US LIQUIDS INC.
00 Xxxxx Xxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxx 00000
NOTE AGREEMENT
December 13, 1996
Sanifill, Inc.
(herein called "Sanifill")
Each Sanifill Affiliate (as hereinafter defined)
which becomes bound by certain provisions
of this Agreement as hereinafter provided
(together with Sanifill, the "Holders")
c/o Sanifill, Inc.
0000 Xxxxx Xxxxxxx, Suite 000
Xxxxxxx Xxxxxxxx
Xxxxxxx, Xxxxx 00000
Ladies and Gentlemen:
1. GENERAL PROVISIONS. Under an Asset Purchase Agreement dated
December 2, 1996 (the "Acquisition Agreement"), among US Liquids Inc., a
Delaware corporation (the "Company"), Sanifill, Xxxxxxxx Xxxxx, X.X., a
Delaware limited partnership ("CW"), and Xxxxxxxx Xxxxx XXXX, L.P. ("CWN"),
both of which are Affiliates of Sanifill, the Company is this date purchasing
(or designating under Section 11.04 of the Acquisition Agreement that there
be transferred to an Affiliate of the Company) substantially all of the
assets of each of CW and CWN in exchange for (i) a Promissory Note of the
Holder dated the date of this Agreement, payable to the order of Sanifill in
the original principal amount of $27,800,000 (the "Note" or "Notes"), (ii) a
Warrant for the purchase of 2,000,000 shares of Common Stock, $.01 par value
per share, of the Company, and (iii) the assumption by the Company of certain
designated liabilities of each of CW and CWN.
This Note Agreement (this "Agreement") is the "Note Purchase
Agreement" referred to in Section 8.02(c) of the Acquisition Agreement, and
sets forth certain agreements made by the Company to induce Sanifill to
accept the Note as partial consideration for the assets of CW and CWN being
sold to the Company under the Acquisition Agreement.
With respect to the Note, the Company and Sanifill agree as follows:
2. [INTENTIONALLY DELETED]
3. CONDITIONS OF CLOSING. The obligation of Sanifill to accept the Note
is subject to the satisfaction of the following conditions on or before the
Closing Date:
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3A. OPINION OF COMPANY'S COUNSEL. Sanifill shall have received from
counsel for the Company, who shall be acceptable to Sanifill, a favorable
opinion reasonably satisfactory to Sanifill and substantially in the form of
EXHIBIT A attached hereto.
3B. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The representations
and warranties in paragraph 8 shall be true in all material respects on and as
of such Closing Date, except to the extent of changes caused by the transactions
herein contemplated; no Event of Default or Default shall exist on the Closing
Date; and the Company shall have delivered to Sanifill an Officer's Certificate,
dated the Closing Date, to both such effects.
3C. EXECUTION PERMITTED BY APPLICABLE LAWS. The execution and
delivery of the Note to Sanifill on the terms and conditions herein provided
shall not violate any applicable law or governmental regulation (including,
without limitation, Section 5 of the Securities Act or Regulation G, T or X of
the Board of Governors of the Federal Reserve System) and shall not subject any
Holder to any tax (other than any tax on income earned), penalty, liability or
other onerous condition under or pursuant to any applicable law or governmental
regulation.
3D. PROCEEDINGS. All corporate and other proceedings taken or to be
taken in connection with the transactions contemplated hereby and all related
documents shall be reasonably satisfactory in substance and form to Sanifill,
and Sanifill shall have received such counterpart originals or certified or
other copies of such documents as Sanifill may reasonably request. In this
connection, the Company shall deliver to Sanifill:
(i) copies of its certificate of incorporation (certified as of a
recent date by the Secretary of the State of Delaware) and its by-laws
(certified by its Secretary) as in effect on the date of Closing;
(ii) copies (certified by its Secretary) of all corporate action taken
by the Company to authorize the signing, delivery and performance of this
Agreement, and the Note; and
(iii) certificates of incumbency and specimen signatures of the
Company's officers authorized to sign and deliver this Agreement and the
Note.
3E. CERTIFICATE OF GOOD STANDING. Sanifill shall have received a
certificate of existence and a certificate of good standing for the Company
issued by the Secretary of State of Delaware or other certificates of
qualification to do business as a foreign corporation in each other state in
which the Company is required by law to be qualified to do business, each, dated
as of a date not more than twenty days prior to Closing.
3F. [INTENTIONALLY DELETED]
3G. [INTENTIONALLY DELETED]
3H. [INTENTIONALLY DELETED]
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3I. GUARANTY AGREEMENT. You shall have received a signed counterpart
of the Guaranty Agreement from each Subsidiary (other than a Subsidiary
organized under the law of any jurisdiction other than any of the United States
or any of its territories).
3J. [INTENTIONALLY DELETED]
4. PREPAYMENTS.
Until the Notes have been paid in full, the principal and accrued
interest shall be due and payable in accordance with the terms and conditions
provided for in the Note.
5. AFFIRMATIVE COVENANTS. So long as any Note is outstanding and unpaid,
the Company covenants as follows:
5A. REPORTING REQUIREMENTS.
5A(1) GENERAL INFORMATION. The Company covenants that it will
deliver to each Significant Holder:
(i) as soon as practicable and in any event within 50 days after the
end of each quarterly period (other than the fourth quarterly period) in
each fiscal year,
(1) Consolidated statements of income, stockholders' equity and
cash flows for the period from the beginning of the current fiscal
year to the end of such quarterly period, and
(2) a Consolidated balance sheet as at the end of such quarterly
period,
setting forth in each case in comparative form figures for the
corresponding period in the preceding fiscal year, all in reasonable detail
and certified by an authorized financial officer of the Company as fairly
presenting, in all material respects, the financial condition of the
Company and its Consolidated Subsidiaries as of the end of such period and
the results of their operations for the period then ended in accordance
with generally accepted accounting principles, subject to changes resulting
from normal year-end adjustments and the exclusion of footnote disclosures
required by generally accepted accounting principles;
(ii) as soon as practicable and in any event within 100 days after the
end of eachfiscal year,
(1) Consolidated statements of income, stockholders' equity and
cash flows for such year, and
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(2) a Consolidated balance sheet as at the end of such year,
setting forth in each case in comparative form corresponding Consolidated
figures from the preceding annual audit, all in reasonable detail and
reported on by independent public accountants of recognized standing
selected by the Company whose report shall be without limitation as to the
scope of the audit;
(iii) promptly upon transmission thereof, copies of all such
financial statements, proxy statements, notices and reports as it shall
send to its public stockholders and copies of all registration statements
(without exhibits) and all reports which it files with the Securities and
Exchange Commission (or any governmental body or agency succeeding to the
functions of the Securities and Exchange Commission), other than reports
pursuant to Section 16(a) of the Exchange Act, registration statements on
Form S-8, annual reports on Form 11-K and registration statements on any
equity securities pursuant to any "shelf" registration under the Securities
Act which does not involve an underwritten public offering;
(iv) promptly upon receipt thereof, a copy of each other report
(including, without limitation, management letters) submitted to the
Company or any Subsidiary by independent accountants in connection with any
annual, interim or special audit made by them of the books of the Company
or any Subsidiary;
(v) promptly upon receipt thereof, a copy of each report, survey,
study, evaluation, assessment or other document prepared by any consultant,
engineer, Environmental Authority or other Person relating to compliance by
the Company or any Subsidiary with any Environmental Requirements; and
(vi) with reasonable promptness, such other financial data as a
Significant Holder may reasonably request;
5A(2) QUARTERLY OFFICER'S CERTIFICATES. Together with each
delivery of financial statements required by clauses 5A(i) and (ii) above, the
Company will deliver to each Significant Holder an Officer's Certificate
demonstrating (with computations in reasonable detail) compliance with the
provisions of paragraphs 6A, 6B, 6C(2) and 6D and stating that there exists no
Event of Default or Default, or, if any Event of Default or Default exists,
specifying the nature and period of existence thereof and what action the
Company has taken, is taking or proposes to take with respect thereto;
5A(3) ANNUAL ACCOUNTANT'S LETTER. Together with each delivery
of financial statements required by clause 5A(ii) above, the Company will
deliver to each Significant Holder a certificate of the independent public
accountants giving the report on such financial statements stating that, in
making the audit necessary for their report, they have obtained no knowledge
of any Event of Default or Default, or, if they have obtained knowledge of
any Event of Default or Default, specifying the nature and period of
existence thereof. The accountants, however, shall not be liable to anyone
as a result of this provision by reason of their failure to obtain knowledge
of any Event of Default or
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Default which would not be disclosed in the course of an audit conducted in
accordance with generally accepted auditing standards;
5A(4) SPECIAL INFORMATION. The Company also covenants that within
10 Business Days after any Responsible Officer obtains knowledge of:
(a) an Event of Default or Default;
(b) a material adverse change in the financial condition, business or
operations of the Company and its Subsidiaries, taken as a whole;
(c) legal proceedings filed against the Company and/or any
Subsidiary, which, if determined adversely, reasonably could be expected to
have a material adverse effect on the financial condition, business or
operations of the Company and its Subsidiaries, taken as a whole;
(d) a default under any agreement or note evidencing Debt for which
the Company or any Subsidiary is liable, which individually or in the
aggregate with all other agreements and notes in default for which the
Company or any Subsidiary is liable, exceed $1,000,000;
(e) any (i) Environmental Liabilities, (ii) pending, threatened or
anticipated Environmental Proceedings, (iii) Environmental Notices, (iv)
Environmental Judgments and Orders, or (v) Environmental Releases at, on,
in, under or in any way affecting the Properties, which, in any such case,
reasonably could be expected to have a material adverse effect on the
business, operations or financial condition of the Company and its
Subsidiaries, taken as a whole; or
(f) with respect to any Plan that is subject to the funding
requirements of Section 302 of ERISA or Section 412 of the Code, the
Company (i) having given or being required to give notice to the Pension
Benefit Guaranty Corporation that a material reportable event has occurred
with respect to such Plan, (ii) having delivered notice to the Pension
Benefit Guaranty Corporation of any intent to withdraw from or terminate
any such Plan, or (iii) having failed to make timely a contribution to any
such Plan;
the Company will deliver to Sanifill an Officer's Certificate specifying the
nature and period of existence thereof and what action the Company or the
Subsidiary has taken, is taking or proposes to take with respect thereto.
5B. INFORMATION REQUIRED BY RULE 144A. The Company covenants that it
will, upon the request of the holder of the Note that certifies to the Company
that such holder intends to transfer the Note, provide such holder, and any
qualified institutional buyer designated by such holder, such financial and
other information as such holder may reasonably determine to be necessary in
order to permit compliance with the information requirements of Rule 144A under
the Securities Act in connection with the resale of any interest in the Note,
except at such times as the Company is subject
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to the reporting requirements of section 13 or 15(d) of the Exchange Act.
For the purpose of this paragraph 5B, the term "QUALIFIED INSTITUTIONAL
BUYER" shall have the meaning specified in Rule 144A under the Securities Act.
5C. INSPECTION OF PROPERTY. The Company covenants that, at such
reasonable times and as often as Sanifill may reasonably request, it will permit
any Person designated by Sanifill in writing, at Sanifill's expense upon
reasonable notice and without materially disrupting the operations of the
Company and any Subsidiary, to:
(i) visit and inspect any of the Properties;
(ii) examine the corporate books and financial records of the
Company and its Subsidiaries and make copies thereof or extracts therefrom;
and
(iii) discuss the affairs, finances and accounts of any of such
corporations with the principal officers of the Company or any Subsidiary
and independent public accountants to the Company.
5D. MAINTENANCE OF INSURANCE. The Company covenants that it and each
Subsidiary will maintain, with responsible insurers, insurance with respect to
its properties and business against such casualties and contingencies
(including, but not limited to, public liability, larceny, embezzlement or other
criminal misappropriation) and in such amounts as is customary in the case of
similarly situated corporations engaged in the same or similar businesses.
5E. MAINTENANCE OF CORPORATE EXISTENCE/COMPLIANCE WITH
LAW/PRESERVATION OF PROPERTY. The Company covenants that, except as permitted
under paragraph 6C(3) and 6D, it and each Subsidiary will:
(i) preserve, renew and keep in full force and effect the corporate
existence and qualification to do business of the Company and its
Subsidiaries (other than those Subsidiaries not material to the financial
condition, business or operations of the Company and its Subsidiaries taken
as a whole);
(ii) comply with all laws and regulations (including, without
limitation, laws and regulations relating to equal employment opportunity
and employee safety) applicable to it and any Subsidiary except where the
failure to comply could not reasonably be expected to have a material
adverse effect on the business, operations or financial condition of the
Company and its Subsidiaries, taken as a whole;
(iii) maintain, preserve and protect all material intellectual
property of the Company and its Subsidiaries; and
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(iv) preserve all the remainder of its property used or useful in
the conduct of its business and keep the same in good repair, working order
and condition excluding normal wear and tear and damage related to force
majeure.
5F. COMPLIANCE WITH ENVIRONMENTAL LAWS. The Company and each
Subsidiary will comply in a timely fashion with, or operate pursuant to valid
waivers of the provisions of, all applicable Environmental Requirements,
including, without limitation, all applicable regulations of the Environmental
Protection Agency or other relevant federal, state or local governmental
authority, where the failure to comply reasonably could be expected to have a
material adverse effect on the business, operations or financial condition of
the Company and its Subsidiaries taken as a whole. THE COMPANY AGREES TO
INDEMNIFY AND HOLD SANIFILL, SANIFILL'S OFFICERS, AGENTS AND EMPLOYEES HARMLESS
FROM ANY LOSS, LIABILITY, CLAIM OR EXPENSE THAT ANY OF THEM MAY INCUR OR SUFFER
AS A RESULT OF A BREACH BY THE COMPANY OR ANY SUBSIDIARY, AS THE CASE MAY BE, OF
THIS COVENANT OTHER THAN AS A RESULT OF THE GROSS NEGLIGENCE OR WILFUL
MISCONDUCT OF SUCH PERSON. The Company shall not be deemed to have breached or
violated this paragraph 5F if the Company or any Subsidiary is challenging in
good faith by appropriate proceedings diligently pursued the application or
enforcement of such Environmental Requirements for which adequate reserves have
been established in accordance with generally accepted accounting principles.
5G. NO INTEGRATION. The Company covenants that it has taken and will
take all necessary action so that the issuance of the Note does not and will not
require registration under the Securities Act. The Company covenants that no
future offer and sale of debt securities of the Company of any class will be
made if there is a reasonable possibility that such offer and sale would, under
the doctrine of "integration", subject the issuance of the Note to you to the
registration requirements of the Securities Act.
5H. FINANCIAL RECORDS. The Company will, and will cause each
Subsidiary to, keep proper books of record and account in which full and correct
entries (subject to normal year end adjustments and, as to interim statements,
the absence of footnotes) will be made of the business and affairs of the
Company or such Subsidiary under generally accepted accounting principles
consistently applied (except for changes disclosed in the financial statements
furnished to you pursuant to paragraph 5A and concurred in by the independent
public accountants referred to in paragraph 5A).
5I. ADDITIONAL GUARANTY AGREEMENTS.
(i) The Company covenants that if any Person (other than a Person
organized under the law of any jurisdiction other than any of the United States
or its territories) becomes a Subsidiary after the date hereof, it will cause
that Person to sign a counterpart original supplement of the Guaranty Agreement
and deliver the original counterpart supplement of such agreement to you within
30 days after it has become a Subsidiary.
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(ii) Sanifill agrees that in the case of:
(A) a sale, transfer or other disposition (whether in a single
transaction or a series of related transactions and whether by merger,
consolidation or otherwise) permitted by this Agreement of all of the
issued and outstanding capital stock of any Subsidiary to any Person that
is not, at the time of such sale, transfer or other disposition, the
Company or a Subsidiary;
(B) the dissolution of any Subsidiary permitted by this Agreement; or
(C) the release of any Subsidiary from all guarantees of Debt of the
Company;
then automatically and without further action upon an event described in
clause (A) or (B) above and at the written request of the Company upon an
event described in clause (C) above:
(1) the Guaranty Agreement of such Subsidiary (each such
Subsidiary a "RELEASED SUBSIDIARY") shall be deemed terminated and of
no further force and effect; and
(2) no holder of any Notes shall have any claim against such
Released Subsidiary under such Guaranty Agreement.
(iii) Sanifill agrees, at the expense of the Company, to execute
and deliver to the Company, for the benefit of any Person, a written
release, disclaimer, termination or quitclaim, and such other release
documents as the Company may reasonably request to evidence such
termination.
6. NEGATIVE COVENANTS. So long as any Note is outstanding and unpaid,
unless the Required Holders otherwise agree in writing, the Company covenants as
follows:
6A. NET WORTH, INTEREST COVERAGE, FIXED CHARGE COVERAGE, SENIOR
OBLIGATIONS AND DEBT LIMITS. The Company covenants that it will not at any time
permit:
(i) Consolidated Net Worth to be less than $100,000, plus 100% of the
value of any consideration received in connection with the issuance of any
capital stock by the Company after execution of the Agreement, plus 100% of
any other capital contributions or paid in equity received after execution
of the Agreement, plus 50% of cumulative Consolidated Net Earnings from
January 1,1997 to the most recently completed fiscal quarter (ignoring each
fiscal quarter in which there was a Consolidated Net Loss during such
period);
(ii) Consolidated Earnings before Interest and Taxes to be less than
200% of Consolidated Interest Charges, net of interest income;
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(iii) Consolidated EBITDA to be less than (i) 75% of Consolidated
Fixed Charges during the first twelve months following the execution of
this Agreement and (ii) 100% of consolidated Fixed charges thereafter.
(iv) Consolidated Debt less Consolidated cash to exceed 400% of
Consolidated EBITDA; or
(v) Consolidated Priority Debt to exceed 25% of Consolidated
Adjusted Tangible Assets.
6B. DIVIDEND AND RESTRICTED INVESTMENT LIMITATION; INVESTMENT IN
FOREIGN SUBSIDIARIES.
6B(1). DIVIDEND AND RESTRICTED INVESTMENT LIMITATION. The Company
covenants that, except as otherwise permitted by the following sentence, it will
not:
(i) pay or declare any dividend on any class of its stock or make
any other distribution on account of any class of its stock; or
(ii) redeem, purchase or otherwise acquire, directly or
indirectly, any shares of
its stock; or
(iii) make or permit any Subsidiary to make any Investments other
than Permitted Investments (all of the foregoing being herein called
"RESTRICTED PAYMENTS");
except out of Consolidated Net Income Available For Restricted Payments and only
if
(1) at the time of declaration of such Restricted Payment, no Default
or Event of Default exists or would exist; and
(2) the Restricted Payment is made within 60 days after the
declaration thereof.
"CONSOLIDATED NET EARNINGS AVAILABLE FOR RESTRICTED PAYMENTS" shall
mean:
(1) $500,000;
(2) PLUS 50% of Consolidated Net Income or minus 100% of the
Consolidated Net Loss, as the case may be, for the period (taken as one
accounting period) beginning on January 1, 1997, and ending as of the last
day of the most recently completed fiscal quarter before any proposed
Restricted Payment; PLUS
(3) the total net cash proceeds received by the Company from the sale
of its stock after December 31, 1996.
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The calculation of Restricted Payments and Consolidated Net Earnings Available
for Restricted Payments shall exclude: (x) stock splits, dividends paid, or
distributions made, in stock of the Company; or (y) exchanges of stock of one or
more classes of the Company, except to the extent cash or other value is
involved in such exchange. The term "stock" as used in this paragraph 6B shall
include warrants or options to purchase stock.
6B(2). INVESTMENT IN FOREIGN SUBSIDIARIES. The Company covenants
that it will not make any Investment in or acquire the assets of any Person that
makes the major portion of its sales to Persons located outside the United
States; PROVIDED THAT, this restriction shall not prohibit the Company from
acquiring or maintaining its investment in any Person (i) that makes sales to
Persons in Mexico and (ii) has been identified to Sanifill as a potential
acquisition candidate of the Company.
6C. LIENS, DEBT AND OTHER RESTRICTIONS. The Company covenants
that it will not and will not permit any Subsidiary to:
6C(1) LIENS. Create, assume or suffer to exist any Lien upon any
of its property or assets, whether now owned or hereafter acquired, except:
(i) Liens for taxes (including ad valorem and property taxes) and
assessments or governmental charges or levies not yet due or which are
being actively contested in good faith by appropriate proceedings;
(ii) Liens associated with Consolidated Priority Debt existing as
of the date hereof to the extent they do not exceed fifteen percent (15%)
of Consolidated Tangible Assets;
(iii) other Liens incidental to the conduct of its business or the
maintenance, operation, construction or ownership of its property and
assets (including pledges or deposits in connection with workers'
compensation and social security taxes, assessments and charges, and
landlords, mechanics and materialmen Liens and survey exceptions or
encumbrances, easements or reservations, rights-of-way, or zoning
restrictions) PROVIDED THAT (A) such Liens were not incurred in connection
with the borrowing of money, or the obtaining of advances or credit or the
payment of the deferred purchase price of property and (B) the existence of
such Lien does not materially detract from the value of such property or
assets to the Company or any Subsidiary or unreasonably interfere with the
ordinary conduct of business;
(iv) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business to secure (or to obtain
letters of credit that secure) the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, performance bonds,
purchase, construction or sales contracts and other similar obligations, in
each case not incurred or made in connection with Debt;
(v) (A) any right of set off or banker's lien (whether by common
law, statute, contract or otherwise) in favor of any Senior Lender or any
banking institution with whom the
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Company or any Subsidiary maintains any deposit or collection account or
(B) any other set off right in favor of any other Person arising under
common law or statute; and
(vi) Liens created by, resulting from or arising in connection
with any litigation or legal proceeding involving the Company or any
Subsidiary, excluding any judgment Liens in the form of attachments in aid
of execution on a judgment to the extent the aggregate amount of all
judgments does not exceed $1,000,000; or
6C(2) DEBT. Create, incur, assume or suffer to exist any Debt,
except:
(i) Debt of any Subsidiary to the Company or any Wholly-Owned
Subsidiary;
(ii) Debt of any Subsidiary under the Guaranty Agreement; or
(iii) Debt of any Subsidiary to any other Senior Lender solely
under a Guarantee of the Company's Debt provided, that (1) at the later of
the date of incurrence of such Guarantee or the date on which a Guaranty
Agreement and a Contribution Agreement are required to be provided pursuant
to paragraph 5K, such Subsidiary is a party to each of the Guaranty
Agreement and Contribution Agreement and (2) such Subsidiary has not
previously been a Released Subsidiary;
(iv) Consolidated Priority Debt;
(v) other Debt of Subsidiaries permitted under paragraphs 6A and
6C(2);
(vi) other Debt of the Company (other than Debt owed to a
Subsidiary) permitted under paragraphs 6A and 6C(2);
6C(3) MERGER OR CONSOLIDATION. Merge, consolidate or exchange
shares with any other Person, except that:
(i) any Subsidiary may merge or consolidate with the Company or
any Wholly-Owned Subsidiary; provided, in the case of a Wholly-Owned
Subsidiary, it remains a Wholly-Owned Subsidiary immediately after the
merger or consolidation;
(ii) any Subsidiary may merge or consolidate with any other
Person; provided, (a) the surviving corporation or partnership becomes a
Wholly-Owned Subsidiary as a result of, and remains a Wholly-Owned
Subsidiary immediately after, the merger or consolidation; and (b)
immediately after such merger or consolidation, no Default or Event of
Default shall have occurred or exist and the Company could incur at least
$1 of additional Consolidated Priority Debt under this Agreement; or
(iii) the Company may merge or consolidate with any other
corporation (including a Subsidiary) if the continuing or surviving
corporation is the Company or another corporation
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which is organized under the laws of, and has a majority of the Assets
located in, the United States or a State thereof or the District of
Columbia and the continuing or surviving corporation (if not the
Company) shall assume expressly the obligations of the Company hereunder
and under the Notes under an agreement reasonably acceptable to
Sanifill, and immediately after such merger or consolidation, no Default
or Event of Default shall have occurred or exist and the Company or such
continuing or surviving corporation could incur at least $1 of
additional Senior Funded Debt under this Agreement; or
6C(6) CHANGE IN BUSINESS. Enter into any business which is
substantially different from that presently conducted by the Company and its
Subsidiaries; PROVIDED, HOWEVER, that the Company may enter into any other
nonhazardous environmental waste business not prohibited by that certain Buyer
Noncompetition Agreement dated as of December 13, 1996 by and between the
Company and Sanifill.
6D. SALE OF PROPERTY. The Company will not, and will not permit any
Subsidiary to, Dispose of any property or assets, except:
(i) any Subsidiary may Dispose of its assets to the Company or a
Wholly-Owned Subsidiary;
(ii) the Company may Dispose of all or substantially all its
assets to any other corporation (including a Subsidiary) if the continuing
or surviving corporation is organized under the laws of, and has a majority
of its assets located in, the United States or a State thereof or the
District of Columbia and shall assume expressly the obligations of the
Company hereunder and under the Notes under an agreement reasonably
acceptable to Sanifill, and immediately after such transfer, no Default or
Event of Default shall have occurred or exist and the continuing or
surviving corporation could incur at least $1 of additional Senior Funded
Debt under this Agreement;
(iii) the Company or any Subsidiary may Dispose of its assets so
long as, immediately after giving effect to such proposed Disposition:
(A) the consideration for such assets represents the Fair Market
Valueof such assets (as determined in good faith by a Responsible
Officer in the case of assets having a Fair Market Value of less
than $500,000 or otherwise, the Company's Board) at the time of
such Disposition; and
(B) the consideration for such assets is less than $500,000 at
the time of such Disposition; and
(C) the net book value of all assets so Disposed of (whether or
not leased back) by the Company and its Subsidiaries:
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(1) during the prior 12 months, does not exceed 10% of
Consolidated Tangible Assets; and
(2) after the date of this Agreement, does not exceed 20%
of Consolidated Tangible Assets; and
(D) the amount of Consolidated Operating Income produced by all
assets so Disposed of (whether or not leased back) by the Company and
its Subsidiaries:
(1) during the prior 12 months, does not exceed 20% of
Consolidated Operating Income at the end of the most recently
completed 12 months; and
(2) after the date of this Agreement, does not exceed 40%
of Consolidated Operating Income at the end of the most recently
completed 12 months; and
(E) no Default or Event of Default shall exist;
PROVIDED, HOWEVER, if after any Disposition, the net book value of all
assets Disposed of during the prior 12 months exceeds 20% of
Consolidated Tangible Assets or the Consolidated Operating Income
produced by all assets Disposed of during the prior 12 months exceeds
20% of Consolidated Operating Income, the Company shall, within 9
months of the date of such Disposition, apply the proceeds (net of
reasonable expenses) from such Disposition to prepay, on a ratable and
pro rata basis, Consolidated Senior Funded Debt or to acquire
operating assets and equipment to be used in the business of the
Company and its Subsidiaries.
For purposes of this paragraph 6D:
(iv) "DISPOSITION" means the sale, Lease, transfer or other
disposition of property, and "DISPOSED OF" has a corresponding meaning to
Disposition. "LEASE" means the lease of any property for more than 5
years;
(v) CALCULATION OF NET BOOK VALUE/CONSOLIDATED OPERATING INCOME.
The net book value of any assets shall be determined as of the respective
date of Disposition of those assets and the Consolidated Operating Income
produced by any assets shall be determined using Consolidated Operating
Income for the 12 month period before the respective date of Disposition of
those assets; and
(vi) SALES OF LESS THAN ALL THE STOCK OF A SUBSIDIARY. In the case of
the sale or issuance of the stock of a Subsidiary, the amount of
Consolidated Operating Income, or amount of Consolidated Tangible Assets,
as the case may be, contributed by the stock Disposed of shall be assumed
to be the percentage of outstanding stock sold or to be sold.
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6E. SUBSIDIARY STOCK AND DEBT. The Company will not:
(i) directly or indirectly sell, assign, pledge or otherwise
dispose of any Debt of or any shares of stock of (or warrants, rights
or options to acquire stock of) any Subsidiary except to a Wholly-Owned
Subsidiary and except as permitted pursuant to paragraph 6D;
(ii) permit any Subsidiary directly or indirectly to sell, assign,
pledge or otherwise dispose of any Debt of the Company or any other
Subsidiary, or any shares of stock of (or warrants, rights or options to
acquire stock of) any other Subsidiary, except to the Company or a Wholly-
Owned Subsidiary and except pursuant to paragraph 6D;
(iii) permit any Subsidiary to have outstanding any shares of
Preferred Stock other than Preferred Stock (i) existing at the time the
Subsidiary becomes a Subsidiary or (2) owned by the Company or a Wholly-
Owned Subsidiary;
(iv) permit any Subsidiary directly or indirectly to issue or
sell any shares of its stock (or warrants, rights or options to acquire its
stock) except to the Company or a Wholly Owned Subsidiary and except as
permitted pursuant to paragraph 6C(3) and 6D;
(v) permit the ownership of any direct or indirect interest of
the Company in the equity of any Foreign Subsidiary by any Person other (a)
than a Wholly-Owned Subsidiary that (1) has become a party to a Guaranty
Agreement and a Contribution Agreement and (2) has no Debt (other than as
provided in clause (a) above or permitted under paragraph 6C(2)(iii)) or
(b) another Foreign Subsidiary;
(vi) permit any Subsidiary to enter into or otherwise be bound by
or subject to any contract or agreement (including, without limitation, any
provision of its certificate or articles of incorporation or bylaws) that
restricts its ability to pay dividends or other distributions on account of
its stock; or
(vii) permit any Subsidiary to create, incur, assume or maintain
any Debt except as permitted by paragraphs 6A and 6C(2).
6F. ERISA. The Company covenants that it will not nor permit any
Subsidiary to:
(i) terminate or withdraw from any Plan resulting in the incurrence
of any material liability to the Pension Benefit Guaranty Corporation;
(ii) engage in or permit any Person to engage in any prohibited
transaction (as defined in Section 4975 of the Code) involving any Plan
(other than a Multiemployer Plan) which would subject the Company or any
Subsidiary to any material tax, penalty or other liability;
14
(iii) incur or suffer to exist any material accumulated funding
deficiency (as defined in section 302 of ERISA and section 412 of the
Code), whether or not waived, involving any Plan (other than a
Multiemployer Plan); or
(iv) allow or suffer to exist any risk or condition which presents a
risk of incurring a material liability to the Pension Benefit Guaranty
Corporation.
6G. ENVIRONMENTAL MATTERS. The Company covenants that it will
not, and will not permit any Third Party to, use, produce, manufacture,
process, generate, store, dispose of, manage at, or ship or transport to or
from the Properties any Hazardous Materials except for Hazardous Materials
used, produced, released or managed in the ordinary course of business in
compliance with all applicable Environmental Requirements where the failure
to do so would not have a reasonable possibility of materially adversely
affecting the business, operations or financial condition of the Company and
its Subsidiaries taken as a whole and except for Hazardous Materials released
in amounts which do not require remediation pursuant to applicable
Environmental Requirements if remediation is required, such remediation would
not have a reasonable possibility of materially adversely affecting the
business, operations or financial condition of the Company and its
Subsidiaries taken as a whole.
7. EVENTS OF DEFAULT.
7A. ACCELERATION. If any of the following events shall occur and
be continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise):
(i) the Company defaults in the payment of any principal or interest
on any Note for more than 5 Business Days after the date due; or
(ii) the Company or any Subsidiary defaults (whether as primary
obligor or as guarantor or other surety) in any payment of principal of or
interest on any other obligation for money borrowed (or any Capitalized
Lease Obligation, any obligation under a conditional sale or other title
retention agreement, any obligation (other than a current trade payable
that does not constitute Debt) issued or assumed as full or partial payment
for property whether or not secured by a purchase money mortgage or any
obligation under notes payable or drafts accepted representing extensions
of credit) beyond any period of grace provided with respect thereto; or the
Company or any Subsidiary fails to perform or observe any other agreement,
term or condition contained in any agreement under which any such
obligation is created (or if any other event thereunder or under any such
agreement shall occur and be continuing) and the effect of such failure or
other event is to cause, or to permit the holder or holders of such
obligation (or a trustee on behalf of such holder or holders) to cause,
such obligation to become due (or to be repurchased by the Company or any
Subsidiary) prior to any stated maturity, PROVIDED THAT the aggregate
amount of all obligations as to which such a payment default shall occur
and be continuing or such a failure or other event causing or permitting
15
acceleration (or resale to the Company or any Subsidiary) shall occur and
be continuing exceeds $1,000,000; or
(iii) any representation or warranty made by the Company herein or
by the Company or any of its officers in any writing furnished in
connection with or pursuant to this Agreement shall be false in any
material respect on the date as of which made; or
(iv) the Company fails to perform or observe any agreement contained
in paragraph 6; or
(v) the Company fails to perform or observe any other agreement
contained herein and such failure shall not be remedied within 30 days
after any Responsible Officer obtains actual knowledge thereof or after
receipt by the Company of written notice of such failure; or
(vi) the Company or any Subsidiary makes an assignment for the
benefit of creditors or is generally not paying its debts as such debts
become due; or
(vii) any decree or order for relief in respect of the Company or
any Subsidiary is entered under any Bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of debt, dissolution or liquidation
or similar law, whether now or hereafter in effect (herein called the
"BANKRUPTCY LAW"), of any jurisdiction; or
(viii) the Company or any Subsidiary petitions or applies to any
tribunal for, or consents to, the appointment of, or taking possession by,
a trustee, receiver, custodian, liquidator or similar official of the
Company or any Subsidiary, or of any substantial part of the assets of the
Company or any Subsidiary, or commences a voluntary case under the
Bankruptcy Law of the United States or any proceedings (other than
proceedings for the voluntary liquidation and dissolution of a Subsidiary)
relating to the Company or any Subsidiary under the Bankruptcy Law of any
other jurisdiction; or
(ix) any such petition or application is filed, or any such
proceedings are commenced, against the Company or any Subsidiary and the
Company or such Subsidiary by any act indicates its approval thereof,
consent thereto or acquiescence therein, or an order, judgment or decree is
entered appointing any such trustee, receiver, custodian, liquidator or
similar official, or approving the petition in any such proceedings, and
such order, judgment or decree remains unstayed and in effect for more than
60 days; or
(x) any order, judgment or decree is entered in any proceedings
against the Company decreeing the dissolution of the Company and such
order, judgment or decree remains unstayed and in effect for more than 60
days; or
(xi) a final judgment or judgments in an amount in excess of
$1,000,000, individually or in the aggregate, shall be rendered against the
Company or any Subsidiary (for which no insurer has acknowledged, in
writing, responsibility for liability, subject to
16
customary deductible) and, within 60 days after entry thereof, such
judgment is not discharged or execution thereof stayed pending appeal, or
within 60 days after the expiration of any such stay, such judgment is not
discharged; or
(xii) any order, judgment or decree is entered in any proceedings
against the Company or any Subsidiary decreeing a split-up of the Company
or such Subsidiary which requires the divestiture of assets representing a
substantial part (being an amount equal to 20% of Consolidated Tangible
Assets), or the divestiture of the stock of a Subsidiary whose assets
represent a substantial part, of the consolidated assets of the Company and
its Subsidiaries (determined in accordance with generally accepted
accounting principles) or which requires the divestiture of assets, or
stock of a Subsidiary, which shall have contributed at least 20% of
Consolidated Operating Income for any of the three fiscal years then most
recently ended, and such order, judgment or decree remains unstayed and in
effect for more than 60 days; or
(xiii) any Subsidiary shall fail to comply with the terms of the
Guaranty Agreement or Contribution Agreement to which it is a party beyond
any applicable grace period.
(xiv) the Company or any ERISA Affiliate, in its capacity as an
employer under a Multiemployer Plan, makes a complete or partial withdrawal
from such Multiemployer Plan resulting in the incurrence by such
withdrawing employer of a withdrawal liability in an amount exceeding
$2,000,000; or
(xv) any Subsidiary or any other Person (which Sanifill reasonably
believes in good faith may have the right to do so) shall disavow or
attempt to terminate the Guaranty Agreement or Contribution Agreement or
the Guaranty Agreement or Contribution Agreement shall cease to be in full
force and effect with respect to any Subsidiary for any reason whatsoever;
then:
(a) if such event is an Event of Default specified in clause (i) or
(ii) of this paragraph 7A, the holder of any Note (other than the Company
or any Subsidiary or Affiliate) may at its option, by written notice to the
Company, declare all of the Notes held by such holder to be, and all of the
Notes held by such holder shall thereupon be and become, immediately due
and payable at par together with interest accrued and unpaid thereon,
without presentment, demand, protest or other notice of any kind
(including, without limitation, notice of intent to accelerate), all of
which are hereby waived by the Company,
(b) if such event is an Event of Default specified in any of clauses
(vii), (viii), (ix) or (x) of this paragraph 7A with respect to the
Company, all of the Notes at the time outstanding shall automatically
become immediately due and payable at par together with interest accrued
and unpaid thereon, without presentment, demand, protest or notice of any
kind (including, without limitation, notice of intent to accelerate and
notice of acceleration of maturity), all of which are hereby waived by the
Company, and
17
(c) if such event is any other Event of Default specified in this
paragraph 7A, the Required Holder(s) of the Notes may at its or their
option, by written notice to the Company, declare all of the Notes to be,
and all of the Notes shall thereupon be and become, immediately due and
payable, together with interest accrued and unpaid thereon with respect to
each Note, without presentment, demand, protest or other notice of any kind
(including, without limitation, notice of intent to accelerate), all of
which are hereby waived by the Company.
7B. RESCISSION OF ACCELERATION. At any time after the Note shall
have been declared immediately due and payable pursuant to paragraph 7A, the
Required Holder(s) may, by notice in writing to the Company, rescind and
annul such declaration and its consequences.
7C. NOTICE OF ACCELERATION OR RESCISSION. Whenever any Note shall
be declared immediately due and payable pursuant to paragraph 7A or any such
declaration shall be rescinded and annulled pursuant to paragraph 7B, the
Company shall forthwith give written notice thereof to the holder of each
Note at the time outstanding.
7D. OTHER REMEDIES. If any Event of Default or Default shall
occur and be continuing, any holder of the Note may proceed to protect and
enforce its rights under this Agreement and the Note by exercising such
remedies as are available to such holder in respect thereof under applicable
law, either by suit in equity or by action at law, or both, whether for
specific performance of any covenant or other agreement contained in this
Agreement or in aid of the exercise of any power granted in this Agreement.
No remedy conferred in this Agreement upon any holder of the Note is intended
to be exclusive of any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to every other remedy conferred herein or
now or hereafter existing at law or in equity or by statute or otherwise.
8 . REPRESENTATIONS, COVENANTS AND WARRANTIES. The Company represents
and warrants as follows:
8A. ORGANIZATION. The Company is a corporation duly organized and
existing in good standing under the laws of the State of Delaware, and each
Subsidiary is duly organized and existing in good standing under the laws of
the jurisdiction in which it is incorporated or formed. SCHEDULE 8A hereto
is an accurate and complete list of all Subsidiaries as of the date hereof
and includes the jurisdiction of incorporation and ownership of all such
Subsidiaries and indicates all Subsidiaries executing the Guaranty Agreement.
The Company and each Subsidiary has the corporate or partnership power to own
its respective properties and to carry on its respective businesses as now
being conducted and is duly qualified and authorized to do business in each
other jurisdiction in which the character of its respective properties or the
nature of its respective businesses require such qualification or
authorization except where the failure to be so qualified or authorized could
not reasonably be expected to have a material adverse effect on the business,
operations or financial condition of the Company and its Subsidiaries, taken
as a whole.
8B. FINANCIAL STATUS. The Company was formed on November ___,
1996, and as a newly formed entity, has no operations, employees, liabilities
(other than for normal organizational
18
expenses and expenses incurred in connection with the purchase of the assets
pursuant to the Agreement not to exceed $200,000), obligations, properties or
assets, other than cash, whether tangible or intangible, personal or real,
other than as expressly provided for and described in the Acquisition
Agreement.
8C. DEFAULTS. The Company is not in default under the provisions
of any agreement, document or instrument to which it is a party or which it
or any of its properties is bound, which default or violation would,
individual or in the aggregate, materially and adversely affect the business,
financial condition, properties, prospects or operations of the Company.
8D. ACTIONS PENDING. There is no action, suit, investigation or
proceeding pending or, to the knowledge of the Company, threatened against
the Company or any Subsidiary, or any properties or rights of the Company or
any Subsidiary, by or before any court, arbitrator or administrative or
governmental body which could reasonably be expected to result in any
material adverse change in the business, condition (financial or otherwise)
or operations of the Company and its Subsidiaries taken as a whole.
8E. OUTSTANDING DEBT. Neither the Company nor any Subsidiary has
any Debt outstanding except as permitted by paragraphs 6A and 6C(2). There
is no default under the provisions of any instrument evidencing any Debt or
of any agreement relating thereto.
8F. [INTENTIONALLY DELETED]
8G. [INTENTIONALLY DELETED]
8H. CONFLICTING AGREEMENTS AND OTHER MATTERS. Neither the Company
nor any Subsidiary is a party to any contract or agreement or subject to any
charter or other corporate restriction which materially and adversely affects
its business, property or assets, or financial condition of the Company and
its Subsidiaries taken as a whole. Neither the execution nor delivery of
this Agreement or the Note or any Guaranty Agreement, nor the issuance of the
Note, nor fulfillment of nor compliance with the terms and provisions hereof
and of the Note or any Guaranty Agreement will conflict with, or result in a
breach of the terms, conditions or provisions of, or constitute a default
under, or result in any violation of, or result in the creation of any Lien
upon any of the properties or assets of the Company or any Subsidiary
pursuant to, the charter or by-laws of the Company or any Subsidiary, any
award of any arbitrator or any agreement (including any agreement with
stockholders), instrument, order, judgment, decree, statute, law, rule or
regulation to which the Company or any Subsidiary is subject. Neither the
Company nor any Subsidiary is a party to, or otherwise subject to any
provision contained in, any instrument evidencing Debt of the Company or such
Subsidiary, any agreement relating thereto or any other contract or agreement
(including its charter) which limits the amount of, or otherwise imposes
restrictions on the incurring of, Debt of the Company of the type to be
evidenced by the Note.
8I. [INTENTIONALLY DELETED]
19
8J. ERISA. The Company currently does not participate in any Plan
or Multiemployer Plan.
8K. GOVERNMENTAL CONSENT. Assuming the representations made by you
in paragraph 8 and Article IV of the Acquisition Agreement are accurate, neither
the nature of the Company or of any Subsidiary, nor any of their respective
businesses or properties, nor any relationship between the Company or any
Subsidiary and any other Person, nor any circumstance in connection with the
offering, issuance, sale or delivery of the Note is such as to require any
authorization, consent, approval, exemption or other action by or notice to or
filing with any court or administrative or governmental body (other than those
which are made or obtained prior to Closing and routine filings after the
Closing Date for the Note with the Securities and Exchange Commission and/or
state Blue Sky authorities) in connection with the execution and delivery of
this Agreement, the issuance or delivery of the Note or fulfillment of or
compliance with the terms and provisions hereof or of the Note.
8L. [INTENTIONALLY DELETED]
8M. PERMITS, LICENSES, ETC. Assuming the representations made by you
in Article IV of the Acquisition Agreement are accurate, the Company possesses
all permits, licenses, patents, patent rights or licenses, trademarks, trademark
rights, trade names, trade name rights and copyrights which are required to
conduct its business, and which failure of the Company to so possess could
reasonably be expected to have a material and adverse effect on the Company.
8N. DISCLOSURE. Neither this Agreement nor any other document,
certificate or statement furnished to any Holder by or on behalf of the Company
in connection herewith contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements contained
herein and therein not misleading. There is no fact peculiar to the Company or
any Subsidiary which materially adversely affects or in the future may (so far
as the Company can now foresee) materially adversely affect the business,
property or assets, or financial condition of the Company and its Subsidiaries
taken as a whole and which has not been set forth in this Agreement or in the
other documents, certificates and statements furnished to you by or on behalf of
the Company prior to the date hereof in connection with the transactions
contemplated hereby. The financial projections provided to Sanifill by, or on
behalf of, the Company, are reasonable based on the assumptions stated therein
and the best information available to the Responsible Officers of the Company,
it being recognized by Sanifill and any Transferee that such projections as to
future events are not to be viewed as facts and that actual results during the
period or periods covered thereby may differ from the projected results.
9. REPRESENTATIONS AND AGREEMENTS OF SANIFILL.
9A. INVESTMENT INTENT. Sanifill is acquiring the Note for its own
account and not with a view to or for sale in connection with any distribution
thereof within the meaning of the Securities Act, PROVIDED THAT the disposition
of such Holder's property shall at all times be and remain within its control.
20
9B. RIGHT OF SET-OFF. Sanifill agrees, and each subsequent holder of
the Note, by its acceptance thereof will thereby agree, that the Note is subject
to a right of set-off in favor of the Company as provided in the Acquisition
Agreement.
10. DEFINITIONS. For the purpose of this Agreement, the terms defined in
the introductory sentence and paragraphs 1 and 2 shall have the respective
meanings specified therein, and the following terms shall have the meanings
specified with respect thereto below:
10A. TERMS.
"ACQUISITION AGREEMENT" is defined in paragraph 1.
"ADJUSTED CAPITAL EXPENDITURES" means any expenditures by the Company
or any Subsidiary for assets to be used more than one year after the date
acquired and which are properly classified as property, equipment or
improvements, fixed assets, or a similar type of capitalized asset under
generally accepted accounting principles, other than any expenditure to acquire
(i) the stock of a corporation which thereupon becomes a Subsidiary or (ii) all
or substantially all of the assets of any Person.
"AFFILIATE" means any Person directly or indirectly controlling,
controlled by, or under direct or indirect common control with, the Company,
except a Subsidiary. A Person shall be deemed to control a corporation if such
Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such corporation, whether through
the ownership of voting securities, by contract or otherwise.
"ATTRIBUTABLE DEBT" means the present value (discounted according to
generally accepted accounting principles at the debt rate implicit in the lease)
of the obligations of the lessee for Rental payments during the term of any
lease constituting a part of a Capitalized Lease Obligation or a Sale and
Leaseback Transaction.
"AUTHORIZED OFFICER" means (i) in the case of the Company, its chief
executive officer, its chief financial officer, any vice president or other
officer of the Company designated as an "Authorized Officer" of the Company in
the INFORMATION SCHEDULE attached hereto or any vice president of the Company
designated as an "Authorized Officer" of the Company for the purpose of this
Agreement in an Officer's Certificate executed by the Company's chief executive
officer or chief financial officer and delivered to Sanifill, and (ii) in the
case of Sanifill, any officer of Sanifill designated as its "Authorized Officer"
in the INFORMATION SCHEDULE or any officer of Sanifill designated as its
"Authorized Officer" for the purpose of this Agreement in a certificate executed
by one of its Authorized Officers. Any action taken under this Agreement on
behalf of the Company by any individual who on or after the date of this
Agreement shall have been an Authorized Officer of the Company and whom Sanifill
in good faith believes to be an Authorized Officer of the Company at the time of
such action shall be binding on the Company even though such individual shall
have ceased to be an Authorized Officer of the Company, and any action taken
under this Agreement on behalf of Sanifill by any individual who on or after the
date of this Agreement shall have been an Authorized
21
Officer of Sanifill and whom the Company in good faith believes to be an
Authorized Officer of Sanifill at the time of such action shall be binding on
Sanifill even though such individual shall have ceased to be an Authorized
Officer of Sanifill.
"BANKRUPTCY LAW" is defined in clause (viii) of paragraph 7A.
"BOARD" means, for any Person, its Board of Directors or equivalent
governing body.
"BUSINESS DAY" means any day other than (i) a Saturday, a Sunday, or
(ii) a day on which commercial banks in New York City or Houston, Texas are
required or authorized to be closed.
"CAPITALIZED LEASE OBLIGATION" means any Rental obligation which,
under generally accepted accounting principles, would be required to be
capitalized on the books of the Company or any Subsidiary, taken at the amount
thereof accounted for as indebtedness (net of interest expense) in accordance
with such principles.
"CERCLA" means the Comprehensive Environmental Response Compensation
and Liability Act.
"CERCLIS" means the Comprehensive Environmental Response Compensation
and Liability Inventory System established pursuant to CERCLA.
"CLOSING DATE" means December 13, 1996.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONSOLIDATED" means the consolidated financial information of the
Company and its Subsidiaries under generally accepted accounting principles.
"CONSOLIDATED ADJUSTED TANGIBLE ASSETS" means the excess of
Consolidated Tangible Assets minus 50% of Foreign Tangible Assets.
"CONSOLIDATED DEBT" means for the Company and its Subsidiaries on a
Consolidated basis at any date of determination the sum (without duplication)
of:
(i) Debt, and
(ii) 50% of the face amount of all letters of credit issued to support
closure and post-closure liabilities of the Company and its Subsidiaries.
"CONSOLIDATED EARNINGS BEFORE INTEREST AND TAXES" means for the
Company and its Subsidiaries on a Consolidated basis for the four fiscal
quarters most recently ended, Consolidated Net Earnings, plus Consolidated
Interest Charges, plus income taxes, in each case for such period.
22
"CONSOLIDATED EBITDA" means for the Company and its Subsidiaries on a
Consolidate basis for the four quarters most recently ended, Consolidated
Earnings before Interest and taxes plus depreciation, amortization, in each
case, for such period.
"CONSOLIDATED FIXED CHARGES" means, for the Company and its
Subsidiaries on a Consolidated basis, the sum (without duplication) of:
(i) all scheduled principal payments on Debt (including all
principal components of Rentals under Capitalized Lease Obligations)
made during the most recently completed four fiscal quarters (the
"PRIOR PERIOD");
(ii) all Rentals (other than for Capitalized Lease Obligations) paid
during the Prior Period;
(iii) all Consolidated Interest Charges for the Prior Period on
all Debt (including all imputed interest components of Rentals under
Capitalized Lease Obligations);
(iv) the amount of all dividends or other distributions made on
account of any Preferred Stock during the Prior Period;
(v) the amount of any scheduled or mandatory purchase or redemption
of Preferred Stock paid or made during the Prior Period;
(vi) the amount of actual cash taxes paid by the Company and its
Subsidiaries during the Prior Period; and
(vii) the lesser of $1,000,000 or total amount of Adjusted Capital
Expenditures during the prior 12 months.
"CONSOLIDATED INTEREST CHARGES" means, for the Company and its
Subsidiaries on a Consolidated basis for the four fiscal quarters most recently
ended, all interest expense (including all amortization or debt discount and
expenses and imputed interest) on all Debt (including Capitalized Lease
Obligations) net of interest income.
"CONSOLIDATED NET EARNINGS" means, for any applicable period, for the
Company and its Subsidiaries on a Consolidated basis, the excess of (a) gross
revenues over (b) all expenses and charges of a proper character (including
current and deferred taxes on income, provision for taxes on unremitted foreign
earnings which are included in gross revenues, and current additions to
reserves) each for the applicable period, but not including in gross revenues:
(i) any gains (net of expenses and taxes applicable thereto) in
excess of losses resulting from the sales, conversions or other
dispositions of capital assets,
(ii) any gains resulting from the write-up of assets,
23
(iii) any earnings of any Person acquired by the Company or any
Subsidiary through purchase, merger or consolidation or otherwise for any
year prior to the year of acquisition not included in gross revenues under
generally accepted accounting principles, or
(iv) any deferred credit representing the excess of equity in any
Subsidiary of the Company at the date of acquisition over the cost of the
investment in such Subsidiary,
all as determined in accordance with generally accepted accounting principles.
If the above calculation results in an amount less than zero, then for such
period there shall be a "CONSOLIDATED NET LOSS" as determined below.
"CONSOLIDATED NET EARNINGS AVAILABLE FOR RESTRICTED PAYMENTS" is
defined in paragraph 6B of this Agreement.
"CONSOLIDATED NET LOSS" means, for any applicable period, for the
Company and its Subsidiaries on a Consolidated basis, the excess of (a) expenses
and charges of a proper character (including current and deferred taxes on
income, provision for taxes an unremitted foreign earnings which are included in
gross revenues, and current additions to resources) over (b) gross revenues for
the same period, but not including in gross revenues those items listed in
clauses (i) through (iv), inclusive, in the definition Consolidated Net Earnings
above, all as determined in accordance with generally accepted accounting
principles. If the above calculation results in an amount of zero or more, then
for such period there shall be "CONSOLIDATED NET EARNINGS" as determined above.
"CONSOLIDATED NET WORTH" means, at any time, for the Company and its
Subsidiaries on a Consolidated basis, shareholders' equity at such time
determined in accordance with generally accepted accounting principles.
"CONSOLIDATED OPERATING INCOME" means, for the Company and its
Subsidiaries on a Consolidated basis for the four fiscal quarters most recently
ended, the sum of (i) Consolidated Net Earnings, or Consolidated Net Loss, as
the case may be, for such period, plus Interest Charges and provision for taxes
deducted in calculating such Consolidated Net Earnings or Consolidated Net Loss
and (ii) Rentals.
"CONSOLIDATED PRIORITY DEBT" means, on a Consolidated basis at any
date of determination the sum (without duplication) of (i) Consolidated Secured
Debt, (ii) Attributable Debt, and (iii) aggregate amount of Debt of all
Subsidiaries; PROVIDED THAT any Debt of a Subsidiary which is a party to the
Guaranty Agreement (1) that consists solely of a Guarantee of Debt of the
Company or (2) that is Subordinated Debt shall not be included in any
calculation of Consolidated Priority Debt.
"CONSOLIDATED SECURED DEBT" means, on a Consolidated basis at any date
of determination, the sum of Capitalized Lease Obligations and any Debt of any
Person which is secured by, or otherwise benefitting from, a Lien on any
property, tangible or intangible, of the Company or any Subsidiary, whether or
not the Company or such Subsidiary has assumed or become liable for the
24
payment of such Debt or obligation, other than permitted under clauses (i),
(ii), (iii), (x) and (xi) of paragraph 6C(l) of this Agreement.
"CONSOLIDATED SENIOR DEBT" means, for the Company and its Subsidiaries
on a Consolidated basis at any time of determination, the excess of (a) the sum
of Debt at such time, over (b) the amount of all Subordinated Debt at such time.
"CONSOLIDATED TANGIBLE ASSETS" means, as at any date of determination,
the excess of (a) the total assets of the Company and its Subsidiaries appearing
on a Consolidated balance sheet prepared under generally accepted accounting
principles as of the date of determination, after deducting any reserves
applicable thereto and after eliminating all intercompany transactions and all
amounts properly attributable to minority interests, if any, in the stock and
surplus of Subsidiaries, over (b) the net book value of all Intangible Assets at
such time.
"DEBT" means with respect to any Person, at any date of determination,
(i) all indebtedness for borrowed money which such Person has
directly or. indirectly created, incurred or assumed; and
(ii) all indebtedness, whether or not for borrowed money, secured by
any Lien on any property or asset owned or held by such Person subject
thereto, whether or not the indebtedness secured thereby shall have been
assumed by such Person; and
(iii) any indebtedness, whether or not for borrowed money, with
respect to which such Person has become directly or indirectly liable and
which represents or has been incurred to finance the purchase price (or a
portion thereof) of any property or services or business acquired by such
Person, whether by purchase, consolidation, merger or otherwise other than
any trade payable in the ordinary course of business that is a current
liability under generally accepted accounting principles; and
(iv) any indebtedness of the character referred to in clauses (i),
(ii) or (iii) of this definition deemed to be extinguished under generally
accepted accounting principles but for which such Person remains legally
liable to the extent the market value of any assets such Person has placed
in trust for the benefit of the holders of that indebtedness is less than
the aggregate amount of that indebtedness; and
(v) any indebtedness of any other Person of the character referred
to in subdivision (i), (ii), (iii) or (iv) of this definition with respect
to which the Person whose Debt is being determined has become liable by
way of a Guarantee;
all as determined in accordance with generally accepted accounting principles,
provided, however, Debt shall not include endorsement of negotiable instruments
for collection in the ordinary course of business.
25
"DISPOSITION" is defined in paragraph 6D of this Agreement.
"ENVIRONMENTAL AUTHORITY" means any foreign, federal, state, local
or regional government that exercises any form of jurisdiction or authority
under any Environmental Requirement.
"ENVIRONMENTAL JUDGMENTS AND ORDERS" means all judgments, decrees
or orders arising from or in any way associated with any Environmental
Requirements, whether or not entered upon consent or written agreements with
an Environmental Authority or other entity arising from or in any way
associated with any Environmental Requirement, whether or not incorporated in
a judgment, degree or order.
"ENVIRONMENTAL LIABILITIES" means any liabilities, whether accrued
or contingent, arising from or relating in any way to any Environmental
Requirements.
"ENVIRONMENTAL NOTICES" means any written communication from any
Environmental Authority stating possible or alleged noncompliance with or
possible or alleged liability under any Environmental Requirement, including
without limitation any complaints, citations, demands or requests from any
Environmental Authority for correction of any purported violation of any
Environmental Requirements or any investigation concerning any purported
violation of any Environmental Requirements. Environmental Notices also
shall mean (i) any written communication from any other Person threatening
litigation or administrative proceedings against or involving the Company
relating to alleged violation of any Environmental Requirements and (ii) any
complaint, petition or similar documents filed by any other Person commencing
litigation or administrative proceedings against or involving the Company
relating to alleged violation of any Environmental Requirements.
"ENVIRONMENTAL PROCEEDINGS" means any judicial or administrative
proceedings arising from or in any way associated with any Environmental
Requirement, other than (i) applications for landfill operating permits, or
airspace permits, or for amendment of any existing permit, filed by the
Company or any of its Subsidiaries with any Environmental Authority, or any
amendments, clarifications, supplements, correspondence, notices, or
restatements thereto, or (ii) any routine reports or notices by the Company
or any of its Subsidiaries filed with or made to any Environmental Authority
pursuant to any landfill operating permit or airspace permit.
"ENVIRONMENTAL RELEASES" means releases (as defined in CERCLA or
under any applicable state or local environmental law or regulation) of
Hazardous Materials. Environmental Releases does not include releases for
which no remediation or reporting is required by applicable Environmental
Requirements and which do not present a danger to health, safety or the
environment.
"ENVIRONMENTAL REQUIREMENTS" means any applicable local, state or
federal law, rule, regulation, permit, order, decision, determination or
requirement relating in any way to Hazardous Materials or to health, safety
or the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
26
"ERISA AFFILIATE" means any corporation which is a member of the
same controlled group of corporations as the Company within the meaning of
section 414(b) of the Code, or any trade or business which is under common
control with the Company within the meaning of section 414(c) of the Code.
"EVENT OF DEFAULT" means any of the events specified in paragraph
7A, PROVIDED THAT there has been satisfied any requirement in connection with
such event for the giving of notice, or the lapse of time, or the happening
of any further condition, event or act, and "DEFAULT" shall mean any of such
events, whether or not any such requirement has been satisfied.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FAIR MARKET VALUE" means at any time, the sale value of property
that would be realized in an arm's-length sale at such time between an
informed and willing buyer, and an informed and willing seller, under no
compulsion to buy or sell, respectively.
"FOREIGN SUBSIDIARY" means any Subsidiary of the Company (i)
organized under the law of any jurisdiction other than any of the United
States or any of its territories or (ii) that makes the major portion of its
sales to persons outside the United States.
"FOREIGN TANGIBLE ASSETS" means, as at any date of determination,
the excess of (a) the aggregate assets of all of the Foreign Subsidiaries,
after deducting any reserves applicable thereto and eliminating all
intercompany transactions, determined in accordance with generally accepted
accounting principles, over (b) the aggregate net book value of all
Intangible Assets owned by Foreign Subsidiaries at such time.
"FUNDED DEBT" means with respect to any Person, all Debt of such
Person which by its terms or by the terms of any instrument or agreement
relating thereto matures, or which is otherwise payable or unpaid, more than
one year from, or is directly or indirectly renewable or extendible at the
option of the debtor to a date more than one year (including an option of the
debtor under a revolving credit or similar agreement obligating the lender or
lenders to extend credit over a period of more than one year) from the date
of the creation thereof.
"GUARANTEE" means, with respect to any Person, any direct or
indirect liability, contingent or otherwise, of such Person with respect to
any Debt, lease, dividend or other obligation of another, including, without
limitation, any such obligation directly or indirectly guaranteed, endorsed
(otherwise than for collection or deposit in the ordinary course of business)
or discounted or sold with recourse by such Person, or in respect of which
such Person is otherwise directly or indirectly liable, including, without
limitation, any such obligation in effect guaranteed by such Person through
any agreement (contingent or otherwise) to purchase, repurchase or otherwise
acquire such obligation or any security therefor, or to provide funds for the
payment or discharge of such obligation (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise), or to
maintain the solvency or any balance sheet or other financial condition of
the obligor of such obligation, or to make payment for any products,
materials or supplies or for any transportation or
27
services regardless of the nondelivery or non-furnishing thereof, in any such
case if the purpose or intent of such agreement is to provide assurance that
such obligation will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such obligation will be
protected against loss in respect thereof. The amount of any Guarantee shall
be equal to the outstanding principal amount of the obligation guaranteed or
such lesser amount to which the maximum exposure of the guarantor shall have
been specifically limited.
"GUARANTY AGREEMENT" means the form of Guaranty Agreement attached
hereto as EXHIBIT B, as it may be supplemented, amended or changed from time to
time in accordance with its terms.
"HAZARDOUS MATERIALS" means (a) hazardous waste as defined in the
Resource Conservation and Recovery Act of 1976, or in any applicable federal,
state or local law or regulation, (b) hazardous substances, as defined in
CERCLA, or in any applicable state or local law or regulation, (c) gasoline,
or any other petroleum product or by-product, (d) toxic substances, as
defined in the Toxic Substances Control Act of 1976, or in any applicable
federal, state or local law or regulation or (e) insecticides, fungicides, or
rodenticides, as deemed in the Federal Insecticide, Fungicide, and
Rodenticide Act of 1975, or in any applicable federal, state or local law or
regulation, as each such Act, statute or regulation may be amended from time
to time.
"HOLDERS" means with respect to the note, the Persons, either
Sanifill or a Sanifill Affiliate, who is purchasing any portion of the Note.
"INTANGIBLE ASSETS" means those assets which would be treated as
intangible under generally accepted accounting principles, including, without
limitation, such items as good will, trademarks, trade names, service marks,
brand names, copyrights, patents, licenses, noncompete agreements and rights
with respect to the foregoing, unamortized debt discount and expense,
organizational expenses, and the excess of cost of purchased Subsidiaries
over equity in the net assets (based on fair market value) thereof at the
date of acquisition and assets located.
"INVESTMENT" means, when used with respect to any Person, any
direct or indirect advance, loan or other extension of credit (other than the
creation of receivables in the ordinary course of business) or capital
contribution by such Person (by means of transfers of property to others or
payments for property or services for the account or use of others, or
otherwise) to any other Person, or any direct or indirect purchase or other
acquisition by such Person of, or of a beneficial interest in, capital stock,
partnership interests, bonds, notes, debentures or other securities issued by
any other Person.
"LIEN" means any mortgage, pledge, security interest, encumbrance,
lien (statutory or otherwise), or charge of any kind (including any agreement
to give any of the foregoing, any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of any
jurisdiction) or any other type of preferential arrangement for the purpose,
or having the effect, of protecting a
28
creditor against loss or securing the payment or performance of an obligation
to a creditor, including any rights of setoff (whether by statute, common
law, contract or otherwise).
"MULTIEMPLOYER PLAN" means any Plan which is a "multiemployer plan"
(as such term is defined in section 4001(a)(3) of ERISA).
"NOTE" or "NOTES" is defined in paragraph 1 of this Agreement.
"OFFICER'S CERTIFICATE" means a certificate signed in the name of
the Company by an Authorized Officer of the Company.
"PERSON" means and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
"PERMITTED INVESTMENTS" means
(i) any evidence of debt, maturing not more than one year after
the date of issue, issued by the United States of America, or any
instrumentality or agency thereof and guaranteed fully as to principal,
interest and premium, if any, by the United States of America,
(ii) any certificate of deposit, maturing not more than one year
after the date of purchase, issued by a commercial bank which is a member
of the Federal Reserve System, has a Xxxxxxxx Bank Watch Rating, at the
time of determination, of "B" (or higher), and has a combined capital and
surplus and undivided profits of at least $250,000,000,
(iii) commercial paper, maturing not more than one year after the
date of purchase, issued by a corporation (other than the Company or any
Subsidiary or Affiliate) organized and existing under the laws of any state
within the United States of America with a rating, at the time as of which
any determination thereof is to be made, of "P-1" (or higher) according to
Xxxxx'x Investors Service, or "A-1" (or higher) according to Standard &
Poor's Corporation,
(iv) property or assets to be used by the Company or any Subsidiary
in the ordinary course of business,
(v) such other Investments in connection with any Closure Reserves
as may be allowed under applicable state law, and
(vi) loans and advances to officers and employees in the ordinary
course of business.
"PLAN" means any "employee pension benefit plan" (as such term is
defined in section 3 of ERISA) which is or has been established or maintained,
or to which contributions are or have been made, by the Company or any ERISA
Affiliate.
29
"PREFERRED STOCK", as applied to any corporation, shall mean shares
of stock of such corporation which are entitled to preference or priority
over any other shares of such corporation in respect of the payment of
dividends or distribution of assets upon liquidation or both.
"PROPERTIES" means all real property owned, leased or otherwise
used or occupied by the Company or any Subsidiary, wherever located.
"RELATED DOCUMENT" means any Guaranty Agreement with a Subsidiary
and any Contribution Agreement among Subsidiaries.
"RELEASED SUBSIDIARY" is defined in paragraph 5I of this Agreement.
"RENTALS" means for any period all fixed rents or charges
(including as such all payments which the lessee is obligated to make on
termination of the lease or surrender of the property) payable by the Company
or a Subsidiary (as lessee, sublessee, license, franchisee or the like) for
such period under a lease, license, or other agreement for the use or
possession of real or personal property, tangible or intangible, as
determined in accordance with generally accepted accounting principles.
"REQUIRED HOLDER(S)" means the holder or holders of at least 51% of
the aggregate principal amount of the Note from time to time outstanding.
"RESPONSIBLE OFFICER" means the chief executive officer, chief
operating officer, principal financial officer, principal accounting officer,
treasurer or assistant treasurer of the Company or any other senior executive
officer of the Company involved principally in its financial administration
or its controllership function.
"RESTRICTED PAYMENTS" is defined in paragraph 6B of this Agreement.
"SALE AND LEASEBACK TRANSACTION" means any arrangement with any
Person or to which such Person is a party providing for the leasing by the
Company or any Subsidiary of real or personal property which has been or is
to be sold or transferred by the Company or any Subsidiary to any Person to
which funds have been or are to be advanced on the security of such property
or rental obligations of the Company or any Subsidiary.
"SANIFILL AFFILIATE" means any corporation or other entity all of
the Voting Stock (or equivalent voting securities or interests) of which is
owned by Sanifill either directly or through Sanifill Affiliates.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
30
"SENIOR FUNDED DEBT" means the excess, at any time, of (a) Funded
Debt at such time, over (b) Funded Debt that is Subordinated Debt at such
time.
"SENIOR LENDER" means any Person to whom the Company or any
Subsidiary owes any Debt (other than Subordinated Debt).
"SIGNIFICANT HOLDER" means (i) you, so long as you shall hold the
Note or any interest therein, or (ii) any other Person which holds Notes in
the original aggregate principal amount of at least $8,000,000.
"SUBSIDIARY" means any corporation or partnership organized under
the laws of any state of the United States of America which conducts the
major portion of its business in and makes the major portion of its sales to
Persons located in the United States or Canada, whose accounts are or are
required to be consolidated with the Company's under generally accepted
accounting principles and any other corporation or partnership if Investment
in or acquisition of such corporation or partnership is made in compliance
with paragraph 6B(2) and its accounts are or are required to be consolidated
with the Company's under generally accepted accounting principles.
"SUBORDINATED DEBT" means any other unsecured Debt of the Company
to any Person created and outstanding upon terms and conditions satisfactory
to the Significant Holders.
"THIRD PARTY" means all lessees, sublessees, licensees and other
users of the Properties, excluding those users of the Properties in the
ordinary course of the Company's business (consistent with its practices on
the Date of Closing) and on a temporary basis.
"TRANSFEREE" means any direct or indirect transferee of all or any
part of the Note by you under this Agreement.
"VOTING STOCK" means, with respect to any corporation, any shares
of stock of such corporation whose holders are entitled under ordinary
circumstances to vote for the election of directors of such corporation
(irrespective of whether at the time stock of any other class or classes
shall have or might have voting power by reason of the happening of any
contingency).
"WHOLLY-OWNED SUBSIDIARY" means any Subsidiary, all of the Voting
Stock of which shall, at the time of determination, be owned by the Company
or another Wholly Owned Subsidiary.
10B. ACCOUNTING PRINCIPLES, TERMS AND DETERMINATIONS. All
references in this Agreement to "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES"
shall be deemed to refer to generally accepted accounting principles in
effect in the United States at the time of application thereof. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all determinations with respect to accounting matters hereunder
shall be made, and all unaudited financial statements and certificates and
reports as to financial matters required to be furnished hereunder shall be
prepared, in accordance with generally accepted accounting principles,
applied on a basis consistent with the most recent audited consolidated
financial statements of the Company and its Subsidiaries delivered
31
pursuant to clause (ii) of paragraph 5A, subject in the case of, interim
statements to normal year end adjustments and to the absence of footnotes.
11. MISCELLANEOUS.
11A. NOTE PAYMENTS. The Company agrees that it will make payments
of principal of, interest on, the Note, which comply with the terms of this
Agreement, by wire transfer of immediately available funds for credit (not
later than 12:00 p.m., New York City local time, on the date due) to the
account or accounts of such Holder, if any, as are specified in the
INFORMATION SCHEDULE, attached hereto, or in the case of any Holder not named
in the INFORMATION SCHEDULE or any Holder wishing to change the account
specified for it in the INFORMATION SCHEDULE, such account or accounts in the
United States as Sanifill may from time to time designate in writing,
notwithstanding any contrary provision herein or in any Note with respect to
the place of payment.
11B. EXPENSES. The Company agrees to pay and cause to be paid on
demand, and save Sanifill, each Holder and any Transferee harmless against
liability for the payment of all reasonable costs and expenses if any
(including reasonable counsel fees and expenses), in connection with the
enforcement (whether through negotiations, legal proceedings or otherwise) of
this Agreement and the Notes.
(b) THE COMPANY AGREES TO INDEMNIFY, DEFEND AND SAVE HARMLESS
SANIFILL AND ANY HOLDER OF ANY INTEREST IN THE NOTE, AND THEIR RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND ATTORNEYS, AND EACH OF THEM
("INDEMNIFIED PARTIES"), FROM AND AGAINST ALL CLAIMS, LOSSES AND LIABILITIES
GROWING OUT OF OR RESULTING FROM ANY FAILURE OF THE COMPANY TO PERFORM ITS
OBLIGATIONS UNDER THIS AGREEMENT OR THE NOTES (INCLUDING, WITHOUT LIMITATION,
ENFORCEMENT OF THIS AGREEMENT); PROVIDED THAT NO INDEMNIFIED PARTY SHALL BE
ENTITLED TO THE BENEFITS OF THIS SECTION 11B TO THE EXTENT ITS OWN GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT CONTRIBUTED TO ITS LOSS AND FURTHER
PROVIDED, THAT IT IS THE INTENTION OF THE COMPANY TO INDEMNIFY THE
INDEMNIFIED PARTIES AGAINST THE CONSEQUENCES OF THEIR OWN NEGLIGENCE.
(c) The obligations of the Company under Section 11B shall survive
any termination of this Agreement and the payment of the Notes.
The obligations of the Company under this paragraph 11B shall survive the
transfer of the Note or portion thereof or interest therein by Sanifill and
the payment of any Note.
11C. CONSENT TO AMENDMENTS. This Agreement may be amended, and the
Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, if the Company shall obtain the
written consent to such amendment, action or omission to act, of Sanifill or
any subsequent holder of the Note. No course of dealing between the Company
and the holder of any Note nor any delay in exercising any rights hereunder
or under any Note shall operate as a waiver of any rights of any holder of
such Note. As used herein and in the Notes, the term "THIS AGREEMENT" and
references thereto shall mean this Agreement as it may be amended or
supplemented from time to time.
32
11D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; LOST
NOTES. The Notes are issuable in registered form without coupons in
denominations of at least $1,000,000, except as may be necessary to reflect
any principal amount not evenly divisible by $1,000,000. The Company shall
keep at its principal office a register in which the Company shall provide
for the registration of Notes and a record of transfers of the Notes. Upon
surrender for registration of transfer of any Note at the principal office of
the Company, the Company shall, at its expense, execute and deliver one or
more new Notes of like tenor and of a like aggregate principal amount,
registered in the name of such transferee or transferees. At the option of
the holder of any Note, such Note may be exchanged for other Notes of like
tenor and of any authorized denominations, of a like aggregate principal
amount, upon surrender of the Note to be exchanged at the principal office of
the Company. Whenever any Notes are so surrendered for exchange, the Company
shall, at its expense, execute and deliver the Notes which the holder making
the exchange is entitled to receive. Each installment of principal payable
on each installment date upon each new Note issued upon any such transfer or
exchange shall be in the same proportion to the unpaid principal amount of
such new Note as the installment of principal payable on such date on the
Note surrendered for registration of transfer or exchange bore to the unpaid
principal amount of such Note. No reference need be made in any such new
Note to any installment or installments of principal previously due and paid
upon the Note surrendered for registration of transfer or exchange. Every
Note surrendered for registration of transfer or exchange shall be duly
endorsed, or be accompanied by a written instrument of transfer duly
executed, by the holder of such Note or such holder's attorney duly
authorized in writing. Any Note or Notes issued in exchange for any Note or
upon transfer thereof shall carry the rights to unpaid interest and interest
to accrue which were carried by the Note so exchanged or transferred, so that
neither gain nor loss of interest shall result from any such transfer or
exchange. Upon receipt of written notice from the holder of any Note of the
loss, theft, destruction or mutilation of such Note and, in the case of any
such loss, theft or destruction, upon receipt of such holder's unsecured
indemnity agreement, or in the case of any such mutilation upon surrender and
cancellation of such Note, the Company will make and deliver a new Note, of
like tenor, in lieu of the lost, stolen, destroyed or mutilated Note.
11E. PERSONS DEEMED OWNERS; PARTICIPATIONS. Prior to due
presentment for registration of transfer, the Company shall treat the Person
in whose name any Note is registered as the owner and holder of such Note for
the purpose of receiving payment of principal of and interest on such Note
and for all other purposes whatsoever, whether or not such Note shall be
overdue, and the Company shall not be affected by notice to the contrary.
Subject to the preceding sentence, the holder of any Note may from time to
time grant participations in such Note to any Person (other than any Person
not an institutional investor) on such terms and conditions as may be
determined by such holder in its sole and absolute discretion.
11F. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein or made in writing by or on
behalf of the Company in connection herewith shall survive the execution and
delivery of this Agreement and the Note, the transfer by Sanifill of any
interest in the Note or portion thereof or interest therein and the payment of
the Note and may be relied upon by any Transferee, regardless of any
investigation made at any time by or on behalf of Sanifill or any Transferee.
Subject to the preceding sentence, this Agreement, the Acquisition Agreement and
the Note embody the entire agreement and understanding between Sanifill
33
and the Company and supersede all prior agreements and understandings
relating to the subject matter hereof.
11G. SUCCESSORS AND ASSIGNS; TRANSFER PROVISIONS. All covenants
and other agreements in this Agreement contained by or on behalf of any of
the parties hereto shall bind and inure to the benefit of the respective
successors and assigns of the parties hereto (including, without limitation,
any Transferee) whether so expressed or not.
11H. DISCLOSURE TO OTHER PERSONS; CONFIDENTIALITY. The Company
acknowledges that the holder of any interest in the Note may deliver copies
of any financial statements and other documents or information, and disclose
any other information disclosed to such holder, by or on behalf of the
Company or any Subsidiary in connection with or pursuant to this Agreement
only to:
(i) Such holder's directors, officers, employees, agents and
professional consultants,
(ii) any other holder of any interest in the Note,
(iii) any Person to which such holder offers to sell such Note or
any part thereof, PROVIDED THAT each such Person agrees in writing to
observe the confidentiality standards described in this paragraph 11H,
(iv) any Person to which such holder sells or offers to sell a
participation in all or any part of the Note, PROVIDED THAT each such
Person agrees in writing to observe the confidentiality standards described
in this paragraph 11H,
(v) any Person from which Sanifill offers to purchase any security of
the Company, PROVIDED THAT each such Person agrees in writing to observe
the confidentiality standards described in this paragraph 11H,
(vi) any federal or state regulatory authority having jurisdiction
over such holder,
(vii) the National Association of Insurance Commissioners or any
similar organization, or
(viii) any other Person to which such delivery or disclosure may be
necessary or reasonably appropriate (a) in compliance with any law, rule,
regulation or order applicable to such holder, (b) in response to any
subpoena or other legal process or informal investigative demand or (c) in
connection with any litigation to which such holder is a party.
11I. NOTICES. All written communications provided for hereunder
(other than communications provided for under paragraph 2) shall be sent by
first class mail or nationwide overnight delivery service (with charges
prepaid) and
34
(i) if to any Person listed in the INFORMATION SCHEDULE attached
hereto, addressed to it at the address specified for such communications in
such INFORMATION SCHEDULE, or at such other address as it shall have
specified in writing to the Person sending such communication; and
(ii) if to any Holder or holder of any Note which is not a Person
listed in such INFORMATION SCHEDULE, addressed to it at such address as it
shall have specified in writing to the Person sending such communication
or, if any such holder shall not have specified an address, then addressed
to such holder in care of the last holder of such interest in the Note
which shall have so specified an address to the Person sending such
communication; PROVIDED, HOWEVER, that any such communication to the
Company may also, at the option of the sender, be delivered by any other
means either to the Company at its address specified in the INFORMATION
SCHEDULE or to any authorized Officer of the Company.
Any communication pursuant to paragraph 2 shall be made by the method
specified for such communication in paragraph 2, and shall be effective to
create any rights or obligations under this Agreement only if, in the case of
a telephone communication, an Authorized Officer of the party conveying the
information and of the party receiving the information are parties to the
telephone call, and in the case of a telecopier communication, the
communication is signed by an Authorized Officer of the party conveying the
information, addressed to the attention of an Authorized Officer of the party
receiving the information, and in fact received at the telecopier terminal
the number of which is listed for the party receiving the communication in
the INFORMATION SCHEDULE or at such other telecopier terminal as the party
receiving the information shall have specified in writing to the party
sending such information.
11J. PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this Agreement
or the Note to the contrary notwithstanding, any payment of principal of or
interest on the Note that is due on a date other than a Business Day shall be
made on the next succeeding Business Day. If the date for any payment is
extended to the next succeeding Business Day by reason of the preceding
sentence, the period of such extension shall be included in the computation
of the interest payable on such Business Day.
11K. INDEPENDENCE OF COVENANTS. All covenants of the Company
hereunder shall be of independent effect so that if a particular action or
condition is not permitted by any one of such covenants, the fact that it
would be permitted by an exception to, or otherwise be within the other
limitations of, another covenant, shall not avoid the occurrence of an Event
of Default or Default if such action is taken or condition exists.
11L. GOVERNING LAW. IN ACCORDANCE WITH THE PROVISIONS OF SECTION
5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, THIS AGREEMENT SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES
SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK.
35
11M. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
11N. DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
11O. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
11P. MAXIMUM INTEREST PAYABLE. The Company and any holders of an
interest in the Note specifically intend and agree to limit contractually the
amount of interest payable under this Agreement, the Note, any Related
Document and all other instruments and agreement related hereto and thereto
to the maximum amount of interest lawfully permitted to be charged under
applicable law. If applicable law is ever construed so as to tender usurious
any amounts called for under this Agreement, the Note or any Related
Document, or contracted for, charged, taken, reserved or received with
respect to the extension of credit evidenced hereby and thereby, or if
acceleration of maturity of the Note or if any prepayment by the Company
results in the Company having paid, or demand having been made on the Company
to pay, any interest in excess of that permitted by applicable law, then all
excess amounts theretofore received by Sanifill shall be credited on the
principal balance of the Note (or, if the Note have been or would thereby be
repaid in full, refunded to the Company), and the provisions of this
Agreement, the Note and any Related Document or demand on the Company shall
immediately be deemed reformed and the amounts thereafter collectible
hereunder and thereunder shall immediately be reduced, without the necessity
of the execution of any new document, so as to comply with applicable law,
but so as to permit the recovery of the fullest amount otherwise called for
hereunder and thereunder. The right to accelerate maturity of the Note does
not include the right to accelerate any interest which has not otherwise
accrued on the date of such acceleration, and Sanifill does not intend to
collect any unearned interest in the event of acceleration. All sums paid or
agreed to be paid to any other holders of an interest in the Note for the
use, forbearance or detention of the indebtedness evidenced hereby and
thereby shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of such indebtedness
until payment in full so that the rate or amount of interest of account of
such indebtedness does not exceed the applicable usury ceiling. As used
herein, the term "INTEREST" means interest as determined under applicable
law, regardless of whether denominated as interest in this Agreement, the
Note or any Related Document. The provisions of this Paragraph 11P shall
control over all other provisions of this Agreement, any Note and any Related
Document.
11Q. LIMITED RECOURSE. No shareholder, officer, director, officer
or agent of the Company or any Subsidiary shall have any liability on the
Note or under any Related Document except to the extent such Person is a
party thereto or as otherwise pursuant to a written agreement expressly
assumed such liability. To be effective, such agreement must refer to the
Note or such Related
36
Document and contain an unequivocal undertaking to assume liability
thereunder. Each of you and each Transferee by its acceptance of the Note,
hereby waives and releases such liability.
If you agree to the foregoing, please sign the form of acceptance
on the enclosed counterpart of this letter and return the same to the
Company, whereupon this letter shall become a binding agreement between the
Company and you.
Very truly yours,
US LIQUIDS INC.
By /s/ W. Xxxxxxx Xxx
-----------------------------------------
Name: W. Xxxxxxx Xxx
--------------------------------------
Title: President
--------------------------------------
The foregoing Agreement is
hereby accepted as of the
date first above written.
SANIFILL, INC.
By /s/ Xxxxx X. Xxxxxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxxxxx
------------------------------
Title: Assistant Secretary
------------------------------
37
INFORMATION
SANIFILL THE COMPANY
SANIFILL, INC. US LIQUIDS INC.
(1) All payments on account of the (1) Address for Notices:
Note shall be made by wire transfer
of immediately available funds for -----------------------------------
credit to:
-----------------------------------
Account No.
-------------- -----------------------------------
-------------------------- Attention: President
--------------------------
(2) Receipt of telephonic or facsimile
notices:
--------------------------
(713)
-------------------------- ---------------------
-------------------------- (713)
---------------------
--------------------------
(3) Authorized Officers:
(2) Address for all notices relating
to payments: ----------------------
Sanifill, Inc.
0000 Xxxxx Xxxxxxx
Xxxxx 000, Xxxxxxx Xxxx.
Xxxxxxx, Xxxxx 00000
Attention:
(4) Recipient of telephonic or
facsimile prepayment notices:
--------------------------
(713)
---------------------
(713)
---------------------
(5) Tax Identification No.:
-----------
(6) Authorized Officers: Xxxxxxx X.
Xxxxxx, H. Xxxxxx Xxxxxx
38
