay to each Issuing Bank, with respect to
each 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 such Issuing Bank or such 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 Borrower does not reimburse such
Issuing Bank on the Drawdown Date, such amount shall, provided that no
Event of Default under Section 13(g) or 13(h) has occurred, become
automatically a Syndicated Loan which is a Base Rate Loan advanced
hereunder in an amount equal to such sum; and
(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 all Letters of Credit shall be paid by
the Borrower to the Administrative Agent to be held as cash collateral
for the applicable Reimbursement Obligations.
SECTION 3.3. OBLIGATIONS ABSOLUTE. The Borrower's respective
obligations under this Section 3 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,
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counterclaim or defense to payment which the Borrower may have or have had
against any Issuing Bank, any Bank or any beneficiary of a Letter of Credit, and
the Borrower expressly waives any such rights that it may have with respect
thereto. The Borrower further agrees with each Issuing Bank and the Banks that
such Issuing Bank and the Banks (i) shall not be responsible for, and the
Borrower's 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 (unless due to the willful
misconduct of such Issuing Bank or any other Bank), or any dispute between or
among the Borrower and 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 Borrower against the beneficiary of any
Letter of Credit or any such transferee, and (ii) 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 except to the extent of their own willful misconduct. The Borrower agrees
that any action taken or omitted by any Issuing Bank or any Bank in good faith
under or in connection with any Letter of Credit and the related drafts and
documents shall be binding upon the Borrower and shall not result in any
liability on the part of such Issuing Bank or any Bank (or their respective
affiliates) to the Borrower. Nothing herein shall constitute a waiver by the
Borrower of any of its rights against any beneficiary of a Letter of Credit.
SECTION 3.4. RELIANCE BY THE ISSUING BANKS. To the extent not
inconsistent with Section 3.3, each Issuing Bank 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, facsimile, telex or teletype message, statement, order or other
document believed by such Issuing Bank in good faith 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 3.5. NOTICE REGARDING LETTERS OF CREDIT. One (1) Business Day
prior to the issuance of any Letter of Credit or amendments, extensions or
terminations thereof, the applicable Issuing Bank shall notify the
Administrative Agent of the terms of such Letter of Credit, amendment, extension
or termination. On the day of any drawing under any Letter of Credit, such
Issuing Bank shall notify the Administrative Agent of such drawing under any
Letter of Credit.
SECTION 3.6. LETTER OF CREDIT FEE. The Borrower shall pay a fee (the
"Letter of Credit Fee") equal to the Applicable L/C Rate on the Maximum Drawing
Amount of the Letters of Credit to the Administrative Agent for the account of
the Banks, to be shared pro rata by the Banks in accordance with their
respective Commitment Percentages. The Letter of Credit Fee shall be payable
quarterly in arrears on the first day of each calendar quarter for the quarter
just ended, with the first such payment commencing October 1, 2001, and on the
Revolving Credit Maturity Date. In addition, an issuing fee (the "Issuance Fee")
with respect to each Letter of Credit to be agreed upon annually between the
Borrower and each Issuing Bank shall be payable by the Borrower to such Issuing
Bank for its account.
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SECTION 4. COMPETITIVE BID LOANS.
SECTION 4.1. THE COMPETITIVE BID OPTION. In addition to the Syndicated
Loans made pursuant to Section 2 hereof, the Borrower may request Competitive
Bid Loans pursuant to the terms of this Section 4. The Banks may, but shall have
no obligation to, make such offers and the Borrower may, but shall have no
obligation to, accept such offers in the manner set forth in this Section 4.
Notwithstanding any other provision herein to the contrary, at no time shall the
aggregate principal amount of Competitive Bid Loans outstanding at any time
exceed the Total Commitment minus the sum of (a) the aggregate outstanding
principal amount of Syndicated Loans (including the Swing Loans), plus (b) the
Maximum Drawing Amount of Letters of Credit, outstanding at such time.
SECTION 4.2. COMPETITIVE BID LOAN ACCOUNTS; COMPETITIVE BID NOTES.
(a) The obligation of the Borrower to repay the outstanding
principal amount of any and all Competitive Bid Loans, plus interest at
the applicable rate accrued thereon, shall be evidenced by this
Agreement and by individual loan accounts (the "Competitive Bid Loan
Accounts" and individually, a "Competitive Bid Loan Account")
maintained by the Administrative Agent on its books for each of the
Banks, it being the intention of the parties hereto that, except as
provided for in paragraph (b) of this Section 4.2, the Borrower's
obligations with respect to Competitive Bid Loans are to be evidenced
only as stated herein and not by separate promissory notes.
(b) Any Bank may at any time, and from time to time, request
that any Competitive Bid Loans outstanding to such Bank be evidenced by
a promissory note of the Borrower in substantially the form of Exhibit
C hereto (each, a "Competitive Bid Note"), dated as of the Effective
Date and completed with appropriate insertions. One Competitive Bid
Note shall be payable to the order of each Bank in an amount equal to
the Total Commitment, and representing the obligation of the Borrower
to pay such Bank such principal amount or, if less, the outstanding
principal amount of any and all Competitive Bid Loans made by such
Bank, plus interest at the applicable Competitive Bid Rate or
Competitive Bid Margin accrued thereon, as set forth herein. Upon
execution and delivery by the Borrower of a Competitive Bid Note, the
Borrower's obligation to repay any and all Competitive Bid Loans made
to it by such Bank and all interest thereon shall thereafter be
evidenced by such Competitive Bid Note.
(c) The Borrower irrevocably authorizes (i) each Bank to make
or cause to be made, in connection with a Drawdown Date of any
Competitive Bid Loan or at the time of receipt of any payment of
principal on such Bank's Competitive Bid Note in the case of a
Competitive Bid Note, and (ii) the Administrative Agent to make or
cause to be made, in connection with a Drawdown Date of any Competitive
Bid Loan or at the time of receipt of any payment of principal on such
Bank's Competitive Bid Loan Account in the case of a Competitive Bid
Loan Account, an appropriate notation on such Bank's records or on the
schedule attached to such Bank's Competitive Bid Note or a continuation
of such schedule attached thereto, or the Administrative Agent's
records, as applicable, reflecting the making of the Competitive Bid
Loan or the receipt of such payment (as the case may be) and such Bank
may, prior to any transfer of a Competitive Bid Note,
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endorse on the reverse side thereof the outstanding principal amount of
Competitive Bid Loans evidenced thereby. The outstanding amount of the
Competitive Bid Loans set forth on such Bank's record or the
Administrative Agent's records, as applicable, 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
Borrower hereunder to make payments of principal of or interest on any
Competitive Bid Loan when due.
SECTION 4.3. COMPETITIVE BID QUOTE REQUEST; INVITATION FOR COMPETITIVE
BID QUOTES.
(a) When the Borrower wishes to request offers to make
Competitive Bid Loans under this Section 4, it shall transmit to the
Administrative Agent by telex or facsimile a Competitive Bid Quote
Request substantially in the form of Exhibit H hereto (a "Competitive
Bid Quote Request") so as to be received no later than 1:00 p.m. (New
York time) (x) five (5) Eurodollar Business Days prior to the requested
Drawdown Date in the case of a Eurodollar Competitive Bid Loan (a
"Eurodollar Competitive Bid Loan") or (y) one (1) Business Day prior to
the requested Drawdown Date in the case of an Absolute Competitive Bid
Loan (an "Absolute Competitive Bid Loan"), specifying:
(i) the requested Drawdown Date (which must be a
Eurodollar Business Day in the case of a Eurodollar
Competitive Bid Loan or a Business Day in the case of an
Absolute Competitive Bid Loan);
(ii) the aggregate amount of such Competitive Bid
Loans, which shall be $10,000,000 or larger multiple of
$1,000,000;
(iii) the duration of the Interest Period(s)
applicable thereto, subject to the provisions of the
definition of Interest Period; and
(iv) whether the Competitive Bid Quotes requested are
for Eurodollar Competitive Bid Loans or Absolute Competitive
Bid Loans.
The Borrower may request offers to make Competitive Bid Loans for more
than one Interest Period in a single Competitive Bid Quote Request. No
new Competitive Bid Quote Request shall be given until the Borrower has
notified the Administrative Agent of its acceptance or non-acceptance
of the Competitive Bid Quotes relating to any outstanding Competitive
Bid Quote Request.
(b) Promptly upon receipt of a Competitive Bid Quote Request,
the Administrative Agent shall send to the Banks by telecopy or
facsimile transmission an Invitation for Competitive Bid Quotes
substantially in the form of Exhibit I hereto, which shall constitute
an invitation by the Borrower to each Bank to submit Competitive Bid
Quotes in accordance with this Section 4.
SECTION 4.4. ALTERNATIVE MANNER OF PROCEDURE. If, after receipt by the
Administrative Agent and each of the Banks of a Competitive Bid Quote Request
from the Borrower in accordance with Section 4.3, the Administrative Agent or
any Bank shall be unable to complete any procedure of
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the auction process described in Sections 4.5 through 4.6 (inclusive) due to the
inability of such Person to transmit or receive communications through the means
specified therein, such Person may rely on telephonic notice for the
transmission or receipt of such communications. In any case where such Person
shall rely on telephone transmission or receipt, any communication made by
telephone shall, as soon as possible thereafter, be followed by written
confirmation thereof.
SECTION 4.5. SUBMISSION AND CONTENTS OF COMPETITIVE BID QUOTES.
(a) Each Bank may, but shall be under no obligation to, submit
a Competitive Bid Quote containing an offer or offers to make
Competitive Bid Loans in response to any Competitive Bid Quote Request.
Each Competitive Bid Quote must comply with the requirements of this
Section 4.5 and must be submitted to the Administrative Agent by telex
or facsimile transmission at its offices as specified in or pursuant to
Section 23 not later than (x) 2:00 p.m. (New York time) on the fourth
Eurodollar Business Day prior to the proposed Drawdown Date, in the
case of a Eurodollar Competitive Bid Loan or (y) 10:00 a.m. (New York
time) on the proposed Drawdown Date, in the case of an Absolute
Competitive Bid Loan, provided that Competitive Bid Quotes may be
submitted by the Administrative Agent in its capacity as a Bank only if
it submits its Competitive Bid Quote to the Borrower not later than (x)
one hour prior to the deadline for the other Banks, in the case of a
Eurodollar Competitive Bid Loan or (y) 15 minutes prior to the deadline
for the other Banks, in the case of an Absolute Competitive Bid Loan.
Subject to the provisions of Sections 11 and 12 hereof, any Competitive
Bid Quote so made shall be irrevocable except with the written consent
of the Administrative Agent given on the instructions of the Borrower.
(b) Each Competitive Bid Quote shall be in substantially the
form of Exhibit J hereto and shall in any case specify:
(i) the proposed Drawdown Date;
(ii) the principal amount of the Competitive Bid Loan
for which each proposal is being made, which principal amount
(w) may be greater than or less than the Commitment of the
quoting Bank, (x) must be $5,000,000 or a larger multiple of
$1,000,000, (y) may not exceed the aggregate principal amount
of Competitive Bid Loans for which offers were requested and
(z) may be subject to an aggregate limitation as to the
principal amount of Competitive Bid Loans for which offers
being made by such quoting Bank may be accepted;
(iii) the Interest Period(s) for which Competitive
Bid Quotes are being submitted;
(iv) in the case of a Eurodollar Competitive Bid
Loan, the margin above or below the applicable Eurodollar Rate
(the "Competitive Bid Margin") offered for each such
Competitive Bid Loan, expressed as a percentage (specified to
the nearest 1/10,000th of 1%) to be added to or subtracted
from such Eurodollar Rate;
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(v) in the case of an Absolute Competitive Bid Loan,
the rate of interest per annum (specified to the nearest
1/10,000th of 1%) (the "Competitive Bid Rate") offered for
each such Absolute Competitive Bid Loan; and
(vi) the identity of the quoting Bank.
A Competitive Bid Quote may include up to five separate offers by the
quoting Bank with respect to each Interest Period specified in the
related Invitation for Competitive Bid Quotes.
(c) Any Competitive Bid Quote shall be disregarded if it:
(i) is not substantially in the form of Exhibit J
hereto;
(ii) contains qualifying, conditional or similar
language;
(iii) proposes terms other than or in addition to
those set forth in the applicable Invitation for Competitive
Bid Quotes; or
(iv) arrives after the time set forth in Section
4.5(a) hereof.
SECTION 4.6. NOTICE TO BORROWER. The Administrative Agent shall
promptly notify the Borrower of the terms (x) of any Competitive Bid Quote
submitted by a Bank that is in accordance with Section 4.5 and (y) of any
Competitive Bid Quote that amends, modifies or is otherwise inconsistent with a
previous Competitive Bid Quote submitted by such Bank with respect to the same
Competitive Bid Quote Request. Any such subsequent Competitive Bid Quote shall
be disregarded by the Administrative Agent unless such subsequent Competitive
Bid Quote is submitted solely to correct a manifest error in such former
Competitive Bid Quote. The Administrative Agent's notice to the Borrower shall
specify (A) the aggregate principal amount of Competitive Bid Loans for which
offers have been received for each Interest Period specified in the related
Competitive Bid Quote Request, (B) the respective principal amounts and
Competitive Bid Margins or Competitive Bid Rates, as the case may be, so
offered, and the identity of the respective Banks submitting such offers, and
(C) if applicable, limitations on the aggregate principal amount of Competitive
Bid Loans for which offers in any single Competitive Bid Quote may be accepted.
SECTION 4.7. ACCEPTANCE AND NOTICE BY BORROWER AND ADMINISTRATIVE
AGENT. Not later than 11:00 a.m. (New York time) on (x) the third Eurodollar
Business Day prior to the proposed Drawdown Date, in the case of a Eurodollar
Competitive Bid Loan or (y) the proposed Drawdown Date, in the case of an
Absolute Competitive Bid Loan, the Borrower shall notify the Administrative
Agent of its acceptance or non-acceptance of each Competitive Bid Quote in
substantially the form of Exhibit K hereto. The Borrower may accept any
Competitive Bid Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Competitive Bid
Loan may not exceed the applicable amount set forth in the related
Competitive Bid Quote Request;
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(ii) acceptance of offers may only be made on the basis of
ascending Competitive Bid Margins or Competitive Bid Rates, as the case
may be, and
(iii) the Borrower may not accept any offer that is described
in subsection 4.5(c) or that otherwise fails to comply with the
requirements of this Agreement.
The Administrative Agent shall promptly notify each Bank which submitted a
Competitive Bid Quote of the Borrower's acceptance or non-acceptance thereof. At
the request of any Bank which submitted a Competitive Bid Quote and with the
consent of the Borrower, the Administrative Agent will promptly notify all Banks
which submitted Competitive Bid Quotes of (a) the aggregate principal amount of,
and (b) the range of Competitive Bid Rates or Competitive Bid Margins of, the
accepted Competitive Bid Loans for each requested Interest Period.
SECTION 4.8. ALLOCATION BY ADMINISTRATIVE AGENT. If offers are made by
two or more Banks with the same Competitive Bid Margin or Competitive Bid Rate,
as the case may be, for a greater aggregate principal amount than the amount in
respect of which offers are accepted for the related Interest Period, the
principal amount of Competitive Bid Loans in respect of which such offers are
accepted shall be allocated by the Administrative Agent among such Banks as
nearly as possible (in such multiples, not less than $1,000,000, as the
Administrative Agent may deem appropriate) in proportion to the aggregate
principal amounts of such offers. Determination by the Administrative Agent of
the amounts of Competitive Bid Loans shall be conclusive in the absence of
manifest error.
SECTION 4.9. FUNDING OF COMPETITIVE BID LOANS. If, on or prior to the
Drawdown Date of any Competitive Bid Loan, the Total Commitment has not
terminated in full and if, on such Drawdown Date, the applicable conditions of
Section Sections 11 and 12 hereof are satisfied, the Bank or Banks whose offers
the Borrower has accepted will fund each Competitive Bid Loan so accepted. Such
Bank or Banks will make such Competitive Bid Loans by crediting the
Administrative Agent for further credit to the Borrower's specified account with
the Administrative Agent, in immediately available funds not later than 1:00
p.m. (New York time) on such Drawdown Date.
SECTION 4.10. FUNDING LOSSES. If, after acceptance of any Competitive
Bid Quote pursuant to Section 4, the Borrower (i) fails to borrow any
Competitive Bid Loan so accepted on the date specified therefor, or (ii) repays
the outstanding amount of the Competitive Bid Loan prior to the last day of the
Interest Period relating thereto, the Borrower shall indemnify the Bank making
such Competitive Bid Quote or funding such Competitive Bid Loan against any loss
or expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Bank to fund or maintain such unborrowed
Competitive Bid Loans, including, without limitation compensation as provided in
Section 6.7.
SECTION 4.11. REPAYMENT OF COMPETITIVE BID LOANS; INTEREST. The
principal of each Competitive Bid Loan shall become absolutely due and payable
by the Borrower on the last day of the Interest Period relating thereto, and the
Borrower hereby absolutely and unconditionally promises to pay to the
Administrative Agent for the account of the relevant Banks at or before 1:00
p.m. (New York time) on the last day of the Interest Periods relating thereto
the principal amount of all such Competitive Bid Loans, plus interest thereon at
the applicable rates. The
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Competitive Bid Loans shall bear interest at the rate per annum specified in the
applicable Competitive Bid Quotes. Interest on the Competitive Bid Loans shall
be payable (a) on the last day of the applicable Interest Periods, and if any
such Interest Period is longer than three months, also on the last day of the
third month following the commencement of such Interest Period, and (b) on the
Revolving Credit Maturity Date for all Revolving Credit Loans. Subject to the
terms of this Agreement, the Borrower may make Competitive Bid Quote Requests
with respect to new borrowings of any amounts so repaid prior to the Revolving
Credit Maturity Date.
SECTION 5. THE TERM LOAN.
SECTION 5.1. CONVERSION OF REVOLVING CREDIT LOANS; THE TERM LOAN. Upon
three (3) days prior written notice to the Administrative Agent and the Banks,
and subject to the terms and conditions set forth in this Agreement, including,
without limitation, the satisfaction of the conditions set forth in Section 12
hereof and the execution and delivery by the Borrower of the Term Notes to the
Banks, on the Revolving Credit Maturity Date the aggregate amount of the
outstanding Revolving Credit Loans at such date shall, at the option of the
Borrower, be converted into a Term Loan in the aggregate principal amount equal
to the aggregate outstanding principal balance of the Revolving Credit Loans on
such date, held severally by the Banks in accordance with their Commitment
Percentages and the Commitments hereunder shall terminate. The Term Loan
outstanding after conversion shall be evidenced by the separate Term Notes (the
"Term Notes") of the Borrower payable to the order of each Bank, each dated as
of the Revolving Credit Maturity Date and in substantially the form of Exhibit L
hereto, completed with appropriate insertions. On the Revolving Credit Maturity
Date, the Borrower shall pay to the Administrative Agent for the pro rata
accounts of the Banks, all interest accrued to such date on the Revolving Credit
Loans, any Facility Fees and other fees payable to the Administrative Agent and
the Banks hereunder and, as soon as reasonably practicable after such payment,
each Bank shall surrender to the Borrower its Revolving Credit Note against
receipt of its Term Note evidencing the amount of the outstanding Revolving
Credit Loans so converted.
SECTION 5.2. THE TERM NOTES. Each Term Note shall represent the
obligation of the Borrower to pay to such Bank the principal amount of the Term
Loan evidenced by the Term Note plus interest accrued thereon, as set forth
below. The Borrower irrevocably authorizes each Bank 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 Commitment 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
Borrower hereunder or under any Term Note to make payments of principal of and
interest on any Term Note when due.
SECTION 5.3. REPAYMENTS OF THE TERM LOAN. The Borrower promises to pay
to the Administrative Agent for the account of the Banks the principal amount of
the Term Loan on the Term Loan Maturity Date in an amount equal to the unpaid
balance of the Term Loan, together with all accrued interest and fees on such
date.
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SECTION 5.4. OPTIONAL PREPAYMENT OF TERM LOAN. The Borrower shall have
the right at any time to prepay the Term Loan on or before the Term Loan
Maturity Date, as a whole, or in part, upon not less than one (1) Business Day
prior written notice to the Administrative Agent, without premium or penalty,
provided that (a) each partial prepayment shall be in the principal amount of
$5,000,000 or an integral multiple thereof, (b) any portion of any Eurodollar
Loan which has been prepaid on any day other than the last day of the Interest
Period relating thereto shall be subject to the payment by the Borrower of any
applicable costs associated with such prepayment as set forth in Section 6.7
hereof, and (c) each partial prepayment shall be allocated among the Banks, in
proportion, as nearly as practicable, to the respective outstanding amount of
each Bank's Term Note, with adjustments to the extent practicable to equalize
any prior prepayments not exactly in proportion. Any prepayment of principal of
the Term Loan shall include all interest accrued on such amount to the date of
prepayment. No amount repaid with respect to the Term Loan may be reborrowed.
SECTION 5.5. INTEREST ON TERM LOAN.
SECTION 5.5.1. NOTIFICATION BY BORROWER. The Borrower 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 if all or any portion of the Term Loan is to be a
Eurodollar Loan. After the Term Loan has been made, the provisions of
Section 2 shall apply mutatis mutandis with respect to all or any
portion of the Term Loan so that the Borrower may have the same
interest rate options and interest rates with respect to all or any
portion of the Term Loan as it would be entitled to with respect to the
Syndicated Loans.
SECTION 5.5.2. AMOUNTS, ETC. Any portion of the Term Loan
which is a Eurodollar Loan relating to any Interest Period shall be in
the amount of $5,000,000 or a whole multiple or $1,000,000 in excess
thereof. No Interest Period relating to the Term Loan or any portion
thereof which is a Eurodollar Loan shall extend beyond the Term Loan
Maturity Date.
SECTION 6. PROVISIONS RELATING TO ALL LOANS AND LETTERS OF CREDIT.
SECTION 6.1. PAYMENTS.
(a) All payments of principal, interest, Reimbursement
Obligations, fees (other than the Issuance Fee) and any other amounts
due hereunder or under any of the other Loan Documents shall be made to
the Administrative Agent at its Loan Office in immediately available
funds by 11:00 a.m. (New York time) on any due date. Subject to the
provisions of Section 30, if a payment is received by the
Administrative Agent at or before 1:00 p.m. (New York time) on any
Business Day, the Administrative Agent shall on the same Business Day
transfer in immediately available funds, as applicable, to (1) each of
the Banks, their pro rata portion of such payment in accordance with
their respective Commitment Percentages, in the case of payments with
respect to Syndicated Loans, Letters of Credit and the Term Loan, (2)
the Administrative Agent in the case of payments with respect to Swing
Line Loans, and (3) the appropriate Bank(s), in the case of payments
with respect to Competitive Bid Loans. If such payment is received by
the Administrative Agent after 1:00 p.m. (New York time) on any
Business Day, such
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transfer shall be made by the Administrative Agent to the applicable
Bank(s) on the next Business Day. In the event that the Administrative
Agent fails to make such transfer to any Bank as set forth above, the
Administrative Agent shall pay to such Bank 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
such Bank for funds acquired by such Bank during each day included in
such period, times (ii) the amount (A) equal to such Bank's Commitment
Percentage of such payment in the case of payments under clause (1)
above, or (B) of such payment to which such Bank is entitled in the
case of payments with respect to Competitive Bid Loans and Swing Line
Loans, times (iii) a fraction, the numerator of which is the number of
days that elapse from and including the date of payment to and
including the date on which the amount due to such Bank shall become
immediately available to such Bank, and the denominator of which is
365. A statement of such Bank submitted to the applicable
Administrative Agent with respect to any amounts owing under this
paragraph shall be prima facie evidence of the amount due and owing to
such Bank by the Administrative Agent.
(b) All payments by the Borrower hereunder and under any of
the other Loan Documents shall be made without recoupment, 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
Borrower is compelled by law to make such deduction or withholding. If
any such obligation is imposed upon the Borrower with respect to any
amount payable by it hereunder or under any of the other Loan
Documents, the Borrower will pay to the Administrative Agent, for the
account of the Banks or (as the case may be) the Administrative Agent,
on the date on which such amount is due and payable hereunder or under
such other Loan Document, such additional amount in Dollars as shall be
necessary to enable the Banks or the Administrative Agent to receive
the same net amount which the Banks or the Administrative Agent would
have received on such due date had no such obligation been imposed upon
the Borrower. The Borrower will deliver promptly to the Administrative
Agent certificates or other valid vouchers for all taxes or other
charges deducted from or paid with respect to payments made by the
Borrower hereunder or under such other Loan Document.
(c) Each Bank that is not incorporated or organized under the
laws of the United States of America or a state thereof or the District
of Columbia (a "Non-U.S. Bank") agrees that, prior to the first date on
which any payment is due to it hereunder, it will deliver to the
Borrower and the Administrative Agent 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. Bank 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. Each Non-U.S. Bank that so
delivers a Form W-8BEN or W-8ECI pursuant to the preceding sentence
further undertakes to deliver to each of the Borrower and the
Administrative Agent two further copies of Form W-8BEN or W-8ECI or
successor applicable form, or other manner of certification, as the
case may be, on or before the date that any such letter or
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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 Borrower, and such extensions or renewals thereof as may
reasonably be requested by the Borrower, certifying in the case of a
Form W-8BEN or W-8ECI that such Non-U.S. Bank 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. Bank from duly
completing and delivering any such form with respect to it and such
Non-U.S. Bank advises the Borrower that it is not capable of receiving
payments without any deduction or withholding of United States federal
income tax.
(d) The Borrower shall not be required to pay any additional
amounts to any Non-U.S. Bank in respect of United States Federal
withholding tax pursuant to Section 18 to the extent that (i) the
obligation to withhold amounts with respect to United States Federal
withholding tax existed on the date such Non-U.S. Bank became a party
to this Agreement or, with respect to payments to a different lending
office designated by the Non-U.S. Bank as its applicable lending office
(a "New Lending Office"), the date such Non-U.S. Bank designated such
New Lending Office with respect to a Loan; provided, however, that this
clause (i) shall not apply to any transferee or New Lending Office as a
result of an assignment, transfer or designation made at the request of
the Borrower; and provided further, however, that this clause (i) shall
not apply to the extent the indemnity payment or additional amounts any
transferee, or Bank through a New Lending Office, would be entitled to
receive without regard to this clause (i) do not exceed the indemnity
payment or additional amounts that the Person making the assignment or
transfer to such transferee, or Bank making the designation of such New
Lending Office, would have been entitled to receive in the absence of
such assignment, transfer or designation; or (ii) the obligation to pay
such additional amounts would not have arisen but for a failure by such
Non-U.S. Bank to comply with the provisions of paragraph (b) above.
(e) Notwithstanding the foregoing, each Bank agrees to use
reasonable efforts (consistent with legal and regulatory restrictions)
to change its lending office to avoid or to minimize any amounts
otherwise payable under Section 18 in each case solely if such change
can be made in a manner so that such Bank, in its sole determination,
suffers no legal, economic or regulatory disadvantage.
SECTION 6.2. COMPUTATIONS. Except as otherwise expressly provided
herein, all computations of interest, Facility 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, except that computations based on the Base Rate 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
Loan if such next succeeding Business Day falls in the
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next succeeding calendar month or after the Revolving Credit Maturity Date, or
Term Loan Maturity Date, as the case may be, it shall be deemed to end on the
next preceding Business Day.
SECTION 6.3. ILLEGALITY; INABILITY TO DETERMINE EURODOLLAR RATE.
Notwithstanding any other provision of this Agreement (other than Section 6.9),
if (a) the introduction of, any change in, or any change in the interpretation
of, any law or regulation applicable to any 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 Bank or
the Administrative Agent to perform its obligations in respect of any Eurodollar
Loans, or (b) if any Bank or the Administrative Agent, as applicable, shall
reasonably determine with respect to Eurodollar 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 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 the Bank or
the Administrative Agent of obtaining or maintaining the Eurodollar Loans during
any Interest Period, then such Bank or the Administrative Agent shall promptly
give telephonic, telex or cable notice of such determination to the Borrower
(which notice shall be conclusive and binding upon the Borrower). Upon such
notification by the Bank or the Administrative Agent, the obligation of the
Banks and the Administrative Agent to make Eurodollar Loans shall be suspended
until the 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 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 to such former Eurodollar Loans.
SECTION 6.4. 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:
(a) subject such Bank to any tax, levy, impost, duty, charge,
fee, deduction or withholding of any nature with respect to this
Agreement, the other Loan Documents, such Bank's Commitment or the
Loans (other than taxes based upon or measured by the income or profits
of such Bank imposed by the jurisdiction of its incorporation or
organization, or the location of its lending office); or
(b) materially change the basis of taxation (except for
changes in taxes on income or profits of such Bank imposed by the
jurisdiction of its incorporation or organization, or the location of
its lending office) of payments to such Bank of the principal or of the
interest on any Loans or any other amounts payable to such Bank under
this Agreement or the other Loan Documents; or
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(c) except as provided in Section 6.5 or as otherwise
reflected in the Base Rate, the Eurodollar Rate, or the applicable rate
for Competitive Bid Loans, impose or increase or render applicable
(other than to the extent specifically provided for elsewhere in this
Agreement) any special deposit, reserve, assessment, liquidity, capital
adequacy or other similar requirements (whether or not having the force
of law) against assets held by, or deposits in or for the account of,
or loans by, or commitments of, an office of any Bank with respect to
this Agreement, the other Loan Documents, such Bank's Commitment or the
Loans; or
(d) impose on such Bank any other conditions or requirements
with respect to this Agreement, the other Loan Documents, the Loans,
such Bank's Commitment or any class of loans or commitments of which
any of the Loans or such Bank's Commitment 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
or such Bank's Commitment or issuing or participating in
Letters of Credit;
(ii) to reduce the amount of principal, interest or
other amount payable to such Bank hereunder on account of such
Bank's Commitment, the Loans or the Reimbursement Obligations;
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 Borrower
hereunder,
then, and in each such case, the Borrower will, upon demand
made by such Bank at any time and from time to time as often as the
occasion therefore may arise (which demand shall be accompanied by a
statement setting forth the basis of such demand which shall be
conclusive absent manifest error), pay such reasonable additional
amounts as will be sufficient to compensate such Bank for such
additional costs, reduction, payment or foregone interest or other sum.
SECTION 6.5. CAPITAL ADEQUACY. If any Bank shall have determined that,
after the date hereof, (a) 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 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, or (b) compliance by such Bank or the
Administrative Agent or any corporation controlling such Bank or the
Administrative Agent with any law, governmental rule, regulation, policy,
guideline or directive (whether or not having the force of law and including any
determination by such central bank or other governmental authority that for
purposes of capital adequacy requirements the Commitments hereunder do not
constitute commitments with an original maturity of one year or less) of any
such entity regarding capital adequacy, has or would
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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 15 days after demand by such Bank, the Borrower 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 6.6. CERTIFICATE. A certificate setting forth the additional
amounts payable pursuant to Section 6.4 or Section 6.5 and a reasonable
explanation of such amounts which are due, submitted by any Bank to the
Borrower, shall be conclusive, absent manifest error, that such amounts are due
and owing; provided that no Bank shall be entitled to additional amounts with
respect to events or circumstances occurring more than one hundred and twenty
(120) days prior to the delivery of such certificate.
SECTION 6.7. EURODOLLAR AND COMPETITIVE BID INDEMNITY. The Borrower
agrees to indemnify the Banks and the Administrative Agent and to hold them
harmless from and against any reasonable loss, cost or expense that any such
Bank and the Administrative Agent may sustain or incur as a consequence of (a)
the default by the Borrower in payment of the principal amount of or any
interest on any Eurodollar Loans or Competitive Bid Loans as and when due and
payable, including any such loss or expense arising from interest or fees
payable by any Bank or the Administrative Agent to lenders of funds obtained by
it in order to maintain its Eurodollar Loans or Competitive Bid Loans, (b) the
default by the Borrower in making a borrowing of a Eurodollar Loan or
Competitive Bid Loan or conversion of a Eurodollar Loan or a prepayment of a
Eurodollar or Competitive Bid Loan after the Borrower has given (or is deemed to
have given) a Syndicated Loan Request, a notice pursuant to Section 2.7 or a
Notice of Acceptance/Rejection of Competitive Bid Quote(s), or a notice pursuant
to Section 2.10, and (c) the making of any payment of a Eurodollar Loan or
Competitive Bid Loan, or the making of any conversion of any Eurodollar Loan to
a Base Rate Loan on a day that is not the last day of the applicable Interest
Period with respect thereto. Such loss, cost, or reasonable expense shall
include an amount equal to the excess, if any, as reasonably determined by each
Bank of (i) its cost of obtaining the funds for (A) the Eurodollar Loan being
paid, prepaid, converted, not converted, reallocated, or not borrowed, as the
case may be (based on the Eurodollar Rate), or (B) the Competitive Bid Loan
being paid, prepaid, or not borrowed, as the case may be (based on the
applicable interest rate) for the period from the date of such payment,
prepayment, conversion, or failure to borrow or convert, as the case may be, to
the last day of the Interest Period for such Loan (or, in the case of a failure
to borrow, the Interest Period for the Loan which would have commenced on the
date of such failure to borrow) over (ii) the amount of interest (as reasonably
determined by such Bank) that would be realized by such Bank in reemploying the
funds so paid, prepaid, converted, or not borrowed, converted, or prepaid for
such period or Interest Period, as the case may be, which determinations shall
be conclusive absent manifest error.
SECTION 6.8. 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
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any of the other Loan Documents shall bear interest compounded monthly and
payable on demand at a rate per annum equal to the Applicable Base Rate plus 2%,
until such amount shall be paid in full (after as well as before judgment).
SECTION 6.9. INTEREST LIMITATION. 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, and 12 U.S.C. Section 85, as amended).
SECTION 6.10. REASONABLE EFFORTS TO MITIGATE. Each Bank agrees that as
promptly as practicable after it becomes aware of the occurrence of an event or
the existence of a condition that would cause it to be affected under Sections
6.3, 6.4 or 6.5, such Bank will give notice thereof to the Borrower, with a copy
to the Administrative Agent and, to the extent so requested by the Borrower and
not inconsistent with such Bank's internal policies, such Bank shall use
reasonable efforts and take such actions as are reasonably appropriate if as a
result thereof the additional moneys which would otherwise be required to be
paid to such Bank pursuant to such sections would be materially reduced, or the
illegality or other adverse circumstances which would otherwise require a
conversion of such Loans or result in the inability to make such Loans pursuant
to such sections would cease to exist, and in each case if, as determined by
such Bank in its sole discretion, the taking of such actions would not adversely
affect such Loans or such Bank or otherwise be disadvantageous to such Bank.
SECTION 6.11. REPLACEMENT OF BANKS. If any Bank (an "Affected Bank")
(i) makes demand upon the Borrower for (or if the Borrower is otherwise required
to pay) amounts pursuant to Sections 6.4 or 6.5, (ii) is unable to make or
maintain Eurodollar Loans as a result of a condition described in Section 6.3,
or (iii) defaults in its obligation to make Loans or to participate in Letters
of Credit in accordance with the terms of this Agreement (such Bank being
referred to as a "Defaulting Bank"), the Borrower may, within 90 days of receipt
of such demand, notice (or the occurrence of such other event causing the
Borrower to be required to pay such compensation or causing Section 6.3 to be
applicable), or default, as the case may be, by notice (a "Replacement Notice")
in writing to the Administrative Agent and such Affected Bank (A) request the
Affected Bank to cooperate with the Borrower in obtaining a replacement bank
satisfactory to the Administrative Agent and the Borrower (the "Replacement
Bank") as provided herein, but none of such Banks shall be under an obligation
to find a Replacement Bank; (B) request the non-Affected Banks to acquire and
assume all of the Affected Bank's Loans and Commitment, and to participate in
Letters of Credit as provided herein, but none of such Banks shall be under an
obligation to do so; or (C) designate a Replacement Bank reasonably satisfactory
to the Administrative Agent. If any satisfactory Replacement Bank shall be
obtained, and/or any of the non-Affected Banks shall agree to acquire and assume
all of the Affected Bank's Loans and Commitment, and to participate in Letters
of Credit then such Affected Bank shall, so long as no Event of Default shall
have occurred and be continuing, assign, in accordance with Section 21, all of
its Commitment, Loans, Notes and other rights and obligations under this
Agreement and all other Loan Documents to such Replacement Bank or non-Affected
Banks, as the case may be, in exchange for payment of the
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principal amount so assigned and all interest and fees accrued on the amount so
assigned, plus all other Obligations then due and payable to the Affected Bank;
provided, however, that (x) such assignment shall be without recourse,
representation or warranty and shall be on terms and conditions reasonably
satisfactory to such Affected Bank and such Replacement Bank and/or non-Affected
Banks, as the case may be, and (y) prior to any such assignment, the Borrower
shall have paid to such Affected Bank all amounts properly demanded and
unreimbursed under Sections 6.4, 6.5 and 6.7. Upon the effective date of such
assignment, the Borrower shall issue replacement Notes to such Replacement Bank
and/or non-Affected Banks, as the case may be, and such Replacement Bank shall
become a "Bank" for all purposes under this Agreement and the other Loan
Documents.
SECTION 6.12. ADVANCES BY ADMINISTRATIVE AGENT. The Administrative
Agent may (unless earlier notified to the contrary by any Bank by 12:00 noon
(New York time) one (1) Business Day prior to any Drawdown Date) assume that
each Bank has made available (or will before the end of such Business Day make
available) to the Administrative Agent the amount of such Bank's Commitment
Percentage with respect to the Loans (or, in the case of Competitive Bid Loans,
the amount of such Bank's accepted offers of such Loans, if any) to be made on
such Drawdown Date, and the Administrative Agent may (but shall not be required
to), in reliance upon such assumption, make available to the Borrower a
corresponding amount. If any Bank makes such amount available to the
Administrative Agent on a date after such Drawdown Date, such 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) the amount equal to such Bank's Commitment Percentage of
such Syndicated Loan (or, in the case of Competitive Bid Loans and Swing Line
Loans, the amount of such Bank's accepted offer of such Competitive Bid Loans,
if any, and portion of such Swing Line Loans) or the Term Loan, as the case may
be, times (iii) a fraction, the numerator of which is the number of days that
elapse from and including such Drawdown Date to but not including the date on
which the amount equal to such Bank's Commitment Percentage of such Loans, or
the amount of such Bank's accepted offers of such Competitive Bid Loans, if any,
and portion of Swing Line Loans, shall become immediately available to the
Administrative Agent, and the denominator of which is 365. A statement of the
Administrative Agent submitted to such Bank with respect to any amounts owing
under this paragraph shall be prima facie evidence of the amount due and owing
to the Administrative Agent by such Bank. If such amount is not in fact made
available to the Administrative Agent by such Bank within three (3) Business
Days of such Drawdown Date, the Administrative Agent shall be entitled to
recover such amount from such Borrower, with interest thereon at the applicable
rate per annum.
SECTION 7. REPRESENTATIONS AND WARRANTIES. The Borrower (and the
Guarantor, where applicable) represents and warrants to the Banks that:
SECTION 7.1. CORPORATE AUTHORITY.
(a) INCORPORATION; GOOD STANDING. The Borrower and each of its
Material Subsidiaries (i) is duly organized, validly existing and in
good standing under the laws of
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its respective jurisdiction of formation, (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
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
could not reasonably be expected to have a Material Adverse Effect.
(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 the Borrower and the
Guarantor, (ii) have been duly authorized by all necessary corporate
proceedings on the part of each of the Borrower and the Guarantor,
(iii) do not conflict with or result in any breach or contravention of
any provision of law, statute, rule or regulation to which any of the
Borrower or the Guarantor or any of their Subsidiaries is subject or
any judgment, order, writ, injunction, license or permit applicable to
the Borrower, the Guarantor or any of their Subsidiaries so as to have
a Material Adverse Effect, and (iv) do not conflict with any provision
of the corporate charter or bylaws of the Borrower, the Guarantor or
any Material Subsidiary or any agreement or other instrument binding
upon the Borrower, the Guarantor or any of their Material Subsidiaries,
except for those conflicts with any such agreement or instrument which
could not reasonably be expected to have a Material Adverse Effect.
(c) ENFORCEABILITY. The execution, delivery and performance of
the Loan Documents by the Borrower and the Guarantor will result in
valid and legally binding obligations of the Borrower and the Guarantor
enforceable against them 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
generally and general principles of equity.
SECTION 7.2. GOVERNMENTAL AND OTHER APPROVALS. The execution, delivery
and performance of the Loan Documents by the Borrower and the Guarantor and the
consummation by the Borrower and the Guarantor of the transactions contemplated
hereby and thereby do not require any approval or consent of, or filing with,
any governmental agency or authority or other third party other than those
already obtained and those required after the date hereof in connection with the
Borrower's performance of its covenants contained in Sections 8, 9 and 10
hereof.
SECTION 7.3. TITLE TO PROPERTIES; LEASES. The Borrower and its
Subsidiaries own all of the assets reflected in the consolidated balance sheet
as at the Interim Balance Sheet Date or acquired since that date (except
property and assets operated under Capital Leases or sold or otherwise disposed
of in the ordinary course of business since that date), subject to no Liens
except Permitted Liens.
SECTION 7.4. FINANCIAL STATEMENTS; SOLVENCY.
(a) There have been furnished to the Banks consolidated
balance sheets of the Borrower and its Subsidiaries dated the Balance
Sheet Date and consolidated statements
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of operations for the fiscal periods then ended, certified by the
Accountants. In addition, there have been furnished to the Banks
consolidated balance sheets of the Borrower and its Subsidiaries dated
the Interim Balance Sheet Date and the related consolidated statements
of operation for the fiscal quarter ending on the Interim Balance Sheet
Date. All said balance sheets and statements of operations have been
prepared in accordance with GAAP (but, in the case of any of such
financial statements which are unaudited, only to the extent GAAP is
applicable to interim unaudited reports), fairly present, in all
material respects, the financial condition of the Borrower 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,
subject, in the case of unaudited interim financial statements, to
changes resulting from audit and normal year-end adjustments and to the
absence of complete footnotes. There are no contingent liabilities of
the Borrower and its Subsidiaries involving material amounts, known to
the officers of the Borrower or the Guarantor which have not been
disclosed in said balance sheets and the related notes thereto or
otherwise in writing to the Banks.
(b) The Borrower and its Subsidiaries on a consolidated basis
(both before and after giving effect to the transactions contemplated
by this Agreement) are 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 7.5. NO MATERIAL CHANGES, ETC. Since the Balance Sheet Date,
there have been no material adverse changes in the consolidated financial
condition, business, assets or liabilities (contingent or otherwise) of the
Borrower and its Subsidiaries, taken as a whole, other than the Shareholder
Suits and changes in the ordinary course of business which have not had a
Material Adverse Effect.
SECTION 7.6. FRANCHISES, PATENTS, COPYRIGHTS, ETC. The Borrower and
each of its Subsidiaries possess all franchises, patents, copyrights,
trademarks, trade names, licenses and permits, and rights in respect of the
foregoing, adequate for the conduct of their business substantially as now
conducted (other than those the absence of which would not have a Material
Adverse Effect) without known conflict with any rights of others other than a
conflict which would not have a Material Adverse Effect.
SECTION 7.7. LITIGATION. Except as set forth on Schedule 7.7 or in the
Disclosure Documents, there are no actions, suits, proceedings or investigations
of any kind pending or, to the knowledge of the Borrower, threatened against the
Borrower or any of its Subsidiaries before any court, tribunal or administrative
agency or board which, either in any case or in the aggregate, could reasonably
be expected to have a Material Adverse Effect.
SECTION 7.8. NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Borrower
nor any of its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the
judgment of the Borrower's or such Subsidiary's officers has or could reasonably
be expected in the future to have a Material Adverse Effect.
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Neither the Borrower nor any of its Subsidiaries is a party to any contract or
agreement which in the judgment of the Borrower's or its Subsidiary's officers
has or could reasonably be expected to have any Material Adverse Effect, except
as otherwise reflected in adequate reserves as required by GAAP.
SECTION 7.9. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. Neither the
Borrower nor any of its Subsidiaries is (a) violating any provision of its
charter documents or by-laws or (b) violating any agreement or instrument to
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 (in the case of such agreements or
such instruments) reasonably be expected to result in a Material Adverse Effect.
SECTION 7.10. TAX STATUS. The Borrower and its Subsidiaries have filed
all federal, state, provincial and territorial income and all other tax returns,
reports and declarations (or obtained extensions with respect thereto) required
by applicable law to be filed by them (unless and only to the extent that the
Borrower or such Subsidiary has set aside on its books provisions reasonably
adequate for the payment of all unpaid and unreported taxes as required by
GAAP); and have paid all taxes and other governmental assessments and charges
(other than taxes, assessments and other governmental charges imposed by
jurisdictions other than the United States, Canada or any political subdivision
thereof which in the aggregate are not material to the financial condition,
business or assets of the Borrower or such Subsidiary on an individual basis or
of the Borrower and its Subsidiaries on a consolidated basis) 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, as required by
GAAP, 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. Except to the extent contested in the
manner permitted in the preceding sentence, there are no unpaid taxes in any
material amount claimed by the taxing authority of any jurisdiction to be due
and owing by the Borrower or any Subsidiary, nor do the officers of the Borrower
or any of its Subsidiaries know of any basis for any such claim.
SECTION 7.11. NO EVENT OF DEFAULT. No Default or Event of Default has
occurred hereunder and is continuing.
SECTION 7.12. HOLDING COMPANY AND INVESTMENT COMPANY ACTS. Neither the
Borrower nor any of its Subsidiaries 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 a "registered investment company", or an "affiliated company" or a
"principal underwriter" of a "registered investment company", as such terms are
defined in the Investment Company Act of 1940.
SECTION 7.13. ABSENCE OF FINANCING STATEMENTS, ETC. Except as permitted
by Section 9.1 of this Agreement, there is no Indebtedness senior to the
Obligations, and except for Permitted Liens, there are no Liens, or any
effective financing statement, security agreement, chattel mortgage, real estate
mortgage or other document filed or recorded with any filing records, registry,
or other
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public office, which purports to cover, affect or give notice of any present or
possible future Lien on any assets or property of the Borrower or any of its
Subsidiaries or right thereunder.
SECTION 7.14. EMPLOYEE BENEFIT PLANS.
SECTION 7.14.1. IN GENERAL. Each Employee Benefit Plan has
been maintained and operated in compliance with the provisions of ERISA
and, to the extent applicable, the Code, including but not limited to
the provisions thereunder respecting prohibited transactions. Promptly
upon the request of any Bank or the Administrative Agent, the Borrower
will furnish 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.
SECTION 7.14.2. TERMINABILITY OF WELFARE PLANS. Under each
Employee Benefit Plan which is an employee welfare benefit plan within
the meaning of Section 3(1) or Section 3(2)(B) of ERISA, no benefits
are due unless the event giving rise to the benefit entitlement occurs
prior to plan termination (except as required by Title I, Part 6 of
ERISA). The Borrower or an ERISA Affiliate, as appropriate, 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
the Borrower or such ERISA Affiliate without material liability to any
Person.
SECTION 7.14.3. GUARANTEED PENSION PLANS. 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. No liability to the PBGC (other than required
insurance premiums, all of which have been paid) has been incurred by
the Borrower or any ERISA Affiliate with respect to any Guaranteed
Pension Plan (other than Terminated Plans) and there has not been any
ERISA Reportable Event, or any other event or condition which presents
a material risk of termination of any Guaranteed Pension Plan by the
PBGC. Other than with respect to the Terminated Plans, 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.
SECTION 7.14.4. MULTIEMPLOYER PLANS. Neither the 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. Neither the 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
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that any Multiemployer Plan intends to terminate or has been terminated
under Section 4041A of ERISA.
SECTION 7.15. ENVIRONMENTAL COMPLIANCE. The Borrower and its
Subsidiaries have taken all steps that they have deemed reasonably necessary to
investigate the past and present condition and usage of the Real Property and
the operations conducted by the Borrower and its Subsidiaries and, based upon
such diligent investigation, have determined that, except as set forth on
Schedule 7.15 or in the Disclosure Documents:
(a) Neither the Borrower, its Material Subsidiaries, nor any
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 the Resource Conservation and Recovery Act
("RCRA"), the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 as amended ("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
applicable international, federal, state, provincial, territorial or
local statute, regulation, ordinance, order or decree relating to
health, safety, waste transportation or disposal, or the environment
(the "Environmental Laws"), which violation, individually or in the
aggregate, could reasonably be expected to have a Material Adverse
Effect.
(b) Except with respect to any such matters that could not
reasonably be expected to have a Material Adverse Effect, neither the
Borrower nor any of its Material Subsidiaries has received notice from
any third party including, without limitation: any federal, state,
provincial, territorial or local governmental authority, (i) that any
one of them has been identified by the United States Environmental
Protection Agency ("EPA") as a potentially responsible party under
CERCLA with respect to a site listed on the National Priorities List,
40 C.F.R. Part 300 Appendix B; (ii) that any hazardous waste, as
defined by 42 U.S.C. 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) or any toxic substance, oil or
hazardous materials or other chemicals or substances regulated by any
Environmental Laws, excluding household hazardous waste ("Hazardous
Substances"), which any one of them has generated, transported or
disposed of, has been found at any site at which a federal, state,
provincial, territorial or local agency or other third party has
conducted or has ordered that the Borrower or any of its Material
Subsidiaries conduct a remedial investigation, removal or other
response action pursuant to any Environmental Law; or (iii) that it is
or shall be a named party to any claim, action, cause of action,
complaint, legal or administrative proceeding arising out of any third
party's incurrence of costs, expenses, losses or damages of any kind
whatsoever in connection with the Release of Hazardous Substances.
(c) Except for those occurrences or situations that could not
reasonably be expected to have a Material Adverse Effect, (i) no
portion of the Real Property or other assets of the Borrower and its
Material Subsidiaries has been used for the handling, processing,
storage or disposal of Hazardous Substances except in accordance with
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applicable Environmental Laws; (ii) in the course of any activities
conducted by the Borrower, its Material Subsidiaries, or operators of
the Real Property or other assets of the Borrower and its Material
Subsidiaries, no Hazardous Substances have been generated or are being
used on such properties except in accordance with applicable
Environmental Laws; (iii) there have been no unpermitted Releases or
threatened Releases of Hazardous Substances on, upon, into or from the
Real Property or other assets of the Borrower or its Material
Subsidiaries; and (iv) any Hazardous Substances that have been
generated on the Real Property or other assets of the Borrower or its
Material Subsidiaries have been transported offsite only by carriers
having an identification number issued by the EPA, treated or disposed
of only by treatment or disposal facilities maintaining valid permits
as required under applicable Environmental Laws, which transporters and
facilities have been and are, to the Borrower's knowledge, operating in
compliance with such permits and applicable Environmental Laws.
SECTION 7.16. DISCLOSURE. No representation or warranty made by the
Borrower or the Guarantor in this Agreement or in any agreement, instrument,
document, certificate, or financial statement furnished to the Banks or the
Administrative Agent by or on behalf of or at the request of the Borrower and
the Guarantor 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, taken as a whole, not misleading in light of the circumstances in which
they are made.
SECTION 7.17. PERMITS AND GOVERNMENTAL AUTHORITY. All permits (other
than those the absence of which could not reasonably be expected to have a
Material Adverse Effect) required for the construction and operation of all
landfills currently owned or operated by the Borrower or any of its Material
Subsidiaries have been obtained and remain in full force and effect and are not
subject to any appeals or further proceedings or to any unsatisfied conditions
that may allow material modification or revocation. Neither the Borrower nor any
of its Subsidiaries, nor, to the knowledge of the Borrower, the holder of such
permits is in violation of any such permits, except for any violation which
could not reasonably be expected to have a Material Adverse Effect.
SECTION 8. AFFIRMATIVE COVENANTS OF THE BORROWER. The Borrower agrees
that, so long as any Obligation or any Letter of Credit is outstanding or the
Banks have any obligation to make Loans, 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, it shall, and shall cause its Subsidiaries to, comply with the
following covenants:
SECTION 8.1. PUNCTUAL PAYMENT. The 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, all in accordance with the terms of this Agreement
and such other Loan Documents.
SECTION 8.2. MAINTENANCE OF U.S. OFFICE. The Borrower will maintain its
chief executive offices at Houston, Texas, or at such other place in the United
States of America as the Borrower shall designate upon 30 days' prior written
notice to the Administrative Agent.
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SECTION 8.3. RECORDS AND ACCOUNTS. The Borrower will, and will cause
each of its Subsidiaries to, 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 8.4. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION. The
Borrower will deliver to the Banks:
(a) as soon as practicable, but, in any event not later than
100 days after the end of each fiscal year of the Borrower, the
consolidated balance sheet of the Borrower and its Subsidiaries as at
the end of such year, consolidated statements of cash flows, and the
related consolidated statements of operations, each setting forth in
comparative form the figures for the previous fiscal year, all such
consolidated financial statements to be in reasonable detail, prepared,
in accordance with GAAP and, with respect to the consolidated financial
statements, certified by PricewaterhouseCoopers LLP or Arthur Andersen
LLP or by other nationally recognized independent auditors selected by
the Borrower and reasonably satisfactory to the Administrative Agent
(the "Accountants"). In addition, simultaneously therewith, the
Borrower shall provide the Banks with a written statement from such
Accountants to the effect that they have read a copy of this Agreement,
and that, in making the examination necessary to said certification,
they have obtained no knowledge of any Default or Event of Default, 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;
(b) as soon as practicable, but in any event not later than 60
days after the end of each of the first three fiscal quarters of each
fiscal year of the Borrower, copies of the consolidated balance sheet
and statement of operations of the Borrower and its Subsidiaries as at
the end of such quarter, subject to year-end adjustments, and the
related consolidated statement of cash flows, all in reasonable detail
and prepared in accordance with GAAP (to the extent GAAP is applicable
to interim unaudited financial statements) with a certification by the
principal financial or accounting officer of the Borrower (the "CFO or
the CAO") that the consolidated financial statements are prepared in
accordance with GAAP (to the extent GAAP is applicable to interim
unaudited financial statements) and fairly present, in all material
respects, the consolidated financial condition of the Borrower and its
Subsidiaries on a consolidated basis as at the close of business on the
date thereof and the results of operations for the period then ended,
subject to year-end adjustments and the exclusion of detailed
footnotes;
(c) simultaneously with the delivery of the financial
statements referred to in (a) and (b) above, a certificate in the form
of Exhibit F hereto (the "Compliance Certificate") signed by the CFO or
the CAO or the Borrower's corporate treasurer, stating that the
Borrower and its Subsidiaries are in compliance with the covenants
contained in Section Section 8, 9 and 10 hereof as of the end of the
applicable period and setting forth in reasonable detail computations
evidencing such compliance with respect to the covenants contained
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in Section 10 hereof and that no Default or Event of Default exists,
provided that if the Borrower shall at the time of issuance of such
Compliance Certificate or at any other time obtain knowledge of any
Default or Event of Default, the Borrower shall 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 Borrower proposes to take with respect thereto;
(d) 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 Borrower's and its Subsidiaries'
stockholders generally; and
(e) from time to time such other financial data and other
information as the Banks may reasonably request.
The Borrower hereby authorizes each Bank to disclose any information
obtained pursuant to this Agreement to all appropriate governmental regulatory
authorities where required by law; provided, however, 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 the Borrower has or may have under the
federal Right to Financial Privacy Act of 1978, as in effect from time to time,
except as to matters specifically permitted therein.
SECTION 8.5. EXISTENCE AND CONDUCT OF BUSINESS. The Borrower will, and
will cause each Material Subsidiary, to do or cause to be done all things
necessary to preserve and keep in full force and effect its existence, rights
and franchises; and effect and maintain its foreign qualifications (except where
the failure of the Borrower or any Material Subsidiary to remain so qualified
could not reasonably be expected to have a Material Adverse Effect), licensing,
domestication or authorization, except as any of the foregoing may be terminated
by its Board of Directors in the exercise of its reasonable judgment; provided
that such termination could not reasonably be expected to have a Material
Adverse Effect. The Borrower will not, and will cause its Subsidiaries not to,
become obligated under any contract or binding arrangement which, at the time it
was entered into, could reasonably be expected to have a Material Adverse
Effect. The Borrower will, and will cause each Subsidiary to, continue to engage
primarily in any of the businesses now conducted by the Borrower and its
Subsidiaries and in related businesses, and any additional businesses acquired
pursuant to the terms of Section 9.4(a) hereunder.
SECTION 8.6. MAINTENANCE OF PROPERTIES. The Borrower will, and will
cause its Material Subsidiaries to, 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 (ordinary wear and tear excepted) and supplied with all
necessary equipment and cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Borrower and its Material Subsidiaries 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 the Borrower or any of its Subsidiaries from discontinuing the operation
and maintenance of any of its properties if such discontinuance is, in the
judgment of the Borrower or such Subsidiary, desirable in the conduct of its or
their business and which could not reasonably be expected to have a Material
Adverse Effect.
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SECTION 8.7. INSURANCE. The Borrower will, and will cause its
Subsidiaries to, maintain with financially sound and reputable insurance
companies (including captive insurance companies), funds or underwriters,
insurance of the kinds, covering the risks (other than risks arising out of or
in any way connected with personal liability of any officers and directors
thereof) and in the relative proportionate amounts usually carried by reasonable
and prudent companies conducting businesses similar to that of the Borrower and
its Subsidiaries, in amounts substantially similar to the existing coverage
policies maintained by the Borrower and its Subsidiaries, copies of which have
been provided to the Administrative Agent. In addition, the Borrower will
furnish from time to time, upon the Administrative Agent's request, a summary of
the insurance coverage of the Borrower and its Subsidiaries, 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.
SECTION 8.8. TAXES. The Borrower will, and will cause its Subsidiaries
to, duly pay and discharge, or cause to be paid and discharged, before the same
shall become overdue, all taxes, assessments and other governmental charges
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 upon
any of its property; provided, however, that any such tax, assessment, charge,
levy or claim need not be paid if the failure to do so (either individually, or
in the aggregate for all such failures) could not reasonably be expected to have
a Material Adverse Effect and the validity or amount thereof shall currently be
contested in good faith by appropriate proceedings and if the Borrower or such
Subsidiary shall have set aside on its books adequate reserves with respect
thereto as required by GAAP; and provided, further, that the Borrower or such
Subsidiary will pay all such taxes, assessments, charges, levies or claims prior
to foreclosure on any Lien which may have attached as security therefor.
SECTION 8.9. INSPECTION OF PROPERTIES, BOOKS AND CONTRACTS. The
Borrower will, and will cause its Material Subsidiaries to, permit the
Administrative Agent or any Bank or any of their designated representatives,
upon reasonable notice, to visit and inspect any of the properties of the
Borrower and its Material Subsidiaries, to examine the books of account of the
Borrower and its Material Subsidiaries, or contracts (and to make copies thereof
and extracts therefrom), and to discuss the affairs, finances and accounts of
the Borrower and its Material Subsidiaries with, and to be advised as to the
same by, their officers, all at such times and intervals as may be reasonably
requested.
SECTION 8.10. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES AND PERMITS;
MAINTENANCE OF MATERIAL LICENSES AND PERMITS. The Borrower will, and will cause
each Subsidiary to, (i) comply with the provisions of its charter documents and
by-laws; (ii) comply with all agreements and instruments by which it or any of
its properties may be bound except where noncompliance could not reasonably be
expected to have a Material Adverse Effect; (iii) comply with all applicable
laws and regulations (including Environmental Laws), decrees, orders, judgments,
licenses and permits, including, without limitation, all environmental permits
("Applicable Requirements"), except where noncompliance with such Applicable
Requirements could not reasonably be expected to have a Material Adverse Effect;
(iv) maintain all operating permits for all landfills now owned or hereafter
acquired, except where the failure to do so could not
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reasonably be expected to have a Material Adverse Effect; and (v) dispose of
hazardous waste only at licensed disposal facilities operating, to the
Borrower's knowledge, in compliance with Environmental Laws, except where the
failure to do so could not reasonably be expected to have a Material Adverse
Effect. If at any time any authorization, consent, approval, permit or license
from any officer, agency or instrumentality of any government shall become
necessary or required in order that the Borrower or any Material Subsidiary may
fulfill any of its obligations hereunder or under any other Loan Document, the
Borrower will immediately take or cause to be taken all reasonable steps within
the power of the Borrower or such Material Subsidiary to obtain such
authorization, consent, approval, permit or license and furnish the Banks with
evidence thereof.
SECTION 8.11. ENVIRONMENTAL INDEMNIFICATION. The Borrower covenants and
agrees that it will indemnify and hold the Banks, the Issuing Banks and the
Administrative Agent and their respective affiliates, and each of the
representatives, agents and officers of each of the foregoing, harmless from and
against any and all claims, expense, damage, loss or liability incurred by the
Banks, the Issuing Banks or the Administrative Agent (including all reasonable
costs of legal representation incurred by the Banks, the Issuing Banks or the
Administrative Agent) relating to (a) any Release or threatened Release of
Hazardous Substances on the Real Property; (b) any violation of any
Environmental Laws or Applicable Requirements with respect to conditions at the
Real Property or other assets of the Borrower or its Subsidiaries, or the
operations conducted thereon; or (c) the investigation or remediation of offsite
locations at which the Borrower, any of its Subsidiaries, or their predecessors
are alleged to have directly or indirectly Disposed of Hazardous Substances. It
is expressly acknowledged by the Borrower that this covenant of indemnification
shall survive the payment of the Loans and Reimbursement Obligations and
satisfaction of all other Obligations hereunder and shall inure to the benefit
of the Banks, the Issuing Banks, the Administrative Agent and their affiliates,
successors and assigns.
SECTION 8.12. FURTHER ASSURANCES. The Borrower and the Guarantor will
cooperate with the Administrative Agent and execute such further instruments and
documents as the Administrative Agent shall reasonably request to carry out to
the Majority Banks' satisfaction the transactions contemplated by this
Agreement.
SECTION 8.13. NOTICE OF POTENTIAL CLAIMS OR LITIGATION. The Borrower
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 litigation against the Borrower or any of its Subsidiaries wherein the
asserted, demanded or alleged liability is in excess of $25,000,000 or which
questions the validity or enforceability of any Loan Document, together with a
copy of each such complaint or other notice received by the Borrower or any of
its Subsidiaries if requested by the Administrative Agent.
SECTION 8.14. NOTICE OF CERTAIN EVENTS CONCERNING INSURANCE AND
ENVIRONMENTAL CLAIMS.
(a) The Borrower will provide the Banks with written notice as
to any material cancellation or material adverse change in any
insurance of the Borrower or any of its Material Subsidiaries within
ten (10) Business Days after the Borrower's or any of
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its Material Subsidiary's receipt of any notice (whether formal or
informal) of such material cancellation or material change by any of
its insurers.
(b) The Borrower will promptly, and in any event within ten
(10) Business Days of the Borrower's obtaining knowledge thereof,
notify the Banks in writing of any of the following events:
(i) upon the Borrower's or any Material Subsidiary's
obtaining knowledge of any violation of any Environmental Law
regarding the Real Property or the Borrower's or any
Subsidiary's operations which violation could reasonably be
expected to have a Material Adverse Effect;
(ii) upon the Borrower's or any Material Subsidiary'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 reasonably be expected to
have a Material Adverse Effect;
(iii) upon the Borrower's or any Material
Subsidiary'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 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) the Borrower's, any Material
Subsidiary's or any Person's operation of the Real Property,
(B) contamination on, from, or into the Real Property, or (C)
investigation or remediation of offsite locations at which the
Borrower, any Material Subsidiary, or its predecessors are
alleged to have directly or indirectly Disposed of Hazardous
Substances, and with respect to which the asserted, demanded
or alleged liability associated therewith exceeds $35,000,000;
or
(iv) upon the Borrower's or any Material Subsidiary's
obtaining knowledge that any expense or loss which
individually or in the aggregate exceeds $35,000,000 has been
incurred by such governmental authority in connection with the
assessment, containment, removal or remediation of any
Hazardous Substances with respect to which the Borrower or any
Material Subsidiary has been alleged to be liable by such
governmental authority or for which a Lien may be imposed on
the Real Property by such governmental authority.
SECTION 8.15. NOTICE OF DEFAULT. The Borrower 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 $25,000,000 as to which the Borrower or any
of its Material Subsidiaries is a party or obligor, whether as principal or
surety, the Borrower shall promptly upon obtaining actual knowledge thereof give
written notice thereof to the Banks, describing the notice of action and the
nature of the claimed default.
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SECTION 8.16. USE OF PROCEEDS. The proceeds of the Loans shall be used
for general corporate purposes, to provide working capital, to provide letters
of credit and to refinance existing Indebtedness of the Borrower and its
Subsidiaries. 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 8.17. CERTAIN TRANSACTIONS. Except as disclosed in the
Disclosure Documents prior to the Effective Date, and except for arm's length
transactions pursuant to which the Borrower or any Subsidiary makes payments in
the ordinary course of business upon terms no less favorable than the Borrower
or such Subsidiary could obtain from third parties, none of the officers,
directors, or employees or any other affiliate of the Borrower or any Subsidiary
are presently or shall be a party to any transaction with the Borrower or any
Subsidiary (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 Borrower or any
Subsidiary, 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.
SECTION 9. CERTAIN NEGATIVE COVENANTS OF THE BORROWER. The Borrower
agrees that, so long as any Obligation or Letter of Credit is outstanding or the
Banks have any obligation to make Loans or any Issuing Bank has any obligation
to issue, extend or renew any Letters of Credit hereunder, or the Banks have any
obligation to reimburse any Issuing Bank for drawings honored under any Letter
of Credit, it shall, and shall cause its Subsidiaries to, comply with the
following covenants:
SECTION 9.1. RESTRICTIONS ON INDEBTEDNESS. Neither the Borrower nor any
of its 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 Indebtedness of any other Person (other than the Borrower or any
of its Subsidiaries), or incur any Indebtedness other than:
(a) Indebtedness arising under this Agreement or the other
Loan Documents;
(b) (i) Indebtedness incurred by the Borrower or any
Subsidiary with respect to any suretyship or performance bond incurred
in the ordinary course of its business, and undrawn landfill closure
bonds; and
(ii) Guarantees of any of its Subsidiaries' obligations to
governmental authorities in lieu of the posting of any landfill closure
bonds;
(c) Unsecured Indebtedness of the Borrower (and any guarantee
thereof by the Guarantor), including commercial paper and the Five Year
Revolving Credit Facility, which is pari passu or subordinated to the
Obligations; provided that there does not exist
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a Default or Event of Default at the time of the incurrence of such
Indebtedness and no Default or Event of Default would be created by the
incurrence of such Indebtedness;
(d) Indebtedness of the Guarantor and the Borrower's
Subsidiaries listed in Schedule 9.1(d) and any extension, renewal or
refinancing by the Guarantor or such Subsidiary of such Indebtedness,
provided that the terms and conditions of any such extension, renewal
or refinancing are substantially the same as the terms and conditions
in effect on the Effective Date, or are more favorable to the Guarantor
or such Subsidiary; and
(e) (i) Other Indebtedness of the Borrower's Subsidiaries
(other than of the Guarantor), (ii) secured Indebtedness of the
Borrower, (iii) Indebtedness with respect to drawn landfill closure
bonds, and (iv) Indebtedness with respect to Permitted Receivables
Transactions; provided that the aggregate amount of all such
Indebtedness in this Section 9.1(e) shall not exceed 15% of
Consolidated Tangible Assets at any time.
SECTION 9.2. RESTRICTIONS ON LIENS. The Borrower will not, and will
cause its Subsidiaries not to, create or incur or suffer to be created or
incurred or to exist any Lien of any kind upon any property or assets of any
character, whether now owned or 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
for Permitted Liens.
The Borrower and the Guarantor covenant and agree that if either of
them or any of their Subsidiaries shall create or assume any Lien upon any of
their respective properties or assets, whether now owned or hereafter acquired,
other than Permitted Liens (unless prior written consent shall have been
obtained from the Banks), the Borrower and the Guarantor will make or cause to
be made effective provision whereby the Obligations and the Guaranteed
Obligations will be secured by such Lien equally and ratably with any and all
other Indebtedness thereby secured so long as such other Indebtedness shall be
so secured; provided, that the covenants of the Borrower and the Guarantor
contained in this sentence shall only be in effect for so long as the Borrower
or the Guarantor shall be similarly obligated under any other Indebtedness;
provided, further, that an Event of Default shall occur for so long as such
other Indebtedness becomes secured notwithstanding any actions taken by the
Borrower or the Guarantor to ratably secure the Obligations and the Guaranteed
Obligations hereunder.
SECTION 9.3. RESTRICTIONS ON INVESTMENTS. Except to the extent provided
in Section 9.4, neither the Borrower nor any Subsidiary may make or permit to
exist or to remain outstanding any Investment, unless both before and after
giving effect thereto (i) the Borrower and its
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Subsidiaries are in compliance with the covenants set forth in Sections 8, 9
and 10 hereof; (ii) 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;
and (iii) the aggregate amount of all Investments (excluding Investments in (A)
direct obligations of the United States of America or any agency thereof having
maturities of less than one (1) year, (B) certificates of deposit having
maturities of less than one (1) year, issued by commercial banks in the United
States or Canada having capital and surplus of not less than $100,000,000, and
(C) Subsidiaries), does not exceed 15% of Consolidated Tangible Assets;
provided, that the ability of the Borrower and its Subsidiaries to incur any
Indebtedness in connection with any Investment permitted by this Section 9.3
shall be governed by Section 9.1.
SECTION 9.4. MERGERS, CONSOLIDATIONS, SALES.
(a) Neither the Borrower nor any Subsidiary shall be a party
to any merger, consolidation or exchange of stock unless the Borrower
shall be the surviving entity with respect to any such transaction to
which the Borrower is a party and the Guarantor shall be the survivor
of any merger with any other Subsidiary or a Subsidiary shall be the
surviving entity (and continue to be a Subsidiary) with respect to any
such transactions to which one or more Subsidiaries is a party (and the
conditions set forth below are satisfied), or purchase or otherwise
acquire all or substantially all of the assets or stock of any class
of, or any partnership, membership or joint venture or other interest
in, any other Person except as otherwise provided in Section 9.3 or
this Section 9.4. Notwithstanding the foregoing, the Borrower and its
Subsidiaries may purchase or otherwise acquire all or substantially all
of the assets or stock of any class of, or joint venture or other
interest in, any Person if the following conditions have been met: (i)
the proposed transaction will not otherwise create a Default or an
Event of Default hereunder; and (ii) the business to be acquired
predominantly involves (A) the collection, transfer, hauling, disposal
or recycling of solid waste or thermal soil remediation, or (B) other
lines of businesses currently engaged in, or related, associated,
complementary or supplementary thereto, whether from an operational,
business, financial, technical or administrative standpoint; provided
that the Borrower or its Subsidiaries may purchase or otherwise acquire
all or substantially all of the assets or stock of any class of, or any
partnership, membership or joint venture or other interest in, any
Persons in unrelated businesses, not to exceed an aggregate amount of
$100,000,000 during the first year following the Effective Date, and
not to exceed a total aggregate amount of $200,000,000 during the term
of this Agreement. Notwithstanding anything herein to the contrary, the
ability of the Borrower and its Subsidiaries to incur any Indebtedness
in connection with any transaction permitted pursuant to this Section
9.4 shall be governed by Section 9.1.
(b) Neither the Borrower nor any Subsidiary shall sell,
transfer, convey or lease any assets or group of assets, including the
sale or transfer of any property owned by the Borrower or any
Subsidiary in order then or thereafter to lease such property or lease
other property which the Borrower or such Subsidiary intends to use for
substantially the same purpose as the property being sold or
transferred, or sell or assign, with or without recourse, any
receivables, except (i) transfers of real or personal property among
Subsidiaries of the Borrower, (ii) so long as no Default or Event of
Default has occurred
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and is continuing, or would result therefrom, sales of assets or
pursuant to a sale-leaseback transaction, provided that any net cash
proceeds from any such sale or sale-leaseback shall, within 180 days,
either be used to pay down outstanding Loans under this Agreement and
outstanding loans under the Five Year Revolving Credit Facility pro
rata, or be reinvested by such Person in assets of the business of the
Borrower and its Subsidiaries, used for working capital, invested in
Investments in accordance with the provisions of Section 9.3 or used
for other general corporate purposes, (iii) sales of accounts
receivable (and contract rights, general intangibles or chattel paper
related thereto) more than sixty (60) days past due sold or assigned in
the ordinary course of collecting past due accounts, or (iv) pursuant
to a Permitted Receivables Transaction.
SECTION 9.5. RESTRICTED DISTRIBUTIONS AND REDEMPTIONS. Neither the
Borrower nor any of its Subsidiaries will (a) declare or pay any Distributions,
or (b) redeem, convert, retire or otherwise acquire shares of any class of its
capital stock (other than in connection with a merger permitted by Section 9.4
hereof or conversion into another form of equity of any preferred shares of the
Borrower existing as of the Effective Date pursuant to the terms thereof);
unless at the time of such Distribution or redemption no Default or Event of
Default exists or would be created hereunder. Notwithstanding the above, any
Subsidiary may make Distributions to the Borrower and the Borrower agrees that
neither the Borrower nor any Material Subsidiary will enter into any agreement
restricting Distributions from such Material Subsidiary to the Borrower.
SECTION 9.6. EMPLOYEE BENEFIT PLANS. None of the Borrower, any of its
Subsidiaries, or 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 the Borrower on a consolidated basis; 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 the Borrower or the Guarantor 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 (within the meaning of Section 4001 of
ERISA), other than with respect to the Terminated Plans, 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 Borrower and its Subsidiaries will (i) promptly upon the request of
any Bank or the Administrative Agent, 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
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attachments, in respect of each Guaranteed Pension Plan and (ii) promptly upon
receipt or dispatch, furnish to the Banks any notice, report or demand 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, 4242 or 4245 of ERISA.
SECTION 10. FINANCIAL COVENANTS OF THE BORROWER. The Borrower agrees
that, so long as any Obligation or Letter of Credit is outstanding or the Banks
have any obligation to make Loans, or any Issuing Bank has any obligation to
issue, extend or renew any Letter of Credit hereunder, or the Banks have any
obligation to reimburse any Issuing Bank for drawings honored under any Letter
of Credit, it shall comply with the following covenants:
SECTION 10.1. INTEREST COVERAGE RATIO. As of the end of any fiscal
quarter of the Borrower, the Borrower will not permit the ratio of (a) EBIT for
the four fiscal quarters then ending to (b) Consolidated Total Interest Expense
for such period to be less than the applicable ratio set forth in the table
below:
FISCAL QUARTER(S) ENDING: RATIO:
------------------------- ------
6/30/01 - 12/31/01 2.25:1.00
3/31/02 - 12/31/02 2.50:1.00
3/31/03 and thereafter 3.00:1.00
SECTION 10.2. TOTAL DEBT TO EBITDA. As of the end of any fiscal quarter
of the Borrower, the Borrower will not permit the ratio of (a) Total Debt to (b)
EBITDA for the four fiscal quarters then ending to exceed 3.00:1.00.
SECTION 10.3. MINIMUM NET WORTH. The Borrower will not permit
Consolidated Net Worth at any time to be less than $3,500,000,000, plus 75% of
cumulative positive Consolidated Net Income for each fiscal quarter, beginning
with the fiscal quarter ending March 31, 2001.
SECTION 11. CONDITIONS PRECEDENT.
SECTION 11.1. CONDITIONS TO EFFECTIVENESS. The effectiveness of this
Agreement and the obligations of the Banks to make any Loans and of any Issuing
Bank to issue Letters of Credit and of the Banks to participate in Letters of
Credit and otherwise be bound by the terms of this Agreement shall be subject to
the satisfaction of each of the following conditions precedent:
SECTION 11.1.1. CORPORATE ACTION. All corporate action
necessary for the valid execution, delivery and performance by the
Borrower and the Guarantor of the Loan Documents shall have been duly
and effectively taken, and evidence thereof certified by authorized
officers of the Borrower and the Guarantor and satisfactory to the
Administrative Agent shall have been provided to the Banks.
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SECTION 11.1.2. LOAN DOCUMENTS, ETC. Each of the Loan
Documents and other documents listed on the closing agenda 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 Majority Banks.
SECTION 11.1.3. CERTIFICATE OF NO CHANGE. The Banks shall have
received from each of the Borrower and the Guarantor a certificate,
certified by a duly authorized officer of such Person to be true and
complete on the Effective Date, of (a) no changes (other than those
attached thereto) to its charter or other incorporation documents since
last delivered to the Administrative Agent, and (b) no changes to its
by-laws (other than those attached thereto) since last delivered to the
Administrative Agent.
SECTION 11.1.4. INCUMBENCY CERTIFICATE. The Banks shall have
received an incumbency certificate, dated as of the Effective Date,
signed by duly authorized officers of the Borrower and the Guarantor
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
Borrower and the Guarantor; (b) to make Syndicated Loan Requests and
Letter of Credit Requests; (c) to make Competitive Bid Quote Requests;
and (d) to give notices and to take other action on the Borrower's or
the Guarantor's behalf under the Loan Documents.
SECTION 11.1.5. CERTIFICATES OF INSURANCE. The Administrative
Agent shall have received 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 coverage of the Borrower and its Subsidiaries.
SECTION 11.1.6. OPINION OF COUNSEL. The Banks shall have
received a favorable legal opinion from the deputy general counsel to
the Borrower and the Guarantor addressed to the Banks, dated the
Effective Date, in form and substance satisfactory to the
Administrative Agent.
SECTION 11.1.7. SATISFACTORY FINANCIAL CONDITION. Other than
as disclosed in the Disclosure Documents, no material adverse change
shall have occurred in the financial condition, results of operations,
business, properties or prospects of the Borrower and its Subsidiaries,
taken as a whole, since the Interim Balance Sheet Date.
SECTION 11.1.8. PAYMENT OF CLOSING FEES. The Borrower shall
have paid the agreed upon closing fees to the Administrative Agent for
the account of the Banks.
SECTION 11.1.9. PAYOFF OF EXISTING DEBT. The Administrative
Agent shall have received evidence, in form and substance satisfactory
to the Administrative Agent, that (a) the 364 Day Loan Agreement, dated
as of July 10, 2000, among the Borrower, the Guarantor and certain of
the Banks has been paid in full and terminated, (b) the Fourth Amended
and Restated Revolving Credit Agreement, dated as of July 10, 2000,
among the Borrower, the Guarantor and certain of the Banks has been
paid in full and terminated, and (c) the new Five Year Revolving Credit
Facility is effective.
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SECTION 11.1.10. CLOSING CERTIFICATE. The Borrower shall have
delivered to the Administrative Agent a certificate, dated as of the
Effective Date, stating that, as of such date (a) the representations
and warranties set forth herein or in any other Loan Document are true
and correct, and (b) no Default or Event of Default has occurred and is
continuing.
SECTION 12. CONDITIONS TO ALL LOANS. The obligations of the Banks to
make or continue for an additional Interest Period in accordance with Section
2.7 any Loan and the obligation of any Issuing Bank to issue, extend, or renew
any Letter of Credit at the time of and subsequent to the Effective Date is
subject to the following conditions precedent:
SECTION 12.1. REPRESENTATIONS TRUE. Each of the representations and
warranties of the Borrower and the Guarantor (as applicable) 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 such
Loan or the issuance, extension, or renewal of any Letter of Credit, as
applicable, 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
either individually or in the aggregate do not result in a Material Adverse
Effect, and to the extent that such representations and warranties relate
expressly and solely to an earlier date).
SECTION 12.2. PERFORMANCE; NO EVENT OF DEFAULT. The Borrower shall have
performed and complied with all terms and conditions herein required to be
performed or complied with by it prior to or at the time of the making of any
Loan the issuance, extension or renewal of any Letter of Credit, and at the time
of the making of any Loan or the issuance, renewal or extension of any Letter of
Credit, there shall exist no Default or Event of Default or condition which
would result in a Default or an Event of Default upon consummation of such Loan
or issuance, extension, or renewal of any Letter of Credit, as applicable. Each
request for a Loan, or for issuance, extension or renewal of a Letter of Credit
shall constitute certification by the Borrower that the conditions specified in
Sections 12.1 and 12.2 will be duly satisfied on the date of such Loan or Letter
of Credit issuance, extension or renewal.
SECTION 12.3. 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, for any
Issuing Bank to issue, extend or renew, or the Banks to participate in, Letters
of Credit hereunder.
SECTION 12.4. GOVERNMENTAL REGULATION. The Banks shall have received
from the Borrower and its Subsidiaries 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 12.5. PROCEEDINGS AND DOCUMENTS. All proceedings in connection
with the transactions contemplated by this Agreement and all documents incident
thereto shall have been
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delivered to the Banks as of the date of the making of any extension of credit
in substance and in form satisfactory to the Banks, including without limitation
a Syndicated Loan Request in the form attached hereto as Exhibit D or a Letter
of Credit Request in the form attached hereto as Exhibit E 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 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 Borrower shall fail to pay any principal of the
Loans when the same shall become due and payable, whether at the stated
date of maturity or any accelerated date of maturity or at any other
date fixed for payment;
(b) if the Borrower shall fail to pay any interest or fees or
other amounts owing hereunder (other than those specified in subsection
(a) above) within five (5) Business Days after the same shall become
due and payable whether at the Revolving Credit Maturity Date, Term
Loan Maturity Date or any accelerated date of maturity or at any other
date fixed for payment;
(c) if the Borrower shall fail to comply with any of the
covenants contained in Sections 8.4, 8.5, 8.15, 8.16, 9 and 10 hereof;
(d) if the Borrower 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) and
such failure shall not be remedied within 30 days after written notice
of such failure shall have been given to the Borrower by the
Administrative Agent or any of 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 the Borrower or any of its Subsidiaries shall fail to
pay when due, or within any applicable period of grace, any
Indebtedness or Swap Obligation in an aggregate amount greater than
$50,000,000, or fail to observe or perform any material term, covenant
or agreement contained in any one or more agreements by which it is
bound, evidencing or securing any Indebtedness or Swap Obligation in an
aggregate amount greater than $50,000,000 for such period of time as
would permit, 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
terminate its commitment with respect thereto;
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(g) if the Borrower, the Guarantor or any Material 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 or receiver of the Borrower, the
Guarantor or any Material Subsidiary, or of any substantial part of the
assets of the Borrower, the Guarantor or any Material Subsidiary or
commences any case or other proceeding relating to the Borrower, the
Guarantor or any Material 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 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 the
Borrower, the Guarantor or any Material Subsidiary or the Borrower, the
Guarantor or any Material Subsidiary indicates its approval thereof,
consent thereto or acquiescence therein;
(h) if a decree or order is entered appointing any such
trustee, custodian, liquidator or receiver or adjudicating the Borrower
or the Guarantor or any Material 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 the Borrower or the
Guarantor or any Material Subsidiary in an involuntary case under
federal bankruptcy laws of any jurisdiction as now or hereafter
constituted, and such decree or order remains in effect for more than
45 days, whether or not consecutive;
(i) if there shall remain in force, undischarged, unsatisfied
and unstayed, for more than thirty days, whether or not consecutive,
any final judgment against the Borrower or any Subsidiary which, with
other outstanding final judgments against the Borrower and its
Subsidiaries exceeds in the aggregate $25,000,000 after taking into
account any undisputed insurance coverage;
(j) if, with respect to any Guaranteed Pension Plan, an ERISA
Reportable Event shall have occurred and the Banks shall have
determined in their reasonable discretion that such event reasonably
could be expected to result in liability of the Borrower or any
Subsidiary to the PBGC or the Plan in an aggregate amount exceeding
$25,000,000 and such event in the circumstances occurring reasonably
could constitute grounds for the partial or complete termination of
such Plan by the PBGC or for the appointment by the appropriate United
States District Court of a trustee to administer such Plan; or a
trustee shall have been appointed by the appropriate United States
District Court to administer such Plan; or the PBGC shall have
instituted proceedings to terminate such Plan;
(k) 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 Borrower, the Guarantor, or
any of their respective stockholders, or any court or any other
governmental or regulatory authority or agency of
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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; or
(l) if 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 voting stock of
the Borrower; or during any period of twelve consecutive calendar
months, individuals who were directors of the Borrower on the first day
of such period (together with any new directors whose election by such
board or whose nomination for election by the shareholders of the
Borrower was approved by a vote of a majority of the directors still in
office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved)
shall cease to constitute a majority of the board of directors of the
Borrower;
then, and in any such event, so long as the same may be continuing, the
Administrative Agent may, and upon the request of the Majority Banks shall, by
notice in writing to the Borrower, 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, notice of intent to
accelerate, notice of acceleration to the extent permitted by law or other
notice of any kind, all of which are hereby expressly waived by the Borrower;
provided that in the event of any Event of Default specified in Section 13.1(g)
or 13.1(h) with respect to the Borrower or the Guarantor, all such amounts shall
become immediately due and payable automatically and without any requirement of
notice from the Administrative Agent or any Bank. Upon demand by the Majority
Banks after the occurrence of any Event of Default, the Borrower shall
immediately provide to the Administrative Agent cash in an amount equal to the
aggregate Maximum Drawing Amount to be held by the Administrative Agent as
collateral security for the Reimbursement Obligations.
SECTION 13.2. TERMINATION OF COMMITMENTS. If any Event of Default
pursuant to Sections 13.1(g) or 13.1(h) hereof shall occur with respect to the
Borrower or the Guarantor, any unused portion of the Total Commitment hereunder
shall forthwith terminate and the Banks and the Issuing Banks shall be relieved
of all obligations to make Loans or to issue, extend or renew Letters of Credit
hereunder; or if any other Event of Default shall occur, the Majority Banks may
by notice to the Borrower 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 and the Issuing
Banks shall be relieved of all further obligations to make Loans or to issue,
extend or renew Letters of Credit hereunder. No termination of any portion of
the Total Commitment hereunder shall relieve the Borrower of any of its existing
Obligations to the Banks, the Issuing Banks or the Administrative Agent
hereunder or elsewhere.
SECTION 13.3. REMEDIES. 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 and other Obligations pursuant
to Section 13.1, each Bank, upon notice to the other Banks, if owed any amount
with respect to the Loans or the Reimbursement Obligations, may proceed to
protect and
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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, any recovery being subject to the terms of Section
30 hereof. No remedy herein conferred upon any Bank or the Administrative Agent
or the holder of any Note 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 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 to the Borrower and any securities or other
property of the Borrower in the possession of such Bank may be applied to or set
off against the payment of 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 Borrower to the Banks or the Administrative Agent.
Any amounts set off pursuant to this Section 14 shall be distributed ratably in
accordance with Section 30 among all of the Banks by the Bank setting off such
amounts. If any Bank fails to share such setoff ratably, the Administrative
Agent shall have the right to withhold such Bank's share of the Borrower's
payments until each of the Banks shall have, in the aggregate, received a pro
rata repayment.
SECTION 15. EXPENSES. Whether or not the transactions contemplated
herein shall be consummated, the Borrower hereby promises to reimburse the
Administrative Agent and the Joint Lead Arrangers and Joint Book Managers for
all reasonable out-of-pocket fees and disbursements (including all reasonable
attorneys' fees) incurred or expended in connection with the syndication,
preparation, filing or recording, or interpretation of this Agreement, the other
Loan Documents, or any amendment, modification, approval, consent or waiver
hereof or thereof. The Borrower further promises to reimburse the Administrative
Agent and the Banks for all reasonable out-of-pocket fees and disbursements
(including all reasonable legal fees and the allocable cost of in-house
attorneys' fees) incurred or expended in connection with the enforcement of any
Obligations or the satisfaction of any indebtedness of the Borrower hereunder or
under any other Loan Document, or in connection with any litigation, proceeding
or dispute hereunder in any way related to the credit hereunder. The Borrower
also promises to pay the Administrative Agent all reasonable out-of-pocket fees
and disbursements, incurred or expended in connection with the Competitive Bid
Loan procedure under Section 4 hereof.
SECTION 16. THE AGENTS.
SECTION 16.1. APPOINTMENT, POWERS AND IMMUNITIES. Each Bank hereby
irrevocably appoints and authorizes Fleet to act as Administrative Agent,
provided, however, the Administrative Agent is hereby authorized to serve only
as administrative agent for the Banks and to exercise such powers as are
reasonably incidental thereto and as are set forth in this Agreement and the
other Loan Documents. The Administrative Agent hereby acknowledges that it does
not have the authority to negotiate any agreement which would bind the Banks or
agree to any amendment,
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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
Agreement, and in the other Loan Documents, the Administrative Agent shall take
action or refrain from acting only upon instructions of the Banks. It is agreed
that the duties, rights, privileges and immunities of the Issuing Banks, in
their capacity as issuers of Letters of Credit hereunder, shall be identical to
the duties, rights, privileges and immunities of the Administrative Agent as
provided in this Section 16. The Administrative Agent shall not have any duties
or responsibilities or any fiduciary relationship with any Bank except those
expressly set forth in this Agreement and the other Loan Documents. Neither the
Administrative Agent nor any of its affiliates shall be responsible to the Banks
for any recitals, statements, representations or warranties made by the Borrower
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 Borrower or any other
Person to perform its obligations hereunder or thereunder or in respect of the
Notes. The Administrative Agent 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. The Administrative Agent,
the Agents and any of their directors, officers, employees or agents shall not
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 Administrative Agent in its separate
capacity as a Bank shall have the same rights and powers hereunder as any other
Bank. The Co-Documentation Agents and the Co-Syndication Agents shall not have
any right, power, obligation, liability, responsibility or duty under this
Credit Agreement in such capacity, other than, with respect to the
Co-Documentation Agents and BOA, those applicable to all Banks as Banks.
SECTION 16.2. ACTIONS BY ADMINISTRATIVE AGENT. The Administrative Agent
shall be fully justified in failing or refusing to take any action under this
Agreement as reasonably deemed appropriate unless it shall first have received
the consent of the Majority Banks (or, when expressly required hereby, all 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. The Administrative 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 the instruction
of the Majority Banks (or, when expressly required hereby or thereby, all of the
Banks), and such instruction 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 16.3. INDEMNIFICATION. Without limiting the obligations of the
Borrower hereunder or under any other Loan Document, the Banks agree to
indemnify the Administrative Agent, its affiliates and its respective directors,
officers, agents and employees (to the extent not reimbursed by the Borrower)
ratably in accordance with their respective Commitment Percentages for any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may at any time be imposed on, incurred by or asserted against the
Administrative 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
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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 Administrative Agent (or any agent
thereof), IT BEING THE INTENT OF THE PARTIES HERETO THAT ALL SUCH INDEMNIFIED
PARTIES SHALL BE INDEMNIFIED FOR THEIR ORDINARY SOLE OR CONTRIBUTORY NEGLIGENCE.
SECTION 16.4. REIMBURSEMENT. Without limiting the provisions of
Sections 6.1(a), 6.12, and 14, the Administrative Agent shall not be obliged to
make available to any Person any sum which the Administrative Agent is expecting
to receive for the account of that Person until the Administrative Agent has
determined that it has received that sum. The Administrative Agent may, however,
disburse funds prior to determining that the sums which the Administrative Agent
expects to receive have been finally and unconditionally paid to the
Administrative Agent, if the Administrative Agent wishes to do so. If and to the
extent that the Administrative Agent does disburse funds and it later becomes
apparent that the Administrative Agent did not then receive a payment in an
amount equal to the sum paid out, then any Person to whom the Administrative
Agent made the funds available shall, on demand from the Administrative Agent,
refund to the Administrative Agent the sum paid to that Person. If, in the
opinion of the Administrative Agent, the distribution of any amount received by
it in such capacity hereunder or under the other 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 the Administrative Agent is to be repaid, each Person to whom any
such distribution shall have been made shall either repay to the Administrative
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.
SECTION 16.5. DOCUMENTS. The Administrative Agent will forward to each
Bank, promptly after receipt thereof, a copy of each notice or other document
furnished to the Administrative Agent for such Bank hereunder; provided,
however, that, notwithstanding the foregoing, the Administrative 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 16.6. NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER BANKS.
Each Bank represents that it has, independently and without reliance on the
Administrative Agent, the 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 Borrower and the Guarantor and the
decision to enter into this Agreement and the other Loan Documents and agrees
that it will, independently and without reliance upon the Administrative Agent,
the Agents 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. Except as herein expressly provided to the contrary, the
Administrative Agent shall not be required to keep informed as to the
performance or observance by the Borrower and the Guarantor 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
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furnished to the Banks by the Administrative Agent hereunder, the Administrative
Agent 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 the Administrative Agent or any of their affiliates. Each Bank
shall have access to all documents relating to the Administrative Agent's
performance of their duties hereunder at such Bank's request. Unless any Bank
shall promptly object to any action taken by the Administrative Agent hereunder
of which such Bank has actual knowledge (other than actions which require the
prior consent of such Bank in accordance with the terms hereof or to which the
provisions of Section 16.8 are applicable and other than actions which
constitute gross negligence or willful misconduct by the Administrative Agent),
such Bank shall be presumed to have approved the same.
SECTION 16.7. RESIGNATION OF ADMINISTRATIVE AGENT. The Administrative
Agent may resign at any time by giving 60 days' prior written notice thereof to
the Banks and the Borrower. Upon any such resignation, the Majority Banks (other
than the resigning Administrative Agent) shall have the right to appoint a
successor Administrative Agent from among the Banks, subject to the consent of
the Borrower. If no successor to the Administrative Agent shall have been so
appointed by the Majority Banks and approved by the Borrower and shall have
accepted such appointment within 30 days after the retiring Administrative
Agent's giving of notice of resignation, then the retiring Administrative Agent
may, on behalf of the Banks, appoint a successor Administrative Agent from among
the remaining Banks, which shall be a financial institution having a combined
capital and surplus in excess of $1,000,000,000. Upon the acceptance of any
appointment as the Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder. After the retiring Administrative
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 the Administrative Agent. Any new Issuing Bank appointed
pursuant to this Section 16.7 shall immediately issue new Letters of Credit in
place of Letters of Credit previously issued or, if acceptable to the resigning
Issuing Bank, issue letters of credit in favor of the resigning Issuing Bank as
security for the outstanding Letters of Credit and shall in due course replace
all Letters of Credit previously issued by the resigning Issuing Bank.
SECTION 16.8. ACTION BY THE BANKS, CONSENTS, AMENDMENTS, WAIVERS, ETC.
(a) No failure or delay by the Administrative Agent, any Issuing Bank or any
Bank in exercising any right or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent, the Issuing
Banks and the Banks hereunder are cumulative and are not exclusive of any rights
or remedies that they would otherwise have. No waiver of any provision of this
Agreement or consent to any departure by the Borrower therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of this
section, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. Without limiting the generality of
the foregoing, the making of a Loan or issuance of a Letter of Credit shall not
be construed as a waiver of any Default or Event
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of Default, regardless of whether the Administrative Agent, any Lender or the
Issuing Bank may have had notice or knowledge of such Default or Event of
Default at the time.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower and the Majority Banks or by the Borrower and the
Administrative Agent with the consent of the Majority Banks; provided that no
such agreement shall (i) increase the Commitment of any Bank without the written
consent of such Bank, (ii) reduce the principal amount of any Loan or
Reimbursement Obligations, or reduce the rate of interest thereon or on the
Notes, or reduce any fees payable hereunder, without the written consent of each
Bank affected thereby, (iii) postpone the scheduled date of payment of the
principal amount of any Loan, or any interest thereon, or any fees payable
hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment, without the written
consent of each Bank affected thereby; (iv) release the Borrower from its
Obligations or the Guarantor from its Guaranteed Obligations hereunder without
the written consent of each Bank, or (v) change any of the provisions of this
Section 16.8 or the definition of "Majority Banks", without the written consent
of each Bank; provided further that no such agreement shall amend, modify or
otherwise affect the rights or duties of the Administrative Agent or any Issuing
Bank hereunder without the prior written consent of the Administrative Agent or
the Issuing Banks, as the case may be.
SECTION 17. INDEMNIFICATION. The Borrower agrees to indemnify and hold
harmless the Banks, the Agents, the Issuing Banks, the Joint Lead Arrangers and
Joint Book Managers and the Administrative Agent and their affiliates, as well
as the Banks' and the Administrative Agent's and their affiliates' 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 statutorily 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
negligence or willful misconduct of such indemnified party. In any
investigation, enforcement matter, proceeding or litigation, or the preparation
therefor, the Banks and the Administrative Agent shall be entitled to select
their own counsel and, in addition to the foregoing indemnity, the Borrower
agrees to pay promptly the reasonable fees and expenses of such counsel
(including the non-duplicative allocated cost of internal counsel), and
settlement costs. In the event of the commencement of any such proceeding or
litigation against the Banks or Administrative Agent by third parties, the
Borrower shall be entitled to participate in such proceeding or litigation with
counsel of their choice at their expense. The covenants of this Section 17 shall
survive payment or satisfaction of payment of amounts owing with respect to any
Note or any other Loan Document and satisfaction of all the Obligations
hereunder, IT BEING THE INTENT OF THE PARTIES HERETO THAT ALL SUCH INDEMNIFIED
PARTIES SHALL BE INDEMNIFIED FOR THEIR ORDINARY SOLE OR CONTRIBUTORY NEGLIGENCE.
SECTION 18. WITHHOLDING TAXES. The Borrower hereby agrees that:
(a) Any and all payments made by the Borrower hereunder shall
be made free and clear of, and without deduction for, any and all
present or future taxes, levies, fees,
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duties, imposts, deductions, charges or withholdings of any nature
whatsoever, excluding, in the case of the Administrative Agent or the
Banks or any holder of the Notes, (i) taxes imposed on, or measured by,
its net income or profits, (ii) franchise taxes imposed on it, (iii)
taxes imposed by any jurisdiction as a direct consequence of it, or any
of its affiliates, having a present or former connection with such
jurisdiction, including, without limitation, being organized, existing
or qualified to do business, doing business or maintaining a permanent
establishment or office in such jurisdiction, and (iv) taxes imposed by
reason of its failure to comply with any applicable certification,
identification, information, documentation or other reporting
requirement (all such non-excluded taxes being hereinafter referred to
as "Indemnifiable Taxes"). In the event that any withholding or
deduction from any payment to be made by the Borrower hereunder is
required in respect of any Indemnifiable Taxes pursuant to any
applicable law, or governmental rule or regulation, then the Borrower
will (i) direct to the relevant taxing authority the full amount
required to be so withheld or deducted, (ii) forward to the
Administrative Agent for delivery to the applicable Bank an official
receipt or other documentation satisfactory to the Administrative Agent
and the applicable Bank evidencing such payment to such taxing
authority, and (iii) direct to the Administrative Agent for the account
of the relevant Banks such additional amount or amounts as is necessary
to ensure that the net amount actually received by each relevant Bank
will equal the full amount such Bank would have received had no such
withholding or deduction (including any Indemnifiable Taxes on such
additional amounts) been required. Moreover, if any Indemnifiable Taxes
are directly asserted against the Administrative Agent or any Bank with
respect to any payment received by the Administrative Agent or such
Bank by reason of the Borrower's failure to properly deduct and
withhold such Indemnifiable Taxes from such payment, the Administrative
Agent or such Bank may pay such Indemnifiable Taxes and the Borrower
will promptly pay all such additional amounts (including any penalties,
interest or reasonable expenses) as is necessary in order that the net
amount received by such Person after the payment of such Indemnifiable
Taxes (including any Indemnifiable Taxes on such additional amount)
shall equal the amount such Person would have received had not such
Indemnifiable Taxes been asserted. Any such payment shall be made
promptly after the receipt by the Borrower from the Administrative
Agent or such Bank, as the case may be, of a written statement setting
forth in reasonable detail the amount of the Indemnifiable Taxes and
the basis of the claim.
(b) The Borrower shall pay any present or future stamp or
documentary taxes or any other excise or any other similar levies which
arise from any payment made hereunder or from the execution, delivery
or registration of, or otherwise with respect to, this Agreement or any
other Loan Document ("Other Taxes").
(c) The Borrower hereby indemnifies and holds harmless the
Administrative Agent and each Bank for the full amount of Indemnifiable
Taxes or Other Taxes (including, without limitation, any Indemnifiable
Taxes or Other Taxes imposed on amounts payable under this Section 18)
paid by the Administrative Agent or such Bank, as the case may be, and
any liability (including penalties, interest and reasonable expenses)
arising therefrom or with respect thereto, by reason of the Borrower's
failure to properly
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deduct and withhold Indemnifiable Taxes pursuant to paragraph (a) above
or to properly pay Other Taxes pursuant to paragraph (b) above. Any
indemnification payment from the Borrower under the preceding sentence
shall be made promptly after receipt by the Borrower from the
Administrative Agent or Bank of a written statement setting forth in
reasonable detail the amount of such Indemnifiable Taxes or such Other
Taxes, as the case may be, and the basis of the claim.
(d) If the Borrower pays any amount under this Section 18 to
the Administrative Agent or any Bank and such payee knowingly receives
a refund of any taxes with respect to which such amount was paid, the
Administrative Agent or such Bank, as the case may be, shall pay to the
Borrower the amount of such refund promptly following the receipt
thereof by such payee.
(e) In the event any taxing authority notifies the Borrower or
the Guarantor that any of them has improperly failed to deduct or
withhold any taxes (other than Indemnifiable Taxes) from a payment made
hereunder to the Administrative Agent or any Bank, the Borrower shall
timely and fully pay such taxes to such taxing authority.
(f) The Administrative Agent or the Banks shall, upon the
request of the Borrower, take reasonable measures to avoid or mitigate
the amount of Indemnifiable Taxes required to be deducted or withheld
from any payment made hereunder if such measures can be taken without
such Person in its sole judgment suffering any legal, regulatory or
economic disadvantage.
(g) Without prejudice to the survival of any other agreement
of the parties hereunder, the agreements and obligations of the
Borrower contained in this Section 18 shall survive the payment in full
of the Obligations.
SECTION 19. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.
SECTION 19.1. CONFIDENTIALITY. Each of the Banks and the Administrative
Agent agrees, on behalf of itself and each of its affiliates, directors,
officers, employees and representatives, to use reasonable precautions to keep
confidential, in accordance with their customary procedures for handling
confidential information of the same nature and in accordance with safe and
sound banking practices, any non-public information supplied to it by the
Borrower or any of its Subsidiaries pursuant to this Agreement that is
identified by such Person as being confidential at the time the same is
delivered to the Banks or the Administrative Agent, provided that nothing herein
shall limit the disclosure of any such information (a) after such information
shall have become public other than through a violation of this Section 19, or
becomes available to any of the Banks or the Administrative Agent on a
nonconfidential basis from a source other than the Borrower, (b) to the extent
required by statute, rule, regulation or judicial process, (c) to counsel for
any of the Banks or the Administrative Agent, (d) to bank examiners or any other
regulatory authority having jurisdiction over any Bank or the Administrative
Agent, or to auditors or accountants, (e) to the Administrative Agent, any Bank
or any Financial Affiliate, (f) in connection with any litigation to which any
one or more of the Banks, the Administrative Agent or any Financial Affiliate is
a party, or in connection with the enforcement of rights or remedies
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hereunder or under any other Loan Document, (g) to an affiliate of any Bank or
the Administrative Agent, (h) to any actual or prospective assignee or
participant or any actual or prospective counterparty (or its advisors) to any
swap or derivative transactions referenced to credit or other risks or events
arising under this Agreement or any other Loan Document so long as such
assignee, participant or counterparty, as the case may be, agrees to be bound by
the provisions of Section 19.1 or (i) with the consent of the Borrower.
SECTION 19.2. PRIOR NOTIFICATION. Unless specifically prohibited by
applicable law or court order, each of the Banks and the Administrative Agent
shall, prior to disclosure thereof, notify the Borrower of any request for
disclosure of any such non-public information by any governmental agency or
representative thereof (other than any such request in connection with an
examination of the financial condition of such Bank by such governmental agency)
or pursuant to legal process.
SECTION 19.3. OTHER. In no event shall any Bank or the Administrative
Agent be obligated or required to return any materials furnished to it or any
Financial Affiliate by the Borrower or any of its Subsidiaries. The obligations
of each Bank under this Section 19 shall supersede and replace the obligations
of such Bank under any confidentiality letter in respect of this financing
signed and delivered by such Bank to the Borrower prior to the date hereof and
shall be binding upon any assignee of, or purchaser of any participation in, any
interest in any of the Loans or Reimbursement Obligations from any Bank.
SECTION 20. 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 Borrower or the Guarantor pursuant hereto shall be deemed to have
been relied upon by the Banks, the Issuing Banks and the Administrative Agent,
notwithstanding any investigation heretofore or hereafter made by them, and
shall survive the making by the Banks of the Loans and the issuance, extension
or renewal of any Letters of Credit by any Issuing Bank, as herein contemplated,
and shall continue in full force and effect so long as any amount due under this
Agreement, any Obligation, any Letter of Credit or any Note remains outstanding
and unpaid or any Bank has any obligation to make any Loans or any Issuing Bank
has any obligation to issue, extend, or renew any Letters of Credit hereunder.
All statements contained in any certificate or other paper delivered by or on
behalf of the Borrower pursuant hereto or in connection with the transactions
contemplated hereby shall constitute representations and warranties by the
Borrower hereunder.
SECTION 21. ASSIGNMENT AND PARTICIPATION. It is understood and agreed
that each Bank shall have the right to assign at any time all or a portion of
its Commitment Percentage and interests in the risk relating to the Loans,
outstanding Letters of Credit and its Commitment hereunder in an amount equal to
or greater than $5,000,000 (or, if a Bank's Commitment is less than $5,000,000,
in a minimum amount equal to such Bank's Commitment, provided that prior to any
Commitment reductions pursuant to Section 2.3, such Bank's Commitment was at
least $10,000,000) to additional banks or other financial institutions with the
prior written approval of the Administrative Agent and, so long as no Event of
Default has occurred and is continuing, the Borrower, which approvals shall not
be unreasonably withheld. Any Bank may at any time, and from time to time,
assign to any branch, lending office, or affiliate of such Bank all or any part
of
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its rights and obligations under the Loan Documents by notice to the
Administrative Agent and the Borrower. It is further agreed that each bank or
other financial institution which executes and delivers to the Administrative
Agent and the Borrower hereunder an Assignment and Acceptance substantially in
the form of Exhibit G hereto (an "Assignment and Acceptance") together with an
assignment fee in the amount of $3,500 payable by the assigning Bank to the
Administrative Agent, shall, on the date specified in such Assignment and
Acceptance, become a party to this Agreement and the other Loan Documents for
all purposes of this Agreement and the other Loan Documents, and its portion of
the Commitment, the Loans and Letters of Credit shall be as set forth in such
Assignment and Acceptance. The Bank assignor thereunder shall, to the extent
that rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights (except for indemnity rights
arising out of the period prior to such assignment) and be released from its
obligations under this Agreement and the other Loan Documents. Upon the
execution and delivery of such Assignment and Acceptance, (a) the Borrower shall
issue to the assignee bank or other financial institution Notes in the amount of
such bank's or other financial institution's Commitment dated the date of the
assignment or such other date as may be specified by the Administrative Agent,
and otherwise completed in substantially the form of Exhibits A or B, and to the
extent any assigning Bank has retained a portion of its obligations hereunder, a
replacement Syndicated Note, to the assigning Bank reflecting its assignment;
(b) to the extent applicable, the Borrower shall issue a Competitive Bid Note in
substantially the form of Exhibit C (and a replacement Competitive Bid Note) or
the Administrative Agent shall make appropriate entries on the Competitive Bid
Loan Accounts to reflect such assignment of Competitive Bid Loan(s); and (c)
this Agreement and Schedule 1 shall be deemed to be appropriately amended to
reflect (i) the status of the bank or financial institution as a party hereto
and (ii) the status and rights of the Banks hereunder.
Each Bank shall also have the right to grant participations to one or
more banks or other financial institutions in its Commitment, the Loans and
outstanding Letters of Credit. The documents evidencing any such participation
shall limit such participating bank's or financial institution's voting rights
with respect to this Agreement to the matters set forth in Section 16.8(b)(i) -
(v).
Notwithstanding the foregoing, no assignment or participation shall
operate to increase the Total Commitment hereunder or otherwise alter the
substantive terms of this Agreement, and no Bank which retains a Commitment
hereunder shall have a Commitment of less than $10,000,000, except as a result
of reductions in the Total Commitment pursuant to Section 2.3 hereof.
Anything contained in this Section 21 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 enforcement thereof shall
release the pledgor Bank from its obligations hereunder or under any of the
other Loan Documents.
The Borrower agrees that in addition to disclosures made in accordance
with standard and customary banking practices any Bank may disclose information
obtained by such Bank pursuant to this Agreement to assignees or participants
and potential assignees or participants hereunder;
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provided that such assignees or participants or potential assignees or
participants shall agree to be bound by Section 19 hereof.
SECTION 22. 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 assigns of the parties hereto
and thereto; provided, that the Borrower shall not assign or transfer its rights
or obligations hereunder or thereunder without the prior written consent of each
of the Banks.
SECTION 23. 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 first class mail,
postage prepaid, or sent by telegraph, telex or facsimile and confirmed by
letter, addressed as follows:
(a) if to the Borrower or the Guarantor, at 1001 Fannin
Street, Suite 4000, Houston, Texas 77002, Attention: Ronald H. Jones,
Treasurer, facsimile number (713) 209-9710, with a copy to Lawrence
O'Donnell, Executive Vice President, General Counsel and Secretary,
facsimile number (713) 512-6325; or
(b) if to the Administrative Agent at Fleet National Bank, 100
Federal Street, Boston, Massachusetts 02110, Attention: H. Louis
Bailey, Managing Director, facsimile number (617) 434-2160; or
(c) if to any Bank, at the last address provided to the
Administrative Agent;
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, facsimile, 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 24. MISCELLANEOUS. The rights and remedies herein expressed are
cumulative and not exclusive of any other rights which the Banks, the Issuing
Banks or the Administrative Agent 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. This Agreement, to the extent
signed and delivered by means of a facsimile machine, shall be treated in all
manner and respects as an original agreement or instrument and shall be
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considered to have the same binding legal effect as if it were the original
signed version thereof delivered in person. At the request of any party hereto,
each other party hereto shall re-execute original forms thereof and deliver them
to all other parties. No party hereto shall raise the use of a facsimile machine
to deliver a signature or the fact that any signature or agreement or instrument
was transmitted or communicated through the use of a facsimile machine as a
defense to the formation of a contract and each party forever waives such
defense.
SECTION 25. CONSENTS, ETC. Neither this Agreement nor any term hereof
may be changed, waived, discharged or terminated, except as provided in this
Section 25, subject to the provisions of Section 16.8. No waiver shall extend to
or affect any obligation not expressly waived or impair any right consequent
thereon. Except as otherwise expressly provided in this Agreement, any consent
or approval required or permitted by this Agreement to be given by the Banks may
be given, and any term of this Agreement or of any other instrument related
hereto or mentioned herein may be amended, and the performance or observance by
the Borrower of any terms of this Agreement or such other instrument or the
continuance of any Default or Event of Default may be waived (either generally
or in a particular instance and either retroactively or prospectively) with, but
only with, the written consent of the Borrower and the Majority Banks. To the
extent permitted by law, no course of dealing or delay or omission on the part
of any of the Banks, the Issuing Banks or the Administrative Agent in exercising
any right shall operate as a waiver thereof or otherwise be prejudicial thereto.
No notice to or demand upon the Borrower shall entitle the Borrower to other or
further notice or demand in similar or other circumstances.
SECTION 26. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL 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, THE BORROWER AND THE
GUARANTOR HEREBY WAIVE ANY RIGHT EITHER OF THEM 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 BORROWER AND THE GUARANTOR EACH (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY BANK, ANY ISSUING BANK, THE
ADMINISTRATIVE AGENT OR ANY AGENT HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH BANK, SUCH ISSUING BANK, THE ADMINISTRATIVE AGENT OR SUCH AGENT WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (B)
ACKNOWLEDGES THAT THE ADMINISTRATIVE AGENT, THE BANKS, AND THE ISSUING BANKS
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
BECAUSE OF, AMONG OTHER THINGS, THE BORROWER'S AND THE GUARANTOR'S WAIVERS AND
CERTIFICATIONS CONTAINED HEREIN.
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SECTION 27. GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS AGREEMENT
AND 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 BORROWER AND THE GUARANTOR CONSENT AND AGREE THAT ANY SUIT FOR THE
ENFORCEMENT OF THIS 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 BORROWER IN ACCORDANCE WITH LAW AT THE
ADDRESS SPECIFIED IN Section 23. THE BORROWER AND THE GUARANTOR 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 28. 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 29. GUARANTY.
SECTION 29.1. GUARANTY. For value received and hereby acknowledged and
as an inducement to the Banks and the Issuing Banks to make the Loans available
to the Borrower, and issue, extend or renew Letters of Credit for the account of
the Borrower, the Guarantor hereby unconditionally and irrevocably guarantees
(a) the full punctual payment when due, whether at stated maturity, by
acceleration or otherwise, of all Obligations of the Borrower now or hereafter
existing whether for principal, interest, fees, expenses or otherwise, and (b)
the strict performance and observance by the Borrower of all agreements,
warranties and covenants applicable to the Borrower in the Loan Documents and
(c) the obligations of the Borrower under the Loan Documents (such Obligations
collectively being hereafter referred to as the "Guaranteed Obligations").
SECTION 29.2. GUARANTY ABSOLUTE. The Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms
hereof, regardless of any law, regulation or order now or hereafter in effect in
any jurisdiction affecting any of such terms or the rights of any Bank, any
Issuing Bank or the Administrative Agent with respect thereto. The liability of
the Guarantor under the guaranty granted under this Agreement with regard to the
Guaranteed Obligations shall be absolute and unconditional irrespective of:
(a) any change in the time, manner or place of payment of, or
in any other term of, all or any of its Guaranteed Obligations or any
other amendment or waiver of or any consent to departure from this
Agreement or any other Loan Document (with regard to such Guaranteed
Obligations);
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(b) any release or amendment or waiver of or consent to
departure from any other guaranty for all or any of its Guaranteed
Obligations;
(c) any change in ownership of the Borrower;
(d) any acceptance of any partial payment(s) from the Borrower
or the Guarantor; or
(e) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Borrower in respect of its
Obligations under any Loan Document.
The guaranty under this Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any Guaranteed
Obligation is rescinded or must otherwise be returned by the Banks, the Issuing
Banks or the Administrative Agent upon the insolvency, bankruptcy or
reorganization of the Borrower or otherwise, all as though such payment had not
been made.
SECTION 29.3. EFFECTIVENESS; ENFORCEMENT. The guaranty under this
Agreement shall be effective and shall be deemed to be made with respect to each
Loan and each Letter of Credit as of the time it is made, issued or extended, or
becomes a Letter of Credit under this Agreement, as applicable. No invalidity,
irregularity or unenforceability by reason of any bankruptcy or similar law, or
any law or order of any government or agency thereof purporting to reduce, amend
or otherwise affect any liability of the Borrower, and no defect in or
insufficiency or want of powers of the Borrower or irregular or improperly
recorded exercise thereof, shall impair, affect, be a defense to or claim
against such guaranty. The guaranty under this Agreement is a continuing
guaranty and shall (a) survive any termination of this Agreement, and (b) remain
in full force and effect until payment in full of, and performance of, all
Guaranteed Obligations and all other amounts payable under this Agreement. The
guaranty under this Agreement is made for the benefit of the Administrative
Agent, the Issuing Banks and the Banks and their successors and assigns, and may
be enforced from time to time as often as occasion therefor may arise and
without requirement on the part of the Administrative Agent, the Issuing Banks
or the Banks first to exercise any rights against the Borrower, or to resort to
any other source or means of obtaining payment of any of the said obligations or
to elect any other remedy.
SECTION 29.4. WAIVER. Except as otherwise specifically provided in any
of the Loan Documents, the Guarantor hereby waives promptness, diligence,
protest, notice of protest, all suretyship defenses, notice of acceptance and
any other notice with respect to any of its Guaranteed Obligations and the
guaranty under this Agreement and any requirement that the Banks, the Issuing
Banks or the Administrative Agent protect, secure, perfect any security interest
or Lien or any property subject thereto or exhaust any right or take any action
against the Borrower or any other Person. The Guarantor also irrevocably waives,
to the fullest extent permitted by law, all defenses which at any time may be
available to it in respect of its Guaranteed Obligations by virtue of any
statute of limitations, valuation, stay, moratorium law or other similar law now
or hereafter in effect.
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SECTION 29.5. EXPENSES. The Guarantor hereby promises to reimburse (a)
the Administrative Agent for all reasonable out-of-pocket fees and disbursements
(including all reasonable attorneys' fees), incurred or expended in connection
with the preparation, filing or recording, or interpretation of the guaranty
under this Agreement, the other Loan Documents to which the Guarantor is a
party, or any amendment, modification, approval, consent or waiver hereof or
thereof, and (b) the Administrative Agent, the Issuing Banks and the Banks and
their respective affiliates for all reasonable out-of-pocket fees and
disbursements (including reasonable attorneys' fees), incurred or expended in
connection with the enforcement of its Guaranteed Obligations (whether or not
legal proceedings are instituted). The Guarantor will pay any taxes (including
any interest and penalties in respect thereof) other than the Banks' taxes based
on overall income or profits, payable on or with respect to the transactions
contemplated by the guaranty under this Agreement, the Guarantor hereby agreeing
jointly and severally to indemnify each Bank with respect thereto.
SECTION 29.6. CONCERNING JOINT AND SEVERAL LIABILITY OF THE GUARANTOR.
(a) The Guarantor hereby irrevocably and unconditionally
accepts, not merely as a surety but also as a co-debtor, joint and
several liability with the Borrower, with respect to the payment and
performance of all of its Guaranteed Obligations (including, without
limitation, any Guaranteed Obligations arising under this Section 29),
it being the intention of the parties hereto that all such Guaranteed
Obligations shall be the joint and several Guaranteed Obligations of
the Guarantor and the Borrower without preferences or distinction among
them.
(b) If and to the extent that the Borrower shall fail to make
any payment with respect to any of its Obligations as and when due or
to perform any of its Guaranteed Obligations in accordance with the
terms thereof, then in each such event the Guarantor will make such
payment with respect to, or perform, such Guaranteed Obligation.
(c) The Guaranteed Obligations of the Guarantor under the
provisions of this Section 29 constitute full recourse obligations of
the Guarantor enforceable against the Guarantor to the full extent of
its properties and assets, irrespective of the validity, regularity or
enforceability of this Agreement or any other circumstance whatsoever.
(d) Except as otherwise expressly provided in this Agreement,
the Guarantor hereby waives notice of acceptance of its joint and
several liability, notice of any Loans made, or Letters of Credit
issued under this Agreement, notice of any action at any time taken or
omitted by the Administrative Agent, the Issuing Banks or the Banks
under or in respect of any of the Guaranteed Obligations, and,
generally, to the extent permitted by applicable law, all demands,
notices and other formalities of every kind in connection with this
Agreement. The Guarantor hereby assents to, and waives notice of, any
extension or postponement of the time for the payment of any of the
Guaranteed Obligations, the acceptance of any payment of any of the
Guaranteed Obligations, the acceptance of any partial payment thereon,
any waiver, consent or other action or acquiescence by the
Administrative Agent, the Issuing Banks or the Banks at any time or
times in respect of any Default or Event of Default by the Borrower or
the Guarantor in
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the performance or satisfaction of any term, covenant, condition or
provision of this Agreement or any other Loan Document, any and all
other indulgences whatsoever by the Administrative Agent, the Issuing
Banks or the Banks in respect of any of the Guaranteed 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 Guaranteed
Obligations or the addition, substitution or release, in whole or in
part, of the Borrower or the Guarantor. Without limiting the generality
of the foregoing, the Guarantor assents to any other action or delay in
acting or failure to act on the part of the Banks, the Issuing Banks or
the Administrative Agent with respect to the failure by the Borrower or
the Guarantor to comply with its respective Obligations or Guaranteed
Obligations, 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 29, afford grounds for terminating,
discharging or relieving the Guarantor, in whole or in part, from any
of the Guaranteed Obligations under this Section 29, it being the
intention of the Guarantor that, so long as any of the Guaranteed
Obligations hereunder remain unsatisfied, the Guaranteed Obligations of
the Guarantor under this Section 29 shall not be discharged except by
performance and then only to the extent of such performance. The
Guaranteed Obligations of the Guarantor under this Section 29 shall not
be diminished or rendered unenforceable by any winding up,
reorganization, arrangement, liquidation, reconstruction or similar
proceeding with respect to the Borrower or the Guarantor or the Banks,
the Issuing Banks or the Administrative Agent. The joint and several
liability of the Guarantor hereunder shall continue in full force and
effect notwithstanding any absorption, merger, consolidation,
amalgamation or any other change whatsoever in the name, membership,
constitution or place of formation of the Borrower or the Guarantor,
the Banks, the Issuing Banks or the Administrative Agent.
(e) The Guarantor shall be liable under this Section 29 only
for the maximum amount of such liabilities that can be incurred under
applicable law without rendering this Section 29 voidable under
applicable law relating to fraudulent conveyance and fraudulent
transfer, and not for any greater amount. Accordingly, if any
obligation under any provision under this Section 29 shall be declared
to be invalid or unenforceable in any respect or to any extent, it is
the stated intention and agreement of the Guarantor, the Administrative
Agent, the Issuing Banks and the Banks that any balance of the
obligation created by such provision and all other obligations of the
Guarantor under this Section 29 to the Banks, the Issuing Banks or the
Administrative Agent shall remain valid and enforceable, and that all
sums not in excess of those permitted under applicable law shall remain
fully collectible by the Banks, the Issuing Banks and the
Administrative Agent from the Borrower or the Guarantor, as the case
may be.
(f) The provisions of this Section 29 are made for the benefit
of the Administrative Agent, the Issuing Banks and the Banks and their
successors and assigns, and may be enforced in good faith by them from
time to time against the Guarantor as often as occasion therefor may
arise and without requirement on the part of the Administrative Agent,
the Issuing Banks or the Banks first to marshal any of their claims or
to exercise any of their rights against the Borrower or the Guarantor
or to exhaust any remedies available to them against the Borrower or
the Guarantor or to resort to any other source or
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means of obtaining payment of any of the obligations hereunder or to
elect any other remedy. The provisions of this Section 29 shall remain
in effect until all of the Guaranteed Obligations shall have been paid
in full or otherwise fully satisfied and the Commitments have expired
and all outstanding Letters of Credit have expired, matured or
otherwise been terminated. If at any time, any payment, or any part
thereof, made in respect of any of the Guaranteed Obligations, is
rescinded or must otherwise be restored or returned by the Banks, the
Issuing Banks or the Administrative Agent upon the insolvency,
bankruptcy or reorganization of the Borrower or the Guarantor, or
otherwise, the provisions of this Section 29 will forthwith be
reinstated in effect, as though such payment had not been made.
SECTION 29.7. WAIVER. Until the final payment and performance in full
of all of the Obligations, the Guarantor shall not exercise and the Guarantor
hereby waives any rights the Guarantor may have against the Borrower arising as
a result of payment by the Guarantor hereunder, by way of subrogation,
reimbursement, restitution, contribution or otherwise, and will not prove any
claim in competition with the Administrative Agent, the Issuing Banks or any
Bank in respect of any payment hereunder in any bankruptcy, insolvency or
reorganization case or proceedings of any nature; the Guarantor will not claim
any setoff, recoupment or counterclaim against the Borrower in respect of any
liability of the Borrower to the Guarantor; and the Guarantor waives any benefit
of and any right to participate in any collateral security which may be held by
the Administrative Agent, the Issuing Banks or any Bank.
SECTION 29.8. SUBROGATION; SUBORDINATION. The payment of any amounts
due with respect to any indebtedness of the Borrower for money borrowed or
credit received now or hereafter owed to the Guarantor is hereby subordinated to
the prior payment in full of all of the Obligations. The Guarantor agrees that,
after the occurrence of any default in the payment or performance of any of the
Obligations, the Guarantor will not demand, sue for or otherwise attempt to
collect any such indebtedness of the Borrower to the Guarantor until all of the
Obligations shall have been paid in full. If, notwithstanding the foregoing
sentence, the Guarantor shall collect, enforce or receive any amounts in respect
of such indebtedness while any Obligations are still outstanding, such amounts
shall be collected, enforced and received by the Guarantor as trustee for the
Banks, the Issuing Banks and the Administrative Agent and be paid over to the
Administrative Agent at Default, for the benefit of the Banks, the Issuing
Banks, and the Administrative Agent on account of the Obligations without
affecting in any manner the liability of the Guarantor under the other
provisions hereof.
SECTION 30. 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,
84
-78-
setoff or counterclaim against any Borrower (pursuant to Section 14 or
otherwise), including a secured claim under Section 506 of the
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,
Reimbursement Obligations and other Obligations held by it (other than
pursuant to Section 6.4, Section 6.5 or Section 6.7) as a result of
which the unpaid principal portion of the Notes and the Obligations
held by it shall be proportionately less than the unpaid principal
portion of the Notes and Obligations held by any other Bank, it shall
be deemed to have simultaneously purchased from such other Bank a
participation in the Notes and Obligations held by such other Bank, so
that the aggregate unpaid principal amount of the Notes, Obligations
and participations in Notes and Obligations held by each Bank shall be
in the same proportion to the aggregate unpaid principal amount of the
Notes and Obligations then outstanding as the principal amount of the
Notes 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 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 30 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. The Borrower expressly consents
to the foregoing arrangements and agrees that any Person holding such a
participation in the Notes 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 the Borrower
to such Person as fully as if such Person had made a Loan directly to
the Borrower in the amount of such participation.
SECTION 31. FINAL AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
85
-79-
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as of the date first set forth above.
THE BORROWER AND GUARANTOR:
WASTE MANAGEMENT, INC.
By: /s/ Ronald H. Jones
-------------------------------------
Name: Ronald H. Jones
Title: Vice President and Treasurer
WASTE MANAGEMENT HOLDINGS, INC.
By: /s/ William L. Trubeck
-------------------------------------
Name: William L. Trubeck
Title: Executive Vice President
Chief Financial Officer
By: /s/ Ronald H. Jones
-------------------------------------
Name: Ronald H. Jones
Title: Vice President and Treasurer
THE BANKS AND AGENTS:
FLEET NATIONAL BANK, individually and
as Administrative Agent
By: /s/ H. Louis Bailey
-------------------------------------
Name: H. Louis Bailey
Title: Managing Director
BANK OF AMERICA, N.A.
By: /s/ Dan M. Killian
-------------------------------------
Name: Dan M. Killian
Title: Managing Director
86
-80-
THE CHASE MANHATTAN BANK
By: /s/ James R. Dolphin
-------------------------------------------
Name: James R. Dolphin
Title: Senior Vice President
DEUTSCHE BANK AG, NEW YORK BRANCH AND/OR
CAYMAN ISLANDS BRANCH
By: /s/ Jean M. Hannigan Stephanie Strohe
-------------------------------------------
Name: Jean M. Hannigan Stephanie Strohe
Title: Director Vice President
CITIBANK, N.A.
By: /s/ David L. Harris
-------------------------------------------
Name: David L. Harris
Title: Vice President
ABN AMRO BANK N.V.
By: /s/ Judy C. Chiang
-------------------------------------------
Name: Judy C. Chiang
Title: Senior Vice President
By: /s/ C. David Allman
-------------------------------------------
Name: C. David Allman
Title: Vice President
THE BANK OF NOVA SCOTIA
By: /s/ N. Bell
-------------------------------------------
Name: N. Bell
Title: Assistant Agent
87
-81-
BARCLAYS BANK PLC
By: /s/ L. Peter Yetman
-------------------------------------------
Name: L. Peter Yetman
Title: Director
BNP PARIBAS
By: /s/ Mike Shryock
-------------------------------------------
Name: Mike Shryock
Title: Vice President
By: /s/ John Stacy
-------------------------------------------
Name: John Stacy
Title: Managing Director
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Atilla Koc
-------------------------------------------
Name: Atilla Koc
Title: Senior Vice President
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Phillip K. Liebscher
-------------------------------------------
Name: Phillip K. Liebscher
Title: Managing Director
ROYAL BANK OF CANADA
By: /s/ Ritta Lee
-------------------------------------------
Name: Ritta Lee
Title: Senior Manager
88
-82-
BANK ONE, N.A.
By: /s/ John J. Zollinger, IV
-------------------------------------------
Name: John J. Zollinger
Title: Associate Director
WACHOVIA BANK, N.A.
By: /s/ Bradford L. Watkins
-------------------------------------------
Name: Bradford L. Watkins
Title: Vice President
TORONTO DOMINION (TEXAS), INC.
By: /s/ Alva J. Jones
-------------------------------------------
Name: Alva J. Jones
Title: Vice President
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK BRANCH
By: /s/ Walter T. Duffy III
-------------------------------------------
Name: Walter T. Duffy III
Title: Associate Director
By: /s/ Anthony Alessandro
-------------------------------------------
Name:Anthony Allesandro
Title: Manager
THE FUJI BANK, LIMITED
By: /s/ Raymond Ventura
-------------------------------------------
Name: Raymond Ventura
Title: Senior Vice President
89
-83-
THE INDUSTRIAL BANKS OF JAPAN, LIMITED
NEW YORK BRANCH
By: /s/ Michael N. Oakes
-------------------------------------------
Name: Michael N. Oakes
Title: Senior Vice President, Houston Office
THE DAI-ICHI KANGYO BANK LTD., NY BRANCH
By: /s/ Robert P. Gallagher
-------------------------------------------
Name: Robert P. Gallagher
Title: Vice President
COMERICA BANK
By: /s/ Carol S. Geraghty
-------------------------------------------
Name: Carol S. Geraghty
Title: Vice President
THE BANK OF NEW YORK
By: /s/ David Sunderwith
-------------------------------------------
Name: David Sunderwith
Title: Vice President
CREDIT SUISSE FIRST BOSTON
By: /s/ Robert N. Finney /s/ Mark Heron
----------------------------------------------
Name: Robert N. Finney Mark Heron
Title: Managing Director Asst. Vice President
90
-84-
LEHMAN COMMERCIAL PAPER INC.
By: /s/ Michael E. O'Brien
-------------------------------------------
Name: Michael E. O'Brien
Title: Authorized Signatory
MELLON BANK, N.A.
By: /s/ Louis E. Flori
-------------------------------------------
Name: Louis E. Flori
Title: Vice President
MERRILL LYNCH BANK USA
By: /s/ D. Kevin Imlay
-------------------------------------------
Name: D. Kevin Imlay
Title: Senior Lending Officer
SUNTRUST BANK
By: /s/ Frank A. Coe
-------------------------------------------
Name: Frank A. Coe
Title: Vice President
THE MITSUBISHI TRUST AND BANKING CORPORATION
By: /s/ Toshihiro Hayashi
-------------------------------------------
Name: Toshihiro Hayashi
Title: Senior Vice President
91
-85-
EXHIBIT A
FORM OF
SYNDICATED NOTE
$________________ as of June 29, 2001
FOR VALUE RECEIVED, the undersigned, WASTE MANAGEMENT, INC., a Delaware
corporation (the "Borrower"), hereby absolutely and unconditionally promises to
pay to the order of [INSERT NAME OF PAYEE BANK] (the "Bank") at the loan office
of Fleet National Bank, as Administrative Agent for the Banks, at 100 Federal
Street, Boston, Massachusetts 02110:
(a) on the Revolving Credit Maturity Date as defined in the 364-Day
Loan Agreement, dated as of June 29, 2001 (as amended, modified, supplemented,
restated and in effect from time to time, the "Loan Agreement"), by and among
the Borrower, the Guarantor, the Bank, the Administrative Agent, and such other
banks or financial institutions that are or may become parties to the Loan
Agreement from time to time in accordance with the provisions thereof, the
principal amount of ___________________ DOLLARS ($_________) or, if less, the
then outstanding aggregate unpaid principal amount of Syndicated Loans made by
the Bank to the Borrower pursuant to the Loan Agreement; and
(b) interest on the principal balance hereof from time to time
outstanding from the date hereof through and including the date on which such
principal amount is paid in full, at the times and at the rates provided in the
Loan Agreement, subject however to the provisions of Section 6.9 of the Loan
Agreement.
This Syndicated Note evidences borrowings under, is subject to the
terms and conditions of, and has been issued by the Borrower in accordance with,
the Loan Agreement and is one of the Syndicated Notes referred to therein. The
Bank and any holder hereof are entitled to the benefits of the Loan Agreement
and may enforce the agreements of the Borrower contained therein, and any holder
hereof may exercise the respective remedies provided for thereby or otherwise
available in respect thereof, all in accordance with the respective terms
thereof. All capitalized terms used in this Syndicated Note and not otherwise
defined herein shall have the same meanings herein as in the Loan Agreement.
The Bank shall endorse, and is hereby irrevocably authorized by the
Borrower to endorse, on the schedule attached to this Syndicated Note or a
continuation of such schedule attached hereto and made a part hereof, an
appropriate notation evidencing advances and repayments of principal of this
Syndicated Note, provided that failure by the Bank to make any such notations
shall not affect any of the Borrower's obligations or the validity of any
repayments made by the Borrower in respect of this Syndicated Note.
92
-86-
The Borrower has the right in certain circumstances and the obligation
in certain other circumstances to prepay the whole or part of the principal of
this Syndicated Note on the terms and conditions specified in the Loan
Agreement.
If any one or more Events of Default shall occur, the entire unpaid
principal amount of this Syndicated Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Loan Agreement.
The Borrower and every endorser of this Syndicated Note or the
obligation represented hereby waive presentment, demand, notice, protest, notice
of intent to accelerate, notice of acceleration and all other demands and
notices in connection with the delivery, acceptance, performance, default or
enforcement of this Syndicated Note, assent to any extension or postponement of
the time of payment or any other indulgence, to any substitution, exchange or
release of collateral and to the addition or release of any other party or
person primarily or secondarily liable.
This Syndicated Note shall be deemed to take effect as an instrument
under the internal laws of the State of New York, without regard to principles
of conflicts-of-laws or choice of law doctrines, and for all purposes shall be
construed in accordance with such laws.
IN WITNESS WHEREOF, the Borrower has caused this Syndicated Note to be
signed on its behalf by its duly authorized officer as of the day and year first
above written.
WASTE MANAGEMENT, INC.
By:
---------------------------------
Title:
93
-87-
Amount of
Principal Balance of
Amount of Paid or Principal Notation
Date Loan Type Loan Prepaid Unpaid Made By
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
94
EXHIBIT B
FORM OF
SWING LINE NOTE
$10,000,000 as of June 29, 2001
FOR VALUE RECEIVED, the undersigned, WASTE MANAGEMENT, INC., a Delaware
corporation (the "Borrower"), hereby absolutely and unconditionally promises to
pay to the order of FLEET NATIONAL BANK (the "Bank") at the loan office of Fleet
National Bank, as Administrative Agent for the Banks, at 100 Federal Street,
Boston, Massachusetts 02110:
(a) on the Revolving Credit Maturity Date, as defined in the 364-Day
Loan Agreement, dated as of June 29, 2001 (as amended, modified, supplemented,
restated and in effect from time to time, the "Loan Agreement"), by and among
the Borrower, the Guarantor, the Bank, the Administrative Agent, and such other
banks or financial institutions that are or may become parties to the Loan
Agreement from time to time in accordance with the provisions thereof, the
principal amount of TEN MILLION DOLLARS ($10,000,000) or, if less, the then
outstanding aggregate unpaid principal amount of Swing Line Loans made by the
Bank to the Borrower pursuant to the Loan Agreement; and
(b) interest on the principal balance hereof from time to time
outstanding from the date hereof through and including the date on which such
principal amount is paid in full, at the times and at the rates provided in the
Loan Agreement, subject however to the provisions of Section 6.9 of the Loan
Agreement.
This Swing Line Note evidences borrowings under, is subject to the
terms and conditions of, and has been issued by the Borrower in accordance with
the Loan Agreement and is the Swing Line Note referred to therein. The Bank and
any holder hereof are entitled to the benefits of the Loan Agreement and may
enforce the agreements of the Borrower contained therein, and any holder hereof
may exercise the respective remedies provided for thereby or otherwise available
in respect thereof, all in accordance with the respective terms thereof. All
capitalized terms used in this Swing Line Note and not otherwise defined herein
shall have the same meanings herein as in the Loan Agreement.
The Bank shall endorse, and is hereby irrevocably authorized by the
Borrower to endorse, on the schedule attached to this Swing Line Note or a
continuation of such schedule attached hereto and made a part hereof, an
appropriate notation evidencing advances and repayments of principal of this
Swing Line Note, provided that failure by the Bank to make any such notations
shall not affect any of the Borrower's obligations or the validity of any
repayments made by the Borrower in respect of this Swing Line Note.
95
-2-
The Borrower has the right in certain circumstances and the obligation
in certain other circumstances to prepay the whole or part of the principal of
this Swing Line Note on the terms and conditions specified in the Loan
Agreement.
If any one or more Events of Default shall occur, the entire unpaid
principal amount of this Swing Line Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Loan Agreement.
The Borrower and every endorser of this Swing Line Note or the
obligation represented hereby waive presentment, demand, notice, protest, notice
of intent to accelerate, notice of acceleration and all other demands and
notices in connection with the delivery, acceptance, performance, default or
enforcement of this Swing Line Note, assent to any extension or postponement of
the time of payment or any other indulgence, to any substitution, exchange or
release of collateral and to the addition or release of any other party or
person primarily or secondarily liable.
This Swing Line Note shall be deemed to take effect as an instrument
under the internal laws of the State of New York, without regard to principles
of conflicts-of-laws or choice of law doctrines, and for all purposes shall be
construed in accordance with such laws.
IN WITNESS WHEREOF, the Borrower has caused this Swing Line Note to be
signed on its behalf by its duly authorized officer as of the day and year first
above written.
WASTE MANAGEMENT, INC.
By:
---------------------------------
Title:
96
-3-
Amount of
Principal Balance of
Amount of Paid or Principal Notation
Date Loan Prepaid Unpaid Made By
-------------------- ------------------ ------------------ ------------------ ------------------
-------------------- ------------------ ------------------ ------------------ ------------------
-------------------- ------------------ ------------------ ------------------ ------------------
-------------------- ------------------ ------------------ ------------------ ------------------
-------------------- ------------------ ------------------ ------------------ ------------------
-------------------- ------------------ ------------------ ------------------ ------------------
-------------------- ------------------ ------------------ ------------------ ------------------
-------------------- ------------------ ------------------ ------------------ ------------------
-------------------- ------------------ ------------------ ------------------ ------------------
-------------------- ------------------ ------------------ ------------------ ------------------
-------------------- ------------------ ------------------ ------------------ ------------------
-------------------- ------------------ ------------------ ------------------ ------------------
-------------------- ------------------ ------------------ ------------------ ------------------
-------------------- ------------------ ------------------ ------------------ ------------------
-------------------- ------------------ ------------------ ------------------ ------------------
-------------------- ------------------ ------------------ ------------------ ------------------
-------------------- ------------------ ------------------ ------------------ ------------------
-------------------- ------------------ ------------------ ------------------ ------------------
-------------------- ------------------ ------------------ ------------------ ------------------
-------------------- ------------------ ------------------ ------------------ ------------------
-------------------- ------------------ ------------------ ------------------ ------------------
-------------------- ------------------ ------------------ ------------------ ------------------
97
EXHIBIT C
FORM OF
COMPETITIVE BID NOTE
$750,000,000 as of June 29, 2001
FOR VALUE RECEIVED, the undersigned, WASTE MANAGEMENT, INC., a Delaware
corporation (the "Borrower"), hereby absolutely and unconditionally promises to
pay to the order of [INSERT NAME OF PAYEE BANK] (the "Bank") at the loan office
of Fleet National Bank, as Administrative Agent for the Banks, at 100 Federal
Street, Boston, Massachusetts 02110:
(a) on the last date of the relevant Interest Period(s), and on the
Revolving Credit Maturity Date as defined in the 364-Day Loan Agreement, dated
as of June 29, 2001 (as amended, modified, supplemented, restated and in effect
from time to time, the "Loan Agreement"), by and among the Borrower, the
Guarantor, the Bank, the Administrative Agent, and such other banks or financial
institutions that are or may become parties to the Loan Agreement from time to
time in accordance with the provisions thereof, the principal amount of SEVEN
HUNDRED FIFTY MILLION DOLLARS ($750,000,000) or, if less, the aggregate unpaid
principal amount of Competitive Bid Loans made by the Bank to the Borrower
pursuant to the Loan Agreement; and
(b) interest on the principal balance hereof from time to time
outstanding from the date hereof through and including the date on which such
principal amount is paid in full, at the times and at the rates provided in the
Loan Agreement, subject however to the provisions of Section 6.9 of the Loan
Agreement.
This Competitive Bid Note evidences borrowings under, is subject to the
terms and conditions of, and has been issued by the Borrower in accordance with
the terms of the Loan Agreement and is one of the Competitive Bid Notes referred
to therein. The Bank and any holder hereof are entitled to the benefits of the
Loan Agreement and may enforce the agreements of the Borrower contained therein,
and any holder hereof may exercise the respective remedies provided for thereby
or otherwise available in respect thereof, all in accordance with the respective
terms thereof. All capitalized terms used in this Competitive Bid Note and not
otherwise defined herein shall have the same meanings herein as in the Loan
Agreement.
The Bank shall endorse, and is hereby irrevocably authorized by the
Borrower to endorse, on the schedule attached to this Competitive Bid Note or a
continuation of such schedule attached hereto and made a part hereof, an
appropriate notation evidencing advances and repayments of principal of this
Competitive Bid Note, provided that failure by the Bank to make any such
98
-2-
notations shall not affect any of the Borrower's obligations or the validity of
any repayments made by the Borrower in respect of this Competitive Bid Note.
The Borrower has the obligation in certain circumstances to prepay the
whole or part of the principal of this Competitive Bid Note on the terms and
conditions specified in the Loan Agreement.
If any one or more Events of Default shall occur, the entire unpaid
principal amount of this Competitive Bid Note and all of the unpaid interest
accrued thereon may become or be declared due and payable in the manner and with
the effect provided in the Loan Agreement.
The Borrower and every endorser of this Competitive Bid Note or the
obligation represented hereby waive presentment, demand, notice, protest, notice
of intent to accelerate, notice of acceleration and all other demands and
notices in connection with the delivery, acceptance, performance, default or
enforcement of this Competitive Bid Note, assent to any extension or
postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
This Competitive Bid Note shall be deemed to take effect as an
instrument under the internal laws of the State of New York, without regard to
principles of conflicts-of-laws or choice of law doctrines, and for all purposes
shall be construed in accordance with such laws.
IN WITNESS WHEREOF, the Borrower has caused this Competitive Bid Note
to be signed on its behalf by its duly authorized officer as of the day and year
first above written.
WASTE MANAGEMENT, INC.
By:
---------------------------------
Title:
99
-3-
Amount of
Principal Balance of
Amount of Paid or Principal Notation
Date Loan Type Loan Prepaid Unpaid Made By
- ---------------------- ------------------- -------------------- --------------------- ------------------- ------------------
- ---------------------- ------------------- -------------------- --------------------- ------------------- ------------------
- ---------------------- ------------------- -------------------- --------------------- ------------------- ------------------
- ---------------------- ------------------- -------------------- --------------------- ------------------- ------------------
- ---------------------- ------------------- -------------------- --------------------- ------------------- ------------------
- ---------------------- ------------------- -------------------- --------------------- ------------------- ------------------
- ---------------------- ------------------- -------------------- --------------------- ------------------- ------------------
- ---------------------- ------------------- -------------------- --------------------- ------------------- ------------------
- ---------------------- ------------------- -------------------- --------------------- ------------------- ------------------
- ---------------------- ------------------- -------------------- --------------------- ------------------- ------------------
- ---------------------- ------------------- -------------------- --------------------- ------------------- ------------------
- ---------------------- ------------------- -------------------- --------------------- ------------------- ------------------
- ---------------------- ------------------- -------------------- --------------------- ------------------- ------------------
- ---------------------- ------------------- -------------------- --------------------- ------------------- ------------------
- ---------------------- ------------------- -------------------- --------------------- ------------------- ------------------
- ---------------------- ------------------- -------------------- --------------------- ------------------- ------------------
- ---------------------- ------------------- -------------------- --------------------- ------------------- ------------------
- ---------------------- ------------------- -------------------- --------------------- ------------------- ------------------
- ---------------------- ------------------- -------------------- --------------------- ------------------- ------------------
- ---------------------- ------------------- -------------------- --------------------- ------------------- ------------------
- ---------------------- ------------------- -------------------- --------------------- ------------------- ------------------
- ---------------------- ------------------- -------------------- --------------------- ------------------- ------------------
100
EXHIBIT D
FORM OF SYNDICATED LOAN REQUEST
WASTE MANAGEMENT, INC.
364-Day Loan Agreement (the "Loan Agreement") dated as of June 29, 2001
Syndicated Loan Request under Section 2.6(a)
Total Commitment
-------------------
Loans outstanding
-------------------
Amount of this Request
-------------------
Maximum Drawing Amount of
outstanding Letters of Credit
-------------------
Total of all outstanding and requested -------------------
Loans plus Maximum Drawing Amount of
all outstanding Letters of Credit
plus Amount of this Request (must not
exceed Total Commitment)
Proposed Drawdown Date
-------------------
Interest Rate Option (Base Rate or Eurodollar)
-------------------
Interest Period (if Eurodollar)
-------------------
Conversion under Section 2.7
Amount to be converted from
Eurodollar to Base Rate:
-------------------
Amount to be converted from
Base Rate to Eurodollar:
-------------------
Amount to be maintained as
Eurodollar Loan:
-------------------
Conversion Date
-------------------
Interest Period (if Eurodollar)
-------------------
I certify that the above is true and correct, and that all of the
conditions set forth in Section 12 of the Loan Agreement have been satisfied as
of the date hereof.
WASTE MANAGEMENT, INC.
By:
---------------------------------
Name:
Title:
------------------------------------
Date
101
EXHIBIT E
FORM OF LETTER OF CREDIT REQUEST
WASTE MANAGEMENT, INC.
364-Day Loan Agreement (the "Loan Agreement") dated as of June 29, 2001
Letter of Credit Request Under Section 3.1
Total Commitment
-------------------
Maximum Drawing Amount of
Letters of Credit outstanding
-------------------
Amount of this Request from Letter of Credit
Application (attached)
-------------------
Loans outstanding
-------------------
Maximum Drawing Amount of all outstanding
and Requested Letters of Credit
(must not exceed the Total Commitment
minus Total of all Revolving Credit Loans outstanding)
-------------------
I certify that the above is true and correct, and that all of the
conditions set forth in Section 12 of the Loan Agreement have been satisfied as
of the date hereof.
WASTE MANAGEMENT, INC.
By:
---------------------------------
Name:
Title:
------------------------------------
Date
cc: [
]
102
EXHIBIT F
FORM OF COMPLIANCE CERTIFICATE
WASTE MANAGEMENT, INC.
Compliance Certificate dated ______________________
I, ____________________________, [Chief Financial Officer][Chief Accounting
Officer][Corporate Treasurer] of WASTE MANAGEMENT, INC. (the "Borrower") certify
that no Default or Event of Default exists and that the Borrower is in
compliance with Sections 8, 9 & 10 of the 364-Day Loan Agreement dated as of
June 29, 2001 (as amended, modified, supplemented, restated and in effect from
time to time, the "Loan Agreement"), [as of the end of the quarter ended
__________]. Computations to evidence compliance with Section 10 of the Loan
Agreement are detailed below. Capitalized terms used herein without definition
shall have the meanings assigned to such terms in the Loan Agreement.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
SECTION 10.1 INTEREST COVERAGE RATIO
Consolidated Net Income $
--------------- (i)
Plus (without duplication):
interest expense $
--------------- (ii)
income tax expense $
--------------- (iii)
one-time charges related to Terminated
Plans taken in the fiscal quarter ending
September 30, 2000 (maximum $80,231,000) $
--------------- (iv)
one-time charges related to Terminated
Plans taken in the fiscal quarter ending
December 31, 2000 (maximum $28,102,000) $
--------------- (v)
non-cash extraordinary
non-recurring writedowns or writeoffs of assets $
--------------- (vi)
non-recurring extraordinary
charges for settlements or judgement costs with
respect to Shareholder Suits $
--------------- (vii)
Minus non-cash extraordinary gains on the sale of assets $
--------------- (viii)
EBIT (sum of (i) through (viii)) $
--------------- (a)
Consolidated Net Income of Acquired Businesses $
--------------- (i)
Plus (without duplication):
interest expense $
--------------- (ii)
income tax expense $
--------------- (iii)
EBIT of Acquired Businesses (sum of (i) through (iii)) $
--------------- (b)
Sum of (a) plus (b) $
--------------- (c)
Consolidated Total Interest Expense $
--------------- (d)
Ratio of (c) to (d) :
------ ------
Minimum ratio for the fiscal quarters ending:
6/30/01 - 12/31/01 2.25:1
3/31/02 - 12/31/02 2.50:1
3/31/03 and thereafter 3.00:1
103
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SECTION 10.2 TOTAL DEBT TO EBITDA
EBIT (from Section 10.1 item (c) above) $
--------------- (i)
Plus:
Depreciation expense $
--------------- (ii)
Amortization expense $
--------------- (iii)
EBITDA (sum of (i) through (iii)) $
--------------- (iv)
The sum of the following (calculated on a
consolidated basis for the Borrower and
its Subsidiaries):
Indebtedness for borrowed money $
--------------- (v)
Obligations for deferred purchase price of
property or services (other than trade payables) $
--------------- (vi)
Obligations evidenced by debt instruments $
--------------- (vii)
Obligations under conditional sales $
--------------- (viii)
Obligations, liabilities and indebtedness
under Capitalized Leases $
--------------- (ix)
Obligations, liabilities and indebtedness
under bonding arrangements $
--------------- (x)
(to the extent that a surety has been called upon
to make payment on a bond)
Guaranties of the Indebtedness of others $
--------------- (xi)
Indebtedness secured by liens or
encumbrances on property $
--------------- (xii)
Swap Obligations $
--------------- (xiii)
Reimbursement obligations
with respect to letters of credit $
--------------- (xiv)
Total Debt (sum of v - xiv) $
--------------- (xv)
Ratio of (xv) to (iv) :
---- ----
Maximum ratio: 3.00:1.00
104
-3-
SECTION 10.3 MINIMUM NET WORTH
Consolidated Net Worth $
--------------- (a)
Cumulative positive quarterly Consolidated Net
Income (commencing with the fiscal quarter ending
March 31, 2001) $
--------------- (b)
Item (b) multiplied by 0.75 $
--------------- (c)
Sum of $3,500,000,000 plus item (c) $
--------------- (d)
Difference of (d) minus (a) $
(not to exceed zero at any time) ---------------
105
EXHIBIT G
FORM OF ASSIGNMENT AND ACCEPTANCE
Dated as of _______ ___, ____
Reference is made to the 364-DAY LOAN AGREEMENT dated as of June 29,
2001 (as amended, modified, supplemented, restated and in effect from time to
time, the "Loan Agreement"), by and among WASTE MANAGEMENT, INC., a Delaware
corporation (the "Borrower"), WASTE MANAGEMENT HOLDINGS, INC., a wholly-owned
Subsidiary of the Borrower (the "Guarantor"), FLEET NATIONAL BANK, a national
banking association ("Fleet"), BANK OF AMERICA, N.A., a national banking
association, THE CHASE MANHATTAN BANK, a national banking association, DEUTSCHE
BANK AG, NEW YORK BRANCH, the duly licensed New York branch of a German
corporation, CITIBANK, N.A., a national banking association, and the other
financial institutions which become lenders thereunder (collectively, the
"Banks"), and Fleet as administrative agent (the "Administrative Agent").
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned to such terms in the Loan Agreement.
[___________________] (the "Assignor") and [_____________________] (the
"Assignee") hereby agree as follows:
32. ASSIGNMENT. Subject to the terms and conditions of this Assignment
and Acceptance, the Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes without recourse to the Assignor, the
rights, benefits, indemnities and obligations of the Assignor under the Loan
Agreement equal to ________________% of its Commitment Percentage and
___________% of its interest in and under the Loans and the risk relating to
outstanding Letters of Credit, each as in effect immediately prior to the
Effective Date (as hereinafter defined).
33. ASSIGNOR'S REPRESENTATIONS. The Assignor (i) represents and
warrants that (A) it is legally authorized to enter into this Assignment and
Acceptance, (B) as of the date hereof, its Commitment is $_______________, its
Commitment Percentage is ________________%, the aggregate outstanding principal
balance of its Loans equals $_______________, and the aggregate outstanding
amount of its participations in Letters of Credit equals $_______________ (in
each case before giving effect to the assignment contemplated hereby or any
contemplated assignments which have not yet become effective), and (C)
immediately after giving effect to all assignments which have not yet become
effective, the Assignor's Commitment Percentage will be sufficient to give
effect to this Assignment and Acceptance, (ii) makes no representation or
warranty, express or implied, and assumes and shall have no responsibility with
respect to any statements, warranties or representations made in or in
connection with the Loan Agreement or any of the other Loan Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Loan Agreement, the other Loan Documents or any other instrument or
document furnished pursuant thereto or the attachment, perfection or priority of
any security interest or mortgage, other than that it is the legal and
beneficial owner of the interest being assigned by it hereunder free and clear
of any claim or encumbrance; (iii) makes no representation or warranty and
assumes and shall have no responsibility with respect to the financial condition
of the
106
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Borrower or any of its Subsidiaries or any other Person primarily or secondarily
liable in respect of any of the Obligations, or the performance or observance by
the Borrower or any of its Subsidiaries or any other Person primarily or
secondarily liable in respect of any of the Obligations of any of its
obligations under the Loan Agreement or any of the other Loan Documents or any
other instrument or document delivered or executed pursuant thereto; and (iv)
attaches hereto the Notes delivered to it under the Loan Agreement.
The Assignor requests that the Borrower exchange the Assignor's Notes
for new Notes payable to the Assignor and the Assignee as follows:
Payable to the Order of: Type of Note Amount of Note:
------------------------ ------------ ---------------
[Assignor Syndicated $ ]
--------------------
[Assignee Syndicated $ ]
--------------------
[Assignor Swing Line $ ]
--------------------
[Assignee Swing Line $ ]
--------------------
[OR]
[Assignor Term $ ]
--------------------
[Assignee Term $ ]
--------------------
[The Assignor requests that [the Borrower issue [a] new Competitive Bid
Note[s] payable to the Assignee and/or Assignor] or [the Administrative Agent
make the appropriate entries on the Competitive Bid Loan Accounts] to reflect
the assignment of Competitive Bid Loans.(1)]
34. ASSIGNEE'S REPRESENTATIONS. The Assignee (i) represents and
warrants that (A) it is duly and legally authorized to enter into this
Assignment and Acceptance, (B) the execution, delivery and performance of this
Assignment and Acceptance do not conflict with any provision of law or of the
charter or by-laws of the Assignee, or of any agreement binding on the Assignee,
(C) all acts, conditions and things required to be done and performed and to
have occurred prior to the execution, delivery and performance of this
Assignment and Acceptance, and to render the same the legal, valid and binding
obligation of the Assignee, enforceable against it in accordance with its terms,
have been done and performed and have occurred in due and strict compliance with
all applicable laws, (ii) confirms that it has received a copy of the Loan
Agreement and each of the other Loan Documents, together with copies of the most
recent financial statements delivered pursuant to Sections 7.4 and 8.4 of the
Loan Agreement and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (iii) agrees that it will, independently and without
reliance upon the Assignor, the Administrative Agent, or any other Bank and
based on such documents
- ----------
(1) Elect applicable option (unless a Term Note is requested).
107
-3-
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Loan Agreement and
the other Loan Documents; (iv) appoints and authorizes the Administrative Agent
to take such action as agent on its behalf and to exercise such powers under the
Loan Agreement and the other Loan Documents as are delegated to the
Administrative Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; (v) agrees that it will perform in accordance
with their terms all the obligations which by the terms of the Loan Agreement
are required to be performed by it as a Bank; and (vi) acknowledges that it has
made arrangements with the Assignor satisfactory to the Assignee with respect to
its pro rata share of Letter of Credit Fees in respect of outstanding Letters of
Credit.
35. EFFECTIVE DATE. The effective date for this Assignment and
Acceptance shall be _____________________ (the "Effective Date"). Following the
execution of this Assignment and Acceptance, each party hereto shall deliver its
duly executed counterpart hereof to the Administrative Agent for acceptance by
the Administrative Agent. The Loan Agreement shall thereupon be amended to
reflect the status and rights of the Banks thereunder.
36. RIGHTS UNDER LOAN AGREEMENT. Upon such acceptance and amendment,
from and after the Effective Date, (i) the Assignee shall be a party to the Loan
Agreement and, to the extent provided in this Assignment and Acceptance, have
the rights and obligations of a Bank thereunder, and (ii) the Assignor shall,
with respect to that portion of its interest under the Loan Agreement assigned
hereunder, relinquish its rights and be released from its obligations under the
Loan Agreement; provided, however, that the Assignor shall retain its rights to
be indemnified pursuant to Section 17 of the Loan Agreement with respect to any
claims or actions with reference to matters arising prior to the Effective Date.
37. PAYMENTS. Upon such acceptance and amendment, from and after the
Effective Date, the Administrative Agent shall make all payments in respect of
the rights and interests assigned hereby (including payments of principal,
interest, fees and other amounts) to the Assignee. The Assignor and the Assignee
shall make any appropriate adjustments in payments for periods prior to the
Effective Date by the Administrative Agent or with respect to the making of this
assignment directly between themselves.
38. GOVERNING LAW. THIS ASSIGNMENT AND ACCEPTANCE IS A CONTRACT 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 (WITHOUT REFERENCE TO CONFLICT OF LAWS OR
CHOICE OF LAW DOCTRINES).
39. COUNTERPARTS. This Assignment and Acceptance may be executed in any
number of counterparts which shall together constitute but one and the same
agreement.
108
-4-
IN WITNESS WHEREOF, intending to be legally bound, each of the
undersigned has caused this Assignment and Acceptance to be executed on its
behalf by its officer thereunto duly authorized, as of the date first above
written.
[ASSIGNOR]
By:
-----------------------------------
Name:
Title:
[ASSIGNEE]
By:
-----------------------------------
Name:
Title:
CONSENTED TO:
FLEET NATIONAL BANK, as
Administrative Agent
By:
-------------------------------
Name:
Title:
WASTE MANAGEMENT, INC.
By:
-------------------------------
Name:
Title:
Waste Management Holdings, Inc. executes this Assignment and Acceptance
solely for purposes of ratifying its guaranty under Section 29 of the Loan
Agreement.
WASTE MANAGEMENT HOLDINGS, INC.
By:
----------------------------
Name:
Title:
109
EXHIBIT H
FORM OF COMPETITIVE BID QUOTE REQUEST
WASTE MANAGEMENT, INC.
364-Day Loan Agreement (the "Loan Agreement")
dated as of June 29, 2001
Competitive Bid Quote Request under Section 4.3
Total Commitment
-------------------
Competitive Bid Loans outstanding
-------------------
Competitive Bid Loans Requested
-------------------
Maximum Drawing Amount of
outstanding Letters of Credit
-------------------
Syndicated Loans (including Swing Line Loans) outstanding
-------------------
Total of all outstanding and Requested
-------------------
Competitive Bid Loans
(must not exceed the Total Commitment
minus Total of all Syndicated Loans outstanding
(including Swing Line Loans) and Maximum
Drawing Amount of outstanding Letters of Credit)
Type of Competitive Bid Loans Requested Eurodollar / Absolute
Requested Drawdown Date
-------------------
Principal Amount of Requested
Competitive Bid Loan Requested Interest Period(s)
------------------------------ ------------------
I certify that the above is true and correct, and that all of the
conditions set forth in Section 12 of the Loan Agreement have been satisfied as
of the date hereof.
WASTE MANAGEMENT, INC.
By:
---------------------------------
Name:
Title:
------------------------------------
Date
110
EXHIBIT I
WASTE MANAGEMENT, INC.
(the "Borrower")
364-Day Loan Agreement (the "Loan Agreement") dated as of June 29, 2001
FORM OF INVITATION FOR COMPETITIVE BID QUOTES
ATTN:
REF:
RE: INVITATION FOR COMPETITIVE BID QUOTES
AGT DTD / /
FLEET NATIONAL BANK AS ADMINISTRATIVE AGENT
INVITATION FOR COMPETITIVE BID QUOTES DATED / /
PURSUANT TO SECTION 4.3 OF THE ABOVE REFERENCED LOAN AGREEMENT, YOU ARE INVITED
TO SUBMIT A COMPETITIVE BID QUOTE TO THE BORROWER FOR THE FOLLOWING PROPOSED
COMPETITIVE BID LOAN(S):
DATE OF BORROWING: / /
AGGREGATE AMOUNT REQUESTED:
PRINCIPAL AMOUNT INTEREST PERIOD
- ---------------- ---------------
SUCH COMPETITIVE BID QUOTES SHOULD OFFER COMPETITIVE BID RATE(S)/MARGIN(S).
PLEASE RESPOND IN WRITING TO THIS INVITATION BY NO LATER THAN A.M./P.M. (NEW
YORK TIME ON / / TO ONE OF THE FOLLOWING:
PRIMARY FAX NO. 212-819-5897 (Attn: Ellie Awad)
ALTERNATE FAX NO. 212-819-5898 (Attn: DawnMarie Matos)
NOTE: PLEASE FOLLOW-UP YOUR SUBMITTED WRITTEN BID(S) WITH PHONE VERIFICATION TO
CONFIRM. IF YOU ARE UNABLE TO SEND YOUR FAX DUE TO AN OCCUPIED FAX LINE, PLEASE
CALL BY A.M./P.M. IN ADDITION, PLEASE SUBMIT YOUR BID(S) IN SUBSTANTIALLY THE
FORM OF "EXHIBIT J" TO THE LOAN AGREEMENT.
QUOTES RECEIVED AFTER [2:00 P.M. (IN THE CASE OF EURODOLLAR COMPETITIVE BID
LOANS)/10:00 A.M. (IN THE CASE OF ABSOLUTE COMPETITIVE BID LOANS] (NEW YORK
TIME) WILL NOT BE FORWARDED TO THE BORROWER.
111
-2-
SUBMITTED BIDS MUST BE FIVE MILLION DOLLARS OR A LARGER MULTIPLE OF ONE MILLION
DOLLARS. ALSO, PLEASE SPECIFY LIMITATION AMOUNTS, IF APPLICABLE.
FLEET NATIONAL BANK, as
Administrative Agent
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Date:
----------------------------
112
EXHIBIT J
FORM OF COMPETITIVE BID QUOTE
WASTE MANAGEMENT, INC.
364-Day Loan Agreement (the "Loan Agreement")
dated as of June 29, 2001
Competitive Bid Quote under Section 4.5
Bank
-------------------
Person to Contact
-------------------
Date of Competitive Bid Quote Request
-------------------
Type of Competitive Bid Loans Requested Eurodollar / Absolute
Requested Drawdown Date
-------------------
Principal Amount Proposed Competitive
of Competitive Requested Bid Rate/Competitive
Bid Loan Offered Interest Period(s) Bid Margin
---------------- ------------------ --------------------
I certify that the above is true and correct, and that the offer(s) set forth
above irrevocably obligates us to make such Competitive Bid Loan(s) if such
offer(s) is/are accepted by the Borrower and all of the conditions set forth in
Section 12 of the Loan Agreement have been satisfied as of the requested
Drawdown Date.
[NAME OF BANK]
By:
---------------------------
Name:
-------------------------
Title:
------------------------
------------------------------
Date
113
EXHIBIT K
FORM OF NOTICE
OF ACCEPTANCE/REJECTION
OF COMPETITIVE BID QUOTE(S)
WASTE MANAGEMENT, INC.
364-Day Loan Agreement (the "Loan Agreement")
dated as of June 29, 2001
Notice of Competitive Bid Quote(s) under Section 4.7
Date of Competitive Bid Quote(s)
---------------------
Type of Competitive Bid Loans Requested Eurodollar / Absolute
Requested Drawdown Date
---------------------
We hereby ACCEPT the following Competitive Bid Quote(s):
Competitive Bid
Principal Rate/Competitive
Amount of Quote Interest Period(s) Bid Margin Bank
--------------- ------------------ ----------------- ----
We hereby REJECT the following Competitive Bid Quote(s):
Competitive Bid
Principal Rate/Competitive
Amount of Quote Interest Period(s) Bid Margin Bank
--------------- ------------------ ---------------- ----
The accepted and rejected Competitive Bid Quotes described above
constitute all Competitive Bid Quotes submitted by the Banks in accordance with
Section 4.5 of the Loan Agreement.
WASTE MANAGEMENT, INC.
By:
------------------------
Name:
----------------------
Title:
---------------------
---------------------------
Date
114
EXHIBIT L
FORM OF
TERM NOTE
$ ,
--------------- -------- -- ----
FOR VALUE RECEIVED, the undersigned WASTE MANAGEMENT, INC., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of [INSERT
NAME OF PAYEE BANK] (the "Bank") at the loan office of Fleet National Bank, as
Administrative Agent for the Banks, at 100 Federal Street, Boston, Massachusetts
02110:
(a) prior to or on the Term Loan Maturity Date as defined in
the 364-Day Loan Agreement dated as of June 29, 2001 (as amended,
modified, supplemented, restated and in effect from time to time, the
"Loan Agreement"), by and among the Borrower, the Bank and other
parties thereto, the principal amount of ___________________ DOLLARS
($_________), evidencing the Term Loan made by the Bank to the Borrower
pursuant to the Loan Agreement; and
(b) interest from the date hereof on the principal amount from
time to time outstanding to and including the maturity hereof at the
rates and terms and in all cases in accordance with the terms of the
Loan Agreement.
This Note evidences borrowings under and has been issued by the
Borrower in accordance with the terms of the Loan Agreement and is a Term Note
referred to therein. The Bank and any holder hereof is entitled to the benefits
of the Loan Agreement and the other Loan Documents, and may enforce the
agreements of the Borrower contained therein, and any holder hereof may exercise
the respective remedies provided for thereby or otherwise available in respect
thereof, all in accordance with the respective terms thereof. All capitalized
terms used in this Note and not otherwise defined herein shall have the same
meanings herein as in the Loan Agreement.
The Borrower irrevocably authorizes the Bank to make or cause to be
made, at the time of receipt of any payment of principal of this Note, an
appropriate notation on the grid attached to this Note, or the continuation of
such grid, or any other similar record, including computer records, reflecting
the receipt of such payment. The outstanding amount of the Term Loan set forth
on the grid attached to this Note, or the continuation of such grid, or any
other similar record, including computer records, maintained by the Bank with
respect to the Term Loan shall be prima facie evidence of the principal amount
of the Term Loan owing and unpaid to the Bank, but the failure to record, or any
error in so recording, any such amount on any such grid, continuation or other
record shall not limit or otherwise affect the obligation of the Borrower
hereunder or under the Loan Agreement to make payments of principal of and
interest on this Note when due.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note on the terms and conditions specified in the Loan Agreement.
115
-2-
If any one or more of the Events of Default shall occur, the entire
unpaid principal amount of this Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Loan Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Bank or such holder, nor shall any delay, omission or waiver
on any one occasion be deemed a bar or waiver of the same or any other right on
any future occasion.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
This Note shall be deemed to take effect as an instrument under the
internal laws of the State of New York, without regard to principles of
conflicts-of-laws or choice of law doctrines, and for all purposes shall be
construed in accordance with such laws.
IN WITNESS WHEREOF, the Borrower has caused this Note to be signed on
its behalf by its duly authorized officer as of the day and year first above
written.
WASTE MANAGEMENT, INC.
By:
-----------------------------
Title:
116
-3-
Amount of
Principal Balance of
Amount of Paid or Principal Notation
Date Loan Type Loan Prepaid Unpaid Made By
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
117
APPLICATION AND AGREEMENT
FOR STANDBY LETTER OF CREDIT
- --------------------------------------------------------------------------------------------------------------------------
To: (Please Check One Issuing "Bank.
Please issue an irrevocable Standby Letter of Credit substantially in accordance
with this application.
- --------------------------------------------------------------------------------- -----------------------
Deliver the Letter of Credit: (For Bank Use Only)
Directly to the beneficiary by courier, Attn: _______________________ L/C No. ____________
D/T No. ____________
Through your correspondent by courier, Swift/Telex
for delivery to the beneficiary
- --------------------------------------------------------------------------------- -----------------------
- ------------------------------------------------------------------------------------------------------------
Advising Bank (Name and Address) Applicant (Name and Address)
- -------------------------------------------------------------------------------------------------------------
Beneficiary (Name and Address: Amount ____________________________________
INCLUDE CURRENCY IN NOT U.S. DOLLARS
Amount in Words: __________________________
- -------------------------------------------------------------------------------------------------------------
This Letter of Credit is transferable. Partial drawings are Permitted Prohibited
- -------------------------------------------------------------------------------------------------------------
All bank charges, other than Bank's, are for Expiry Date:
beneficiary's account.
- ------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Available by beneficiary's drafts at sight accompanied by the following:
A statement purportedly signed by an authorized officer of the
beneficiary reading as follows: (Please use concise terms).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Attached is a format which is an integral part of this application.
Special Instructions:
---------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
We hereby certify that the transactions covered by this Application and
Agreement are not prohibited under any existing Laws and regulations of the
United States, including the Foreign Assets Control Regulations of the United
States Treasury Department and that any transaction covered by this Application
and Agreement complies in every respect with all existing United States
Government Laws and Regulations.
Reference to any document, instrument or agreement is for identification
purposes only and such document, instrument or agreement will not be
incorporated into the terms of the Letter of Credit.
This credit will be subject to the Uniform Customs and Practice for Documentary
Credits of the International Chamber of Commerce Currently in effect.
- --------------------------------------- -------------------------------------------------------------------------
(FOR BANK USE ONLY) WE AGREE TO ALL THE TERMS AND CONDITIONS ON THE FACE AND REVERSE HEREOF.*
Relationship Manager approval
(also indicate approval of applicant's
authority)
- ---------------------------------------
AUTHORIZED SIGNATURE COMPANY/
BANK NAME:
- --------------------------------------- -------------------------------------------------------------
DATE
Internal Form #13429 "Standby LC BY:
Set-Up/Change" is required with each --------------------------------------------------------------------
application. AUTHORIZED SIGNATURE - TITLE DATE
- --------------------------------------- -------------------------------------------------------------------------
13423 7/00 PKG 25 EA
118
-2-
* The terms and conditions of this Application and Agreement for Standby Letter
of Credit ("LC Agreement") are superceded by that certain 364-Day Loan Agreement
dated June 29, 2001 by and among Waste Management, Inc., Waste Management
Holdings, Inc., Fleet National Bank, as Administrative Agent, and other
financial institutions (the "Credit Agreement"), and to the extent of any
conflict or inconsistency between the terms and conditions of the LC Agreement
and the Credit Agreement, the Credit Agreement shall control and prevail.
For good and valuable consideration, the receipt and adequacy of which
is hereby acknowledged, the Bank and the customer agrees as follows:
1. Each reference hereinafter contained to: (a) "Bank", "Bank's
Address", "Customer", "Customer's Address", and "Expiry Date" shall be deemed to
refer to the defined terms on Page 1 of this Agreement; (b) "Agreement" shall be
deemed to refer to this Application and Agreement for Standby Letter of Credit,
including without limitation the application portion on Page 1 hereof; (c)
"Business Day" shall be deemed to refer to any day on which commercial banks
located in the state of the Bank's Address are not required or authorized to
remain closed and which is not a Saturday, Sunday or legal holiday; (d) "Credit"
shall be deemed to refer to the letter of credit to be issued by the Bank
substantially in the form set forth in the application portion of this
Agreement, all amendments thereto, and any substitutions or replacements
thereof; (e) "Events of Default" shall be deemed to refer to one or more of the
events of default or defaults specified in Paragraph 6 of this Agreement; (f)
"Prime Rate" shall be deemed to refer to the rate of interest designated by the
Bank from time to time as being its prime rate of interest.
2. As to instruments payable in U.S. Dollars, the Customer will: (a)
pay the Bank in U.S. Dollars the amount paid on any sight draft or, at the
Bank's option, pay the Bank in advance the amount required to pay such draft;
and (b) pay the Bank in U.S. Dollars the amount of each acceptance on demand,
but in any event not later than one Business Day prior to maturity.
3. As to instruments payable in a foreign currency, the Customer will:
(a) pay the bank in U.S. Dollars, the equivalent of the amount paid on any sight
draft, immediately upon such payment being made, at the Bank's then selling rate
for cable transfers to the place of payment in the currency in which the draft
is drawn; and (b) in the case of each acceptance pay the Bank in U.S. Dollars,
on demand, but in any event in time to reach the place of payment by mail not
later than one Business Day prior to maturity, the equivalent thereof at the
Bank's then selling rate for the currency in which the acceptance is payable, or
at the Bank's option pay the Bank on demand the equivalent of the acceptance in
U.S. Dollars at the Bank's then selling rate for cable transfers to the place of
payment in such currency. If for any reason there should exist at the time in
question no rate of exchange generally current in the sate of the Bank's Address
for effective cable transfers of the sort provided for, the Customer will pay
the Bank on demand an amount in U.S. Dollars equivalent to the actual cost to
the Bank of settlement of the Bank's obligations to the payor of the draft or
acceptance or any holder thereof, as the case may be, however and whenever such
settlement is made by the Bank.
4. The Customer will pay the Bank on demand a commission at such rate
as the Bank may determine, plus interest where chargeable, and all fees, charges
and expenses, including reasonable counsel fees, incurred or paid by the Bank in
protecting or enforcing its rights under this Agreement, or in connection with
the Credit issued pursuant hereto and any confirmation thereof, or arising or
caused in any manner whatsoever in connection therewith, including without
limitation reasonable counsel fees and expenses incurred in connection with the
defense of all actions seeking to restrain or enjoin payment of the credit or
any draft accepted under the Credit or attachment or garnishment proceedings
involving any of the proceeds of the Credit or any such draft. In addition to
commissions, fees, charges, expenses and amounts otherwise payable with respect
to the issuance of the Credit, the customer shall pay to the Bank on demand such
amounts as the Bank in its sole discretion determines are necessary to
compensate the Bank for any costs attributable to the Bank's issuing or having
outstanding or making payment under the Credit resulting from the application or
any domestic or foreign law or regulation or the interpretation or
administration thereof applicable to the Bank regarding any reserve, assessment,
capitalization (including the cost of maintaining capital sufficient to permit
issuance of the Credit, provided the cost attributed to the Credit is determined
in good faith by any reasonable method) or similar requirement whether existing
at the time of issuance of the Credit or adopted thereafter. All amounts not
paid when due in accordance with this Agreement (including without limitation
those set forth in paragraph 2, 3 and 4 hereof) shall bear interest until paid
in full at a rate per annum equal to six percent (6%) above the Prime Rate, not
to exceed the maximum rate of interest permitted by applicable law. Each change
in such interest rate shall take effect simultaneously with the corresponding
change in the Prime Rate. The bank is hereby irrevocably authorized to charge
any one or more of the Customer's accounts with the Bank for payment in full or
in part of any of the Customer's obligations to the Bank under this Agreement.
At the option of the Bank, if there is a separate revolving line of credit, line
or credit, or other credit facility existing between the Bank and the customer,
the Bank is irrevocably authorized to satisfy the Customer's reimbursement
obligation to the Bank, in whole or in part, by making an advance under such
facility.
5. The users of the Credit shall be deemed the Customer's agents, and
the customer assumes all risks of their acts or omissions. The Customer's
obligation to pay the Bank for all amounts due under this Agreement is absolute
and unconditional. Such obligation of the Customer shall not be affected by, and
the Bank shall not be responsible for, the validity, sufficiency, correctness or
genuineness of documents, even if such documents should in fact prove to be in
any or all respects incorrect, defective, invalid, insufficient, fraudulent or
forged; any breach of contract or dispute between any beneficiary of the Credit
and the Customer; the existence of any claim, setoff, defense or other right
which the Customer may have at any time against the beneficiary or any other
person or entity, whether in connection with this Agreement, the transaction
contemplated herein or any unrelated transaction; the failure of any draft or
certificate to bear reference or adequate reference to the Credit; errors,
omissions, interruptions or delays in transmission or delivery of any messages
by mail, telex, telecopy, or otherwise; the exchange, release or non-perfection
of any collateral or the release of any guarantor; or any consequences arising
from causes beyond the Bank's control; and none of the above shall affect,
impair or prevent the fixing of any of the Bank's rights or powers hereunder.
Any provision with respect to any of the foregoing matters which is contained in
the Credit itself may be waived by the Bank. The Customer will hold the Bank
harmless from all loss or damage in respect of any of the foregoing matters
which is contained in the Credit itself may be waived by the Bank. The Customer
will hold the Bank harmless from all loss or damage in respect of any of the
foregoing matters, and from any and all damage and loss whatsoever suffered by
the Bank by reason of any and all action taken by the Bank in good faith.
6. The Customer will deliver to the Bank on demand such additional
security (including cash) as the Bank may from time to time require, to be held
as general collateral for all the customer's liabilities to the Bank hereunder
and for all other liabilities, absolute or contingent due or to become due,
which may be at any time owing to Bank by the Customer. All property belonging
to the Customer, including any collection items, now or hereafter handed to the
Bank or for any purpose left in the Bank's possession by the Customer for the
Customer's account, or in transit to or from the Bank, by mail or carriers, and
all balances of any deposit accounts the customer may have with the Bank, are
hereby made security, and the Bank is hereby granted a security interest
therein, for all such liabilities and may be held or disposed of as the Bank may
see fit, and applied toward any payment of any and all such liabilities, all of
which shall become immediately due and payable upon an Event of Default. Each of
the following events or actions by or affecting the Customer shall constitute an
Event of Default; default in the performance of any undertaking to the Bank
under this Agreement, any trust receipt, or under any other obligation to the
Bank or agreement with the Bank; insolvency, or the filing by or against the
Customer of any petition under the Bankruptcy Code or any similar Federal or
state statute; the filing by or against the Customer of a petition for the
appointment of a receiver; the making of an assignment for the benefit of
creditors; the Customer's death, failure in business, dissolution, suspension or
termination of existence; any seizure, vesting or intervention by or under
authority in the conduct of its business is curtailed; or the attachment or
distraint of any of the Customer's funds or other property which may be in, or
come into, the Bank's possession or under the Bank's control, or that of any
third party acting for the Bank, or of the same becoming subject at any time to
any mandatory order of court or other legal proceSection The Bank may at any
time transfer into the Bank's or its nominee's name all or any part of such
security, before or after maturity of any of the customer's obligations and
without any notice to the Customer or any other person. Whenever the Bank deems
it necessary for the Bank's or the Customer's protection, or after an Event of
Default specified herein, or other default, the Bank shall have the right to
accelerate and make immediately due and payable all of the Customer's
obligations to the Bank under the Credit and this Agreement and under any other
document or agreement (including without limitation the obligations evidenced by
the outstanding (but undrawn upon) Credit and/or by acceptances which have not
matured). The Bank shall have, in addition to all other rights and remedies
under applicable law, the rights and remedies of a secured party under the
Uniform Commercial Code, and the Bank may, without regard to such maturity,
realize upon (by sale, assignment, setoff, application or otherwise) all or any
part of such security, in each case without advertisement, notice to, tender,
demand or call of any kind upon the Customer or any other person, except that,
unless such security is perishable or threatens to decline speedily in value or
is of a type customarily sold on a recognized market, the Bank shall give the
Customer three Business Days prior written notice of the time and place of any
public sale thereof or of the time after which any private sale or other
intended disposition thereof is to be made. Any such sale or assignment may be
public, private or upon any broker's board or exchange, for cash, on credit or
for future delivery, and as such price and upon such terms and conditions, as
the Bank deems appropriate. For this purpose, the Bank may, so far as the
Customer can give authority therefor, enter upon any premises on which such
security or any proceeds thereof may be situated and remove the same therefrom,
or require that such security or proceeds be made available tot he Bank at a
place or places reasonably convenient to both the Bank and the Customer. The
Bank may acquire all or any part of such security and any purchaser shall hold
same free from any equity of redemption or other claim or right on the
Customer's part, which are hereby specifically waiver specifically waived and
released. The Bank may discount, settle compromise, or extend any obligations
constituting such security, and sue thereon in the Bank's or the Customer's
name. However, the Banks shall not be liable for failure to collect or demand
payment of, or protest or give notice of non-payment of, any obligation included
in such security or part thereof, or for any delay in so doing, nor shall the
Bank be under any obligation to take any action whatever in respect to such
security or any part thereof. No advertising, notice, tender, demand, or call at
any time given or made shall be a waiver of the Bank's right to proceed in the
same or other instances without any further action.
7. The receipt by the Bank at any time or other collateral shall not be
deemed a waiver of any of the Bank's rights or powers relating to any collateral
which the Bank may hold at the time of such receipt.
8. No failure on the part of the Bank to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereto; nor shall any
single or partial exercise of any right hereunder preclude any other further
exercise thereof or the exercise of any right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law. No amendment or
waiver of any provision of this Agreement nor consent to any departure by the
parties hereto shall in any event be effective unless the same shall be in
writing and signed by such party, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
9. This Agreement shall continue in force notwithstanding any change in
the composition of firm or firms parties hereto, or drawers of drafts hereunder,
or in the incorporation of any such firm.
10. The Customer authorizes the Bank, without reference to or approval
by the Customer, to set forth the terms of this Agreement in the Credit in such
language as the Bank may deem appropriate with such variations from such terms
as the Bank may in its discretion determine (which determination shall be
conclusive and binding upon the Customer) are necessary and are not materially
inconsistent with this Agreement.
11. All rights under the Credit and this Agreement (whether or not the
Credit is documentary or non-documentary in nature) shall be determined by the
Uniform Customs and Practice for Documentary Credits of the International
Chamber of Commerce in effect (International Chamber of Commerce Publication No.
500 or the most recent revision or successor thereto which shall be in effect
from time to time), the terms of which are known to the Customer and which are
incorporated by reference herein, and all rights under the Credit and this
Agreement, to the extent not inconsistent with said Uniform Customs and
Practices, shall be construed in accordance with the local laws of the State of
the Bank's Address.
12. The Customer represents, warrants and covenants to the Bank that
(a) if a partnership or a corporation, it is duly organized, validly existing
and in good standing; (b) it has the power to execute, deliver and perform this
Agreement; (c) the execution, delivery and performance of this Agreement have
been duly authorized by all requisite action; (d) the execution delivery and
performance of this Agreement and the issuance of the Credit will not violate
any provision of law, any order of any court or other agency of government, the
Articles of Incorporation or By-Laws of a corporate Customer or the Partnership
Agreement of a partnership Customer, or any indenture, agreement or other
instrument of which it is a party, or by which it is bound, or be in conflict
with result in a breach of or constitute (with the due notice or lapse of time
or both) a default under any such indenture, agreement or other instrument, or
result in the creation or imposition of any lien, charge or encumbrance of any
nature whatsoever upon any of the property or assets of the Customer (other than
in favor of the Bank) or the acceleration of any of the Customer's outstanding
indebtedness; (e) the Customer has heretofore furnished to the Bank accurate and
complete financial data and other information based on its operations in
previous years, and said financial data furnished to the Bank is accurate and
complete and fairly presents the financial position and the results of
operations for the periods indicated therein; (f) there has been no material
adverse change in the condition, financial or otherwise, of the Customer since
the date of the most recent financial statement; and (g) the Customer shall
furnish to the Bank periodically such financial statements, balance sheets and
profit and loss statements, together with supporting schedules, tax returns, and
such other information regarding the operations, assets, business, affairs and
financial conditions of the Customer, as the Bank shall from time to time
request.
13. If this Agreement is signed by two or more Customers, it shall be
the joint and several agreement and obligation of such Customers.
14. The customer agrees that in the event of any extension of the
maturity or time for presentation of drafts, acceptances or documents, or any
other amendments or modification of the terms of the Credit, at the request of
any single Customer, with or without notification to the others, or in the event
of any increase in the amount of the Credit at any single
119
-3-
Customer's request, with or without notification to the others, this amount
shall be binding upon the Customer with regard to the Credit so increased or
otherwise amended or modified, to drafts, documents and property covered
thereby, and to any action taken by the Bank or any of its corespondents in
accordance with such extension, increase or other modification.
15. The Bank is authorized to interpret the Credit in accordance with
rules, regulations, and customs prevailing at the place and time during which
the Credit is available or the drafts are drawn or negotiated.
16. The Bank is authorized to pay conforming drawings submitted by an
administrator, trustee in bankruptcy, debtor-in-possession, assignee for the
benefit of creditors, liquidator, receiver or other legal representative of the
party who is authorized to draw.
17. The available amount of the Credit shall be reduced by the amount
of any conforming drawing made thereunder.
18. All notices and other communications provided hereunder shall be in
writing and shall be personally delivered or sent by certified first class mail,
return receipt requested, or by telex or telecopy. Unless otherwise specified in
this Agreement, all such notices and other communications to the Bank shall be
mailed, telexed, telecopied or delivered to it, addressed to the Bank, c/o
_____________________________________________________________________, and all
such notices and other communications to the Customer shall be mailed, telexed,
telecopied or delivered to the Customer, at the Customer's AddreSection The Bank
and the Customer reserve the right to change such address, telex number and/or
telecopy number in a written notice to the other party. All such notices and
other communications shall, when mailed certified or registered mail, be
effective three days after the date of deposit in the mails, addressed as
aforesaid; when personally delivered, when received a the address aforesaid;
and, when sent by telex or telecopy when received at the then current telex or
telecopy number.
19. Any provision of this Agreement which is prohibited, unenforceable
or not authorized in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition, unenforceability or
non-authorization without invalidating the remaining provisions hereof or
affecting the validity, enforceability or legality of such provision in any
other jurisdiction.
20. This Agreement may be executed in tow or more counterparts, each of
which shall constitute an original, but both or all of which, when taken
together, shall constitute but one instrument, and shall become effective when
copies hereof which, when taken together, bear the signatures of each of the
parties, hereto shall be delivered to the Bank.
21. The Customer hereby expressly submits to the non-exclusive
jurisdiction of all federal and state courts sitting in the state of the Bank's
Address, and agrees that any processor notice of motion or other application to
any of said courts or a judge thereof may be served upon the Customer within or
without such court's jurisdiction by registered or certified mail, return
receipt requested, or by personal service, at the Customer's Address (or at such
other address as the Customer shall specify by a prior notice in writing to the
Bank), provided reasonable time for appearance is allowed. The Customer hereby
irrevocably waives any objection which it may now or hereafter have to the
laying of venue to any suit, action or proceeding arising out of or relating to
this Agreement brought in any federal or state courts sitting in the Bank's
location and hereby further irrevocably waives any claim that any such suit,
action or proceeding brought in any such court has been brought in any
inconvenient forum. Notwithstanding the foregoing, the Bank may sue the Customer
in any jurisdiction where the Customer or any of its assets may be found and may
serve legal process upon the Customer in any other manner permitted by law.
22. THE CUSTOMER HEREBY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY
JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS AGREEMENT OR THE CREDIT,
AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A
JURY.
23. The Bank reserves the right to sell or assign all or any portion of
the Bank's right, title and interest in and to the Agreement and all related
documents, and to participate all or any portion of the aforesaid. In connection
therewith, the Customer authorizes the Bank to deliver to any such purchaser or
participant and any prospective purchaser or participant the originals and/or
copies of the Agreement, financial statements relating to the Customer and any
guarantors, and any and all other credit or other information from time to time
in the Bank's possession.
24. The issuance of the Credit by the Bank constitutes the Bank's
adoption, authentication, signature, and agreement to be bound by the terms and
provisions of this Agreement.
25. This Agreement shall be binding upon the Customer's respective
executors, administrators, successors and assigns and shall inure to the benefit
of the Bank and its successors and assigns.
1
EXHIBIT 10.3
WASTE MANAGEMENT, INC.
Performance-Based Incentive Compensation Plan
(Amended and Restated as of January 1, 2001)
1. Purpose. The principal purpose of the Waste Management, Inc.
Performance-Based Incentive Compensation Plan (the "Plan") is to advance the
interests of Waste Management, Inc. (the "Company") by providing for annual or
other periodic bonuses for key employees of the Company and its subsidiaries who
are designated as participants in the Plan in the manner hereinafter provided,
so as to attract and retain such individuals, make their compensation
competitive with other opportunities and provide them with an incentive to
strive to achieve the Company's financial and other business objectives.
2. Administration. With respect to participation in the Plan by individuals
who are executive officers of the Company ("Key Participants"), the Plan shall
be administered by the Compensation Committee (the "Committee") of the Board of
Directors of the Company (the "Board"). With respect to participation in the
Plan by individuals who are not Key Participants, the Plan shall be administered
by a committee appointed by the Company's Chief Executive Officer, and all
references herein to the "Committee" shall be deemed to mean such committee as
to matters involving the participation in the Plan of such individuals who are
not Key Participants, provided, however, that in the event of a Change in
Control (as such term is defined in the Company's 1996 Stock Option Plan for
Non-Employee Directors, as may be amended from time to time) of the Company, the
Plan shall be administered by those members of the Committee, if any, and those
members of the Board, continuing as directors of the Company, but, if there are
no such continuing directors, decisions shall be made by the Committee as
constituted prior to the Change in Control. Any person serving on the Committee
shall be entitled to the full benefits of the indemnification provisions set
forth in Article X of the Company's By-Laws, including, without limitation, any
actions or failure to act by such persons administering this Plan following any
Change in Control.
3. Eligibility.
(a) Participants in the Plan for a calendar year (a "Plan Year") shall be
selected by the Committee at the beginning of such Plan Year from among the key
employees of the Company and its subsidiaries.
(b) Notwithstanding the foregoing, individuals who become eligible to
participate in the Plan after the beginning of a Plan Year shall, subject to
selection and approval by the Committee, be entitled to a bonus prorated to
reflect such participant's number of months of participation during the Plan
Year or for any longer period determined by the Committee.
(c) A participant whose employment terminates during the Plan Year shall
not be entitled to the payment of a bonus under the Plan, except, with respect
to a non-Key Participant, as the Committee may otherwise determine in its sole
discretion. The Committee, in its discretion, may also award all or part of a
target bonus to a Key
2
Participant whose employment terminates due to his disability, death or other
circumstances of cessation of employment as determined appropriate by the
Committee.
4. Bonuses. (a) Each participant in the Plan shall be eligible to receive
such bonus, if any, for each Plan Year as may be payable pursuant to the
performance criteria described below. Except as provided in Section 7 below, the
Committee shall establish each Plan Year a "target bonus" for each participant
equal to a percentage of such participant's annual base salary as of the last
day of such Plan Year, and the maximum amount of a target bonus that may be
awarded to a participant for a Plan Year shall be 200% thereof or as limited by
Section 6(c).
(b) Participants shall have their bonuses, if any, determined on the basis
of the degree of achievement of performance goals which shall be established by
the Committee in writing, based on corporate objectives determined by the Board,
and which goals shall be stated in terms of the attainment of specified levels
of or percentage changes (as compared to a prior measurement period or the
current year's budget) in any one or more of the following measurements: the
Company's revenue, earnings per share of common stock (the "Common Stock"),
pretax income, cash flow from operations, total cash flow, return on equity,
return on capital, return on assets, net operating profits after taxes, economic
value added, total stockholder return, strategic growth, return on sales, or
other financial metrics or individual performance objectives which are measured
solely in terms of the attainment of quantitative targets related to the
Company's business, or any combination thereof. The Committee shall for each
Plan Year establish the performance goal or goals from among the foregoing to
apply to each participant and a formula or matrix prescribing the extent to
which such participant's target bonus shall be earned based upon the degree of
achievement of such performance goal or goals. Except as provided in Section 7
below, the Committee may also designate, with respect to a non-Key Participant,
any other factor or factors to serve as performance goals. The Committee may
determine that the bonus payable to any participant shall be based upon the
attainment of the above-specified performance goals but applied in whole or in
part to the results of a subsidiary, business unit, division or department of
the Company for which such participant has substantial management
responsibility.
(c) Except as provided in Section 7 below, a non-Key Participant whose
target bonus or performance goals are changed by the Committee during the Plan
Year to reflect a change in responsibilities or otherwise shall have his or her
bonus award, if any, based on the amount of base salary earned and the
performance goals applicable while in each target bonus category during the Plan
Year.
(d) The earnings per share of the Company's Common Stock for any year shall
be as determined by the Company's independent public accountants or a primary,
rather than fully-diluted, basis, and all other financial measurements which are
used as the performance goals set forth in this Section 4 (or as a component of
such performance goals) shall be determined in accordance with generally
accepted accounting principles, excluding as to both such earnings and other
measurements the effects of changes in
3
accounting standards or methods and special, unusual or nonrecurring events as
determined appropriate by the Committee.
(e) Except as provided in Section 6 below, the Committee may, in its sole
discretion, (i) award or increase the amount of bonuses payable to one or more
non-Key Participants even though not earned in accordance with the performance
goals established pursuant to this Section 4, or (ii) decrease the amount of
bonuses otherwise payable to one or more participants even though earned in
accordance with the performance goals established pursuant to this Section 4.
5. Payment. Payment of bonuses for any Plan Year shall be made in cash as
soon as reasonably practicable after the end of such Plan Year.
6. Participation by Certain Officers. Notwithstanding any other provisions
of the Plan to the contrary, the following provisions shall be applicable to
participation in the Plan by Key Participants:
(a) Each such participant's target bonus under this Plan for such Plan Year
shall be based solely on achievement of one or more of the performance goals as
established by the Committee pursuant to Section 4 above.
(b) With respect to each such participant, no bonus shall be payable
hereunder except upon written certification by the Committee that the
performance goals have been satisfied to a particular extent and that any other
material terms and conditions precedent to payment of a bonus pursuant to the
Plan have been satisfied.
(c) The maximum bonus award payable to any such participant for any Plan
Year shall be $3,000,000.
7. Adjustments for Changes in Stock, Mergers, Etc. In the event of
dividends payable in Common Stock or in the case of the subdivision or
combination of Common Stock, appropriate revision shall be made in any earnings
per share criteria established by the Committee pursuant to Section 4 above. In
the event of a Change in Control (as such term is defined in the Company's 1996
Stock Option Plan for Non-Employee Directors, as may be amended from time to
time) of the Company (i) the Plan Year shall end as of the date of such Change
in Control, (ii) the Committee shall cause any bonus awards payable to
participants for the current Plan Year to be promptly calculated (without any
discretionary decrease pursuant to Section 4(e)(ii)) and (iii) the Company shall
pay such bonus awards to participants (determined as of the date of the Change
in Control without regard to any subsequent termination of employment) as
promptly as practicable following the Committee's determination, notwithstanding
any other Plan provision to the contrary. In calculating the amount, timing,
eligibility and other factors affecting bonuses payable to participant in
connection with the Change in Control, the Committee, as constituted prior to
the Change in Control, is authorized to take into consideration such factors as
the shortened Plan Year, seasonal fluctuations in results of the criteria
4
established under Section 4(b) hereof and any other equitable adjustments to the
formulae or matrices established by the Committee pursuant to Section 4 as it
deems appropriate.
8. Participant's Interests. A participant's interest in any bonus awards
hereunder shall at all times be reflected on the Company's books as a general
unsecured and unfunded obligation to the Company subject to the terms and
conditions of the Plan. The Plan shall not give any person any right or security
interest in any asset of the Company or any fund in which any deferred payment
is deemed invested. Neither the Company, the Board nor the Committee shall be
responsible for the adequacy of the general assets of the Company to discharge
the payment of its obligations hereunder nor shall the Company be required to
reserve or set aside funds therefor.
9. Non-Alienation of Benefits: Beneficiary Designation. All rights and
benefits under the Plan are personal to the participant and neither the Plan nor
any right or interest of a participant or any other person arising under the
Plan is subject to voluntary or involuntary alienation, sale, transfer, or
assignment without the Committee's consent, which may be withheld in its
discretion. Subject to the foregoing, the Company shall establish such
procedures as it deems necessary for a participant to designate one or more
beneficiaries to whom any bonus payment the Committee determines to make and any
deferred amounts would be payable in the event of the participant's death.
Absent such a designation, payment shall be made to the participant's estate.
10. Withholding for Taxes. Notwithstanding any other provisions of this
Plan, the Company may withhold from any payment made by it under the Plan such
amount or amounts as may be required for purposes of complying with the tax
withholding or other provisions of the Code or the Social Security Act or any
state's income tax act or for purposes of paying any estate, inheritance or
other tax attributable to any amounts payable hereunder.
11. No Employment Rights. Nothing contained in the Plan shall confer upon
any participant any right to be continued in the employ of the Company or any of
its subsidiaries or interfere in any way with the right of the Company or any of
its subsidiaries to terminate a participant's employment at any time.
12. Gender and Number. Where the context admits, words denoting men include
women, the plural includes the singular, and the singular includes the plural.
13. Committee or Company Determinations Final. Each determination provided
for in the Plan shall be made by the Committee or the Company, as the case may
be, under such procedures as may from time to time be prescribed by the
Committee or the Company and shall be made in the sole discretion of the
Committee or the Company, as the case may be. As such determination shall be
conclusive on all parties.
14. Amendment or Termination. The Board may in its sole discretion
terminate or amend the Plan from time to time. No such termination or amendment
shall alter a participant's right to receive a distribution as awarded but
unpaid to such participant, as
5
to which this Plan shall remain in effect following its termination until all
such amounts have been paid.
15. Successors. The Plan is binding on and will inure to the benefit of any
successor to the Company, whether by way of merger, consolidation, purchase or
otherwise.
16. Controlling Law. The Plan shall be construed in accordance with the
laws of the State of Texas.
1
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into on
this 1st day of April, 2001 by and between Canadian Waste Services, Inc. (the
"Company"), and Domenic Pio (the "Executive"). The Company is an indirect
subsidiary of Waste Management, Inc. ("WMI").
1. EMPLOYMENT AND TERMINATION OF PREVIOUS EMPLOYMENT AGREEMENT.
The Company shall employ Executive, and Executive shall be employed by
the Company upon the terms and subject to the conditions set forth in this
Agreement.
The Company and Executive hereby agree that the certain Employment
Agreement between Executive and Canadian Waste Services, Inc. dated on or about
April 6, 1999 is wholly and completely terminated, and any and all obligations
of the Company and Executive created thereunder, whether express or implied,
shall be null and void and of no further force or effect, and that the only
continuing rights, obligations, and duties between the Company and Executive
shall be those expressly set forth in this Agreement.
2. TERM OF EMPLOYMENT.
The period of Executive's employment under this Agreement shall
commence on April 1, 2001 ("Employment Date"), and shall continue for a period
of two (2) years thereafter, and shall automatically be renewed for successive
one (1) year periods thereafter, unless Executive's employment is terminated in
accordance with Section 5 below. The period during which Executive is employed
hereunder shall be referred to as the "Employment Period."
3. DUTIES AND RESPONSIBILITIES.
(A) Executive shall serve as President of Canadian Waste Services, Inc.
In such capacity, Executive shall perform such duties and have the power,
authority, and functions commensurate with such position in similarly-sized
public companies, and have and possess such other authority and functions
consistent with such position as may be assigned to Executive from time to time
by the Chief Executive Officer of WMI.
(B) Executive shall devote substantially all of his working time,
attention and energies to the business of the Company, and its affiliated
entities. Executive may make and manage his personal investments (provided such
investments in other activities do not violate, in any material respect, the
provisions of Section 8 of this Agreement), be involved in charitable and
professional activities, and, with the prior written consent of the WMI Board of
Directors, serve on boards of other for profit entities, provided such
activities do not materially interfere with the performance of his duties
hereunder.
4. COMPENSATION AND BENEFITS.
(A) BASE SALARY. During the Employment Period, the Company shall pay
Executive a base salary at the annual rate of Three Hundred Fifty-Four Thousand
Eight Hundred Ninety and
2
00/100ths Canadian Dollars (C$354,890.00) per year, or such higher rate as may
be determined from time to time by the Company ("Base Salary"). Such Base Salary
shall be paid in accordance with the Company's standard payroll practice for its
executive officers. Once increased, Base Salary shall not be reduced.
(B) ANNUAL BONUS. During the Employment Period, Executive will
be entitled to participate in an annual incentive compensation plan of the
Company. The Executive's target annual bonus will be seventy-five percent (75%)
of his Base Salary in effect for such year (the "Target Bonus"), and his actual
annual bonus may range from 0% to 150% (two times Target Bonus), and will be
determined based upon (i) the achievement of certain WMI and Company performance
goals, as may be established and approved by from time to time by the
Compensation Committee of the WMI Board of Directors, and (ii) the achievement
of personal performance goals as may be established by WMI's Chief Executive
Officer.
(C) STOCK OPTIONS. Executive shall be eligible to be considered for
stock option grants under Waste Management Inc.'s annual stock option award
program as administered by, and at the discretion of, the Compensation Committee
of the WMI Board of Directors.
(D) BENEFIT PLANS AND VACATION. Subject to the terms of such plans,
Executive shall be eligible to participate in or receive benefits under any
pension plan, profit sharing plan, salary deferral plan, medical and dental
benefits plan, life insurance plan, short-term and long-term disability plans,
or any other health, welfare or fringe benefit plan, generally made available to
similarly-situated WMI executive employees. Neither WMI nor the Company shall be
obligated to institute, maintain, or refrain from changing, amending, or
discontinuing any benefit plan, or perquisite, so long as such changes are
similarly applicable to similarly-situated employees generally.
During the Employment Period, Executive shall be entitled to vacation
each year in accordance with the Company's policies in effect from time to time,
but in no event less than four (4) weeks paid vacation per calendar year.
(E) EXPENSE REIMBURSEMENT. The Company shall promptly reimburse
Executive for the ordinary and necessary business expenses incurred by Executive
in the performance of the duties hereunder in accordance with the Company's
customary practices applicable to its executive officers.
During the Employment Period, the Company shall pay Executive a taxable
monthly automobile allowance of one thousand (C$1,000) Canadian dollars per
month to cover the cost of ownership of an automobile or the Company shall lease
an automobile, which Executive shall be entitled to utilize on an exclusive and
taxable benefit basis during the Employment Period. The automobile lease cost
shall be comparable to the taxable automobile allowance in value.
(F) OTHER PERQUISITES. Executive shall be entitled to all perquisites
provided to Senior Vice Presidents of WMI as approved by the Compensation
Committee of the WMI Board of Directors, and as they may exist from time to
time.
2
3
5. TERMINATION OF EMPLOYMENT.
Executive's employment hereunder may be terminated during the
Employment Period under the following circumstances:
(A) DEATH. Executive's employment hereunder shall terminate upon
Executive's death.
(B) TOTAL DISABILITY. The Company may terminate Executive's employment
hereunder upon Executive becoming "Totally Disabled." For purposes of this
Agreement, Executive shall be considered "Totally Disabled" if Executive has
been physically or mentally incapacitated so as to render Executive incapable of
performing the essential functions of Executive's position with or without
reasonable accommodation. Executive's receipt of disability benefits under the
Company's long-term disability plan or receipt of Employment Insurance
disability benefits shall be deemed conclusive evidence of Total Disability for
purpose of this Agreement; provided, however, that in the absence of Executive's
receipt of such long-term disability benefits or Employment Insurance benefits,
WMI's Board of Directors may, in its reasonable discretion (but based upon
appropriate medical evidence), determine that Executive is Totally Disabled.
(C) TERMINATION BY THE COMPANY FOR CAUSE. The Company may terminate
Executive's employment hereunder for "Cause" at any time after providing a
Notice of Termination for Cause to Executive.
(i) For purposes of this Agreement, the term "Cause" means any of the
following: (A) willful or deliberate and continual refusal to
perform Executive's employment duties reasonably requested by the
Company after receipt of written notice to Executive of such
failure to perform, specifying such failure (other than as a
result of Executive's sickness, illness or injury) and Executive
fails to cure such nonperformance within ten (10) days of receipt
of said written notice; (B) breach of any statutory or common law
duty of loyalty to the Company; (C) has been convicted of an
indictable offense; (D) willfully or intentionally caused material
injury to the Company, its property, or its assets; (E) disclosed
to unauthorized person(s) proprietary or confidential information
of the Company; or (F) breach of any of the covenants set forth in
Section 8 hereof.
(ii) For purposes of this Agreement, the phrase "Notice of Termination
for Cause" shall mean a written notice that shall indicate the
specific termination provision in Section 5(c)(i) relied upon, and
shall set forth in reasonable detail the facts and circumstances
which provide the basis for termination for Cause. Further, a
Notification of Termination for Cause shall be required to include
a copy of a resolution duly adopted by at least two-thirds (2/3)
of the entire membership of the WMI Board of Directors at a
meeting of the Board which was called for the purpose of
considering such employment termination, and at which Executive
and his representative had the right to attend and address the
Board, finding that, in the good faith belief of the Board,
Executive engaged in conduct set forth in Section 5(c)(i) herein
and specifying the particulars thereof in reasonable detail.
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The date of termination for Cause shall be the date indicated in
the Notice of Termination for Cause. Any purported termination for
Cause which is held by a court or arbitrator not to have been
based on the grounds set forth in this Agreement or not to have
followed the procedures set forth in this Agreement shall be
deemed a termination by the Company without Cause.
(D) VOLUNTARY TERMINATION BY EXECUTIVE. Executive may terminate his
employment hereunder with or without Good Reason at any time upon written notice
to the Company.
(i) A termination for "Good Reason" means a resignation of employment
by Executive by written notice ("Notice of Termination for Good
Reason") given to WMI's Chief Executive Officer within ninety (90)
days after the occurrence of the Good Reason event, unless such
circumstances are substantially corrected prior to the date of
termination specified in the Notice of Termination for Good
Reason. For purposes of this Agreement, "Good Reason" shall mean
the occurrence or failure to cause the occurrence, as the case may
be, without Executive's express written consent, of any of the
following circumstances: (A) the Company substantially changes
Executive's core duties or removes Executive's responsibility for
those core duties, so as to effectively cause Executive to no
longer be performing the duties of his position (except in each
case in connection with the termination of Executive's employment
for Cause or Total Disability or as a result of Executive's death,
or temporarily as a result of Executive's illness or other
absence), provided that the change in the geographic area of
Executive's responsibility or the reassignment of Executive to a
different geographical area within Canada or the change in
reporting structure shall not constitute Good Reason under any
circumstances; further provided that if the WMI becomes a fifty
percent or more subsidiary of any other entity, Executive shall be
deemed to have a substantial change in the core duties of his
position unless he is a Senior Vice-President of the ultimate
parent entity; (B) removal or the non-reelection of the Executive
from the officer position with the Company specified herein, or
removal of the Executive from any of his then officer positions;
(C) any material breach by the Company of any provision of this
Agreement, including without limitation Section 10 hereof; or (D)
failure of any successor to the Company or to WMI (whether direct
or indirect and whether by merger, acquisition, consolidation or
otherwise) to assume in a writing delivered to Executive upon the
assignee becoming such, the obligations of the Company hereunder.
(ii) A "Notice of Termination for Good Reason" shall mean a notice that
shall indicate the specific termination provision relied upon and
shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for Termination for Good Reason. The
failure by Executive to set forth in the Notice of Termination for
Good Reason any facts or circumstances which contribute to the
showing of Good Reason shall not waive any right of Executive
hereunder or preclude Executive from asserting such fact or
circumstance in enforcing his rights hereunder. The Notice of
Termination for Good Reason shall provide for a
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date of termination not less than ten (10) nor more than sixty
(60) days after the date such Notice of Termination for Good
Reason is given, provided that in the case of the events set forth
in Sections 5(d)(i)(A) or (B), the date may be five (5) business
days after the giving of such notice.
(E) TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company may terminate
Executive's employment hereunder without Cause at any time upon written notice
to Executive.
(F) EFFECT OF TERMINATION. Upon any termination of employment for any
reason, Executive shall immediately resign from all Board memberships and other
positions with the Company, or any of its parent corporations or subsidiaries
held by him at such time.
6. COMPENSATION FOLLOWING TERMINATION OF EMPLOYMENT.
In the event that Executive's employment hereunder is terminated,
Executive shall be entitled to the following compensation and benefits upon such
termination:
(A) TERMINATION BY REASON OF DEATH. In the event that Executive's
employment is terminated by reason of Executive's death, the Company shall pay
the following amounts to Executive's beneficiary or estate:
(i) Any accrued but unpaid Base Salary for services rendered to the
date of death, any accrued but unpaid expenses required to be
reimbursed under this Agreement, any vacation accrued to the date
of termination, any earned but unpaid bonuses for any prior
period, and, to the extent not otherwise paid, a pro-rata bonus or
incentive compensation payment to the extent payments are awarded
to senior executives of WMI and paid at the same time as senior
executives are paid.
(ii) Any benefits to which Executive may be entitled pursuant to the
plans, policies and arrangements (including those referred to in
Section 4(d) hereof), as determined and paid in accordance with
the terms of such plans, policies and arrangements.
(iii) An amount equal to the Base Salary (at the rate in effect as of
the date of Executive's death) which would have been payable to
Executive if Executive had continued in employment for two
additional years. Said payments will be paid to Executive's estate
or beneficiary at the same time and in the same manner as such
compensation would have been paid if Executive had remained in
active employment.
(iv) As of the date of termination by reason of Executive's death,
stock options previously awarded to Executive as of the date of
death shall be fully vested, and Executive's estate or beneficiary
shall have up to one (1) year from the date of death to exercise
all such previously-awarded options, provided that in no event
will any option be exercisable beyond its term. No stock options
contemplated by this Agreement, but not yet awarded to Executive
as of the time of his death, shall be granted.
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(B) TERMINATION BY REASON OF TOTAL DISABILITY. In the event that
Executive's employment is terminated by reason of Executive's Total Disability
as determined in accordance with Section 5(b), the Company shall pay the
following amounts to Executive:
(i) Any accrued but unpaid Base Salary for services rendered to the
date of termination, any accrued but unpaid expenses required to
be reimbursed under this Agreement, any vacation accrued to the
date of termination, and any earned but unpaid bonuses for any
prior period. Executive shall also be eligible for a pro-rata
bonus or incentive compensation payment to the extent such awards
are made to senior executives of WMI for the year in which
Executive is terminated, and to the extent not otherwise paid to
the Executive.
(ii) Any benefits to which Executive may be entitled pursuant to the
plans, policies and arrangements (including those referred to in
Section 4(d) hereof) shall be determined and paid in accordance
with the terms of such plans, policies and arrangements.
(iii) An amount equal to the Base Salary (at the rate in effect as of
the date of Executive's Total Disability) which would have been
payable to Executive if Executive had continued in active
employment for two years following termination of employment, less
any payments under any long-term disability plan or arrangement
paid for by the Company. Payment shall be made at the same time
and in the same manner as such compensation would have been paid
if Executive had remained in active employment until the end of
such period.
(iv) As of the date of termination by reason of Executive's Total
Disability, stock options previously awarded to Executive as of
the date of termination shall be fully vested, and Executive or
his legal guardian shall have up to one (1) year from the date of
death to exercise all such previously-awarded options, provided
that in no event will any option be exercisable beyond its term.
No stock options contemplated by this Agreement, but not yet
awarded to Executive as of the time of his employment termination,
shall be granted.
(C) TERMINATION FOR CAUSE. In the event that Executive's employment is
terminated by the Company for Cause, the Company shall pay the following amounts
to Executive:
(i) Any accrued but unpaid Base Salary for services rendered to the
date of termination, any accrued but unpaid expenses required to
be reimbursed under this Agreement, any vacation accrued to the
date of termination, and any earned but unpaid bonuses for any
prior period.
(ii) Any benefits to which Executive may be entitled pursuant
to the plans, policies and arrangements (including those referred
to in Section 4(d) hereof up to the date of termination) shall be
determined and paid in accordance with the terms of such plans,
policies and arrangements.
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(iii) All options, whether vested or not vested prior to the date of
such termination of employment, shall be automatically cancelled
on the date of employment termination. However, it is expressly
understood and agreed that Executive would have no obligation to
repay or otherwise reimburse the Company for funds received as a
result of Executive's having exercised any previously-vested stock
options prior to his employment termination.
(D) VOLUNTARY TERMINATION BY EXECUTIVE. In the event that Executive
voluntarily terminates employment other than for Good Reason, the Company shall
pay the following amounts to Executive:
(i) Any accrued but unpaid Base Salary for services rendered to the
date of termination, any accrued but unpaid expenses required to
be reimbursed under this Agreement, any vacation accrued to the
date of termination, and any earned but unpaid bonuses for any
prior period.
(ii) Any benefits to which Executive may be entitled pursuant to the
plans, policies and arrangements (including those referred to in
Section 4(d) hereof up to the date of termination) shall be
determined and paid in accordance with the terms of such plans,
policies and arrangements.
(iii) Any stock options that have not vested prior to the date of such
termination of employment shall be automatically cancelled as of
that date, and Executive shall have ninety (90) days following the
date of termination of employment to exercise any previously
vested options; provided that in no event will any option be
exercisable beyond its term. No stock options contemplated by this
Agreement, but not yet awarded to Executive as of the time of his
employment termination, shall be granted.
(E) TERMINATION BY THE COMPANY WITHOUT CAUSE; TERMINATION BY EXECUTIVE
FOR GOOD REASON. In the event that Executive's employment is terminated by the
Company for reasons other than death, Total Disability or Cause, or Executive
terminates his employment for Good Reason, the Company shall pay the following
amounts to Executive:
(i) Any accrued but unpaid Base Salary for services rendered to the
date of termination, any accrued but unpaid expenses required to
be reimbursed under this Agreement, any vacation accrued to the
date of termination, and any earned but unpaid bonuses for any
prior period.
(ii) Any benefits to which Executive may be entitled pursuant to the
plans, policies and arrangements referred to in Section 4(d)
hereof shall be determined and paid in accordance with the terms
of such plans, policies and arrangements.
(iii) An amount equal to two times the sum of Executive's Base Salary
plus his Target Annual Bonus (in each case as then in effect), of
which one-half shall be paid in a lump sum within ten (10) days
after such termination and one-half shall be paid
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during the two (2) year period beginning on the date of
Executive's termination and shall be paid at the same time and in
the same manner as Base Salary would have been paid if Executive
had remained in active employment until the end of such period.
(iv) The Company at its expense will continue for Executive and
Executive's spouse and dependents, all health benefit plans,
programs or arrangements, whether group or individual, disability,
and other benefit plans, in which Executive was entitled to
participate at any time during the twelve-month period prior to
the date of termination, until the earliest to occur of (A) two
years after the date of termination; (B) Executive's death
(provided that benefits provided to Executive's spouse and
dependents shall not terminate upon Executive's death); or (C)
with respect to any particular plan, program or arrangement, the
date Executive becomes eligible to participate in a comparable
benefit provided by a subsequent employer. In the event that
Executive's continued participation in any such Company plan,
program, or arrangement is prohibited, the Company will arrange to
provide Executive with benefits substantially similar to those
which Executive would have been entitled to receive under such
plan, program, or arrangement, for such period on a basis which
provides Executive with no additional after tax cost.
(v) Executive shall continue to vest in all stock option awards or
restricted stock awards over the two (2) year period commencing on
the date of such termination. Executive shall have two (2) years
and six (6) months after the date of termination to exercise all
options to the extent then vested, provided that in no event may
any option be exercisable beyond its term.
(F) NO OTHER BENEFITS OR COMPENSATION. Except as may be provided under
this Agreement, under the terms of any incentive compensation, employee benefit,
or fringe benefit plan applicable to Executive at the time of Executive's
termination or resignation of employment, Executive shall have no right to
receive any other compensation, or to participate in any other plan, arrangement
or benefit, with respect to future periods after such termination or
resignation.
(G) NO MITIGATION; NO SET-OFF. In the event of any termination of
employment hereunder, Executive shall be under no obligation to seek other
employment and there shall be no offset against any amounts due Executive under
this Agreement on account of any remuneration attributable to any subsequent
employment that Executive may obtain. The amounts payable hereunder shall not be
subject to setoff, counterclaim, recoupment, defense or other right which the
Company may have against the Executive or others, except upon obtaining by the
Company of a final non-appealable judgment against Executive.
7. RESIGNATION BY EXECUTIVE FOR GOOD REASON AND COMPENSATION
PAYABLE FOLLOWING CHANGE IN CONTROL.
(A) RESIGNATION FOR GOOD REASON FOLLOWING CHANGE IN CONTROL. In the
event a "Change in Control" occurs and Executive terminates his employment for
Good Reason thereafter, or the Company terminates Executive's employment other
than for Cause, or such
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termination for Good Reason or without Cause occurs in contemplation of such
Change in Control (any termination within six (6) months prior to such Change in
Control being presumed to be in contemplation unless rebutted by clear and
demonstrable evidence to the contrary), the Company shall pay the following
amounts to Executive:
(i) The payments and benefits provided for in Section 6(e), except
that (A) the amount and period with respect to which severance is
calculated pursuant to Section 6(e)(iii) will be three (3) years
and the amount shall be paid in a lump-sum and (B) the benefit
continuation period in Section 6(e)(iv) shall be for three years.
(ii) In lieu of Section 6(e)(v), Executive will be 100% vested in all
benefits, awards, and grants (including stock option grants and
stock awards, all of such stock options exercisable for three (3)
years following Termination, provided that in no event will any
option be exercisable beyond its term) accrued but unpaid as of
the date of termination under any non-qualified pension plan,
supplemental and/or incentive compensation or bonus plans, in
which Executive was a participant as of the date of termination.
Executive shall also receive a bonus or incentive compensation
payment (the "bonus payment"), payable at 100% of the maximum
bonus available to Executive, pro-rated as of the effective date
of the termination. The bonus payment shall be payable within five
(5) days after the effective date of Executive's termination.
Except as may be provided under this Section 7 or under the terms
of any incentive compensation, employee benefit, or fringe benefit
plan applicable to Executive at the time of Executive's
termination of employment, Executive shall have no right to
receive any other compensation, or to participate in any other
plan, arrangement or benefit, with respect to future periods after
such resignation or termination.
(B) CHANGE IN CONTROL. For purposes of this Agreement, "Change in
Control" means the occurrence of any of the following events:
(i) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of WMI (not including in the securities
beneficially owned by such person any securities acquired directly
from WMI or its Affiliates) representing twenty-five percent (25%)
or more of the combined voting power of WMI's then outstanding
voting securities;
(ii) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who,
on the Employment Date, constitute the Board and any new director
(other than a director whose initial assumption of office is in
connection with an actual or threatened election contest,
including but not limited to a consent solicitation, relating to
the election of directors of WMI) whose appointment or election by
the Board or nomination for election by WMI's stockholders was
approved or recommended by a vote of the at least two-thirds
(2/3rds) of the directors then still in office who either were
directors on the Employment Date or whose appointment, election or
nomination for election was previously so approved or recommended;
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(iii) there is a consummated merger or consolidation of WMI or any
direct or indirect subsidiary of WMI with any other corporation,
other than (A) a merger or consolidation which would result in the
voting securities of WMI outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving or parent
entity) more than fifty percent (50%) of the combined voting power
of the voting securities of WMI or such surviving or parent equity
outstanding immediately after such merger or consolidation or (B)
a merger or consolidation effected to implement a recapitalization
of WMI (or similar transaction) in which no Person, directly or
indirectly, acquired twenty-five percent (25%) or more of the
combined voting power of WMI's then outstanding securities (not
including in the securities beneficially owned by such person any
securities acquired directly from WMI or its Affiliates); or
(iv) the stock holders of WMI approve a plan of complete liquidation of
WMI or there is consummated an agreement for the sale or
disposition by WMI of all or substantially all of WMI's assets (or
any transaction having a similar effect), other than a sale or
disposition by WMI of all or substantially all of WMI's assets to
an entity, at least fifty percent (50%) of the combined voting
power of the voting securities of which are owned by stockholders
of WMI in substantially the same proportions as their ownership of
WMI immediately prior to such sale.
For purposes of this Section 7(b), the following terms shall have the
following meanings:
(i) "Affiliate" shall mean an affiliate of WMI, as defined in
Rule 12b-2 promulgated under Section 12 of the Securities Exchange
Act of 1934, as amended from time to time (the "Exchange Act");
(ii) "Beneficial Owner" shall have the meaning set forth in Rule 13d-3
under the Exchange Act;
(iii) "Person" shall have the meaning set forth in Section 3(a)(9) of
the Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof, except that such term shall not include (1) WMI, (2) a
trustee or other fiduciary holding securities under an employee
benefit plan of WMI, (3) an underwriter temporarily holding
securities pursuant to an offering of such securities or (4) a
corporation owned, directly or indirectly, by the stockholders of
WMI in substantially the same proportions as their ownership of
shares of Common Stock of WMI.
8. COVENANTS
(A) THIS AGREEMENT. The terms of this Agreement constitute
Confidential Information, which Executive shall not disclose to anyone other
than Executive's spouse, lawyers, advisors, or as required by law. Disclosure of
these terms is a material breach of this Agreement and could subject Executive
to disciplinary action, including without limitation, termination of employment
for Cause.
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(B) COMPANY PROPERTY. All written materials, records, data, and other
documents prepared or possessed by Executive during Executive's employment with
the Company are the Company's property. All information, ideas, concepts,
improvements, discoveries, and inventions that are conceived, made, developed,
or acquired by Executive individually or in conjunction with others during
Executive's employment (whether during business hours and whether on the
Company's premises or otherwise) which relate to the Company's business,
products, or services are the Company's sole and exclusive property. All
memoranda, notes, records, files, correspondence, drawings, manuals, models,
specifications, computer programs, maps, and all other documents, data, or
materials of any type embodying such information, ideas, concepts, improvements,
discoveries, and inventions are the Company's property. At the termination of
Executive's employment with the Company for any reason, Executive shall return
all of the Company's documents, data, or other Company property to the Company.
(C) CONFIDENTIAL INFORMATION; NON-DISCLOSURE. Executive acknowledges
that the business of the Company is highly competitive and that the Company has
agreed to provide and immediately will provide Executive with access to
"Confidential Information" relating to the business of the Company, WMI, and
their respective affiliates.
For purposes of this Agreement, "Confidential Information" means and
includes the Company's and WMI's confidential and/or proprietary information
and/or trade secrets that have been developed or used and/or will be developed
and that cannot be obtained readily by third parties from outside sources.
Confidential Information includes, by way of example and without limitation, the
following information regarding customers, employees, contractors, and the
industry not generally known to the public; strategies, methods, books, records,
and documents; technical information concerning products, equipment, services,
and processes; procurement procedures and pricing techniques; the names of and
other information concerning customers, investors, and business affiliates (such
as contact name, service provided, pricing for that customer, type and amount of
services used, credit and financial data, and/or other information relating to
the Company's relationship with that customer); pricing strategies and price
curves; positions, plans, and strategies for expansion or acquisitions; budgets;
customer lists; research; weather data; financial and sales data; trading
methodologies and terms; evaluations, opinions, and interpretations of
information and data; marketing and merchandising techniques; prospective
customers' names and marks; grids and maps; electronic databases; models;
specifications; computer programs; internal business records; contracts
benefiting or obligating the Company; bids or proposals submitted to any third
party; technologies and methods; training methods and training processes;
organizational structure; personnel information, including salaries of
personnel; payment amounts or rates paid to consultants or other service
providers; and other such confidential or proprietary information. Information
need not qualify as a trade secret to be protected as Confidential Information
under this Agreement, and the authorized and controlled disclosure of
Confidential Information to authorized parties by Company in the pursuit of its
business will not cause the information to lose its protected status under this
Agreement. Executive acknowledges that this Confidential Information constitutes
a valuable, special, and unique asset used by the Company, Waste Management,
Inc. and their respective affiliates in their businesses to obtain a competitive
advantage over their competitors. Executive further acknowledges that protection
of such Confidential Information against unauthorized
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disclosure and use is of critical importance to the Company, Waste Management,
Inc. and their respective affiliates in maintaining their competitive position.
Executive also will have access to, or knowledge of, Confidential
Information of third parties, such as actual and potential customers, suppliers,
partners, joint venturers, investors, financing sources, and the like, of the
Company, Waste Management, Inc. and their affiliates.
The Company also agrees to provide Executive with one or more of the
following: access to Confidential Information; specialized training regarding
the Company's and WMI's methodologies and business strategies, and/or support in
the development of goodwill such as introductions, information and reimbursement
of customer development expenses consistent with Company policy. The foregoing
is not contingent on continued employment, but is contingent upon Executive's
use of the Confidential Information access, specialized training, and goodwill
support provided by Company for the exclusive benefit of the Company and upon
Executive's full compliance with the restrictions on Executive's conduct
provided for in this Agreement.
In addition to the requirements set forth in Section 5(c)(i), Executive
agrees that Executive will not after Executive's employment with the Company,
make any unauthorized disclosure of any then Confidential Information or
specialized training of the Company, WMI, or their respective affiliates, or
make any use thereof, except in the carrying out of his employment
responsibilities hereunder. Executive also agrees to preserve and protect the
confidentiality of third party Confidential Information to the same extent, and
on the same basis, as the Company's Confidential Information.
(D) UNFAIR COMPETITION RESTRICTIONS. Upon Executive's Employment
Date, the Company agrees to and shall provide Executive with immediate access to
Confidential Information. Ancillary to the rights provided to Executive
following employment termination, the Company's provision of Confidential
Information, specialized training, and/or goodwill support to Executive, and
Executive's agreements, regarding the use of same, and in order to protect the
value of the above-referenced stock options, training, goodwill support and/or
the Confidential Information described above, the Company and Executive agree to
the following provisions against unfair competition. Executive agrees that for a
period of two (2) years following the termination of employment for any reason
("Restricted Term"), Executive will not, directly or indirectly, for Executive
or for others, anywhere in Canada (the "Restricted Area") do the following,
unless expressly authorized to do so in writing by the Chief Executive Officer
of WMI:
Engage in, or assist any person, entity, or business engaged in,
the selling or providing of products or services that would
displace the products or services that (i) the Company or WMI are
currently in the business of providing and were in the business of
providing, or were planning to be in the business of providing, at
the time Executive was employed with the Company, and (ii) that
Executive had involvement in or received Confidential Information
about in the course of employment; the foregoing is expressly
understood to include, without limitation, the business of the
collection, transfer, recycling and resource recovery, or disposal
of
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solid waste, including the operation of waste-to-energy facilities
and alternative energy facilities.
It is further agreed that during the Restricted Term, Executive cannot
engage in any of the enumerated prohibited activities in the Restricted Area by
means of telephone, telecommunications, satellite communications,
correspondence, or other contact from outside the Restricted Area. Executive
further understands that the foregoing restrictions may limit his ability to
engage in certain businesses during the Restricted Term, but acknowledges that
these restrictions are necessary to protect the Confidential Information the
Company has provided to Executive.
A failure to comply with the foregoing restrictions will create a
presumption that Executive is engaging in unfair competition. Executive agrees
that this Section defining unfair competition with the Company or with WMI does
not prevent Executive from using and offering the skills that Executive
possessed prior to receiving access to Confidential Information, confidential
training, and knowledge from the Company. This Agreement creates an advance
approval process, and nothing herein is intended, or will be construed as, a
general restriction against the pursuit of lawful employment in violation of any
controlling provincial or federal laws. Executive shall be permitted to engage
in activities that would otherwise be prohibited by this covenant if such
activities are determined in the sole discretion of the Chief Executive Officer
of WMI to be no material threat to the legitimate business interests of the
Company or WMI.
(E) NON-SOLICITATION OF CUSTOMERS. For a period of two (2) years
following the termination of employment for any reason, Executive will not call
on, service, or solicit competing business from customers of the Company, WMI,
or their respective affiliates whom Executive, within the previous twelve (12)
months, (i) had or made contact with, or (ii) had access to information and
files about, or induce or encourage any such customer or other source of ongoing
business to stop doing business with the Company or WMI.
(F) NON-SOLICITATION OF EMPLOYEES. During Executive's
employment, and for a period of two (2) years following the termination of
employment for any reason, Executive will not, either directly or indirectly,
call on, solicit, encourage, or induce any other employee or officer of the
Company, WMI, or their respective affiliates whom Executive had contact with,
knowledge of, or association within the course of employment with the Company to
terminate his or her employment, and will not assist any other person or entity
in such a solicitation.
(G) NON-DISPARAGEMENT. Executive covenants and agrees that
Executive shall not engage in any pattern of conduct that involves the making or
publishing of written or oral statements or remarks (including, without
limitation, the repetition or distribution of derogatory rumors, allegations,
negative reports or comments) which are disparaging, deleterious or damaging to
the integrity, reputation or good will of the Company, its management, or of
management of corporations affiliated with the Company.
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9. ENFORCEMENT OF COVENANTS.
(A) TERMINATION OF EMPLOYMENT AND FORFEITURE OF COMPENSATION.
Executive agrees that any breach by Executive of any of the covenants set forth
in Section 8 hereof during Executive's employment by the Company, shall be
grounds for immediate dismissal of Executive for Cause pursuant to Section
5(c)(i), which shall be in addition to and not exclusive of any and all other
rights and remedies the Company may have against Executive.
(B) RIGHT TO INJUNCTION. Executive acknowledges that a breach of
the covenants set forth in Section 8 hereof will cause irreparable damage to the
Company and/or WMI with respect to which the remedy at law for damages will be
inadequate. Therefore, in the event of breach or anticipatory breach of the
covenants set forth in this section by Executive, Executive and the Company
agree that the Company and/or WMI shall be entitled to seek the following
particular forms of relief, in addition to remedies otherwise available to it at
law or equity: (A) injunctions, both preliminary and permanent, enjoining or
restraining such breach or anticipatory breach and Executive hereby consents to
the issuance thereof forthwith and without bond by any court of competent
jurisdiction; and (B) recovery of all reasonable sums as determined by a court
of competent jurisdiction expended and costs, including reasonable lawyer's
fees, incurred by the Company and/or WMI to enforce the covenants set forth in
this section.
(C) SEPARABILITY OF COVENANTS. The covenants contained in
Section 8 hereof constitute a series of separate but ancillary covenants, one
for each applicable State in the United States and the District of Columbia, and
one for each applicable foreign country. If in any judicial proceeding, a court
shall hold that any of the covenants set forth in Section 8 exceed the time,
geographic, or occupational limitations permitted by applicable laws, Executive
and the Company agree that such provisions shall and are hereby reformed to the
maximum time, geographic, or occupational limitations permitted by such laws.
Further, in the event a court shall hold unenforceable any of the separate
covenants deemed included herein, then such unenforceable covenant or covenants
shall be deemed eliminated from the provisions of this Agreement for the purpose
of such proceeding to the extent necessary to permit the remaining separate
covenants to be enforced in such proceeding. Executive and the Company further
agree that the covenants in Section 8 shall each be construed as a separate
agreement independent of any other provisions of this Agreement, and the
existence of any claim or cause of action by Executive against the Company
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Company of any of the covenants of Section 8.
10. INDEMNIFICATION.
The Company shall indemnify and hold harmless Executive to the fullest
extent permitted by law for any action or inaction of Executive while serving as
an officer and director of the Company or, at the Company's request, as an
officer or director of any other entity or as a fiduciary of any benefit plan.
This provision includes the obligation and undertaking of the Executive to
reimburse the Company for any fees advanced by the Company on behalf of the
Executive should it later be determined that Executive was not entitled to have
such fees advanced by the Company. The Company shall cover the Executive under
directors and officers liability insurance both during and, while potential
liability exists, after the Employment Period
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in the same amount and to the same extent as the Company covers its other
officers and directors.
11. DISPUTES AND PAYMENT OF LAWYER'S FEES.
If at any time during the term of this Agreement or afterwards there
should arise any dispute as to the validity, interpretation or application of
any term or condition of this Agreement, the Company agrees, upon written demand
by Executive (and Executive shall be entitled upon application to any court of
competent jurisdiction, to the entry of a mandatory injunction, without the
necessity of posting any bond with respect thereto, compelling the Company) to
promptly provide sums sufficient to pay on a current basis (either directly or
by reimbursing Executive) Executive's costs and reasonable lawyer's fees
(including expenses of investigation and disbursements for the fees and expenses
of experts, etc.) incurred by Executive in connection with any such dispute or
any litigation, provided that Executive shall repay any such amounts paid or
advanced if Executive is not the prevailing party with respect to at least one
material claim or issue in such dispute or litigation. The provisions of this
Section 11, without implication as to any other section hereof, shall survive
the expiration or termination of this Agreement and of Executive's employment
hereunder.
12. WITHHOLDING OF TAXES.
The Company may withhold from any compensation and benefits payable
under this Agreement all applicable federal, provincial, local, or other taxes.
13. SOURCE OF PAYMENTS.
All payments provided under this Agreement, other than payments made
pursuant to a plan which provides otherwise, shall be paid from the general
funds of the Company, and no special or separate fund shall be established, and
no other segregation of assets made, to assure payment. Executive shall have no
right, title or interest whatever in or to any investments which the Company may
make to aid the Company in meeting its obligations hereunder. To the extent that
any person acquires a right to receive payments from the Company hereunder, such
right shall be no greater than the right of an unsecured creditor of the
Company.
14. ASSIGNMENT.
Except as otherwise provided in this Agreement, this Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective heirs, representatives, successors and assigns. This Agreement shall
not be assignable by Executive (but any payments due hereunder which would be
payable at a time after Executive's death shall be paid to Executive's
designated beneficiary or, if none, his estate) and shall be assignable by the
Company only to any financially solvent corporation or other entity resulting
from the reorganization, merger or consolidation of the Company with any other
corporation or entity or any corporation or entity to or with which the
Company's business or substantially all of its business or assets may be sold,
exchanged or transferred, and it must be so assigned by the Company to, and
accepted as binding upon it by, such other corporation or entity in connection
with any such reorganization, merger, consolidation, sale, exchange or transfer
in a writing delivered to Executive in a form reasonably
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acceptable to Executive (the provisions of this sentence also being applicable
to any successive such transaction).
15. ENTIRE AGREEMENT; AMENDMENT.
This Agreement shall supersede any and all existing oral or written
agreements, representations, or warranties between Executive and the Company or
any of its parent, subsidiaries or affiliated entities relating to the terms of
Executive's employment by the Company. It may not be amended except by a written
agreement signed by both parties.
16. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario applicable to agreements made and to be
performed in that Province, without regard to its conflict of laws provisions.
17. REQUIREMENT OF TIMELY PAYMENTS.
If any amounts which are required, or determined to be paid or payable,
or reimbursed or reimbursable, to Executive under this Agreement (or any other
plan, agreement, policy or arrangement with the Company) are not so paid
promptly at the times provided herein or therein, such amounts shall accrue
interest, compounded daily, at an 8% annual percentage rate, from the date such
amounts were required or determined to have been paid or payable, reimbursed or
reimbursable to Executive, until such amounts and any interest accrued thereon
are finally and fully paid, provided, however, that in no event shall the amount
of interest contracted for, charged or received hereunder, exceed the maximum
non-usurious amount of interest allowed by applicable law.
18. NOTICES.
Any notice, consent, request or other communication made or given in
connection with this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by registered or certified mail, return
receipt requested, or by facsimile or by hand delivery, to those listed below at
their following respective addresses or at such other address as each may
specify by notice to the others:
To the Company: Waste Management , Inc.
1001 Fannin, Suite 4000
Houston, Texas 77002
Attention: Corporate Secretary
To Executive: At the address for Executive set forth
below.
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19. MISCELLANEOUS.
(A) WAIVER. The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver
thereof or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement.
(B) SEPARABILITY. Subject to Section 9 hereof, if any term or
provision of this Agreement is declared illegal or unenforceable by any court of
competent jurisdiction and cannot be modified to be enforceable, such term or
provision shall immediately become null and void, leaving the remainder of this
Agreement in full force and effect.
(C) HEADINGS. Section headings are used herein for convenience of
reference only and shall not affect the meaning of any provision of this
Agreement.
(D) RULES OF CONSTRUCTION. Whenever the context so requires, the use
of the singular shall be deemed to include the plural and vice versa.
(E) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, and
such counterparts will together constitute but one Agreement.
IN WITNESS WHEREOF, this Agreement is EXECUTED and EFFECTIVE as of the
day set forth above.
DOMENIC PIO
("Executive")
/s/ DOMENIC PIO
-----------------------------------
Domenic Pio
--------------------------(address)
-----------------------------------
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CANADIAN WASTE SERVICES, INC.
(The "Company")
By: /s/ DAVID P. STEINER
--------------------------------
David Steiner
Vice-President and Secretary
WASTE MANAGEMENT, INC.
By: /s/ A. MAURICE MYERS
--------------------------------
A. Maurice Myers
President and Chief Executive
Officer
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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into on
this 14th day of May, 2001 by and between Waste Management, Inc. (the
"Company"), and Richard Felago (the "Executive").
1. EMPLOYMENT AND TERMINATION OF PREVIOUS EMPLOYMENT AGREEMENT.
The Company shall employ Executive, and Executive shall be employed by
the Company upon the terms and subject to the conditions set forth in this
Agreement.
The Company and Executive hereby agree that the certain Employment
Agreement between Executive and Wheelabrator Technologies, Inc. dated on or
about May 25, 1999 is wholly and completely terminated, and any and all
obligations of the Company, including those of Wheelabrator Technologies, Inc.,
and Executive created thereunder, whether express or implied, shall be null and
void and of no further force or effect, and that the only continuing rights,
obligations, and duties between the Company and Executive shall be those
expressly set forth in this Agreement.
2. TERM OF EMPLOYMENT.
The period of Executive's employment under this Agreement shall
commence on May 14, 2001 ("Employment Date"), and shall continue for a period of
two (2) years thereafter, and shall automatically be renewed for successive one
(1) year periods thereafter, unless Executive's employment is terminated in
accordance with Section 5 below. The period during which Executive is employed
hereunder shall be referred to as the "Employment Period."
3. DUTIES AND RESPONSIBILITIES.
(A) Executive shall serve as the Company's Senior Vice-President for
the Eastern Area. In such capacity, Executive shall perform such duties and have
the power, authority, and functions commensurate with such position in
similarly-sized public companies, and have and possess such other authority and
functions consistent with such position as may be assigned to Executive from
time to time by the Chief Executive Officer, President, or the Board of
Directors.
(B) Executive shall devote substantially all of his working time,
attention and energies to the business of the Company, and its affiliated
entities. Executive may make and manage his personal investments (provided such
investments in other activities do not violate, in any material respect, the
provisions of Section 8 of this Agreement), be involved in charitable and
professional activities, and, with the prior written consent of the Board of
Directors, serve on boards of other for profit entities, provided such
activities do not materially interfere with the performance of his duties
hereunder.
4. COMPENSATION AND BENEFITS.
(A) BASE SALARY. During the Employment Period, the Company shall pay
Executive a base salary at the annual rate of Four Hundred Forty Thousand and
00/100ths Dollars
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($440,000.00) per year, or such higher rate as may be determined from time to
time by the Company ("Base Salary"). Such Base Salary shall be paid in
accordance with the Company's standard payroll practice for its executive
officers. Once increased, Base Salary shall not be reduced.
(B) ANNUAL BONUS. During the Employment Period, Executive will be
entitled to participate in an annual incentive compensation plan of the Company.
The Executive's target annual bonus will be seventy-five percent (75%) of his
Base Salary in effect for such year (the "Target Bonus"), and his actual annual
bonus may range from 0% to 150% (two times Target Bonus), and will be determined
based upon (i) the achievement of certain corporate and Area performance goals,
as may be established and approved by from time to time by the Compensation
Committee of the Board of Directors, and (ii) the achievement of personal
performance goals as may be established by the Company's Chief Executive
Officer.
(C) STOCK OPTIONS. Executive shall be eligible to be considered for
stock option grants under the Company's annual stock option award program as
administered by, and at the discretion of, the Compensation Committee of the
Board of Directors.
(D) BENEFIT PLANS AND VACATION. Subject to the terms of such plans,
Executive shall be eligible to participate in or receive benefits under any
pension plan, profit sharing plan, salary deferral plan, medical and dental
benefits plan, life insurance plan, short-term and long-term disability plans,
or any other health, welfare or fringe benefit plan, generally made available by
the Company to similarly-situated executive employees. The Company shall not be
obligated to institute, maintain, or refrain from changing, amending, or
discontinuing any benefit plan, or perquisite, so long as such changes are
similarly applicable to similarly-situated employees generally.
During the Employment Period, Executive shall be entitled to vacation
each year in accordance with the Company's policies in effect from time to time,
but in no event less than four (4) weeks paid vacation per calendar year.
(E) EXPENSE REIMBURSEMENT. The Company shall promptly reimburse
Executive for the ordinary and necessary business expenses incurred by Executive
in the performance of the duties hereunder in accordance with the Company's
customary practices applicable to its executive officers.
(F) OTHER PERQUISITES. Executive shall be entitled to all perquisites
provided to Senior Vice Presidents of the Company as approved by the
Compensation Committee of the Board of Directors, and as they may exist from
time to time.
5. TERMINATION OF EMPLOYMENT.
Executive's employment hereunder may be terminated during the
Employment Period under the following circumstances:
(A) DEATH. Executive's employment hereunder shall terminate upon
Executive's death.
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(B) TOTAL DISABILITY. The Company may terminate Executive's employment
hereunder upon Executive becoming "Totally Disabled." For purposes of this
Agreement, Executive shall be considered "Totally Disabled" if Executive has
been physically or mentally incapacitated so as to render Executive incapable of
performing the essential functions of Executive's position with or without
reasonable accommodation. Executive's receipt of disability benefits under the
Company's long-term disability plan or receipt of Social Security disability
benefits shall be deemed conclusive evidence of Total Disability for purpose of
this Agreement; provided, however, that in the absence of Executive's receipt of
such long-term disability benefits or Social Security benefits, the Company's
Board of Directors may, in its reasonable discretion (but based upon appropriate
medical evidence), determine that Executive is Totally Disabled.
(C) TERMINATION BY THE COMPANY FOR CAUSE. The Company may terminate
Executive's employment hereunder for "Cause" at any time after providing a
Notice of Termination for Cause to Executive.
(i) For purposes of this Agreement, the term "Cause" means any of
the following: (A) willful or deliberate and continual refusal
to perform Executive's employment duties reasonably requested
by the Company after receipt of written notice to Executive of
such failure to perform, specifying such failure (other than
as a result of Executive's sickness, illness or injury) and
Executive fails to cure such nonperformance within ten (10)
days of receipt of said written notice; (B) breach of any
statutory or common law duty of loyalty to the Company; (C)
has been convicted of, or pleaded nolo contendre to, any
felony; (D) willfully or intentionally caused material injury
to the Company, its property, or its assets; (E) disclosed to
unauthorized person(s) proprietary or confidential information
of the Company; or (F) breach of any of the covenants set
forth in Section 8 hereof.
(ii) For purposes of this Agreement, the phrase "Notice of
Termination for Cause" shall mean a written notice that shall
indicate the specific termination provision in Section 5(c)(i)
relied upon, and shall set forth in reasonable detail the
facts and circumstances which provide the basis for
termination for Cause. Further, a Notification of Termination
for Cause shall be required to include a copy of a resolution
duly adopted by at least two-thirds (2/3) of the entire
membership of the Board of Directors at a meeting of the Board
which was called for the purpose of considering such
employment termination, and at which Executive and his
representative had the right to attend and address the Board,
finding that, in the good faith belief of the Board, Executive
engaged in conduct set forth in Section 5(c)(i) herein and
specifying the particulars thereof in reasonable detail. The
date of termination for Cause shall be the date indicated in
the Notice of Termination for Cause. Any purported termination
for Cause which is held by an arbitrator not to have been
based on the grounds set forth in this Agreement or not to
have followed the procedures set forth in this Agreement shall
be deemed a termination by the Company without Cause.
(D) VOLUNTARY TERMINATION BY EXECUTIVE. Executive may terminate his
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employment hereunder with or without Good Reason at any time upon written notice
to the Company.
(i) A termination for "Good Reason" means a resignation of
employment by Executive by written notice ("Notice of
Termination for Good Reason") given to the Company's Chief
Executive Officer within ninety (90) days after the occurrence
of the Good Reason event, unless such circumstances are
substantially corrected prior to the date of termination
specified in the Notice of Termination for Good Reason. For
purposes of this Agreement, "Good Reason" shall mean the
occurrence or failure to cause the occurrence, as the case may
be, without Executive's express written consent, of any of the
following circumstances: (A) the Company substantially changes
Executive's core duties or removes Executive's responsibility
for those core duties, so as to effectively cause Executive to
no longer be performing the duties of his position (except in
each case in connection with the termination of Executive's
employment for Cause or Total Disability or as a result of
Executive's death, or temporarily as a result of Executive's
illness or other absence), provided that the change in the
geographic area of Executive's responsibility or the
reassignment of Executive to a different geographical area
within the United States or the change in reporting structure
shall not constitute Good Reason under any circumstances;
further provided that if the Company becomes a fifty percent
or more subsidiary of any other entity, Executive shall be
deemed to have a substantial change in the core duties of his
position unless he is also Senior Vice-President of the
ultimate parent entity; (B) removal or the non-reelection of
the Executive from the officer position with the Company
specified herein, or removal of the Executive from any of his
then officer positions; (C) any material breach by the Company
of any provision of this Agreement, including without
limitation Section 10 hereof; or (D) failure of any successor
to the Company (whether direct or indirect and whether by
merger, acquisition, consolidation or otherwise) to assume in
a writing delivered to Executive upon the assignee becoming
such, the obligations of the Company hereunder.
(ii) A "Notice of Termination for Good Reason" shall mean a notice
that shall indicate the specific termination provision relied
upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for Termination for
Good Reason. The failure by Executive to set forth in the
Notice of Termination for Good Reason any facts or
circumstances which contribute to the showing of Good Reason
shall not waive any right of Executive hereunder or preclude
Executive from asserting such fact or circumstance in
enforcing his rights hereunder. The Notice of Termination for
Good Reason shall provide for a date of termination not less
than ten (10) nor more than sixty (60) days after the date
such Notice of Termination for Good Reason is given, provided
that in the case of the events set forth in Sections
5(d)(i)(A) or (B), the date may be five (5) business days
after the giving of such notice.
(E) TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company may terminate
Executive's employment hereunder without Cause at any time upon written notice
to Executive.
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(F) EFFECT OF TERMINATION. Upon any termination of employment for any
reason, Executive shall immediately resign from all Board memberships and other
positions with the Company or any of its subsidiaries held by him at such time.
6. COMPENSATION FOLLOWING TERMINATION OF EMPLOYMENT.
In the event that Executive's employment hereunder is terminated,
Executive shall be entitled to the following compensation and benefits upon such
termination:
(A) TERMINATION BY REASON OF DEATH. In the event that Executive's
employment is terminated by reason of Executive's death, the Company shall pay
the following amounts to Executive's beneficiary or estate:
(i) Any accrued but unpaid Base Salary for services rendered to
the date of death, any accrued but unpaid expenses required to
be reimbursed under this Agreement, any vacation accrued to
the date of termination, any earned but unpaid bonuses for any
prior period, and, to the extent not otherwise paid, a
pro-rata bonus or incentive compensation payment to the extent
payments are awarded to senior executives of the Company and
paid at the same time as senior executives are paid.
(ii) Any benefits to which Executive may be entitled pursuant to
the plans, policies and arrangements (including those referred
to in Section 4(d) hereof), as determined and paid in
accordance with the terms of such plans, policies and
arrangements.
(iii) An amount equal to the Base Salary (at the rate in effect as
of the date of Executive's death) which would have been
payable to Executive if Executive had continued in employment
for two additional years. Said payments will be paid to
Executive's estate or beneficiary at the same time and in the
same manner as such compensation would have been paid if
Executive had remained in active employment.
(iv) As of the date of termination by reason of Executive's death,
stock options previously awarded to Executive as of the date
of death shall be fully vested, and Executive's estate or
beneficiary shall have up to one (1) year from the date of
death to exercise all such previously-awarded options,
provided that in no event will any option be exercisable
beyond its term. No stock options contemplated by this
Agreement, but not yet awarded to Executive as of the time of
his death, shall be granted.
(B) TERMINATION BY REASON OF TOTAL DISABILITY. In the event that
Executive's employment is terminated by reason of Executive's Total Disability
as determined in accordance with Section 5(b), the Company shall pay the
following amounts to Executive:
(i) Any accrued but unpaid Base Salary for services rendered to
the date of
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termination, any accrued but unpaid expenses required to be
reimbursed under this Agreement, any vacation accrued to the
date of termination, and any earned but unpaid bonuses for any
prior period. Executive shall also be eligible for a pro-rata
bonus or incentive compensation payment to the extent such
awards are made to senior executives of the Company for the
year in which Executive is terminated, and to the extent not
otherwise paid to the Executive.
(ii) Any benefits to which Executive may be entitled pursuant to
the plans, policies and arrangements (including those referred
to in Section 4(d) hereof) shall be determined and paid in
accordance with the terms of such plans, policies and
arrangements.
(iii) An amount equal to the Base Salary (at the rate in effect as
of the date of Executive's Total Disability) which would have
been payable to Executive if Executive had continued in active
employment for two years following termination of employment,
less any payments under any long-term disability plan or
arrangement paid for by the Company. Payment shall be made at
the same time and in the same manner as such compensation
would have been paid if Executive had remained in active
employment until the end of such period.
(iv) As of the date of termination by reason of Executive's Total
Disability, stock options previously awarded to Executive as
of the date of termination shall be fully vested, and
Executive or his legal guardian shall have up to one (1) year
from the date of death to exercise all such previously-awarded
options, provided that in no event will any option be
exercisable beyond its term. No stock options contemplated by
this Agreement, but not yet awarded to Executive as of the
time of his employment termination, shall be granted.
(C) TERMINATION FOR CAUSE. In the event that Executive's employment is
terminated by the Company for Cause, the Company shall pay the following amounts
to Executive:
(i) Any accrued but unpaid Base Salary for services rendered to
the date of termination, any accrued but unpaid expenses
required to be reimbursed under this Agreement, any vacation
accrued to the date of termination, and any earned but unpaid
bonuses for any prior period.
(ii) Any benefits to which Executive may be entitled pursuant to
the plans, policies and arrangements (including those referred
to in Section 4(d) hereof up to the date of termination) shall
be determined and paid in accordance with the terms of such
plans, policies and arrangements.
(iii) All options, whether vested or not vested prior to the date of
such termination of employment, shall be automatically
cancelled on the date of employment termination. However, it
is expressly understood and agreed that Executive would have
no obligation to repay or otherwise reimburse the Company for
funds received as a result of Executive's having exercised any
previously-vested stock options prior to his employment
termination.
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(D) VOLUNTARY TERMINATION BY EXECUTIVE. In the event that Executive
voluntarily terminates employment other than for Good Reason, the Company shall
pay the following amounts to Executive:
(i) Any accrued but unpaid Base Salary for services rendered to
the date of termination, any accrued but unpaid expenses
required to be reimbursed under this Agreement, any vacation
accrued to the date of termination, and any earned but unpaid
bonuses for any prior period.
(ii) Any benefits to which Executive may be entitled pursuant to
the plans, policies and arrangements (including those referred
to in Section 4(d) hereof up to the date of termination) shall
be determined and paid in accordance with the terms of such
plans, policies and arrangements.
(iii) Any stock options that have not vested prior to the date of
such termination of employment shall be automatically
cancelled as of that date, and Executive shall have ninety
(90) days following the date of termination of employment to
exercise any previously vested options; provided that in no
event will any option be exercisable beyond its term. No stock
options contemplated by this Agreement, but not yet awarded to
Executive as of the time of his employment termination, shall
be granted.
(E) TERMINATION BY THE COMPANY WITHOUT CAUSE; TERMINATION BY EXECUTIVE
FOR GOOD REASON. In the event that Executive's employment is terminated by the
Company for reasons other than death, Total Disability or Cause, or Executive
terminates his employment for Good Reason, the Company shall pay the following
amounts to Executive:
(i) Any accrued but unpaid Base Salary for services rendered to
the date of termination, any accrued but unpaid expenses
required to be reimbursed under this Agreement, any vacation
accrued to the date of termination, and any earned but unpaid
bonuses for any prior period.
(ii) Any benefits to which Executive may be entitled pursuant to
the plans, policies and arrangements referred to in Section
4(d) hereof shall be determined and paid in accordance with
the terms of such plans, policies and arrangements.
(iii) An amount equal to two times the sum of Executive's Base
Salary plus his Target Annual Bonus (in each case as then in
effect), of which one-half shall be paid in a lump sum within
ten (10) days after such termination and one-half shall be
paid during the two (2) year period beginning on the date of
Executive's termination and shall be paid at the same time and
in the same manner as Base Salary would have been paid if
Executive had remained in active employment until the end of
such period.
(iv) The Company at its expense will continue for Executive and
Executive's spouse
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and dependents, all health benefit plans, programs or
arrangements, whether group or individual, disability, and
other benefit plans, in which Executive was entitled to
participate at any time during the twelve-month period prior
to the date of termination, until the earliest to occur of (A)
two years after the date of termination; (B) Executive's death
(provided that benefits provided to Executive's spouse and
dependents shall not terminate upon Executive's death); or (C)
with respect to any particular plan, program or arrangement,
the date Executive becomes eligible to participate in a
comparable benefit provided by a subsequent employer. In the
event that Executive's continued participation in any such
Company plan, program, or arrangement is prohibited, the
Company will arrange to provide Executive with benefits
substantially similar to those which Executive would have been
entitled to receive under such plan, program, or arrangement,
for such period on a basis which provides Executive with no
additional after tax cost.
(v) Executive shall continue to vest in all stock option awards or
restricted stock awards over the two (2) year period
commencing on the date of such termination. Executive shall
have two (2) years and six (6) months after the date of
termination to exercise all options to the extent then vested,
provided that in no event may any option be exercisable beyond
its term.
(F) NO OTHER BENEFITS OR COMPENSATION. Except as may be provided under
this Agreement, under the terms of any incentive compensation, employee benefit,
or fringe benefit plan applicable to Executive at the time of Executive's
termination or resignation of employment, Executive shall have no right to
receive any other compensation, or to participate in any other plan, arrangement
or benefit, with respect to future periods after such termination or
resignation.
(G) NO MITIGATION; NO SET-OFF. In the event of any termination of
employment hereunder, Executive shall be under no obligation to seek other
employment, and there shall be no offset against any amounts due Executive under
this Agreement on account of any remuneration attributable to any subsequent
employment that Executive may obtain. The amounts payable hereunder shall not be
subject to setoff, counterclaim, recoupment, defense or other right which the
Company may have against the Executive or others, except upon obtaining by the
Company of a final non-appealable judgment against Executive.
7. RESIGNATION BY EXECUTIVE FOR GOOD REASON AND COMPENSATION PAYABLE
FOLLOWING CHANGE IN CONTROL.
(A) RESIGNATION FOR GOOD REASON FOLLOWING CHANGE IN CONTROL. In the
event a "Change in Control" occurs and Executive terminates his employment for
Good Reason thereafter, or the Company terminates Executive's employment other
than for Cause, or such termination for Good Reason or without Cause occurs in
contemplation of such Change in Control (any termination within six (6) months
prior to such Change in Control being presumed to be in contemplation unless
rebutted by clear and demonstrable evidence to the contrary), the Company shall
pay the following amounts to Executive:
(i) The payments and benefits provided for in Section 6(e), except
that (A) the
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amount and period with respect to which severance is
calculated pursuant to Section 6(e)(iii) will be three (3)
years and the amount shall be paid in a lump-sum and (B) the
benefit continuation period in Section 6(e)(iv) shall be for
three (3) years.
(ii) In lieu of Section 6(e)(v), Executive will be 100% vested in
all benefits, awards, and grants (including stock option
grants and stock awards, all of such stock options exercisable
for three (3) years following Termination, provided that in no
event will any option be exercisable beyond its term) accrued
but unpaid as of the date of termination under any
non-qualified pension plan, supplemental and/or incentive
compensation or bonus plans, in which Executive was a
participant as of the date of termination. Executive shall
also receive a bonus or incentive compensation payment (the
"bonus payment"), payable at 100% of the maximum bonus
available to Executive, pro-rated as of the effective date of
the termination. The bonus payment shall be payable within
five (5) days after the effective date of Executive's
termination. Except as may be provided under this Section 7 or
under the terms of any incentive compensation, employee
benefit, or fringe benefit plan applicable to Executive at the
time of Executive's termination of employment, Executive shall
have no right to receive any other compensation, or to
participate in any other plan, arrangement or benefit, with
respect to future periods after such resignation or
termination.
(B) CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(i) In the event that the Executive shall become entitled to
payments and/or benefits provided by this Agreement or any
other amounts in the "nature of compensation" (whether
pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any person whose
actions result in a change of ownership or effective control
covered by Section 280G(b)(2) of the Code or any person
affiliated with the Company or such person) as a result of
such change in ownership or effective control (collectively
the "Company Payments"), and such Company Payments will be
subject to the tax (the "Excise Tax") imposed by Section 4999
of the Code (and any similar tax that may hereafter be imposed
by any taxing authority) the Company shall pay to the
Executive at the time specified in subsection (iv) below an
additional amount (the "Gross-up Payment") such that the net
amount retained by the Executive, after deduction of any
Excise Tax on the Company Payments and any U.S. federal,
state, and for local income or payroll tax upon the Gross-up
Payment provided for by this Section 7(b), but before
deduction for any U.S. federal, state, and local income or
payroll tax on the Company Payments, shall be equal to the
Company Payments.
(ii) For purposes of determining whether any of the Company
Payments and Gross-up Payments (collectively the "Total
Payments") will be subject to the Excise Tax and the amount of
such Excise Tax, (x) the Total Payments shall be treated as
"parachute payments" within the meaning of Section 280G(b)(2)
of the Code, and all "parachute payments" in excess of the
"base amount" (as defined under Code Section 280G[b][3] of the
Code) shall be treated as subject to the Excise Tax,
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unless and except to the extent that, in the opinion of the
Company's independent certified public accountants appointed
prior to any change in ownership (as defined under Code
Section 280G[b][2]) or tax counsel selected by such
accountants (the "Accountants") such Total Payments (in whole
or in part) either do not constitute "parachute payments,"
represent reasonable compensation for services actually
rendered within the meaning of Section 280G(b)(4) of the Code
in excess of the "base amount" or are otherwise not subject to
the Excise Tax, and (y) the value of any non-cash benefits or
any deferred payment or benefit shall be determined by the
Accountants in accordance with the principles of Section 280G
of the Code.
(iii) For purposes of determining the amount of the Gross-up
Payment, the Executive shall be deemed to pay U.S. federal
income taxes at the highest marginal rate of U.S. federal
income taxation in the calendar year in which the Gross-up
Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of
the Executive's residence for the calendar year in which the
Company Payment is to be made, net of the maximum reduction in
U.S. federal income taxes which could be obtained from
deduction of such state and local taxes if paid in such year.
In the event that the Excise Tax is subsequently determined by
the Accountants to be less than the amount taken into account
hereunder at the time the Gross-up Payment is made, the
Executive shall repay to the Company, at the time that the
amount of such reduction in Excise Tax is finally determined,
the portion of the prior Gross-up Payment attributable to such
reduction (plus the portion of the Gross-up Payment
attributable to the Excise Tax and U.S. federal, state and
local income tax imposed on the portion of the Gross-up
Payment being repaid by the Executive if such repayment
results in a reduction in Excise Tax or a U.S. federal, state
and local income tax deduction), plus interest on the amount
of such repayment at the rate provided in Section
1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in
the event any portion of the Gross-up Payment to be refunded
to the Company has been paid to any U.S. federal, state and
local tax authority, repayment thereof (and related amounts)
shall not be required until actual refund or credit of such
portion has been made to the Executive, and interest payable
to the Company shall not exceed the interest received or
credited to the Executive by such tax authority for the period
it held such portion. The Executive and the Company shall
mutually agree upon the course of action to be pursued (and
the method of allocating the expense thereof) if the
Executive's claim for refund or credit is denied.
In the event that the Excise Tax is later determined by the
Accountant or the Internal Revenue Service to exceed the
amount taken into account hereunder at the time the Gross-up
Payment is made (including by reason of any payment the
existence or amount of which cannot be determined at the time
of the Gross-up Payment), the Company shall make an additional
Gross-up Payment in respect of such excess (plus any interest
or penalties payable with respect to such excess) at the time
that the amount of such excess is finally determined.
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(iv) The Gross-up Payment or portion thereof provided for in
subsection (iii) above shall be paid not later than the
thirtieth (30th) day following an event occurring which
subjects the Executive to the Excise Tax; provided, however,
that if the amount of such Gross-up Payment or portion thereof
cannot be finally determined on or before such day, the
Company shall pay to the Executive on such day an estimate, as
determined in good faith by the Accountant, of the minimum
amount of such payments and shall pay the remainder of such
payments (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code), subject to further
payments pursuant to subsection (iii) hereof, as soon as the
amount thereof can reasonably be determined, but in no event
later than the ninetieth day after the occurrence of the event
subjecting the Executive to the Excise Tax. In the event that
the amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess shall
constitute a loan by the Company to the Executive, payable on
the fifth day after demand by the Company (together with
interest at the rate provided in Section 1274(b)(2)(B) of the
Code).
(v) In the event of any controversy with the Internal Revenue
Service (or other taxing authority) with regard to the Excise
Tax, the Executive shall permit the Company to control issues
related to the Excise Tax (at its expense), provided that such
issues do not potentially materially adversely affect the
Executive, but the Executive shall control any other issues.
In the event the issues are interrelated, the Executive and
the Company shall in good faith cooperate so as not to
jeopardize resolution of either issue, but if the parties
cannot agree the Executive shall make the final determination
with regard to the issues. In the event of any conference with
any taxing authority as to the Excise Tax or associated income
taxes, the Executive shall permit the representative of the
Company to accompany the Executive, and the Executive and the
Executive's representative shall cooperate with the Company
and its representative.
(vi) The Company shall be responsible for all charges of the
Accountant.
(vii) The Company and the Executive shall promptly deliver to each
other copies of any written communications, and summaries of
any verbal communications, with any taxing authority regarding
the Excise Tax covered by this Section 7(b).
(C) CHANGE IN CONTROL. For purposes of this Agreement, "Change in
Control" means the occurrence of any of the following events:
(i) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such person any securities
acquired directly from the Company or its Affiliates)
representing twenty-five percent (25%) or more of the combined
voting power of the Company's then outstanding voting
securities;
(ii) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals
who, on the Employment Date, constitute the Board and any new
director (other than a director whose initial
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assumption of office is in connection with an actual or
threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of
the Company) whose appointment or election by the Board or
nomination for election by the Company's stockholders was
approved or recommended by a vote of the at least two-thirds
(2/3rds) of the directors then still in office who either were
directors on the Employment Date or whose appointment,
election or nomination for election was previously so approved
or recommended;
(iii) there is a consummated merger or consolidation of the Company
or any direct or indirect subsidiary of the Company with any
other corporation, other than (A) a merger or consolidation
which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into
voting securities of the surviving or parent entity) more than
fifty percent (50%) of the combined voting power of the voting
securities of the Company or such surviving or parent equity
outstanding immediately after such merger or consolidation or
(B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in
which no Person, directly or indirectly, acquired twenty-five
percent (25%) or more of the combined voting power of the
Company's then outstanding securities (not including in the
securities beneficially owned by such person any securities
acquired directly from the Company or its Affiliates); or
(iv) the stock holders of the Company approve a plan of complete
liquidation of the Company or there is consummated an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets (or any transaction
having a similar effect), other than a sale or disposition by
the Company of all or substantially all of the Company's
assets to an entity, at least fifty percent (50%) of the
combined voting power of the voting securities of which are
owned by stockholders of the Company in substantially the same
proportions as their ownership of the Company immediately
prior to such sale.
For purposes of this Section 7(c), the following terms shall have the
following meanings:
(i) "Affiliate" shall mean an affiliate of the Company, as
defined in Rule 12b-2 promulgated under Section 12 of the
Securities Exchange Act of 1934, as amended from time to time
(the "Exchange Act");
(ii) "Beneficial Owner" shall have the meaning set forth in
Rule 13d-3 under the Exchange Act;
(iii) "Person" shall have the meaning set forth in Section
3(a)(9) of the Exchange Act, as modified and used in Sections
13(d) and 14(d) thereof, except that such term shall not
include (1) the Company, (2) a trustee or other fiduciary
holding securities under an employee benefit plan of the
Company, (3) an underwriter temporarily holding securities
pursuant to an offering of such securities or (4) a
corporation owned, directly or indirectly, by the stockholders
of
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the Company in substantially the same proportions as their
ownership of shares of Common Stock of the Company.
8. COVENANTS
(A) THIS AGREEMENT. The terms of this Agreement constitute Confidential
Information, which Executive shall not disclose to anyone other than Executive's
spouse, attorneys, advisors, or as required by law. Disclosure of these terms is
a material breach of this Agreement and could subject Executive to disciplinary
action, including without limitation, termination of employment for Cause.
(B) COMPANY PROPERTY. All written materials, records, data, and other
documents prepared or possessed by Executive during Executive's employment with
the Company are the Company's property. All information, ideas, concepts,
improvements, discoveries, and inventions that are conceived, made, developed,
or acquired by Executive individually or in conjunction with others during
Executive's employment (whether during business hours and whether on the
Company's premises or otherwise) which relate to the Company's business,
products, or services are the Company's sole and exclusive property. All
memoranda, notes, records, files, correspondence, drawings, manuals, models,
specifications, computer programs, maps, and all other documents, data, or
materials of any type embodying such information, ideas, concepts, improvements,
discoveries, and inventions are the Company's property. At the termination of
Executive's employment with the Company for any reason, Executive shall return
all of the Company's documents, data, or other Company property to the Company.
(C) CONFIDENTIAL INFORMATION; NON-DISCLOSURE. Executive acknowledges
that the business of the Company is highly competitive and that the Company has
agreed to provide and immediately will provide Executive with access to
"Confidential Information" relating to the business of the Company and its
affiliates.
For purposes of this Agreement, "Confidential Information" means and
includes the Company's confidential and/or proprietary information and/or trade
secrets that have been developed or used and/or will be developed and that
cannot be obtained readily by third parties from outside sources. Confidential
Information includes, by way of example and without limitation, the following
information regarding customers, employees, contractors, and the industry not
generally known to the public; strategies, methods, books, records, and
documents; technical information concerning products, equipment, services, and
processes; procurement procedures and pricing techniques; the names of and other
information concerning customers, investors, and business affiliates (such as
contact name, service provided, pricing for that customer, type and amount of
services used, credit and financial data, and/or other information relating to
the Company's relationship with that customer); pricing strategies and price
curves; positions, plans, and strategies for expansion or acquisitions; budgets;
customer lists; research; weather data; financial and sales data; trading
methodologies and terms; evaluations, opinions, and interpretations of
information and data; marketing and merchandising techniques; prospective
customers' names and marks; grids and maps; electronic databases; models;
specifications; computer programs; internal business records; contracts
benefiting or obligating the Company; bids or proposals submitted to any third
party; technologies and methods; training methods and training processes;
organizational structure; personnel information, including
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salaries of personnel; payment amounts or rates paid to consultants or other
service providers; and other such confidential or proprietary information.
Information need not qualify as a trade secret to be protected as Confidential
Information under this Agreement, and the authorized and controlled disclosure
of Confidential Information to authorized parties by Company in the pursuit of
its business will not cause the information to lose its protected status under
this Agreement. Executive acknowledges that this Confidential Information
constitutes a valuable, special, and unique asset used by the Company or its
affiliates in their businesses to obtain a competitive advantage over their
competitors. Executive further acknowledges that protection of such Confidential
Information against unauthorized disclosure and use is of critical importance to
the Company and its affiliates in maintaining their competitive position.
Executive also will have access to, or knowledge of, Confidential
Information of third parties, such as actual and potential customers, suppliers,
partners, joint venturers, investors, financing sources, and the like, of the
Company and its affiliates.
The Company also agrees to provide Executive with one or more of the
following: access to Confidential Information; specialized training regarding
the Company's methodologies and business strategies, and/or support in the
development of goodwill such as introductions, information and reimbursement of
customer development expenses consistent with Company policy. The foregoing is
not contingent on continued employment, but is contingent upon Executive's use
of the Confidential Information access, specialized training, and goodwill
support provided by Company for the exclusive benefit of the Company and upon
Executive's full compliance with the restrictions on Executive's conduct
provided for in this Agreement.
In addition to the requirements set forth in Section 5(c)(i), Executive
agrees that Executive will not after Executive's employment with the Company,
make any unauthorized disclosure of any then Confidential Information or
specialized training of the Company or its affiliates, or make any use thereof,
except in the carrying out of his employment responsibilities hereunder.
Executive also agrees to preserve and protect the confidentiality of third party
Confidential Information to the same extent, and on the same basis, as the
Company's Confidential Information.
(D) UNFAIR COMPETITION RESTRICTIONS. Upon Executive's Employment Date,
the Company agrees to and shall provide Executive with immediate access to
Confidential Information. Ancillary to the rights provided to Executive
following employment termination, the Company's provision of Confidential
Information, specialized training, and/or goodwill support to Executive, and
Executive's agreements, regarding the use of same, and in order to protect the
value of the above-referenced stock options, training, goodwill support and/or
the Confidential Information described above, the Company and Executive agree to
the following provisions against unfair competition. Executive agrees that for a
period of two (2) years following the termination of employment for any reason
("Restricted Term"), Executive will not, directly or indirectly, for Executive
or for others, anywhere in the United States (including all parishes in
Louisiana) (the "Restricted Area") do the following, unless expressly authorized
to do so in writing by the Chief Executive Officer of the Company:
Engage in, or assist any person, entity, or business engaged
in, the selling or providing of products or services that
would displace the
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products or services that (i) the Company is currently in the
business of providing and was in the business of providing, or
was planning to be in the business of providing, at the time
Executive was employed with the Company, and (ii) that
Executive had involvement in or received Confidential
Information about in the course of employment; the foregoing
is expressly understood to include, without limitation, the
business of the collection, transfer, recycling and resource
recovery, or disposal of solid waste, including the operation
of waste-to-energy facilities.
It is further agreed that during the Restricted Term, Executive cannot
engage in any of the enumerated prohibited activities in the Restricted Area by
means of telephone, telecommunications, satellite communications,
correspondence, or other contact from outside the Restricted Area. Executive
further understands that the foregoing restrictions may limit his ability to
engage in certain businesses during the Restricted Term, but acknowledges that
these restrictions are necessary to protect the Confidential Information the
Company has provided to Executive.
A failure to comply with the foregoing restrictions will create a
presumption that Executive is engaging in unfair competition. Executive agrees
that this Section defining unfair competition with the Company does not prevent
Executive from using and offering the skills that Executive possessed prior to
receiving access to Confidential Information, confidential training, and
knowledge from the Company. This Agreement creates an advance approval process,
and nothing herein is intended, or will be construed as, a general restriction
against the pursuit of lawful employment in violation of any controlling state
or federal laws. Executive shall be permitted to engage in activities that would
otherwise be prohibited by this covenant if such activities are determined in
the sole discretion of the Chief Executive Officer of the Company to be no
material threat to the legitimate business interests of the Company.
(E) NON-SOLICITATION OF CUSTOMERS. For a period of two (2) years
following the termination of employment for any reason, Executive will not call
on, service, or solicit competing business from customers of the Company or its
affiliates whom Executive, within the previous twelve (12) months, (i) had or
made contact with, or (ii) had access to information and files about, or induce
or encourage any such customer or other source of ongoing business to stop doing
business with Company.
(F) NON-SOLICITATION OF EMPLOYEES. During Executive's employment, and
for a period of two (2) years following the termination of employment for any
reason, Executive will not, either directly or indirectly, call on, solicit,
encourage, or induce any other employee or officer of the Company or its
affiliates whom Executive had contact with, knowledge of, or association within
the course of employment with the Company to terminate his or her employment,
and will not assist any other person or entity in such a solicitation.
(G) NON-DISPARAGEMENT. Executive covenants and agrees that Executive
shall not engage in any pattern of conduct that involves the making or
publishing of written or oral statements or remarks (including, without
limitation, the repetition or distribution of derogatory rumors, allegations,
negative reports or comments) which are disparaging, deleterious or
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damaging to the integrity, reputation or good will of the Company, its
management, or of management of corporations affiliated with the Company.
9. ENFORCEMENT OF COVENANTS.
(A) TERMINATION OF EMPLOYMENT AND FORFEITURE OF COMPENSATION. Executive
agrees that any breach by Executive of any of the covenants set forth in Section
8 hereof during Executive's employment by the Company, shall be grounds for
immediate dismissal of Executive for Cause pursuant to Section 5(c)(i), which
shall be in addition to and not exclusive of any and all other rights and
remedies the Company may have against Executive.
(B) RIGHT TO INJUNCTION. Executive acknowledges that a breach of the
covenants set forth in Section 8 hereof will cause irreparable damage to the
Company with respect to which the Company's remedy at law for damages will be
inadequate. Therefore, in the event of breach or anticipatory breach of the
covenants set forth in this section by Executive, Executive and the Company
agree that the Company shall be entitled to seek the following particular forms
of relief, in addition to remedies otherwise available to it at law or equity:
(A) injunctions, both preliminary and permanent, enjoining or restraining such
breach or anticipatory breach and Executive hereby consents to the issuance
thereof forthwith and without bond by any court of competent jurisdiction; and
(B) recovery of all reasonable sums as determined by a court of competent
jurisdiction expended and costs, including reasonable attorney's fees, incurred
by the Company to enforce the covenants set forth in this section.
(C) SEPARABILITY OF COVENANTS. The covenants contained in Section 8
hereof constitute a series of separate but ancillary covenants, one for each
applicable State in the United States and the District of Columbia, and one for
each applicable foreign country. If in any judicial proceeding, a court shall
hold that any of the covenants set forth in Section 8 exceed the time,
geographic, or occupational limitations permitted by applicable laws, Executive
and the Company agree that such provisions shall and are hereby reformed to the
maximum time, geographic, or occupational limitations permitted by such laws.
Further, in the event a court shall hold unenforceable any of the separate
covenants deemed included herein, then such unenforceable covenant or covenants
shall be deemed eliminated from the provisions of this Agreement for the purpose
of such proceeding to the extent necessary to permit the remaining separate
covenants to be enforced in such proceeding. Executive and the Company further
agree that the covenants in Section 8 shall each be construed as a separate
agreement independent of any other provisions of this Agreement, and the
existence of any claim or cause of action by Executive against the Company
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Company of any of the covenants of Section 8.
10. INDEMNIFICATION.
The Company shall indemnify and hold harmless Executive to the fullest
extent permitted by Delaware law for any action or inaction of Executive while
serving as an officer and director of the Company or, at the Company's request,
as an officer or director of any other entity or as a fiduciary of any benefit
plan. This provision includes the obligation and undertaking of the Executive to
reimburse the Company for any fees advanced by the Company on behalf of the
Executive should it later be determined that Executive was not entitled to have
such fees
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advanced by the Company under Delaware law. The Company shall cover the
Executive under directors and officers liability insurance both during and,
while potential liability exists, after the Employment Period in the same amount
and to the same extent as the Company covers its other officers and directors.
11. DISPUTES AND PAYMENT OF ATTORNEY'S FEES.
If at any time during the term of this Agreement or afterwards there
should arise any dispute as to the validity, interpretation or application of
any term or condition of this Agreement, the Company agrees, upon written demand
by Executive (and Executive shall be entitled upon application to any court of
competent jurisdiction, to the entry of a mandatory injunction, without the
necessity of posting any bond with respect thereto, compelling the Company) to
promptly provide sums sufficient to pay on a current basis (either directly or
by reimbursing Executive) Executive's costs and reasonable attorney's fees
(including expenses of investigation and disbursements for the fees and expenses
of experts, etc.) incurred by Executive in connection with any such dispute or
any litigation, provided that Executive shall repay any such amounts paid or
advanced if Executive is not the prevailing party with respect to at least one
material claim or issue in such dispute or litigation. The provisions of this
Section 11, without implication as to any other section hereof, shall survive
the expiration or termination of this Agreement and of Executive's employment
hereunder.
12. WITHHOLDING OF TAXES.
The Company may withhold from any compensation and benefits payable
under this Agreement all applicable federal, state, local, or other taxes.
13. SOURCE OF PAYMENTS.
All payments provided under this Agreement, other than payments made
pursuant to a plan which provides otherwise, shall be paid from the general
funds of the Company, and no special or separate fund shall be established, and
no other segregation of assets made, to assure payment. Executive shall have no
right, title or interest whatever in or to any investments which the Company may
make to aid the Company in meeting its obligations hereunder. To the extent that
any person acquires a right to receive payments from the Company hereunder, such
right shall be no greater than the right of an unsecured creditor of the
Company.
14. ASSIGNMENT.
Except as otherwise provided in this Agreement, this Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective heirs, representatives, successors and assigns. This Agreement shall
not be assignable by Executive (but any payments due hereunder which would be
payable at a time after Executive's death shall be paid to Executive's
designated beneficiary or, if none, his estate) and shall be assignable by the
Company only to any financially solvent corporation or other entity resulting
from the reorganization, merger or consolidation of the Company with any other
corporation or entity or any corporation or entity to or with which the
Company's business or substantially all of its business or assets may be sold,
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exchanged or transferred, and it must be so assigned by the Company to, and
accepted as binding upon it by, such other corporation or entity in connection
with any such reorganization, merger, consolidation, sale, exchange or transfer
in a writing delivered to Executive in a form reasonably acceptable to Executive
(the provisions of this sentence also being applicable to any successive such
transaction).
15. ENTIRE AGREEMENT; AMENDMENT.
This Agreement shall supersede any and all existing oral or written
agreements, representations, or warranties between Executive and the Company or
any of its subsidiaries or affiliated entities relating to the terms of
Executive's employment by the Company. It may not be amended except by a written
agreement signed by both parties.
16. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Texas applicable to agreements made and to be performed
in that State, without regard to its conflict of laws provisions.
17. REQUIREMENT OF TIMELY PAYMENTS.
If any amounts which are required, or determined to be paid or payable,
or reimbursed or reimbursable, to Executive under this Agreement (or any other
plan, agreement, policy or arrangement with the Company) are not so paid
promptly at the times provided herein or therein, such amounts shall accrue
interest, compounded daily, at an 8% annual percentage rate, from the date such
amounts were required or determined to have been paid or payable, reimbursed or
reimbursable to Executive, until such amounts and any interest accrued thereon
are finally and fully paid, provided, however, that in no event shall the amount
of interest contracted for, charged or received hereunder, exceed the maximum
non-usurious amount of interest allowed by applicable law.
18. NOTICES.
Any notice, consent, request or other communication made or given in
connection with this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by registered or certified mail, return
receipt requested, or by facsimile or by hand delivery, to those listed below at
their following respective addresses or at such other address as each may
specify by notice to the others:
To the Company: Waste Management , Inc.
1001 Fannin, Suite 4000
Houston, Texas 77002
Attention: Corporate Secretary
To Executive: At the address for Executive set forth below.
19. MISCELLANEOUS.
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(A) WAIVER. The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver
thereof or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement.
(B) SEPARABILITY. Subject to Section 9 hereof, if any term or provision
of this Agreement is declared illegal or unenforceable by any court of competent
jurisdiction and cannot be modified to be enforceable, such term or provision
shall immediately become null and void, leaving the remainder of this Agreement
in full force and effect.
(C) HEADINGS. Section headings are used herein for convenience of
reference only and shall not affect the meaning of any provision of this
Agreement.
(D) RULES OF CONSTRUCTION. Whenever the context so requires, the use of
the singular shall be deemed to include the plural and vice versa.
(E) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, and
such counterparts will together constitute but one Agreement.
IN WITNESS WHEREOF, this Agreement is EXECUTED and EFFECTIVE as of the
day set forth above.
RICHARD FELAGO
("Executive")
/s/ RICHARD FELAGO
-----------------------------------------
Richard Felago
--------------------------------(Address)
-----------------------------------------
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WASTE MANAGEMENT, INC.
(The "Company")
By: /s/ A. MAURICE MYERS
--------------------------------------
A. Maurice Myers
President and Chief Executive Officer
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EXHIBIT 12
WASTE MANAGEMENT, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN MILLIONS, EXCEPT RATIOS)
(UNAUDITED)
SIX MONTHS
ENDED
JUNE 30,
------------
2001 2000
---- ----
Income before income taxes, extraordinary item, cumulative
effect of change in accounting principle and minority
interests................................................. $519 $237
---- ----
Fixed charges deducted from income:
Interest expense.......................................... 301 411
Implicit interest in rents................................ 31 32
---- ----
332 443
---- ----
Earnings available for fixed charges................... $851 $680
==== ====
Interest expense............................................ $301 $411
Capitalized interest........................................ 9 9
Implicit interest in rents.................................. 31 32
---- ----
Total fixed charges.................................... $341 $452
==== ====
Ratio of earnings to fixed charges..................... 2.5 1.5
==== ====