EXHIBIT 10.9.1
[Composite Conformed Copy]
AMENDMENT NO. 1 AND CONSENT
dated as of December 1, 1993
to
CREDIT AGREEMENT
dated as of March 20, 1992
among
SAFETY-KLEEN CORP.
the BANKS signatory thereto
and
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Agent
AMENDMENT NO. 1 AND CONSENT TO CREDIT AGREEMENT
THIS AMENDMENT NO. 1 AND CONSENT dated as of December 1, 1993 among
SAFETY-KLEEN CORP., the BANKS signatory hereto and THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION), as Agent.
W I T N E S S E T H
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WHEREAS, the parties hereto have entered into a Credit Agreement dated as of
March 20, 1992 (the "Agreement");
WHEREAS, in connection with the circumstances described in Exhibit A hereto
(the "Charge"), the Borrower will breach Section 8.01 and Section 8.04 of the
Agreement;
WHEREAS, in order to avoid such breaches of the Agreement, the Borrower has
requested, and the Banks have agreed, to amend Section 8.01 and waive compliance
with Section 8.04 of the Agreement, as more fully set forth below; and
WHEREAS, the parties hereto desire to amend Section 11.01 of the Agreement in
certain respects, as more fully set forth below;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions.
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Unless otherwise specifically defined herein, each term used herein which is
defined in the Agreement shall have the meaning assigned to such term in the
Agreement.
SECTION 2. Consent to Charge.
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The Borrower and the Banks hereby agree as follows:
(a) Section 8.01 is hereby amended to delete the words "$425,000,000 plus
50%" and insert in their stead the words "$289,000,000 plus 50%."
(b) Any non-compliance with Section 8.04 of the Agreement for the last fiscal
quarter of 1993 is hereby waived.
(c) For the purposes of clause (a) in the definition of "Material Adverse
Effect", the Charge will not be deemed to be a negative impact.
SECTION 3. Amendment of Section 11.01 of the Agreement.
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Section 11.01 of the Agreement is amended to read as follows:
"Section 11.01. Amendments and Waivers. Except as otherwise expressly
provided in this Agreement, any provision of this Agreement may be amended or
modified only by an instrument in writing signed by the Borrower, the Agent and
the Required Banks, or by the Borrower and the Agent acting with the consent of
the Required Banks and any provision of this Agreement may be waived by the
Required Banks or by the Agent acting with the consent of the Required Banks;
provided that no amendment, modification or waiver shall, unless by an
instrument signed by all of the Banks or by the Agent acting with the consent of
all of the Banks: (a) increase or extend the term, or extend the time or waive
any requirement for the reduction or termination, of the Commitments, (b) extend
the date fixed for the payment of principal of or interest on any Loan, (c)
reduce the amount of any payment of principal thereof or the rate at which
interest is payable thereon or any fee payable hereunder, (d) alter the terms of
this Section 11.01, (e) amend the definition of the term 'Required Banks' or (f)
waive any of the documentary conditions precedent set forth in Section 4.01
hereof and provided, further, that any amendment of Article 10 hereof or any
amendment which increases the obligations of the Agent hereunder shall require
the consent of the Agent. No failure on the part of the Agent or any Bank to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof or preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law."
SECTION 4. Representations.
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The Borrower represents and warrants:
(a) Each of the representations and warranties contained in Article 5 of
the Agreement is true and correct on the date hereof as though made on and as
of the date hereof and as if each reference in such Article 5 to "this
Agreement" and "the Notes" included reference to this Amendment No. 1 and
Consent and no event has occurred and is continuing which constitutes a Default
or Event of Default.
(b) The execution, delivery and performance by the Borrower of the
Agreement, as amended hereby, have been duly authorized by all necessary
corporate action.
(c) Upon the effectiveness of this Amendment No. 1 and Consent pursuant to
Section 5, the Agreement as amended hereby, will constitute a valid and binding
obligaton of the Borrower.
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SECTION 5. Effectiveness.
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This Amendment No. 1 and Consent shall be effective as of the date hereof
when the parties hereto shall have each executed a counterpart hereof and
delivered the same to the Agent.
SECTION 6. Effect of Amendment on Agreement; Ratification and Confirmation
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of Agreement, as Amended.
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On and after the effective date of this Amendment No. 1 and Consent each
reference in the Agreement to "this Agreement", "hereunder", "hereof", or words
of like import referring to the Agreement, and each reference in the Notes
referring to "the Agreement", "thereunder", "thereof", or words of like import
referring to the Agreement, shall mean the Agreement as amended by this
Amendment No. 1 and Consent. The Agreement, as amended by this Amendment No. 1
and Consent, is and shall continue to be in full force and effect and is hereby
in all respects ratified and confirmed.
SECTION 7. Amendment Fee.
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The Borrower will pay to the Banks a non-refundable amendment fee, in an
amount acceptable to the Agent in its sole discretion. The amendment fee shall
be payable to the Banks pro rata in accordance with their respective
Commitments. The amendment fee shall be due and payable on December 31, 1993,
and fully earned when due. If the amendment fee is not fully paid when due, this
Amendment No. 1 and Consent shall become void and of no effect.
SECTION 8. Counterparts.
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This Amendment No. 1 and Consent may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
SECTION 9. Section Headings.
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The Section headings in this Amendment No. 1 and Consent are inserted for
convenience only and shall not be part of this instrument.
SECTION 10. GOVERNING LAW.
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THIS AMENDMENT NO. 1 AND CONSENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 11. Entire Agreement.
----------------
This Amendment No. 1 and Consent and the Agreement as amended hereby
constitute the entire agreement and understanding between the parties hereto and
supersede any and all prior agreements and understandings relating to the
subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 and
Consent to be executed as of the date first above written.
SAFETY-KLEEN CORP.
By:/s/ Laurence M. Rudnick
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Title: Treasurer
By:
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Title:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION), as Agent
By:/s/ Thomas T. Daniels
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Title: Vice President
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By:/s/ Thomas T. Daniels
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Title: Vice President
THE NORTHERN TRUST COMPANY
By:/s/ John R. Falb
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Title: Vice President
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THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Armund J. Schoen, Jr.
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Title: Vice President
NBD BANK, N.A.
By: /s/ Steven K. Wagner
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Title: Second Vice President
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EXHIBIT A
Safety-Kleen Corp.
1000 N. Randall Road
Elgin, Illinois 60123
[Safety-Kleen Logo] N E W S (708) 697-8460
For further information:
FOR RELEASE: IMMEDIATELY CONTACT: ROBERT W. WILLMSCHEN
(708) 468-2002
LARRY RUDNICK
(708) 468-2408
SAFETY-KLEEN CORP. REPORTS RESTRUCTURING PLAN
ELGIN, IL, December 13, 1993 -- Safety-Kleen Corp. (NYSE: SK) announced today
that it has developed a restructuring plan based on conversion of its core
Parts Cleaner Service to new technology and a comprehensive review of all of
its operations. The Company had previously announced on October 4, 1993 that it
would develop such a plan. The Company said it would record a special charge of
$229 million ($136 million after tax or $2.36 per share) in the fourth quarter
related to the restructuring plan and a change in accounting for the cost of
environmental remediation at the Company's facilities. Further, the Company said
it expects a net earnings benefit in 1994 in the range of $12 million to $15
million as a direct result of these actions.
The Company said that the pretax special charge includes $179 million related to
the restructuring plan and $50 million related to a change in accounting for
remediation costs. It further said that the pretax restructuring charge of $179
million includes $117 million of asset writedowns and $62 million of other
restructuring charges. The after-tax total special charge of $136 million
includes an estimated $39 million of costs that will require cash outflows in
the future ($3 million in 1993 and 1994 and $36 million thereafter) and $97
million of non-cash items.
Donald W. Brinckman, Chairman and Chief Executive Officer of Safety-Kleen, said,
"We have been extremely disappointed with our poor operating results during
1993. As a result, we undertook a comprehensive review of our operations and
developed a strategic restructuring plan which we believe better focuses the
Company on our core environmental services and reduces our current cost
structure. We believe it also improves the value of these services, particularly
our parts cleaner services, to our customers."
"A major factor in our sluggish earnings performance in 1993 is the lack of
growth in our core parts cleaner service," Brinckman added. "We believe this is
due to a number of factors, including customers' desires to minimize hazardous
waste generation and/or reduce costs, as well as the sluggish economy. We
believe that the new filtration parts cleaner service we have been test
marketing represents a substantial increase in the value of our service and
responds to the changing
needs of the marketplace. The new parts cleaner extends the life of the solvent
and reduces the number of annual services required. As a result, the customer
generates less waste and the annual cost of the service is less. We have priced
the service such that the customer, on an annual basis, will pay approximately
10% less than he currently pays for our standard parts cleaner service.
However, since the unit is serviced less frequently, our annual service cost is
also lower. If the customer uses the recommended service intervals, we expect
our annual gross profit margins on the new service will be higher than on the
existing service."
Brinckman said, "As part of the restructuring plan, we have provided for the
writedown of the cost of parts cleaner machines which we expect to replace
with the new filtration parts cleaners, as well as the cost of converting the
customers to the new machines. We plan a major effort to convert a large
portion of our current parts cleaner service customers to the new filtration
parts cleaner service over the next two to three years. This new service has
been well received in our test markets and we believe it will result in better
customer retention and market penetration."
"The anticipated conversion of a large portion of our parts cleaners to the new
technology will reduce the amount of solvent recycling capacity required,"
Brinckman said. "We plan to close our Clayton, New Jersey recycling plant in
1994. We have provided for this as well as certain other capacity reductions in
our restructuring charge."
Brinkckman said, "With the anticipated future collection of less spent solvent
from our parts cleaner service, we plan to convert many of our branch permitted
hazardous waste storage facilities to transfer locations, eliminating the need
for permits required under the Resource Conservation and Recovery Act (RCRA),
thus reducing unnecessary operating costs driven by RCRA-imposed requirements.
The restructuring charge includes the write-off of the capitalized cost of the
permits at the affected facilities."
The Company said that other elements of the restructuring plan include the
following:
. a workforce reduction of approximately 375 jobs
. discontinuing certain minor business activities, including the sale of
Allied Products, that are not essential to providing customers with
quality environmental services
. writedown of goodwill and other assets of certain business operations
that have sustained economic impairment affected by changes in market
and regulatory conditions
. consolidation of the Company's accumulation and distribution centers to
improve operating efficiencies
The Company said that the $50 million charge represents a change in accounting
principles and a change in estimate for remediation costs relating to all
operating and previously-closed sites prior to conducting detailed individual
site investigations to ascertain the existence and extent of contamination.
Brinckman said, "We expect a net earnings benefit in 1994 in the range of $12
million to $15 million as a direct result of cost reductions and other actions
resulting from the restructuring plan and accounting change. This does not
include the impact of potential higher margins and growth as a result of our new
filtration parts cleaner service or the impact of potential growth in any of our
other businesses."
"We also plan to keep a tight rein on capital expenditures," Brinckman added.
"Our capital expenditures are currently expected to be in the range of $100
million in both 1993 and 1994, down from $168 million in 1991 and $143 million
in 1992."
Brinckman concluded, "We believe that the actions we have taken will enhance
the value of our services to our customers and provide better returns for our
shareholders."
Safety-Kleen Corp. is the world's largest recycler of automotive and industrial
hazardous and non-hazardous fluids. Safety-Kleen's common stock is traded on the
New York Stock Exchange under the trading symbol SK.
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