<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 22, 1998
REGISTRATION NO. 333-53169
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
OVERNITE CORPORATION
(Exact name of Registrant as specified in its charter)
VIRGINIA 6719 APPLIED FOR
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code) Identification Number)
incorporation or
organization)
1000 SEMMES AVENUE
P.O. BOX 1216
RICHMOND, VIRGINIA 23218
(804) 231-8000
(Address, including zip code and telephone number, including area code, of
Registrant's principal executive offices)
---------------
MR. PATRICK D. HANLEY
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
1000 SEMMES AVENUE
P.O. BOX 1216
RICHMOND, VIRGINIA 23218
(804) 231-8000
(Name, address, including zip code and telephone number, including area code,
of agent for service)
---------------
Copies to:
DAVID M. CARTER, ESQ. WILLIAM P. ROGERS, JR., ESQ.
HUNTON & WILLIAMS CRAVATH, SWAINE & MOORE
RIVERFRONT PLAZA, EAST TOWER 825 EIGHTH AVENUE
951 EAST BYRD STREET NEW YORK, NEW YORK 10019
RICHMOND, VIRGINIA 23219 (212) 474-1270
(804) 788-8200
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 3 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF RICHMOND, COMMONWEALTH OF VIRGINIA ON JULY 22, 1998.
Overnite Corporation
(Registrant)
/s/ Gordon S. Mackenzie
By: __________________________________
GORDON S. MACKENZIE
SENIOR VICE PRESIDENT-OPERATIONS
AND DIRECTOR
SIGNATURE TITLE DATE
* Chairman of the
- ------------------------------------ Board of July 22, 1998
LEO H. SUGGS Directors, Chief
Executive Officer
and President
(Principal
Executive Officer)
* Senior Vice
- ------------------------------------ President, Chief July 22, 1998
PATRICK D. HANLEY Financial Officer
and Director
(Principal
Financial and
Accounting
Officer)
Senior Vice
/s/ Gordon S. Mackenzie President-- July 22, 1998
- ------------------------------------ Operations and
GORDON S. MACKENZIE Director
Senior Vice
- ------------------------------------ President-- July 22, 1998
JOHN W. FAIN Marketing and
Sales and Director
* By /s/ David M. Carter
- ------------------------------------ July 22, 1998
DAVID M. CARTER ATTORNEY-IN-FACT
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
1.1 Form of Underwriting Agreement to be entered into among the
Company, Union Pacific and the Underwriters
3.1 Company's Articles of Incorporation**
3.2 Company's Bylaws**
4.1 Specimen of Common Stock Certificate
5 Opinion of Hunton & Williams with respect to legality
10.1 Form of Bank Credit Facility
10.2 Stock Compensation Plan
10.3 Stock Purchase and Indemnification Agreement
10.4 Services Agreement
10.5 Tax Allocation Agreement
10.6 Computer and Information Technology Agreements
10.7 Pension Plan Agreement
21 Subsidiaries of the Registrant**
23.1 Consent of Deloitte & Touche LLP**
23.2 Consent of Hunton & Williams (included in Exhibit 5)
24 Power of attorney (included on Page II-4)**
27 Financial Data Schedule**
</TABLE>
- --------
*To be filed by amendment
**Previously filed
<PAGE>
EXHIBIT 1.1
_______________ SHARES
OVERNITE CORPORATION
COMMON STOCK, PAR VALUE $.01 PER SHARE
UNDERWRITING AGREEMENT
July [ ], 1998
<PAGE>
July [ ], 1998
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
Donaldson, Lufkin & Jenrette
Securities Corporation
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Morgan Stanley & Co. International Limited
Credit Suisse First Boston (Europe) Limited
Donaldson, Lufkin & Jenrette International
Merrill Lynch International
c/o Morgan Stanley & Co. International Limited
25 Cabot Square
Canary Wharf
London E14 4QA
ENGLAND
Dear Sirs and Mesdames:
Overnite Corporation, a Virginia corporation (the "COMPANY"), proposes
to issue and sell to the several Underwriters, (as defined below)
________________ shares of its Common Stock, par value $.01 per share (the "FIRM
SHARES").
It is understood that, subject to the conditions hereinafter stated,
____________ Firm Shares (the "U.S. FIRM SHARES") will be sold to the several
U.S. Underwriters named in Schedule I hereto (the "U.S. UNDERWRITERS") in
connection with the offering and sale of such U.S. Firm Shares in the United
States and Canada to United States and Canadian Persons (as such terms are
defined in the Agreement Between U.S. and International Underwriters of even
date herewith), and __________ Firm Shares (the "INTERNATIONAL SHARES") will be
sold to the several International Underwriters named in Schedule II hereto (the
"INTERNATIONAL UNDERWRITERS") in connection with the offering and sale of such
International Shares outside the United States and Canada to persons other than
United States and Canadian Persons. Morgan Stanley & Co. Incorporated, Credit
Suisse First Boston Corporation, Donaldson, Lufkin & Jenrette Securities
Corporation and Merrill Lynch, Pierce, Fenner & Smith Incorporated shall act as
representatives (the "U.S. REPRESENTATIVES") of the several U.S. Underwriters,
and Morgan Stanley & Co. International Limited, Credit Suisse First Boston
(Europe)
<PAGE>
Limited, Donaldson, Lufkin & Jenrette International and Merrill Lynch
International shall act as representatives (the "INTERNATIONAL REPRESENTATIVES")
of the several International Underwriters. The U.S. Underwriters and the
International Underwriters are hereinafter collectively referred to as the
Underwriters.
The Company also proposes to issue and sell to the several U.S.
Underwriters not more than an additional __________ shares of its Common Stock,
par value $.01 per share (the "ADDITIONAL SHARES"), if and to the extent that
the U.S. Representatives shall have determined to exercise, on behalf of the
U.S. Underwriters, the right to purchase such shares of common stock granted to
the U.S. Underwriters in Section 3 hereof. The Firm Shares and the Additional
Shares are hereinafter collectively referred to as the "SHARES". The shares of
Common Stock, par value $.01 per share, of the Company to be outstanding after
giving effect to the sales contemplated hereby are hereinafter referred to as
the "COMMON STOCK".
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement relating to the Shares. The registration
statement contains two prospectuses to be used in connection with the offering
and sale of the Shares: the U.S. prospectus, to be used in connection with the
offering and sale of Shares in the United States and Canada to United States and
Canadian Persons, and the international prospectus, to be used in connection
with the offering and sale of Shares outside the United States and Canada to
persons other than United States and Canadian Persons. The international
prospectus is identical to the U.S. prospectus except for the outside front
cover page. The registration statement as amended at the time it becomes
effective, including the information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A under
the Securities Act of 1933, as amended (the "SECURITIES ACT"), is hereinafter
referred to as the "REGISTRATION STATEMENT"; the U.S. prospectus and the
international prospectus in the respective forms first used to confirm sales of
Shares are hereinafter collectively referred to as the "PROSPECTUS". If the
Company has filed an abbreviated registration statement to register additional
shares of Common Stock pursuant to Rule 462(b) under the Securities Act (the
"RULE 462 REGISTRATION STATEMENT"), then any reference herein to the term
"Registration Statement" shall be deemed to include such Rule 462 Registration
Statement.
In connection with the offering of the Shares contemplated hereby, the
Company, Union Pacific Corporation, a Utah corporation ("UPC"), Overnite
Holding, Inc., a
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<PAGE>
Delaware corporation and wholly owned subsidiary of UPC ("OHI"), and Overnite
Transportation Company, a Virginia corporation and wholly owned subsidiary of
OHI ("OTC"), have entered into the transactions described in the Prospectus
under the caption "The Acquisition". Such transactions are referred to herein as
the "ACQUISITION".
1. Representations and Warranties of the Company, OHI and OTC. The
Company, OHI and OTC, jointly and severally, represent and warrant to and agree
with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or threatened by the
Commission.
(b) (i) The Registration Statement, when it became effective, did
not contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) the Registration Statement and the Prospectus
comply and, as amended or supplemented, if applicable, will comply in all
material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder and (iii) the Prospectus does not
contain and, as amended or supplemented, if applicable, will not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that the representations
and warranties set forth in this paragraph do not apply to statements or
omissions in the Registration Statement or the Prospectus based upon
information relating to any Underwriter furnished to the Company or UPC in
writing by such Underwriter through you expressly for use therein.
(c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the failure
to be so qualified or be in good standing would not have a
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<PAGE>
material adverse effect on the Company, OHI and OTC, taken as a whole.
(d) Each of OHI and OTC has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to
own its property and to conduct its business as described in the Prospectus
and is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
material adverse effect on the Company, OHI and OTC, taken as a whole; all
of the issued shares of capital stock of OHI and OTC have been duly and
validly authorized and issued, are fully paid and non-assessable and are
owned directly or indirectly by the UPC, OHI or OTC, as applicable, free
and clear of all liens, encumbrances, equities or claims.
(e) (i) The Company has no subsidiaries; and (ii) OTC is the only
subsidiary of OHI.
(f) This Agreement has been duly authorized, executed and delivered
by each of the Company, OHI and OTC.
(g) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus.
(h) Prior to the issuance of the Shares, (i) the Company has issued
one hundred shares of its capital stock to [ ] in connection with the
approval of certain share option plans (ii) has not agreed, orally or in
writing, to issue or sell any shares of capital stock to any person, other
than pursuant to this Agreement or as set forth in the Prospectus and (iii)
has not conducted any business or incurred any liabilities other than as
described in the Prospectus; upon the issuance of the Shares, the Company
will have the capitalization as set forth in the Prospectus, and upon the
borrowing of funds under the Bank Credit Facility (as defined in the
Prospectus) to complete the Acquisition, as set forth in the Prospectus,
the Company will have the adjusted capitalization shown therein.
(i) The Shares of the Company have been duly authorized and, when
issued and delivered in accordance with the terms of this Agreement, will
be validly
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<PAGE>
issued, fully paid and non-assessable, and the issuance of such Shares will
not be subject to any preemptive or similar rights.
(j) Each of the Tax Allocation Agreement, Services Agreement, Stock
Purchase and Indemnification Agreement, the Computer and Information
Technology Agreements and Pension Plan Agreement (the "INTERCOMPANY
AGREEMENTS") conforms to its description contained in the Prospectus and
has been duly authorized by the Company, OHI and OTC, as applicable, and
when duly executed and delivered by them, each will be a legal, valid and
binding agreement of the Company, OHI and OTC enforceable against them in
accordances with its respective terms.
(k) The execution and delivery by each of the Company, OHI and OTC
of, and the performance by each of the Company, OHI and OTC of its
obligations under, this Agreement and the Intercompany Agreements will not
contravene any provision of applicable law or the articles of incorporation
or by-laws of the Company, OHI or OTC or any agreement or other instrument
binding upon the Company, OHI or OTC that is material to the Company, OHI
and OTC, taken as a whole, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company,
OHI or OTC, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company, OHI or OTC of its obligations under this
Agreement or pursuant to the Intercompany Agreements or in connection with
the Acquisition, except such as may be required by the securities or Blue
Sky laws of the various states in connection with the offer and sale of the
Shares.
(l) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company, OHI and OTC, taken as a whole, from that set
forth in the Prospectus (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement).
(m) There are no legal or governmental proceedings pending or
threatened to which the Company, OHI or OTC is a party or to which any of
the properties of the Company, OHI or OTC is subject that are required to
be described in the Registration Statement or the Prospectus and are not so
described or any statutes, regulations, contracts or other documents that
are
5
<PAGE>
required to be described in the Registration Statement or the Prospectus or
to be filed as exhibits to the Registration Statement that are not
described or filed as required.
(n) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, complied when so filed in
all material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder.
(o) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described
in the Prospectus, will not be an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
(p) The Company, OHI and OTC (i) are in compliance with any and all
applicable foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or hazardous
or toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL
LAWS"), (ii) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, singly or in
the aggregate, have a material adverse effect on the Company, OHI and OTC,
taken as a whole.
(q) Except as accounted for in the financial statements included in
the Prospectus, there are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance
with Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties) which would, singly or in the aggregate, have a material adverse
effect on the Company, OHI and OTC, taken as a whole.
(r) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the
Company
6
<PAGE>
to file a registration statement under the Securities Act with respect to
any securities of the Company or to require the Company to include such
securities with the Shares registered pursuant to the Registration
Statement.
(s) After giving effect to the Acquisition, (i) the Company will not
own any equity interest, directly or indirectly, in any company or other
entity other than OHI, which will be a direct wholly owned subsidiary of
the Company, and OTC, which will be an indirect wholly owned subsidiary of
the Company, (ii) OHI will not own any equity interest, directly or
indirectly, in any company or other entity other than OTC, which will be a
direct wholly owned subsidiary of OHI and (iii) the Company and OHI will
have good and valid title to the stock of OHI and OTC, respectively, free
and clear of all liens, encumbrances, equities or claims.
(t) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) the Company,
OHI and OTC have not incurred any material liability or obligation, direct
or contingent, nor entered into any material transaction not in the
ordinary course of business; and (ii) there has not been any material
change in the capital stock, short-term debt or long-term debt of the
Company, OHI and OTC, except in each case as described in the Prospectus.
(u) The Company, OHI and OTC have good and marketable title in fee
simple to all real property and good and marketable title to all personal
property owned by them which is material to the business of the Company,
OHI and OTC, in each case free and clear of all liens, encumbrances and
defects except such as are described in the Prospectus or such as do not
materially affect the value of such property and do not interfere with the
use made and proposed to be made of such property by the Company, OHI and
OTC; and any real property and buildings held under lease by the Company,
OHI and OTC are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use
made and proposed to be made of such property and buildings by the Company,
OHI and OTC, in each case except as described in the Prospectus.
(v) The Company, OHI and OTC own or possess, or can acquire on
reasonable terms, all material patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other
unpatented
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<PAGE>
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names currently employed
by them in connection with the business now operated by them, and neither
the Company; neither OHI nor OTC has received any notice of infringement of
or conflict with asserted rights of others with respect to any of the
foregoing which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a material adverse
affect on the Company, OHI and OTC, taken as a whole.
(w) Except as described in the Prospectus, no material labor dispute
with the employees of the Company, OHI or OTC exists, or, to the knowledge
of the Company, is imminent.
(x) The Company, OHI and OTC are insured by the insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which they
are engaged; neither the Company, OHI nor OTC has been refused any
insurance coverage sought or applied for; and neither the Company, OHI nor
OTC has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a material adverse effect on the
Company, OHI and OTC, taken as a whole, except as described in the
Prospectus.
(y) The Company, OHI and OTC possess all certificates, authorizations
and permits issued by the appropriate federal, state or foreign regulatory
authorities necessary to conduct their respective business in all material
respects, and neither the Company, OHI nor OTC has received any notice of
proceedings relating to the revocation or modification of any such
certificate, authorization or permit which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would have a
material adverse effect on the Company, OHI and OTC, taken as a whole,
except as described the Prospectus.
(z) The Company, OHI and OTC maintain a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions
are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii)
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<PAGE>
access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
2. Representations and Warranties of UPC. UPC represents and
warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or threatened by the
Commission.
(b) With respect only to the statements and information regarding UPC
under the captions (i) "Prospectus Summary--Background to the Offering,"
(ii) "The Acquisition" and (iii) "Agreements with Union Pacific
Corporation", or otherwise contained in the Prospectus and pertaining to
UPC's ownership of the capital stock of OHI (such statements and
information collectively, the "UPC Information"), (A) the Registration
Statement, when it became effective, did not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (B) the
Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the
Securities Act and the applicable rules and regulations of the Commission
thereunder and (C) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties set
forth in this paragraph do not apply to statements or omissions in the
Registration Statement or the Prospectus based upon information relating to
any Underwriter furnished to UPC in writing by such Underwriter through you
expressly for use therein.
(c) Each of OHI and OTC has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation and has the corporate power and authority
9
<PAGE>
to own its property and to conduct its business as described in the
Prospectus.
(d) This Agreement has been duly authorized, executed and delivered by
UPC.
(e) (i) The outstanding shares of common stock of OTC have been duly
authorized and are validly issued, fully paid and non-assessable; and OHI
has good and valid title to the stock of OTC, free and clear of all liens,
encumbrances, equities or claims, and (ii) the outstanding shares of common
stock of OHI have been duly authorized and are validly issued, fully paid
and non-assessable; and UPC has good and valid title to the stock of OHI,
free and clear of all liens, encumbrances, equities or claims.
(f) The Intercompany Agreements conform to their description
contained in the Prospectus and have been duly authorized by UPC, and when
duly executed and delivered by it, each will be a legal, valid and binding
agreement of UPC, enforceable against it in accordances with its respective
terms.
(g) The execution and delivery by UPC of, and the performance by UPC
of its obligations under, this Agreement and the Intercompany Agreements
will not contravene any provision of applicable law or the articles of
incorporation or by-laws of UPC or any agreement or other instrument
binding upon UPC or any of its subsidiaries (excluding OHI and OTC) that is
material to UPC and its subsidiaries, taken as a whole, or any judgment,
order or decree of any governmental body, agency or court having
jurisdiction over UPC or any of its subsidiaries, and no consent, approval,
authorization or order of, or qualification with, any governmental body or
agency is required for the performance by UPC of its obligations under this
Agreement or pursuant to the Intercompany Agreements or in connection with
the Acquisition, except such as may be required by the securities or Blue
Sky laws of the various states in connection with the offer and sale of the
Shares.
(h) There are no legal or governmental proceedings pending or
threatened to which UPC or any of its subsidiaries (excluding OHI and OTC)
is a party or to which any of the properties of UPC or any of its
subsidiaries (excluding OHI and OTC) is subject that are required to be
described in the Registration Statement or the Prospectus and are not so
described or any statutes, regulations, contracts or other documents to
which UPC is subject or by which UPC is bound that
10
<PAGE>
are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement that
are not described or filed as required.
(i) There are no contracts, agreements or understandings between UPC
and any person granting such person the right to require the Company to
file a registration statement under the Securities Act with respect to any
securities of the Company or to require the Company to include such
securities with the Shares registered pursuant to the Registration
Statement.
(j) UPC has full power and authority to transfer the stock of OHI to
the Company in connection with the Acquisition, and the transfer of such
stock has been duly authorized by all necessary corporate and stockholder
action on the part of UPC, and upon the closing of the Acquisition, UPC
will transfer all of the capital stock of OHI to the Company free and clear
of all liens, encumbrances, equities or claims on the capital stock of OHI
or OTC.
3. Agreements to Sell and Purchase. The Company hereby agrees to
sell to the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company the respective numbers of Firm Shares set forth in Schedules I and II
hereto opposite its names at U.S.$_____/1/ a share ("PURCHASE PRICE").
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the U.S. Underwriters the Additional Shares, and the U.S. Underwriters shall
have a one-time right to purchase, severally and not jointly, up to __________
Additional Shares at the Purchase Price. If the U.S. Representatives, on behalf
of the U.S. Underwriters, elect to exercise such option, the U.S.
Representatives shall so notify the Company in writing not later than 30 days
after the date of this Agreement, which notice shall specify the number of
Additional Shares to be purchased by the U.S. Underwriters and the date on which
such shares are to be purchased. Such date may be the same as the Closing Date
(as defined below) but not earlier than the Closing Date nor later than ten
business days after the date of such notice. Additional Shares may be purchased
as provided in Section 5 hereof
- ---------------
/1/ Offering price less underwriting fee, management fee and selling
concession.
11
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solely for the purpose of covering over-allotments made in connection with the
offering of the U.S. Firm Shares. If any Additional Shares are to be purchased,
each U.S. Underwriter agrees, severally and not jointly, to purchase the number
of Additional Shares (subject to such adjustments to eliminate fractional shares
as the U.S. Representatives may determine) that bears the same proportion to the
total number of Additional Shares to be purchased as the number of U.S. Firm
Shares set forth in Schedule I hereto opposite the name of such Underwriter
bears to the total number of U.S. Firm Shares.
Each of the Company and UPC hereby agrees that, without the prior
written consent of Morgan Stanley & Co. Incorporated on behalf of the
Underwriters, it will not, during the period ending 180 days after the date of
the Prospectus, except with respect to employee stock option plans in effect as
of the date of this Agreement, (i) offer, pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, lend, or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or (ii) enter
into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of the Common Stock, whether
any such transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise. The
foregoing sentence shall not apply to the Shares to be sold hereunder.
4. Terms of Public Offering. The Company is advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Company is further
advised by you that the Shares are to be offered to the public initially at
U.S.$_____ a share (the "PUBLIC OFFERING PRICE") and to certain dealers selected
by you at a price that represents a concession not in excess of U.S.$____ a
share under the Public Offering Price, and that any Underwriter may allow, and
such dealers may reallow, a concession, not in excess of U.S.$____ a share, to
any Underwriter or to certain other dealers.
5. Payment and Delivery. Payment for the Firm Shares shall be made
to the Company in Federal or other funds immediately available against delivery
of such Firm Shares for the respective accounts of the several Underwriters at
10:00 a.m., New York City time, on
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____________, 1998,/2/ or at such other time on the same or such other date, not
later than _________, 1998,/3/ as shall be designated in writing by you. The
time and date of such payment are hereinafter referred to as the "CLOSING DATE".
Payment for any Additional Shares shall be made to the Company in
Federal or other funds immediately available against delivery of such Additional
Shares for the respective accounts of the several Underwriters at 10:00 a.m.,
New York City time, on the date specified in the notice described in Section 3
or at such other time on the same or on such other date, in any event not later
than _______, 1998,/4/ as shall be designated in writing by the U.S.
Representatives. The time and date of such payment are hereinafter referred to
as the "OPTION CLOSING DATE".
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.
6. Conditions to the Underwriters' Obligations. The obligations of
the Company to sell the Shares to the Underwriters and the several obligations
of the Underwriters to purchase and pay for the Shares on the Closing Date are
subject to the condition that the Registration Statement, if not already
effective, shall have become effective not later than 5 p.m. (New York City
time) on the date hereof.
The several obligations of the Underwriters are subject to the
following further conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date there shall not have occurred any change, or any
development involving a prospective change, in the condition,
- ---------------
/2/ Date 3 business days or, in the event the offering is priced after 4:30
p.m. Eastern Time, 4 business days after date of Underwriting Agreement.
/3/ Date 5 business days after the date inserted in accordance with note 2
above.
/4/ Date 10 business days after the expiration of the greenshoe option.
13
<PAGE>
financial or otherwise, or in the earnings, business or operations of (x)
the Company, or (y) OHI and OTC and its subsidiaries, taken as a whole, in
each case from that set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement)
that, in your judgment, is material and adverse and that makes it, in your
judgment, impracticable to market the Shares on the terms and in the manner
contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date:
(i) certificates, dated the Closing Date and signed by (x) an
executive officer of the Company,(y) an executive officer of OHI and
(z) an executive officer of OTC, in each case to the effect set forth
in Section 6(a) above and to the effect that the representations and
warranties of the Company, OHI and OTC contained in this Agreement are
true and correct as of the Closing Date and that the Company, OHI and
OTC have complied with all of the agreements and satisfied all of the
conditions on their part to be performed or satisfied hereunder on or
before the Closing Date.
(ii) a certificate, dated the Closing Date and signed by an
executive officer of UPC to the effect that the representations and
warranties of the UPC contained in this Agreement are true and correct
as of the Closing Date and that UPC has complied with all of the
agreements and satisfied all of the conditions on its part to be
performed or satisfied hereunder on or before the Closing Date.
The officers signing and delivering such certificates may each rely
upon the best of his or her knowledge after reasonable investigation.
(c) The Underwriters shall have received on the Closing Date an
opinion of Hunton & Williams, outside counsel for the Company, OHI and OTC,
dated the Closing Date, to the effect that:
(i) the Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the jurisdiction
of its incorporation, has the corporate power and authority to own its
property and to conduct its business as described in the Prospectus
and is duly qualified to transact business;
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<PAGE>
(ii) each of OHI and OTC is validly existing as a corporation
in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority to own its
property and to conduct its business as described in the Prospectus;
(iii) the outstanding shares of common stock of OTC have been
duly authorized and are validly issued, fully paid and non-assessable;
[OHI has good and valid title to the stock of OTC, free and clear of
all liens, encumbrances, equities or claims;]
(iv) the authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus;
(v) the Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be
validly issued, fully paid and non-assessable, and the issuance of
such Shares will not be subject to any preemptive or similar rights;
(vi) this Agreement has been duly authorized, executed and
delivered by the Company and OTC;
(vii) the execution and delivery by each of the Company, OHI and
OTC of, and the performance by each of the Company, OHI and OTC of its
obligations under, this Agreement will not contravene any provision of
applicable law or the certificate of incorporation or by-laws of the
Company, OHI or OTC or, to such counsel's knowledge, any agreement or
other instrument binding upon the Company, OHI or OTC that is material
to the Company, OHI and OTC and its subsidiaries, taken as a whole,
or, to the best of such counsel's knowledge, any judgment, order or
decree of any governmental body, agency or court having jurisdiction
over the Company, OHI or OTC, and no consent, approval, authorization
or order of, or qualification with, any governmental body or agency is
required for the performance by the Company, OHI or OTC of its
obligations under this Agreement, except (A) such as have been
obtained under the Securities Act, and (B) such as may be required by
the securities or Blue Sky laws of the various states and foreign
jurisdictions in connection with the offer and sale of the Shares by
the U.S. Underwriters and International Underwriters;
15
<PAGE>
(viii) the statements (A) in the Prospectus under the captions
"Agreements with Union Pacific Corporation", "Description of Capital
Stock" and "Underwriters", to the extent such section summarizes the
terms of this Agreement, and (B) in the Registration Statement in
Items 14 and 15, in each case insofar as such statements constitute
summaries of the legal matters, documents or proceedings referred to
therein, fairly present the information called for with respect to
such legal matters, documents and proceedings and fairly summarize the
matters referred to therein;
(ix) the Company is not and, after giving effect to the offering
and sale of the Shares and the application of the proceeds thereof as
described in the Prospectus, will not be an "investment company" as
such term is defined in the Investment Company Act of 1940, as
amended;
(x) each of the Intercompany Agreements has been duly authorized
by the Company, OHI and OTC, and when executed and delivered by them,
each will be a legal, valid and binding agreement of the Company, OHI
and OTC enforceable against them in accordances with its respective
terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equitable principles; and
(xi) such counsel (A) is of the opinion that the Registration
Statement and Prospectus (except for financial statements and
schedules and other financial and statistical data included therein as
to which such counsel need not express any opinion) comply as to form
in all material respects with the Securities Act and the applicable
rules and regulations of the Commission thereunder, (B) has no reason
to believe that (except for financial statements and schedules and
other financial and statistical data as to which such counsel need not
express any belief) the Registration Statement and the prospectus
included therein at the time the Registration Statement became
effective contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading and (C) has no reason to
believe that (except for financial statements and schedules and other
financial and statistical data as to which such counsel need not
express any belief) the
16
<PAGE>
Prospectus contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
(xii) The Registration Statement became effective under the
Securities Act on [ ], 1998, and thereupon the offering of the
Shares as contemplated by the Prospectus became registered under the
Securities Act; to our knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated under the Securities Act.
(d) The Underwriters shall have received on the Closing Date an
opinion of the Senior Vice President and General Counsel or Assistant
General Counsel of UPC or other counsel satisfactory to the U.S.
Representatives, dated the Closing Date, to the effect that:
(i) UPC has good and valid title to the stock of OHI, free and
clear of all liens, encumbrances, equities or claims;
(ii) this Agreement has been duly authorized, executed and
delivered by UPC and OHI;
(iii) the execution and delivery by UPC of, and the performance
by UPC of its obligations under, this Agreement will not contravene
any provision of applicable law or the certificate of incorporation or
by-laws of UPC or, to such counsel's knowledge, any agreement or other
instrument binding upon UPC or any of its subsidiaries (other than OHI
or OTC or any of its subsidiaries) that is material to UPC and its
subsidiaries, taken as a whole, or, to such counsel's knowledge, any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over UPC or any of its subsidiaries (other than
OHI or OTC or any of its subsidiaries), and no consent, approval,
authorization or order of, or qualification with, any governmental
body or agency is required for the performance by UPC of its
obligations under this Agreement, except (A) such as have been
obtained under the Securities Act, and (B) such as may be required by
the securities or Blue Sky laws
17
<PAGE>
of the various states in connection with the offer and sale of the
Shares by the U.S. Underwriters;
(iv) the statements in the Prospectus under the caption
"Agreements with Union Pacific Corporation" insofar as such statements
constitute summaries of the documents referred to therein, fairly
present the information called for with respect to such documents and
fairly summarize the matters referred to therein;
(v) each of the Intercompany Agreements has been duly
authorized, executed and delivered by UPC and is a legal, valid and
binding agreement of UPC enforceable against it in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equitable principles;
(vi) pursuant to the Stock Purchase and Indemnification
Agreement, upon the closing of the Acquisition, UPC will transfer all
of the capital stock of OHI to the Company free and clear of all
liens, encumbrances, equities or claims on the capital stock of OHI or
OTC arising through UPC; and
(vii) (A) such counsel is of the opinion that the Registration
Statement, as of its effective date, and the Prospectus, as of its
date and as of the date hereof, appeared on their face to be
appropriately responsive in all material respects to the requirements
of the Securities Act and the applicable rules and regulations of the
Commission thereunder, (B) nothing has come to the attention of such
counsel in the course of his participation in the preparation of the
Registration Statement and Prospectus that caused him to believe that
the Registration Statement, as of its effective date, or the
Prospectus, as of its date and as of the date hereof, contain or
contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading.
(e) The Underwriters shall have received on the Closing Date an
opinion of the General Counsel of OTC or other counsel satisfactory to the
U.S. Representatives, dated the Closing Date, to the effect that:
18
<PAGE>
(i) the statements in the Prospectus under the captions "Risk
Factors--Disputes with Labor Organizations" (second and third
paragraphs only) and "Business--Employees" (second paragraph only),
"Risk Factors--Possible Adverse Effect of Governmental Policy and
Regulations" (second paragraph only) and "Business--Environmental
Regulation," insofar as such statements constitute summaries of the
legal matters, documents or proceedings referred to therein, fairly
present the information called for with respect to such legal matters,
documents and proceedings and fairly summarize the matters referred to
therein; and
(ii) after due inquiry, such counsel does not know of any legal
or governmental proceedings pending or threatened to which the
Company, OHI or OTC or any of its subsidiaries is a party or to which
any of the properties of the Company, OHI or OTC or any of its
subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or
of any statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required.
(f) The Underwriters shall have received on the Closing Date an
opinion of Richards Layton & Finger, Delaware counsel to the Company, dated
the Closing Date, to the effect that:
(i) the outstanding shares of common stock of OHI have been
duly authorized and are validly issued, fully paid and non-assessable;
(ii) OHI has good and valid title to the stock of OTC, free and
clear of all liens, encumbrances, equities or claims;
(iii) this Agreement has been duly authorized, executed and
delivered by OHI; and
(iv) the execution and delivery by OHI of, and the performance
by OHI of its obligations under, this Agreement will not contravene
any provision of applicable law or the certificate of incorporation or
by-laws of OHI.
19
<PAGE>
(g) The Underwriters shall have received on the Closing Date an
opinion of Cravath, Swaine & Moore, counsel for the Underwriters, dated the
Closing Date, covering the matters referred to in Sections 6(c)(viii) (but
only as to the statements in the Prospectus under "Description of Capital
Stock" and "Underwriters") and 6(c)(xi) above.
With respect to the opinions covering matters stated in Section
6(c)(xi) above, Hunton & Williams, UPC counsel and Cravath, Swaine & Moore
may state that their opinion and belief are based upon their participation
in the preparation of the Registration Statement and Prospectus and any
amendments or supplements thereto and review and discussion of the contents
thereof, but are without independent check or verification, except as
specified.
The opinion of (i) Hunton & Williams described in Section 6(c) above,
(ii) the Senior Vice President and General Counsel or Assistant General
Counsel of UPC or other counsel satisfactory to the U.S. Representatives
described in Section 6(d) above and (iii) the opinion of the General
Counsel of OTC or other counsel satisfactory to the U.S. Representatives
described in Section 6(e) above shall be rendered to the Underwriters at
the request of the Company, UPC or OTC, as the case may be and shall so
state therein.
(g) The Underwriters shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or the Closing Date,
as the case may be, in form and substance satisfactory to the Underwriters,
from Deloitte & Touche LLP, independent public accountants, containing
statements and information of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements
and certain financial information contained in the Registration Statement
and the Prospectus; provided that the letter delivered on the Closing Date
shall use a "cut-off date" not earlier than the date hereof.
(h) The "lock-up" agreements, each substantially in the form of
Exhibit A hereto, between you and certain officers and directors of the
Company relating to sales and certain other dispositions of shares of
Common Stock or certain other securities, delivered to you on or before the
date hereof, shall be in full force and effect on the Closing Date.
(i) The several obligations of the U.S. Underwriters to purchase
Additional Shares hereunder
20
<PAGE>
are subject to the delivery to the U.S. Representatives on the Option
Closing Date of such documents as they may reasonably request with respect
to the good standing of the Company, the due authorization and issuance of
the Additional Shares and other matters related to the issuance of the
Additional Shares.
7. Covenants of the Company and UPC. In further consideration of the
agreements of the Underwriters herein contained, the Company and, with respect
to paragraph (f) below, UPC, covenant with each Underwriter as follows:
(a) To furnish to you, without charge, five signed copies of the
Registration Statement (including exhibits thereto) and for delivery to
each other Underwriter a conformed copy of the Registration Statement
(without exhibits thereto) and to furnish to you in New York City, without
charge, as soon as practicable on the business day next succeeding the date
of this Agreement and during the period mentioned in Section 7(c) below, as
many copies of the Prospectus and any supplements and amendments thereto or
to the Registration Statement as you may reasonably request.
(b) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment or
supplement and not to file any such proposed amendment or supplement to
which you reasonably object, and to file with the Commission within the
applicable period specified in Rule 424(b) under the Securities Act any
prospectus required to be filed pursuant to such Rule.
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters
the Prospectus is required by law to be delivered in connection with sales
by an Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading, or if, in
the opinion of counsel for the Underwriters, it is necessary to amend or
supplement the Prospectus to comply with applicable law, forthwith to
prepare, file with the Commission and furnish, at its own expense, to the
Underwriters and to the dealers (whose names and addresses you will furnish
to the Company) to which Shares may have been sold by you on behalf of the
Underwriters and to any other dealers upon request, either amendments or
supplements to the Prospectus so that the statements in the Prospectus as
so amended or supplemented will not, in
21
<PAGE>
the light of the circumstances when the Prospectus is delivered to a
purchaser, be misleading or so that the Prospectus, as amended or
supplemented, will comply with law.
(d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request.
(e) To make generally available to the Company's security holders and
to you as soon as practicable an earning statement covering the twelve-
month period ending September 30, 1999 that satisfies the provisions of
Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
(f) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of its obligations under this
Agreement, including: (i) the fees, disbursements and expenses of the
Company's counsel and the Company's accountants in connection with the
registration and delivery of the Shares under the Securities Act and all
other fees or expenses in connection with the preparation and filing of the
Registration Statement, any preliminary prospectus, the Prospectus and
amendments and supplements to any of the foregoing, including all printing
costs associated therewith, and the mailing and delivering of copies
thereof to the Underwriters and dealers, in the quantities hereinabove
specified, (ii) all costs and expenses related to the transfer and delivery
of the Shares to the Underwriters, including any transfer or other taxes
payable thereon, (iii) the cost of printing or producing any Blue Sky or
Legal Investment memorandum in connection with the offer and sale of the
Shares under state securities laws and all expenses in connection with the
qualification of the Shares for offer and sale under state securities laws
as provided in Section 7(d) hereof, including filing fees and the
reasonable fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky or
Legal Investment memorandum, (iv) all filing fees and the reasonable fees
and disbursements of counsel to the Underwriters incurred in connection
with the review and qualification of the offering of the Shares by the
National Association of Securities Dealers, Inc., (v) all fees and expenses
in connection with the preparation and filing of the registration statement
on Form 8-A relating to the Common Stock and all costs and expenses
incident to listing the Shares on the Nasdaq
22
<PAGE>
National Market, (vi) the cost of printing certificates representing the
Shares, (vii) the costs and charges of any transfer agent, registrar or
depositary, (viii) the costs and expenses of the Company relating to
investor presentations on any "road show" undertaken in connection with the
marketing of the offering of the Shares, including, without limitation,
expenses associated with the production of road show slides and graphics,
fees and expenses of any consultants engaged in connection with the road
show presentations with the prior approval of the Company, travel and
lodging expenses of the representatives and officers of the Company and any
such consultants, and the cost of any aircraft chartered in connection with
the road show, (ix) all expenses similar to those set forth in (i) through
(viii) of this Section 7 in connection with any offer and sale of the
Shares outside of the United States, including filing fees and the
reasonable fees and disbursements of counsel for the Underwriters in
connection with offers and sales outside of the United States, (x) all
other costs and expenses incident to the performance of the obligations of
the Company hereunder for which provision is not otherwise made in this
Section. It is understood, however, that except as provided in this
Section, Section 8 entitled "Indemnity and Contribution," and the last
paragraph of Section 10 below, the Underwriters will pay all of their costs
and expenses, including fees and disbursements of their counsel, stock
transfer taxes payable on resale of any of the Shares by them and any
advertising expenses connected with any offers they may make.
8. Indemnity and Contribution. (a) (i) The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or omission or alleged untrue
23
<PAGE>
statement or omission based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you expressly
for use therein.
(b) UPC agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of either
Section 15 of the Securities Act or Section 20 of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), from and against any and all losses,
claims, damages and liabilities (including, without limitation, any legal or
other expenses reasonably incurred in connection with defending or investigating
any such action or claim) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
amendment thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but, in each case, only insofar as such statement or
omission relates to the UPC Information.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement, UPC and each person, if any, who controls the Company or
UPC within the meaning of either Section 15 of the Securities Act or Section 20
of the Exchange Act to the same extent as the foregoing indemnity from the
Company and UPC to such Underwriter, but only with reference to information
relating to such Underwriter furnished to the Company or UPC in writing by such
Underwriter through you expressly for use in the Registration Statement, any
preliminary prospectus, the Prospectus or any amendments or supplements thereto.
(d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 8(a), 8(b) or 8(c), such person (the "INDEMNIFIED
PARTY") shall promptly notify the person against whom such indemnity may be
sought (the "INDEMNIFYING PARTY") in writing and the indemnifying party may, and
upon request of the indemnified party, shall, retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified party and any
others the indemnifying party may designate in such proceeding and shall pay the
fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the
24
<PAGE>
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed as
they are incurred. The indemnifying party shall not be liable for any settlement
of any proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(e) To the extent the indemnification provided for in Section 8(a),
8(b) or 8(c) is unavailable to an indemnified party or insufficient in respect
of any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause 8(e)(i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 8(e)(i) above but also the relative
fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Company and UPC on the one hand and the Underwriters on the
other hand in connection with the
25
<PAGE>
offering of the Shares shall be deemed to be in the same respective proportions
as the net proceeds from the offering of the Shares (before deducting expenses)
received by the Company and the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover of the Prospectus, bear to the aggregate Public Offering Price of the
Shares. The relative fault of the Company and UPC on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company and UPC or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 8 are several in proportion to the
respective number of Shares they have purchased hereunder, and not joint.
(f) The Company, UPC and the Underwriters agree that it would not be
just or equitable if contribution pursuant to this Section 8 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in Section 8(e). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 8 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(g) The indemnity and contribution provisions contained in this
Section 8 and the representations, warranties and other statements of the
Company and UPC contained in this Agreement shall remain operative and in
26
<PAGE>
full force and effect regardless of (i) any termination of this Agreement, (ii)
any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter or by or on behalf of the Company, UPC, any of their
officers or directors or any person controlling the Company or UPC and (iii)
acceptance of and payment for any of the Shares.
9. Termination. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses 8(a)(i) through 8(a)(iv), such event, singly or
together with any other such event, makes it, in your judgment, impracticable to
market the Shares on the terms and in the manner contemplated in the Prospectus.
10. Effectiveness; Defaulting Underwriters. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase Shares
that it has or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the number of
Firm Shares set forth opposite their respective names in Schedule I or Schedule
II bears to the aggregate number of Firm Shares set forth opposite the names of
all such non-defaulting Underwriters, or in such other proportions as you may
specify, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the number of Shares that any Underwriter has agreed to
purchase pursuant to this Agreement be increased
27
<PAGE>
pursuant to this Section 10 by an amount in excess of one-ninth of such number
of Shares without the written consent of such Underwriter. If, on the Closing
Date, any Underwriter or Underwriters shall fail or refuse to purchase Firm
Shares and the aggregate number of Firm Shares with respect to which such
default occurs is more than one-tenth of the aggregate number of Firm Shares to
be purchased, and arrangements satisfactory to you and the Company for the
purchase of such Firm Shares are not made within 36 hours after such default,
this Agreement shall terminate without liability on the part of any non-
defaulting Underwriter or the Company. In any such case either you or the
Company shall have the right to postpone the Closing Date, but in no event for
longer than seven days, in order that the required changes, if any, in the
Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. If, on the Option Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase Additional Shares and the
aggregate number of Additional Shares with respect to which such default occurs
is more than one-tenth of the aggregate number of Additional Shares to be
purchased, the non-defaulting Underwriters shall have the option to (i)
terminate their obligation hereunder to purchase Additional Shares or (ii)
purchase not less than the number of Additional Shares that such non-defaulting
Underwriters would have been obligated to purchase in the absence of such
default. Any action taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company or UPC to
comply with the terms or to fulfill any of the conditions of this Agreement, or
if for any reason the Company or UPC shall be unable to perform its obligations
under this Agreement, other than due to a default on the part of any Underwriter
or the exercise of the Underwriters' right of termination under Section 9, the
Company and UPC agree, jointly and severally, to reimburse the Underwriters or
such Underwriters as have so terminated this Agreement with respect to
themselves, for all out-of-pocket expenses (including the fees and disbursements
of their counsel) reasonably incurred by such Underwriters in connection with
this Agreement or the offering contemplated hereunder.
11. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
28
<PAGE>
12. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
13. Headings. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
Very truly yours,
OVERNITE CORPORATION
By:_________________________
Name:
Title:
OVERNITE HOLDING, INC.
By:_________________________
Name:
Title:
29
<PAGE>
OVERNITE TRANSPORTATION COMPANY
By:_________________________
Name:
Title:
UNION PACIFIC CORPORATION
By:_______________________
Name:
Title:
Accepted as of the date hereof
MORGAN STANLEY & CO. INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: Morgan Stanley & Co. Incorporated
By:___________________________
Name:
Title:
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED
DONALDSON, LUFKIN & JENRETTE INTERNATIONAL
MERRILL LYNCH INTERNATIONAL
By: Morgan Stanley & Co. International Limited
By:___________________________
Name:
Title:
30
<PAGE>
SCHEDULE I
U.S. UNDERWRITERS
NUMBER OF
FIRM SHARES
UNDERWRITER TO BE PURCHASED
Morgan Stanley & U.S. Co. Incorporated
Credit Suisse First Boston Corporation
Donaldson, Lufkin & Jenrette
Securities Corporation
Merrill Lynch, Pierce, Fenner & Smith
Incorporated _______________
Total U.S. Firm Shares.............. ===============
31
<PAGE>
SCHEDULE II
INTERNATIONAL UNDERWRITERS
NUMBER OF
FIRM SHARES
UNDERWRITER TO BE PURCHASED
Morgan Stanley & Co. International Limited
Credit Suisse First Boston (Europe) Limited
Donaldson, Lufkin & Jenrette International
Merrill Lynch International _______________
Total International Firm Shares........ ===============
32
<PAGE>
EXHIBIT A
[FORM OF LOCK-UP LETTER]
____________, 1998
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
Donaldson, Lufkin & Jenrette
Securities Corporation
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
Morgan Stanley & Co. International Limited
Credit Suisse First Boston (Europe) Limited
Donaldson, Lufkin & Jenrette International
Merrill Lynch International
c/o Morgan Stanley & Co. International Limited
25 Cabot Square
Canary Wharf
London E14 4QA
ENGLAND
Dear Sirs and Mesdames:
The undersigned understands that Morgan Stanley & Co. Incorporated
("MORGAN STANLEY") and Morgan Stanley & Co. International Limited ("MSIL")
propose to enter into an Underwriting Agreement (the "UNDERWRITING AGREEMENT")
with Overnite Corporation, a Virginia corporation (the "COMPANY") providing for
the public offering (the "PUBLIC OFFERING") by the several Underwriters,
including Morgan Stanley and MSIL (the "UNDERWRITERS") of 33,600,000 shares (the
"SHARES") of the Common Stock, par value $.01 per share, of the Company (the
"COMMON STOCK").
To induce the Underwriters that may participate in the Public Offering
to continue their efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of Morgan
Stanley on behalf of the Underwriters, it will not, during the period commencing
on the date hereof and ending 180 days after the date of the Prospectus (as
defined in the Underwriting Agreement), except with respect to employee stock
option plans in effect as of the date of the Underwriting Agreement, (1) offer,
pledge, sell, contract to sell, sell any option or
33
<PAGE>
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock, or (2) enter into any swap
or other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (a) the sale of any Shares to the Underwriters
pursuant to the Underwriting Agreement or (b) transactions relating to shares of
Common Stock or other securities acquired in open market transactions after the
completion of the Public Offering. In addition, the undersigned agrees that,
without the prior written consent of Morgan Stanley on behalf of the
Underwriters, it will not, during the period commencing on the date hereof and
ending 180 days after the date of the Prospectus, make any demand for or
exercise any right with respect to, the registration of any shares of Common
Stock or any security convertible into or exercisable or exchangeable for Common
Stock.
Whether or not the Public Offering actually occurs depends on a number
of factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
Very truly yours,
____________________________
(Name)
____________________________
(Address)
34
<PAGE>
EXHIBIT 4.1
COMMON STOCK
COMMON STOCK
OVERNITE CORPORATION
INCORPORATED UNDER THE LAWS OF THE COMMONWEALTH OF VIRGINIA
CUSIP 690322 10 2
SEE REVERSE FOR
CERTAIN DEFINITIONS
THIS CERTIFIES THAT
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF $.01 PAR
VALUE EACH OF
OVERNITE CORPORATION
transferable on the books of the Corporation by the owner hereof in person or by
duly authorized attorney upon surrender of this certificate
properly endorsed.
This certificate is not valid unless countersigned by a Transfer Agent and
registered by a Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
Dated:
SECRETARY
CHIEF EXECUTIVE OFFICER AND PRESIDENT
COUNTERSIGNED AND REGISTERED:
FIRST UNION NATIONAL BANK
(Charlotte, N.C.)
TRANSFER AGENT
AND REGISTRAR
BY
AUTHORIZED SIGNATURE
<PAGE>
OVERNITE CORPORATION
THE CORPORATION WILL FURNISH TO ANY SHAREHOLDER UPON REQUEST IN WRITING TO
THE OFFICE OF THE CORPORATION IN RICHMOND, VIRGINIA AND WITHOUT CHARGE, A FULL
STATEMENT OF THE DESIGNATIONS, PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS OF
THE SHARES OF EACH CLASS AUTHORIZED TO BE ISSUED AND THE VARIATIONS IN THE
RELATIVE RIGHTS, LIMITATIONS AND PREFERENCES BETWEEN THE SHARES OF EACH SERIES
OF ANY CLASS AUTHORIZED TO BE ISSUED IN SERIES, SO FAR AS THE SAME HAVE BEEN
FIXED AND DETERMINED, AND THE AUTHORITY OF THE BOARD OF DIRECTORS TO FIX AND
DETERMINE THE RELATIVE RIGHTS AND PREFERENCES OF FUTURE SERIES OR CLASSES.
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM-
TEN ENT-
JT TEN-
as tenants in common
as tenants by the entireties
as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACTu Custodian
(Cust) (Minor)
under Uniform Gifts to Minors Act
(State)
UNIF TRAN MIN ACTu Custodian
(Cust) (Minor)
under Uniform Transfers to Minors Act
(State)
Additional abbreviations may also be used though not in the above list.
For value received, hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
Shares
of the capital stock represented by the within Certificate, and do
hereby irrevocably constitute and appoint
Attorney
to transfer the said stock on the books of the within-named Corporation with
full power of substitution in the premises.
Dated
NOTICE:
THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON
THE FACE OF
THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY
CHANGE WHATEVER.
SIGNATURE(S) GUARANTEED:
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-15.
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, MUTILATED OR
DESTROYED, THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO
THE ISSUANCE OF A REPLACEMENT CERTIFICATE.
<PAGE>
EXHIBIT 5
[Letterhead of Hunton & Williams]
File No.: 22222.8
Direct Dial: (804) 778-8200
July 21, 1998
Board of Directors
Overnite Corporation
1000 Semmes Avenue
Richmond, Virginia 23218
OVERNITE CORPORATION
Registration Statement on Form S-1 (No. 333-53169)
--------------------------------------------------
Gentlemen:
We are acting as counsel for Overnite Corporation (the "Company") in
connection with its Registration Statement on Form S-1, and any amendments
thereto (the "Registration Statement"), as filed with the Securities and
Exchange Commission, with respect to 36,960,000 shares of the Company's Common
Stock, $0.01 par value per share (the "Shares"), which are proposed to be
offered and sold by the Company as described in the Registration Statement. In
connection with the filing of the Registration Statement, you have requested our
opinion concerning certain corporate matters.
In rendering this opinion, we have relied upon, among other things, our
examination of such records of the Company and certificates of its officers and
of public officials as we have deemed necessary.
Based upon the foregoing, we are of the opinion that:
1. The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the Commonwealth of Virginia.
2. The Shares covered by the Registration Statement have been duly authorized
and, when such shares have been issued as described in the Registration
Statement, will be legally issued, fully paid and non-assessable.
We consent to the filing of this opinion with the Securities and Exchange
Commission as an exhibit to the Registration Statement and to the statement made
in reference to this firm under the caption "Legal Matters" in the Prospectus
included therein. In giving this consent, we do not admit that we are within
the category of persons whose consent is required by Section 7 of the Securities
Act of 1933 or the rules and regulations promulgated thereunder by the
Securities and Exchange Commission.
<PAGE>
Board of Directors
July 20, 1998
Page 2
Very truly yours,
<PAGE>
EXHIBIT 10.1
CREDIT AGREEMENT
among
Overnite Corporation
and
Overnite Transportation Company
as Borrowers
and
The Lenders From Time
To Time Parties Hereto,
as Lenders
with
Crestar Bank,
as Agent
Dated as of August __, 1998
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C>
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS...................... 1
Section 1.1 Definitions............................... 1
Section 1.2 Accounting Terms.......................... 20
Section 1.3 Time Period Computations.................. 20
ARTICLE II GENERAL PROVISIONS OF REVOLVING CREDIT FACILITY....... 20
Section 2.1 The Revolving Loans....................... 20
Section 2.2 Revolving Loan Borrowing Procedures....... 21
Section 2.3 Standby Letters of Credit................. 24
Section 2.4 Swing Line Loan Subfacility............... 29
ARTICLE III INTEREST, FEES AND REPAYMENT.......................... 32
Section 3.1 Interest on the Revolving Loans........... 32
Section 3.2 Regulatory Changes........................ 32
Section 3.3 Interest After Due Date................... 33
Section 3.4 Payment and Computations.................. 33
Section 3.5 Payment at Maturity....................... 36
Section 3.6 Prepayments; Certain Early Repayments..... 36
Section 3.7 Facility Fee, Administrative Fee, and
Letter of Credit Fees................... 37
Section 3.8 LIBOR Conversion.......................... 38
Section 3.9 Breakage, etc............................. 39
ARTICLE IV CONDITIONS PRECEDENT.................................. 40
Section 4.1 Conditions Precedent...................... 40
Section 4.2 Further Conditions Precedent to Loans and
Standby Letters of Credit................ 42
ARTICLE V REPRESENTATIONS....................................... 43
Section 5.1 Existence, Power and Authority............ 43
Section 5.2 Authorization; Enforceable Obligations.... 44
Section 5.3 No Legal Bar.............................. 44
Section 5.4 Consents.................................. 44
Section 5.5 Litigation................................ 45
Section 5.6 No Default................................ 45
Section 5.7 Financial Condition....................... 45
Section 5.8 Use of Proceeds........................... 45
Section 5.9 Borrowers Not Investment Companies........ 46
Section 5.10 Taxes..................................... 46
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Section 5.11 Subsidiaries.............................. 46
Section 5.12 Permits, Licenses, Etc.................... 46
Section 5.13 Compliance With Laws...................... 47
Section 5.14 OHI....................................... 48
Section 5.15 Amounts Owed to or from Affiliates;
Intercompany Agreements.................. 48
Section 5.16 Maintenance of Insurance.................. 48
Section 5.17 Properties................................ 49
Section 5.18 Change.................................... 49
Section 5.19 Outstanding Letters of Credit, Suretyship
Agreements and Similar Arrangements...... 49
Section 5.20 Disclosure Generally...................... 49
Section 5.21 Year 2000 Compliance...................... 49
ARTICLE VI COVENANTS............................................. 50
Section 6.1 Affirmative Covenants..................... 50
(a) Information...................................... 50
(i) Audited Annual Financials................. 50
(ii) Quarterly Financial Statements............ 50
(iii) Exchange Act and Securities Act Filings... 51
(iv) No Default................................ 51
(v) Compliance................................ 51
(vi) ERISA..................................... 51
(vii) Material Changes.......................... 51
(viii) Other Information......................... 52
(b) Financial Covenants.............................. 52
(i) Consolidated Indebtedness to Consolidated
Cash Flow Ratio.......................... 52
(ii) Consolidated Fixed Charge Ratio........... 52
(iii) Consolidated Tangible Net Worth Ratio..... 52
(c) Proceeds......................................... 53
(d) Payment of Debts and Taxes....................... 53
(e) ERISA............................................ 53
(f) Conduct and Maintenance of Business.............. 53
(g) Preservation of Corporate Existence.............. 54
(h) Books and Records................................ 54
(i) Insurance........................................ 54
(j) Compliance with Laws............................. 54
(k) Compliance with Loan Documents................... 54
(l) Lending Relationship with the Agent.............. 54
(n) Notice of Default................................ 55
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
(o) Notice of Environmental Claims................... 55
(p) Payments Pari Passu.............................. 55
(q) Year 2000 Compliance............................. 55
(r) Further Assurances............................... 55
Section 6.2 Negative Covenants........................ 55
(a) Liens............................................ 56
(b) Indebtedness..................................... 56
(c) Capital Stock.................................... 57
(d) Loans............................................ 57
(e) No Merger or Acquisition......................... 58
(f) Accounting Policies; Fiscal Year................. 59
(g) Disposition of Assets............................ 59
(h) Permitted Investments............................ 59
ARTICLE VII EVENTS OF DEFAULT..................................... 59
Section 7.1 Events of Default......................... 59
ARTICLE VIII THE AGENT............................................ 62
Section 8.1 Appointment of Agent...................... 62
Section 8.2 Nature of Duties; Non-Reliance on Agent
and other Lenders........................ 63
Section 8.3 Rights, Exculpation, Etc.................. 64
Section 8.4 Reliance; Notice of Default............... 65
Section 8.5 Indemnification........................... 66
Section 8.6 The Agent Individually.................... 66
Section 8.7 Successor Agent; Resignation of Agent..... 66
Section 8.8 Certain Matters Requiring the Consent of
all Lenders.............................. 67
Section 8.9 Defaulting Lenders Vote Not Counted....... 68
ARTICLE IX MISCELLANEOUS.......................................... 69
Section 9.1 Amendments and Waivers; Cumulative
Remedies.................................. 69
Section 9.2 Survival of Representations and
Warranties................................ 69
Section 9.3 Supervening Illegality..................... 69
Section 9.4 No Reduction in Payments................... 70
Section 9.5 Stamp Taxes................................ 70
Section 9.6 Notices.................................... 70
Section 9.7 Governing Law.............................. 72
Section 9.8 Successors and Assigns; Participations;
Assignments................................ 72
Section 9.9 Affirmative Rate of Interest Permitted by
Law....................................... 73
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
Section 9.10 Costs and Expenses; Indemnification........ 74
Section 9.11 Set-Off; Suspension of Payment
and Performance........................... 75
Section 9.12 Sharing of Collections, Proceeds and
Set-Offs; Application of Payments......... 75
Section 9.13 Lenders' Obligations Several; Independent
Nature of Lenders' Rights................. 77
Section 9.14 Judicial Proceedings; Waiver of Jury
Trial..................................... 77
Section 9.15 Integration................................ 78
Section 9.16 Further Acts and Assurances................ 78
Section 9.17 No Fiduciary Relationship.................. 78
Section 9.18 Severability............................... 78
Section 9.19 Counterparts............................... 78
Section 9.20 Headings, Bold Type and Table of Contents.. 79
Schedule I - Lender Commitments....................... v
Schedule 1.1 - Existing Liens........................... v
Schedule 5.5 - Litigation............................... v
Schedule 5.6 - Defaults................................. v
Schedule 5.11 - Subsidiaries............................. v
Schedule 5.15 - Intercompany Debts and Intercompany
Agreements.............................. v
Schedule 5.19 - Letters of Credit, Suretyship Agreements
and Similar Arrangements................ v
Exhibit A Form of Revolving Note..................... v
Exhibit B Form of Swing Line Note.................... v
Exhibit C Form of Borrowing Notice................... v
</TABLE>
iv
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of August __, 1998 (as amended,
modified, or otherwise supplemented from time to time, this "Agreement"), is by
and among (i) OVERNITE CORPORATION, a Virginia corporation ("Parent Borrower"),
and OVERNITE TRANSPORTATION COMPANY, a Virginia corporation ("Operating
Borrower") (collectively, the "Borrowers"), (ii) THE LENDERS FROM TIME TO TIME
PARTIES TO THIS AGREEMENT (each, a "Lender" and, collectively, the "Lenders")
and (iii) CRESTAR BANK, a Virginia banking corporation in its separate capacity
as agent for the Lenders hereunder (in such capacity, the "Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Borrowers have requested the Lenders to make available to
the Borrowers a revolving line of credit for loans and letters of credit up to
an aggregate of $200,000,000 for the purpose of Parent Borrower's acquisition of
Overnite Holding, Inc. and Operating Borrower from Union Pacific Corporation and
working capital and other requirements of the Borrowers, in each case upon the
terms and conditions set forth herein; and
WHEREAS, the Lenders are willing to make the loans and issue the
letters of credit to the Borrowers, and the Agent is willing to act as "Agent",
upon the terms and subject to the conditions and provisions set forth herein;
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements herein contained, the Borrowers, the Lenders and the Agent hereby
agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section I.1 Definitions. As used in this Agreement, and unless the
-----------
context requires a different meaning, the following terms shall have the
meanings indicated (such meanings to be, when appropriate, equally applicable to
both the singular and plural forms of the terms defined):
"Accumulated Funding Deficiency" has the meaning ascribed to that term
------------------------------
in ERISA Section 302.
<PAGE>
"Administrative Fee" has the meaning specified in Section 3.7(b) of
------------------
this Agreement.
"Administrative Fee Letter" has the meaning specified in Section
-------------------------
3.7(b) hereof, and shall include any amendment, modification or supplement
thereof.
"Affected Advance" has the meaning specified in Section 3.8(d) of this
----------------
Agreement.
"Affiliate" means, with respect to a Person, any other Person that,
---------
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such first Person. For
purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling", "controlled by" or "under common control
with"), as applied to any Person, means the possession, directly or
indirectly, of the power to vote 10% or more of the securities having
voting power for the election of directors of such Person or otherwise to
direct or cause the direction of the management and policies of that
Person, whether through the ownership of voting securities or by contract
or otherwise.
"Agent" has the meaning specified in the preamble of this Agreement
-----
and shall include any successor Agent appointed pursuant to Section 8.7 of
this Agreement.
"Agent Lending Office" or "Lending Office of the Agent" means the
-------------------- ---------------------------
Agent's offices at Crestar Bank, 919 East Main Street, Richmond, VA 23219,
Attention: Keith A. Hubbard, or such other office in the United States of
America of Agent as it may from time to time designate to the Borrowers or
the Lenders by written notice.
"Aggregate Commitment" means $200,000,000.00.
--------------------
"Agreement" has the meaning specified in the preamble of this
---------
Agreement.
"Applicable Facility Fee" means, for any period, a facility fee
-----------------------
(stated in basis points) determined based upon the Borrowers' Consolidated
Leverage Ratio, as set forth below:
2
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
Consolidated Applicable Facility Fee
Leverage Ratio (basis points)
---------------------------------------------------------------------------
<S> <C>
less than 2.5 17.5
less than 2.0 more than 2.5 15
less than 1.5 more than 2.0 12.5
less than 1.0 more than 1.5 10
more than 1.0 8.5
---------------------------------------------------------------------------
</TABLE>
"Applicable LIBOR Margin" means, for any period, a number of basis
-----------------------
points, based upon the Borrowers' Consolidated Leverage Ratio, as set forth
below:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
Consolidated Applicable LIBOR Margin
Leverage Ratio (basis points)
---------------------------------------------------------------------------
<S> <C>
less than 2.5 65.5
less than 2.0 more than 2.5 53
less than 1.5 more than 2.0 46.5
less than 1.0 more one 1.5 41
more than 1.0 35.5
---------------------------------------------------------------------------
</TABLE>
"Applicable LIBOR Rate" means, for any period, LIBOR plus the
---------------------
Applicable LIBOR Margin.
"Authorized Officer" means any of the Chief Executive Officer, Chief
------------------
Financial Officer or Treasurer of any Person which is a corporation,
partnership, or other business organization.
"Bank Governmental Body" means (a) the United States of America or any
----------------------
State thereof or any department, agency, commission, board, bureau or
instrumentality of the United States of America or any State thereof, and
(b) any quasi-governmental authority, agency or authority (including any
central bank) exercising regulatory authority over the Lenders pursuant to
applicable law in respect of the transactions contemplated by this
Agreement.
3
<PAGE>
"Bankruptcy Code" means Title 11 of the United States Code or any
---------------
similar or successor federal law for the relief of debtors, as the same may
be amended from time to time.
"Base Rate" means the higher of (a) the Prime Rate and (b) the Federal
---------
Funds Rate plus 0.50%.
"Base Rate Period" means any 30-day period in respect of which
----------------
interest accrues on the Revolving Loans bearing interest at the Base Rate.
"Benefit Plan" means any employee benefit plan (including a
------------
Multiemployer Benefit Plan), the funding requirements of which (under ERISA
Section 302 or Section 412 of the Code) are, or at any time within five
years immediately preceding the time in question were, in whole or in part,
the responsibility of the Borrowers or an ERISA Affiliate.
"Borrowers" means Parent Borrower and Operating Borrower.
---------
"Borrowers' Account" means the bank account of the Borrowers
------------------
maintained with the Agent for general purposes and assigned the account
number designated by the Agent in writing to the Borrowers.
"Borrowing Notice" has the meaning specified in Section 2.2(a) of this
----------------
Agreement.
"Breakage Period" has the meaning specified in Section 3.9 of this
---------------
Agreement.
"Business Day" means any day on which commercial banks are open for
------------
business (and not required or authorized by law to close) in Richmond,
Virginia.
"Capital Expenditures" means all expenditures classified as capital
--------------------
expenditures in accordance with GAAP.
"Capital Lease" of any Person means any lease of any property (whether
-------------
real, personal or mixed) by such Person (as lessee or guarantor or other
surety) which would, in accordance with GAAP, be required to be classified
and accounted for as a capital lease on a balance sheet of such Person.
"Capital Stock" means any and all shares, interests, participations or
-------------
other equivalents (however designated) of capital stock of a corporation,
any and all
4
<PAGE>
equivalent ownership interests in a Person other than a corporation, and
any and all warrants or options to purchase any of the foregoing.
"Cash Equivalents" means securities or other instruments of the type
----------------
described in (i) clauses (a) and (b) of the definition of Permitted
Investment, provided such obligations have a maturity of not more than
--------
twelve (12) months from the date purchased, (ii) clause (c) of the
definition of Permitted Investment, provided such instruments have a
--------
maturity of not more than 270 days from the date purchased, and (iii)
clause (d) of the definition of Permitted Investment, provided such
--------
commercial paper has a maturity of not greater than six (6) months from the
date purchased.
"Change in Control" means one or more of the following events:
-----------------
(a) if any Person (including a person as defined in Section 3(a)(9),
Section 13(d) or Section 14(d) of the Exchange Act) is or becomes the owner
or beneficial owner, directly or indirectly, of securities of the Parent
Borrower representing fifty percent (50%) or more of the combined voting
power of the Parent Borrower's then outstanding securities (the term
"beneficial owner" as used herein shall include but not be limited to any
person with the attributes or interests described in Rule 13d-3 (as now in
effect or as amended) promulgated under the Exchange Act); or
(b) (i) the shareholders of the Parent Borrower approve one or more
mergers, consolidations or combinations of the Parent Borrower with any
other corporations or entities which, if consummated prior to the Maturity
Date, would result in (x) the voting securities of the Parent Borrower
outstanding the day following the Effective Date (together with any voting
securities issued by the Parent Borrower permitted under Section 6.2(c)
herein) representing less than 50% of the combined voting power of the
voting securities of the Parent Borrower or such surviving entity
immediately after consummation of any such merger, consolidation or
combination, or (y) after giving effect to such merger, consolidation or
combination, a change in the person holding the Office of Chief Executive
Officer, President, Chief Operating Officer or Chief Financial Officer of
the Parent Borrower relative to the person holding such respective office
immediately prior to giving effect to such merger, consolidation or
combination, or (ii) the shareholders of the Parent Borrower approve a plan
of liquidation of the Parent Borrower or an agreement for the sale,
disposition or transfer by the Parent Borrower of all or substantially all
the assets of the Borrowers and their Consolidated Subsidiaries.
5
<PAGE>
"Code" means the Internal Revenue Code of 1986, as amended from time
----
to time, and any successor Federal statute.
"Commitment" means, with respect to each Lender's commitment to make
----------
Revolving Loans and to issue (or participate in the issuance of) Standby
Letters of Credit, the aggregate Dollar amount set forth on Schedule I
hereto opposite such Lender's name under the heading "Commitment" or
assigned to it in accordance with Section 9.8(c), as such amount may be
reduced or otherwise adjusted from time to time in accordance with the
provisions of this Agreement.
"Consolidated Cash Flow" means, as computed at any time and from time
----------------------
to time, the sum of the Borrowers' and their Consolidated Subsidiaries'
Consolidated Net Income plus income taxes (other than income taxes excluded
from the definition of Consolidated Net Income), interest charges,
depreciation, amortization expenses (including amortization of goodwill)
and the amount of all rental expenses under operating leases, in each case
to the extent such items are taken into account in determining Consolidated
Net Income.
"Consolidated Indebtedness" means Indebtedness of the Borrowers and
-------------------------
their Consolidated Subsidiaries, as determined in accordance with GAAP.
"Consolidated Leverage Ratio" means the ratio of Consolidated
---------------------------
Indebtedness to Consolidated Cash Flow.
"Consolidated Net Income" means, for any period, the consolidated net
-----------------------
income of the Borrowers and their Consolidated Subsidiaries for any period,
as determined in accordance with GAAP, provided that there shall be
--------
excluded therefrom (a) the net income (or deficit) of any Person accrued
prior to the date it becomes a Consolidated Subsidiary or is merged into or
consolidated with Borrowers or any Consolidated Subsidiary except mergers
accounted for under the pooling of interests method, (b) the net income (or
deficit) of any Person (other than a Consolidated Subsidiary) in which
Borrowers or any Consolidated Subsidiary have an ownership interest, except
to the extent that Borrowers or such Consolidated Subsidiary have received,
or have the right to receive, such income, (c) the undistributed earnings
of any Subsidiary to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of any contractual obligation or requirement of law
applicable to such Subsidiary, (d) any aggregate net gain or loss during
such period arising from the sale, exchange or other disposition of capital
assets (such term to include all fixed assets, whether tangible or
6
<PAGE>
intangible, all inventory sold in conjunction with the disposition of fixed
assets and all securities) other than in the ordinary and usual course of
its business, net of any related provision for taxes, (e) any write-up or
write-down of any asset net of any related provision for taxes, (f) any net
gain from the collection of the proceeds of life insurance policies, (g)
any gain arising from the acquisition of any securities, or the
extinguishment, under GAAP, of any Indebtedness of Borrowers or any
Subsidiary, (h) any extraordinary gain or loss, realized during such
period, net of any related provision for taxes, (i) in the case of a
successor to Parent Borrower by consolidation or merger or as a transferee
of its assets, any net income or loss of the successor corporation prior to
such consolidation, merger or transfer of assets, and (j) any deferred
credit representing the excess of equity in any Subsidiary at the date of
acquisition over the cost of the investment in such Subsidiary.
"Consolidated Net Worth" means, as computed at any time and from time
----------------------
to time, the excess of Consolidated Total Assets over Consolidated Total
Liabilities.
"Consolidated Subsidiary" means with respect to any Person, at any
-----------------------
time, any Subsidiary or other Person the accounts of which are consolidated
with those of such first Person in its consolidated financial statements as
of such time prepared in accordance with GAAP.
"Consolidated Tangible Net Worth" means, as to the Borrowers and their
-------------------------------
Consolidated Subsidiaries at any date of determination thereof, the sum at
such time of: the Consolidated Net Worth of the Borrowers and their
Consolidated Subsidiaries less, with respect to the Borrowers and their
Consolidated Subsidiaries, the total of (a) all assets which would be
classified as intangible assets under GAAP consistently applied and (b) any
revaluation or other write-up in book value of assets following September
30, 1998.
"Consolidated Total Assets" means all assets of the Borrowers and
-------------------------
their Subsidiaries, computed at any time and from time to time on a
consolidated basis, which would be classified, in accordance with GAAP, as
total assets of a corporation conducting a business the same as, or similar
in nature to, the business conducted by the Borrowers and their
Subsidiaries.
"Consolidated Total Liabilities" means all liabilities of the
------------------------------
Borrowers and their Subsidiaries, computed at any time and from time to
time on a consolidated basis, which would be classified, in accordance with
GAAP, as total liabilities of a
7
<PAGE>
corporation conducting a business the same as, or similar in nature to, the
business conducted by the Borrowers and their Subsidiaries.
"Credit Agreement Related Claim" means any claim (whether civil,
------------------------------
criminal or administrative and whether sounding in tort, contract or
otherwise) in any way arising out of, related to, or connected with, this
Agreement or any other Loan Document or the relationships established
hereunder or thereunder.
"Default Rate" means the rate of interest applicable under Section 3.3
------------
of this Agreement from time to time.
"Dollars", "U.S.$" and the sign "$" mean such coin or currency of the
-------
United States of America as at the time shall constitute legal tender for
the payment of public and private debts.
"Drawing" has the meaning specified in Section 2.3(e) of this
-------
Agreement.
"Effective Date" has the meaning specified in Section 4.1 of this
--------------
Agreement.
"Environmental Control Statutes" shall mean each and every applicable
------------------------------
federal, state, county or municipal statute, ordinance, rule, regulation,
order, directive or requirement, together with all successor statutes,
ordinances, rules, regulations, orders, directives or requirements, of any
Governmental Authority, including without limitation laws in any way
related to Hazardous Substances.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"ERISA Affiliate" means any Person, including a Subsidiary or other
---------------
Affiliate, that is a member of any group of organizations within the
meaning of Code Sections 414(b), (c), (m) or (o) of which Borrowers are a
member.
"Event of Default" has the meaning specified in Section 7.1 of this
----------------
Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
and any successor Federal statute.
"Facility Fee" has the meaning specified in Section 3.7(a) of this
------------
Agreement.
8
<PAGE>
"Federal Funds Rate" means, for any day, the rate per annum (rounded
------------------
upward to the nearest 1/100th of 1%) equal to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by the Federal Reserve Bank of New York on the
Business Day next succeeding such day; provided that (a) if such day is not
--------
a Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Business Day and (b) if no such
rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate quoted to the Agent on
such day on such transactions as determined by the Agent.
"Fee Payment Date" means (a) in the case of the Facility Fee, the
----------------
first Business Day following the end of any Fiscal Quarter (or part
thereof), (b) in the case of the Administrative Fee, the first Business Day
following each annual anniversary of the Effective Date, and (c) in the
case of the L/C Fronting Fee, on the date of issuance of the Standby Letter
of Credit to which such fees relate.
"Final Prospectus" means the final prospectus filed with the SEC
----------------
pursuant to SEC Rule 424 in connection with the Parent Borrower Public
Offering.
"Fiscal Quarter" means the quarter, during any Fiscal Year, ending
--------------
March 31, June 30, September 30 and December 31.
"Fiscal Year" has the meaning specified in Section 6.1(a) of this
-----------
Agreement.
"Form 8-K" means Form 8-K as prescribed by the SEC under the Exchange
--------
Act.
"Form 10-K" means Form 10-K as prescribed by the SEC under the
---------
Exchange Act.
"Form 10-Q" means Form 10-Q as prescribed by the SEC under the
---------
Exchange Act.
"Funding Date" means the date on which any loan shall be made by a
------------
Lender to the Borrowers hereunder.
"GAAP" means generally accepted accounting principles as set forth in
----
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
9
<PAGE>
pronouncements of the Financial Accounting Standards Board or such other
statements by such other Person as may be approved by a significant segment
of the accounting profession in the United States.
"Governmental Authority" means any nation or government, any state or
----------------------
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Hazardous Substance" means (a) any substance designated pursuant to
-------------------
section 311(b)(2)(A) of the Federal Water Pollution Control Act, (b) any
element, compound, mixture, solution or substance designated pursuant to
section 102 of CERCLA, (c) any hazardous waste having the characteristics
identified under or listed pursuant to section 3001 of the Solid Waste
Disposal Act (but not including any waste the regulation of which under the
Solid Waste Disposal Act has been suspended by Act of Congress), (d) any
toxic pollutant listed under section 307(a) of the Federal Water Pollution
Control Act, (e) any hazardous air pollutant listed under section 112 of
the Clean Air Act, and (f) any imminently hazardous chemical substance or
mixture with respect to which the Administrator has taken action pursuant
to section 7 of the Toxic Substances Control Act. The term specifically
includes petroleum, including crude oil or any faction thereof, asbestos,
asbestos containing materials and urea formaldehyde insulation. The term
does not include natural gas, natural gas liquids, liquefied natural gas,
or synthetic gas useable for fuel (or mixtures of natural gas and such
synthetic gas).
"Indebtedness" means, without duplication, all (a) indebtedness,
------------
obligations and liabilities now existing or hereafter arising for money
borrowed by the Borrowers or any Subsidiary thereof, whether or not
evidenced by a note, indenture or other agreement (including, without
limitation, the Revolving Notes and the Swing Line Note), (b) reimbursement
or indemnification obligations in respect of any letter of credit issued
for the account of the Borrowers or any Subsidiary thereof (other than
letters of credit related to State Payment Obligations), (c) reimbursement
or indemnification obligations in respect of any guarantee, suretyship
agreement or similar agreement issued on behalf of the Borrowers or any
Subsidiary thereof (other than such obligations in respect of guarantees,
suretyship agreements, and other similar arrangements related to State
Payment Obligations), (d) guarantees, suretyship agreements, and other
similar arrangements effecting the assumption of a debt or obligation of
any Person (other than the Borrowers or a Consolidated Subsidiary thereof)
as to which one or more of the Borrowers or a Consolidated Subsidiary have
a
10
<PAGE>
reimbursement or indemnification obligation, or the endorsement of any
promissory note or other instrument or obligation of any Person (other than
the Borrowers or a Consolidated Subsidiary), (e) obligations of the
Borrowers or any Subsidiary thereof as lessee under any Capital Lease (as
reflected on a balance sheet prepared in accordance with GAAP), (f) all
obligations of the Borrowers or any Subsidiary thereof in respect of any
interest rate or currency swap, rate cap or other similar transaction
(valued in an amount equal to the highest termination payment, if any, that
would be payable by such Person upon termination of such transaction for
any reason on the date of determination); (g) all amounts owing by the
Borrowers or any Subsidiary thereof under purchase money mortgages or other
purchase money liens or conditional sales or other title retention
agreements and (h) all indebtedness secured by purchase money mortgages,
liens, security interests, conditional sales or other title retention
agreements upon property owned by the Borrowers or any Subsidiary thereof
(whether or not the Borrowers or Subsidiary have assumed or become liable
for the payment of such indebtedness).
"Indemnified Person" has the meaning specified in Section 9.10(b) of
------------------
this Agreement.
"Initial Fiscal Quarter" has the meaning specified in Section
----------------------
6.1(b)(i) of this Agreement.
"Intercompany Agreements" has the meaning specified in Section 5.16(b)
-----------------------
of this Agreement.
"Intercompany Debt" has the meaning specified in Section 5.16(a) of
-----------------
this Agreement.
"Interest Payment Date" means (a) in the case of Revolving Loans
---------------------
bearing interest at the Base Rate, the last Business Day of the calendar
quarter (or part thereof) in which interest accrues on such Revolving
Loans, (b) in the case of LIBOR Loans, the expiration of the LIBOR Period
in respect of such LIBOR Loans, (c) in the case of any Swing Line Loans, on
the last Business Day of the Swing Line Period in respect of such Swing
Line Loans, and (d) in the case of any interest period exceeding three (3)
months or ninety (90) days, as the case may be, those days that occur
during such interest period at intervals of three months or ninety days, as
the case may be, after the first day of such Interest Period.
11
<PAGE>
"Investment" in any Person means, without duplication:
----------
(a) the acquisition (whether for cash, property, services or
securities or otherwise) of Capital Stock, bonds, notes, debentures,
partnership, limited liability company, or other ownership interests or
other securities of such Person; and
(b) any deposit with, or advance, loan or other extension of credit
to, such Person or guarantee or assumption of, or other contingent
obligation with respect to, Indebtedness of such Person, other than
Indebtedness and guarantees permitted by Section 6.2(b) and Loans permitted
by Section 6.2(d).
"Issuing Lender" means, initially, the Agent and, thereafter, such
--------------
other Lender as from time to time shall agree to act as the issuer of the
Standby Letters of Credit by notice to the Lenders, the Agent and the
Borrowers.
"L/C Fee" has the meaning specified in Section 2.3(b) of this
-------
Agreement.
"L/C Fee Payment Date" means the last Business Day of the calendar
--------------------
quarter.
"L/C Fronting Fee" has the meaning specified in Section 2.3(b) of this
----------------
Agreement.
"Lender" or "Lenders" have the meanings specified in the preamble of
------ -------
this Agreement.
"Lender Availability" means, as of any date of determination and with
-------------------
respect to each Lender, the amount determined by deducting (a) the amount
of such Lender's Pro Rata Share of the Total Outstanding Amount from (b)
----
the amount of such Lender's Pro Rata Share of the Revolving Loan
Commitment.
"LIBOR" means, with respect to any LIBOR Period, (a) the per annum
-----
interest rate (rounded upward to the nearest 1/100th of 1%) determined on
the basis of the offered rates for Dollar deposits for a term comparable to
such LIBOR Period and in an amount substantially equal to the outstanding
amount of the Revolving Loans in respect of which such determination is
made which appear on the Bloomberg Screen Page BBAM1 as of 11:00 a.m.
(London time) on the day that is two LIBOR Business Days prior to the first
day of such LIBOR Period, divided by (b) a number equal to 1.00 minus
-------
the LIBOR Reserve Rate.
12
<PAGE>
"LIBOR Business Day" means any day on which commercial banks are open
------------------
for international business (including dealings in Dollar deposits) in
London or such other Euro-dollar interbank market as may be selected by the
Agent in its sole discretion.
"LIBOR Conversion" has the meaning specified in Section 3.8(a) of this
----------------
Agreement.
"LIBOR Conversion Notice" has the meaning specified in Section 3.8(a)
-----------------------
of this Agreement.
"LIBOR Loans" means the Revolving Loans which bear interest at the
-----------
Applicable LIBOR Rate.
"LIBOR Period" means the one month, two month, three month or six
------------
month interest period selected by the Borrowers pursuant to any LIBOR
Conversion Notice.
"LIBOR Reserve Rate" means, for any day with respect to a LIBOR Loan,
------------------
the maximum rate (expressed as a decimal) at which a Lender would be
required to maintain reserves under Regulation D of the Board of Governors
of the Federal Reserve System, as amended from time to time (or any
successor or similar regulations relating to such reserve requirements),
against "Eurocurrency liabilities" (as that term is used in Regulation D),
if such liabilities were outstanding. The LIBOR Reserve Rate shall be
adjusted automatically on and as of the effective date of any change in the
LIBOR Reserve Rate.
"Lien" of any Person means any mortgage, deed of trust, lien, pledge,
----
adverse interest in property, charge, security interest or other
encumbrance in or on, or any interest or title of any vendor, lessor,
lender or other secured party to or of such Person under any conditional
sale or other title retention agreement or Capital Lease with respect to,
any property or asset owned or held by such Person, or the signing or
filing of any security agreement with respect to any of the foregoing
authorizing any other party as the secured party thereunder to file any
financing statement.
"Loan" means any Revolving Loan (whether bearing interest at the Base
----
Rate or Applicable LIBOR Rate) or Swing Line Loan, and "Loans" shall mean,
-----
collectively, all Revolving Loans (whether bearing interest at the Base
Rate or Applicable LIBOR Rate) and Swing Line Loans.
13
<PAGE>
"Loan Documents" means this Agreement, the Revolving Notes, the Swing
--------------
Line Note, and the Administrative Fee Letter.
"Mandatory Borrowing" has the meaning specified in Section 2.4(e) of
-------------------
this Agreement.
"Maturity Date" means August ___, 2003.
-------------
"Multiemployer Plan" means any "multiemployer plan" as defined in
------------------
ERISA Section 4001(a)(3) to which the Borrowers or any ERISA Affiliate are
making or accruing an obligation to make contributions, or have within any
of the preceding three plan years made or accrued an obligation to make
contributions.
"Note" means each of the Revolving Notes and the Swing Line Note.
----
"Obligations" means all now existing or hereafter arising
-----------
indebtedness, obligations, liabilities and covenants of the Borrowers to
the Lenders or the Agent, their respective Affiliates or permitted
successors and assigns or any other Indemnified Person, in each case
arising under or evidenced by this Agreement or any other Loan Document,
whether direct or indirect, absolute or contingent, now or hereafter
existing, or due or to become due.
"OHI" means Overnite Holding, Inc., a Delaware corporation and 100%
---
owned Subsidiary of Parent Borrower.
"Operating Borrower" means Overnite Transportation Company, a Virginia
------------------
corporation and 100% owned Subsidiary of OHI.
"Optional Prepayment" means the optional prepayment of Revolving Loans
-------------------
pursuant to Section 3.6(b) of this Agreement or the optional prepayment of
Swing Line Loans pursuant to Section 2.4(f) of this Agreement, as the
context shall require.
"Parent Borrower" means Overnite Corporation, a Virginia corporation.
---------------
"Parent Borrower Public Offering" means the Parent Borrower Public
-------------------------------
Offering of Common Stock of Parent Borrower pursuant to the Form S-1
Registration Statement, Registration Number 333-53169, initially filed with
the SEC on May 20, 1998, as amended.
14
<PAGE>
"PBGC" means the Pension Benefit Guaranty Corporation and any
----
successor Federal Agency.
"Permitted Investment" means each of (a) direct obligations of the
--------------------
United States of America, and agencies thereof; (b) obligations fully
guaranteed by the United States of America; (c) certificates of deposit
issued by, or bankers' acceptance of, or time deposits with, any bank,
trust company or national banking association incorporated or doing
business under the laws of the United States of America or one of the
states thereof having combined capital and surplus and retained earnings of
at least $100,000,000; (d) commercial paper of companies having a rating
assigned to such commercial paper by Standard & Poor's Corporation or
Moody's Investors Service, Inc. (or, if neither such organization shall
rate such commercial paper at any time, by any nationally recognized rating
organization in the United States of America) of at least A-2 or P-2,
respectively; (e) registered investment companies that limit their
investments to the instruments described in clauses (a) through (d) hereof;
(f) overnight repurchase agreements based on securities of the types
described in clauses (a) and (b) with a bank, trust company or national
banking association satisfying the requirements of clause (c); or (g) any
other investment (including, without limitation, investments in Persons
that do not become Subsidiaries as a result of the investment), provided
--------
the aggregate amount of all investments referred to in this clause (g)
shall not exceed $6,000,000.00.
"Permitted Liens" means:
---------------
(a) any Liens for current taxes, assessments and other governmental
charges not yet due and payable or being contested in good faith by the
Borrowers or one or more of their Subsidiaries by appropriate proceedings
and for which adequate reserves have been established by the Borrowers or
one or more of their Subsidiaries as reflected in Borrowers' financial
statements;
(b) any mechanic's, materialman's, carrier's, warehousemen's or
similar Liens for sums not yet due or being contested in good faith by the
Borrowers or one or more of their Subsidiaries by appropriate proceedings
and for which adequate reserves have been established by the Borrowers or
one or more of their Subsidiaries as reflected in Borrowers' financial
statements;
(c) any Liens in favor of the Lenders under the Loan Documents;
(d) easements, rights-of-way, restrictions and other similar
encumbrances on the real property or fixtures of the Borrowers or one or
more
15
<PAGE>
of their Subsidiaries incurred in the ordinary course of business which
individually or in the aggregate are not substantial in amount and which do
not in any case materially detract from the value of the property subject
thereto or interfere with the ordinary conduct of the business of the
Borrowers or any of their Subsidiaries;
(e) Liens (other than Liens imposed on any property of the Borrowers
or one or more of their Subsidiaries or any ERISA Affiliate pursuant to
ERISA or Section 412 of the Code) incurred or deposits made in the ordinary
course of business, including Liens in connection with workers'
compensation, unemployment insurance and other types of social security and
Liens to secure performance of tenders, statutory obligations, trade
contracts (other than for Indebtedness), surety and appeal bonds (in the
case of appeal bonds such Lien shall not secure any reimbursement or
indemnity obligation in an amount greater than $1,000,000), bids, leases
that are not Capital Leases, performance bonds, sales contracts and other
similar obligations, deposits securing liability to insurance carriers
under insurance or self-insurance arrangements, in each case, not incurred
in connection with the obtaining of credit or the payment of a deferred
purchase price, and which do not, in the aggregate, result in a material
adverse effect on the business, operations, assets or condition (financial
or otherwise) of the Borrowers or one or more of their Subsidiaries;
(f) any Liens existing upon the date hereof as set forth in Schedule
1.1 hereto;
(g) Liens securing obligations incurred to finance the deferred
purchase price of property, provided that (i) such Liens shall be created
--------
within 120 days after the acquisition of such property, (ii) such Liens do
not at any time encumber any property other than the property financed by
such obligations, (iii) the amount of the obligation secured thereby is not
increased, and (iv) the principal amount of an obligation secured by any
such Lien shall at no time exceed the lesser of (A) 100% of the original
purchase price of such property and (B) the fair value (as determined in
good faith by the Board of Directors of the Parent Borrower) of such
property at the time it was acquired;
(h) Liens securing obligations assumed in connection with Investments
made in accordance with Sections 6.2(e) and (h), provided that (i) such
--------
Liens exist at the time of the Investment and were not created in
anticipation thereof, (ii) any such Lien is not spread to cover any
additional property or assets after
16
<PAGE>
the time of such Investment, and (iii) the amount of the obligation secured
by any such Lien is not increased; and
(i) other Liens not to exceed $2,000,000 in the aggregate.
"Permitted Uses" means (a) a $105,000,000 payment to Union Pacific
--------------
Corporation in connection with Parent Borrower's acquisition of OHI and
Operating Borrower, (b) working capital, (c) capital expenditures made in
compliance with this Agreement, (d) letters of credit, and (e) general
corporate purposes.
"Person" means an individual, partnership, corporation (including a
------
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government
or any political subdivision or agency thereof.
"Potential Event of Default" means an event, condition or circumstance
--------------------------
which, with the giving of notice or the lapse of time or both, would
constitute an Event of Default.
"Prepayment Date" has the meaning specified in Section 9.3 of this
---------------
Agreement.
"Prime Rate" means the rate of interest established and announced from
----------
time to time by the Agent as its Prime Rate, it being understood and agreed
that the Prime Rate is used as a reference for fixing the lending rate on
commercial loans and is not necessarily the lowest or most favorable rate
of interest charged by the Agent on such loans. The Prime Rate, as applied
to the Revolving Loans, will be changed on the same day as change occurs in
the Agent's Prime Rate, in accordance with the Agent's standard practices
in effect from time to time with respect to the administration of
commercial loans.
"Prohibited Transaction" has the meaning ascribed to such term in
----------------------
ERISA.
"Pro Rata Share" means, as of any date of determination and with
--------------
respect to any Lender, a fraction (expressed as a percentage), the
numerator of which shall be the amount of such Lender's Commitment and the
denominator of which shall be the aggregate amount of Commitments of all
Lenders, as such Commitments may be reduced or otherwise adjusted from time
to time in accordance with the provisions of this Agreement; provided,
--------
however, that if all of the Commitments are terminated or reduced to zero
-------
hereunder, the Pro Rata
17
<PAGE>
Share shall mean, as of any date of determination and with respect to any
Lender, a fraction (expressed as a percentage), the numerator of which
shall be the sum of the aggregate amount of such Lender's Revolving Loans
then outstanding plus the aggregate amount of such Lender's participation
in any outstanding Standby Letter of Credit and the denominator of which
shall be the sum of the aggregate amount of all Revolving Loans then
outstanding plus all Standby Letters of Credit then outstanding.
"Regulation" shall mean any statute, law, ordinance, regulation, order
----------
or rule of any United States or foreign, federal, state, local or other
government or governmental body, including, without limitation, those
covering or related to banking, financial transactions, securities, public
utilities, environmental control, energy, safety, health, transportation,
bribery, record keeping, zoning, antidiscrimination, antitrust, wages and
hours, employee benefits, and price and wage control matters.
"Regulatory Change" means any applicable law, interpretation,
-----------------
directive, request or guideline (whether or not having the force of law),
or any change therein or in the administration or enforcement thereof, that
becomes effective or is implemented or first required or expected to be
complied with after the date hereof, whether the same is (i) the result of
-
an enactment by a government or any agency or political subdivision
thereof, a determination of a court or regulatory authority, or otherwise
or (ii) enacted, adopted, issued or proposed before or after the date
--
hereof, including any such that imposes, increases or modifies any tax,
reserve requirement, insurance charge, special deposit requirement,
assessment or capital adequacy requirement, but excluding any such that
imposes, increases or modifies any income or franchise tax imposed upon any
Lender by any jurisdiction (or any political subdivision thereof) in which
any Lender or any office is located.
"Release of Hazardous Substances" shall mean any spilling, leaking,
-------------------------------
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping, or disposing into the environment of any Hazardous
Substances (including the abandonment or discarding of barrels, containers,
and other closed receptacles containing any Hazardous Substance), but
excludes the normal application of fertilizer or pesticides.
"Reportable Event" means any event or condition described in ERISA
----------------
Section 4043(b), other than an event or condition with respect to which the
30-day notice requirement has been waived.
18
<PAGE>
"Required Lenders" means, except as otherwise provided in Section
----------------
8.9(a) hereof, as of any date of determination, such Lenders whose Pro Rata
Shares of the Revolving Loan Commitment, in the aggregate, are greater than
sixty-six and two-thirds percent (66K%); provided, however, that for so
-------- -------
long as only two financial institutions constitute Lenders hereunder (it
being understood that, solely for the purposes of determining the number of
financial institutions constituting Lenders under this proviso, each
financial institution, together with its Affiliates, shall constitute a
single Lender), Required Lenders shall mean, except as otherwise provided
in Section 8.9(a) hereof, as of any date of determination, such Lenders
whose Pro Rata Shares of the Revolving Loan Commitment, in the aggregate,
constitute one hundred percent (100%).
"Revolving Loan" has the meaning specified in Section 2.1 of this
--------------
Agreement.
"Revolving Loan Commitment" means the commitment of the Lenders to
-------------------------
make Revolving Loans and issue (or participate in the issuance of) Standby
Letters of Credit in an aggregate amount of up to the Aggregate Commitment,
as such amount may be reduced or otherwise adjusted from time to time in
accordance with the provisions of this Agreement.
"Revolving Note" means any promissory note issued to a Lender by the
--------------
Borrowers pursuant to this Agreement, substantially in the form
(appropriately completed) of Exhibit A to this Agreement, as the same may
be amended, modified or supplemented from time to time, and any other
promissory note issued in exchange or substitution thereof, and "Revolving
---------
Notes" means, collectively, all such promissory notes so issued.
-----
"SEC" means the Securities and Exchange Commission and any successor
---
Federal agency.
"Securities Act" means the Securities Act of 1933, as amended, and any
--------------
successor Federal statute.
"Stamp Taxes" has the meaning specified in Section 9.5 of this
-----------
Agreement.
"Standby Letter of Credit" has the meaning specified in Section 2.3 of
------------------------
this Agreement.
19
<PAGE>
"State Payment Obligations" means payment obligations to states of the
-------------------------
United States of America or the District of Columbia in respect of tolls
and fuel taxes not to exceed $5,000,000 in the aggregate at any time.
"Subsidiary" means any corporation, limited liability company,
----------
partnership, trust or other entity a majority of the capital stock (or
equivalent ownership or controlling interest) of which at the time
outstanding, having ordinary voting power for the election of directors (or
equivalent controlling interest or persons), are owned by Borrowers
directly or indirectly, and "Subsidiaries" means, collectively, all such
------------
entities.
"Swing Line Lender" has the meaning specified in Section 2.4(a) of
-----------------
this Agreement.
"Swing Line Borrowing Notice" has the meaning specified in Section
---------------------------
2.4(c) of this Agreement.
"Swing Line Loan" has the meaning specified in Section 2.4(a) of this
---------------
Agreement.
"Swing Line Note" means the promissory note issued by the Borrowers to
---------------
Crestar Bank pursuant to this Agreement in respect of the Swing Line Loans,
substantially in the form (appropriately completed) of Exhibit B to this
Agreement, as the same may be amended, modified or supplemented from time
to time, and any other promissory note issued in exchange or substitution
therefor.
"Swing Line Period" has the meaning specified in Section 2.4(c) of
-----------------
this Agreement.
"Swing Line Subfacility" has the meaning specified in Section 2.4(a)
----------------------
of this Agreement.
"Termination Event" means, with respect to any Benefit Plan, (a) any
-----------------
Reportable Event with respect to such Benefit Plan, (b) the termination of
such Benefit Plan, or the filing of a notice of intent to terminate such
Benefit Plan, or the treatment of any amendment to such Benefit Plan as a
termination under ERISA Section 4041(c), (c) the institution of proceedings
to terminate such Benefit Plan under ERISA Section 4042 or (d) the
appointment of a trustee to administer such Benefit Plan under ERISA
Section 4042.
20
<PAGE>
"Total Outstanding Amount" has the meaning specified in Section 2.1(a)
------------------------
of this Agreement.
"Year 2000 Compliant" has the meaning specified in Section 5.21 of
-------------------
this Agreement.
"Year 2000 Problem" has the meaning specified in Section 5.21 of this
-----------------
Agreement.
Section 1.2 Accounting Terms. All accounting terms not specifically
----------------
defined herein shall be construed in accordance with GAAP consistently applied.
Section 1.3 Time Period Computations. In the computation of a
------------------------
period of time specified in this Agreement from a specified date to a subsequent
date, the word "from" means "from and including" and the words "to" and "until"
mean "to but excluding".
ARTICLE II
GENERAL PROVISIONS OF REVOLVING CREDIT FACILITY
Section 2.1 The Revolving Loans.
-------------------
(a) Revolving Loan Borrowings. Subject to the terms and conditions
-------------------------
of this Agreement, each Lender severally and not jointly agrees to make
revolving loans (each individually, a "Revolving Loan" and, collectively, the
"Revolving Loans") to the Borrowers, at any time and from time to time on and
after the Effective Date until one Business Day prior to the Maturity Date in an
amount which shall not exceed such Lender's Pro Rata Share of the Revolving Loan
Commitment; provided, however, that (i) the sum of the aggregate outstanding
-------- -------
amount of all Revolving Loans plus the aggregate outstanding amount of all Swing
----
Line Loans plus the aggregate outstanding amount of all Standby Letters of
----
Credit (such sum, the "Total Outstanding Amount") shall at no time exceed the
Aggregate Commitment, and (ii) the aggregate outstanding amount of all Revolving
Loans made by each individual Lender pursuant to this Section 2.1 plus the
----
aggregate outstanding amount of all Standby Letters of Credit made by the
Issuing Lender and deemed made by each other Lender pursuant to Section 2.3
hereof shall at no time exceed such Lender's Pro Rata Share of the Revolving
Loan Commitment. Within the limits and subject to the terms and conditions set
forth in this Agreement,
21
<PAGE>
the Borrowers may borrow pursuant to this Section 2.1 and Section 2.2 hereof,
may prepay pursuant to Section 3.6(b), and reborrow under this Section 2.1
hereof.
(b) The Revolving Notes; Maturity. The Revolving Loans made by each
-----------------------------
Lender pursuant hereto shall be evidenced by a separate Revolving Note. Each
Revolving Note shall be issued on or before the Effective Date and shall bear
interest for the period from the initial Funding Date thereof until paid in full
on the unpaid principal amount thereof at the rate specified in Section 3.1 of
this Agreement. Each Lender is hereby authorized to record in the books and
records of such Lender (without making any notation in such Lender's Revolving
Note or any schedule thereto) the amount and Funding Date of each Revolving Loan
made by such Lender, and the amount and date of each payment or prepayment of
any Revolving Loan. No failure to so record nor any error in so recording shall
affect the obligations of the Borrowers to repay the actual outstanding
principal amount of the Revolving Loans, with interest thereon, as provided in
this Agreement. The aggregate principal amount of the Revolving Loans shall be
payable on the Maturity Date, unless sooner accelerated pursuant to the terms of
this Agreement.
Section 2.2 Revolving Loan Borrowing Procedures.
------------------------------------
(a) Notice of Revolving Borrowing. Whenever the Borrowers desire to
-----------------------------
borrow Revolving Loans under Section 2.1 hereof, the Borrowers shall deliver to
the Agent irrevocable written notice substantially in the form of Exhibit C
(each such notice, a "Borrowing Notice"). In the case of a Revolving Loan
bearing interest at the Base Rate, the Borrowing Notice shall be delivered no
later than 10:00 A.M. (Eastern time) on the Funding Date. In the case of a
Revolving Loan bearing interest at the Applicable LIBOR Rate, the Borrowing
Notice shall be delivered no later than 10:00 A.M. at least three (3) LIBOR
Business Days prior to the first day of the LIBOR Period as to which such loan
relates, it being understood that the Borrowers' entitlement to request
Revolving Loans bearing interest at the Applicable LIBOR Rate is subject to
compliance with, and the limitations of, Section 3.8(a) (with such modifications
as shall be necessary to reflect that an initial loan, rather than the
conversion of an outstanding loan, is being requested). The Borrowing Notice
shall specify (i) that the Borrowers wish to effect Revolving Loans, (ii) the
amount of the Revolving Loans thereby requested (which shall not be less than
$3,000,000 and shall be in multiples of $500,000), (iii) the requested Funding
Date of such Revolving Loans, which date shall be a Business Day, and (iv)
whether the requested Revolving Loans will bear interest at the Base Rate or
Applicable LIBOR Rate. Each Borrowing Notice shall be accompanied by the
officer's certificate contemplated by Section 4.2(d) hereof. In lieu of
delivering the above-described Borrowing Notice, and only with the consent of
the Agent in its
22
<PAGE>
sole discretion at such time, the Borrowers may give the Agent telephonic notice
of any such proposed borrowing by the time required under this Section 2.2(a);
provided that, in the event the Agent so consents, such notice shall be
- --------
confirmed in writing by delivery to the Agent promptly (but in no event later
than 12:00 noon (Eastern time) on the Funding Date of the requested Revolving
Loans) of a Borrowing Notice (it being understood that any such telephonic
notice shall be irrevocable). Notwithstanding anything contained herein to the
contrary, the Agent, without any notice or other authorization being required,
shall (and is hereby irrevocably instructed by the Borrowers to) effect
Revolving Loans bearing interest at the Base Rate in an amount sufficient to
effect each payment of interest on the Loans due on each Interest Payment Date,
and of each payment of the Facility Fee and the Administrative Fee due on the
applicable Fee Payment Date, in accordance with Section 3.4(a) of this
Agreement, provided that to the extent such payments are greater than the
--------
aggregate Lender Availability, such payments shall be effected by a debit to the
Borrowers' Account as provided in Section 3.4(a) hereof.
(b) Making of Revolving Loans. Promptly after receipt of a Borrowing
-------------------------
Notice under clause (a) of this Section 2.2 (or telephonic notice if the Agent
so consents thereto), the Agent shall notify each Lender by telecopy or telex or
other customary form of teletransmission of the requested borrowing. Each
Lender shall make the amount of its Revolving Loan available to the Agent in
Dollars and in immediately available funds, not later than 3:00 P.M. (Eastern
time) on the Funding Date specified in the Borrowing Notice. After the Agent's
receipt of the proceeds of such Revolving Loans from the Lenders, the Agent
shall (unless it shall have learned that any of the conditions precedent set
forth in Section 4.2 hereof have not been satisfied) make the proceeds of such
Revolving Loans available to the Borrowers on such Funding Date and shall
disburse such funds in Dollars to the Borrowers in immediately available funds
by crediting the Borrowers' Account.
(c) Failure to Fund by Lender. Unless the Agent shall have been
-------------------------
notified by any Lender prior to 12:00 P.M. (Eastern time) on any Funding Date in
respect of Revolving Loans requested under a Borrowing Notice that such Lender
does not intend to make available to the Agent such Lender's Revolving Loan on
such Funding Date, the Agent may assume that such Lender has made such amount
available to the Agent on such Funding Date and the Agent in its sole discretion
may, but shall not be obligated to, make available to the Borrowers a
corresponding amount on such Funding Date. If such corresponding amount is not
in fact made available to the Agent by such Lender on or prior to 3:00 P.M.
(Eastern time) on a Funding Date, such Lender agrees to pay and the Borrowers
agree to repay to the Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from
23
<PAGE>
the date such amount is made available to the Borrowers until the date such
amount is paid or repaid to the Agent, at (i) in the case of such Lender, the
Federal Funds Rate, and (ii) in the case of the Borrowers, the Base Rate. If
such Lender shall pay to the Agent such corresponding amount, such amount so
paid shall constitute such Lender's Revolving Loan, and if both such Lender and
the Borrowers shall have paid and repaid, respectively, such corresponding
amount, the Agent shall promptly pay over to the Borrowers such corresponding
amount in same day funds, but the Borrowers shall remain obligated for all
interest thereon. Nothing contained in this Section 2.2(b) shall be deemed to
relieve any Lender of its obligation hereunder to make its Revolving Loan on any
Funding Date.
Section 2.3 Standby Letters of Credit.
-------------------------
(a) Generally. Subject to and in accordance with the terms and
---------
conditions set forth herein, the Borrowers may request the Issuing Lender, from
time to time during the period commencing on the Effective Date and ending ten
(10) Business Days prior to the Maturity Date, to issue, and subject to the
terms hereof the Issuing Lender shall issue, for the account of the Borrowers,
one or more standby letters of credit (each, a "Standby Letter of Credit")
pursuant to the Issuing Lender's customary letter of credit application;
provided that by entering into this Agreement the Borrowers shall be deemed to
- --------
have requested the reissuance, effective as of the Effective Date, of all
Standby Letters of Credit previously issued by the Agent for the account of
Operating Borrower prior to the Effective Date, and such Standby Letters of
Credit shall thereafter be deemed for all purposes to have been issued under
this Agreement as of the Effective Date; provided, further, that the L/C
-------- -------
Fronting Fee shall not be payable on the Effective Date in respect of such
Standby Letters of Credit. The aggregate outstanding amount at any time and
from time to time of all Standby Letters of Credit shall not exceed $75,000,000.
The Issuing Lender shall have no obligation to issue any Standby Letter of
Credit if, after giving effect to the issuance thereof, the Total Outstanding
Amount shall then exceed the Aggregate Commitment (it being understood that the
Issuing Lender shall, upon request of the Borrowers, issue a Standby Letter of
Credit in an amount that would, after giving effect to the issuance thereof, not
cause the Aggregate Commitment to be exceeded).
(b) Standby Letter of Credit Fees; Maturity. The Borrowers shall,
---------------------------------------
among other things, pay to the Issuing Lender for the benefit of the Lenders,
pro rata, on each L/C Fee Payment Date, in arrears, a fee (the "L/C Fee") per
annum (calculated on the basis of a 360 day year and the actual number of days
elapsed), computed by multiplying the Applicable LIBOR Margin for the Fiscal
Quarter immediately preceding the applicable L/C Fee Payment Date by the daily
average of the aggregate of all
24
<PAGE>
Standby Letters of Credit outstanding during such Fiscal Quarter. Any change in
the Applicable LIBOR Margin resulting from a change in the Consolidated Leverage
Ratio shall be effective five (5) Business Days after receipt of Borrowers'
financial statements reflecting such ratio; provided, however, that if such
-------- -------
financial statements are not delivered when due, then the highest Applicable
LIBOR Margin shall apply. In addition to the L/C Fee, the Borrowers shall pay to
the Issuing Lender, for its own account, a L/C Fronting Fee equal to 0.05% of
the amount of the Standby Letter of Credit per annum (calculated on the basis of
a 360 days year and the actual number of days the Standby Letter of Credit will
be outstanding) (the "L/C Fronting Fee"). The L/C Fronting Fee shall be payable
not later than the Fee Payment Date.
All Standby Letters of Credit issued by the Issuing Lender as
contemplated by this Section 2.3 shall expire no later than the Maturity Date.
Notwithstanding that the Issuing Lender shall have no obligation to issue any
Standby Letter of Credit the expiration date of which shall extend beyond the
Maturity Date, if the expiration date of any Standby Letter of Credit shall in
fact extend beyond the Maturity Date, then on the last Business Day immediately
preceding the Maturity Date, there shall be deemed to have been made Revolving
Loans in the outstanding amount of all Standby Letters of Credit the expiration
date of which shall occur after the Maturity Date, the proceeds of which the
Issuing Lender shall deposit in a collateral account at the Issuing Lender or an
Affiliate thereof in order to collateralize such Standby Letters of Credit,
which collateral account shall bear interest for the account of the Borrowers
based upon investment of the funds as agreed between the Issuing Lender and the
Borrowers.
(c) Standby Letter of Credit Request Procedure. Whenever the
------------------------------------------
Borrowers desire that a Standby Letter of Credit be issued on its behalf, the
Borrowers shall give the Issuing Lender (with copies to be sent to the Agent and
each other Lender) at least three (3) Business Days' prior written notice
therefor. The execution and delivery of each request for a Standby Letter of
Credit shall be deemed to be a representation and warranty by the Borrowers that
such Standby Letter of Credit may be issued in accordance with, and will not
violate the requirements of, this Section 2.3. Unless the Issuing Lender has
received notice from the Agent or any Lender before it issues the respective
Standby Letter of Credit that one or more of the conditions specified in Section
4.2 are not then satisfied, or that the issuance of such Standby Letter of
Credit would violate this Section 2.3, then the Issuing Lender may issue the
requested Standby Letter of Credit for the account of the Borrowers in
accordance with the terms of this Agreement and, with respect to any matters not
specifically covered by this Agreement, in accordance with the Issuing Lender's
usual and customary commercial lending practices as in effect from time to time.
25
<PAGE>
(d) Letter of Credit Participations.
-------------------------------
(i) Immediately upon the issuance by the Issuing Lender of any
Standby Letter of Credit, the Issuing Lender shall be deemed to have sold
and transferred to each Lender (other than the Issuing Lender), and each
such Lender shall be deemed irrevocably and unconditionally to have
purchased and received from the Issuing Lender, without recourse or
warranty, an undivided interest and participation, in proportion to such
Lender's Pro Rata Share, in such Standby Letter of Credit, each drawing
made thereunder and the obligations of the Borrowers under this Agreement
with respect thereto, and any collateral therefor. Upon any change in a
Lender's Pro Rata Share of the Revolving Loan Commitment, it is hereby
agreed that with respect to all outstanding Standby Letters of Credit,
there shall be an automatic adjustment to the participations pursuant to
this Section 2.3(d) to reflect the new Pro Rata Share of the Revolving Loan
Commitment of the assigning and assignee Lenders.
(ii) In determining whether to pay under any Standby Letter of
Credit, the Issuing Lender shall have no obligation relative to the Lenders
other than to confirm that any documents required to be delivered under
such Standby Letter of Credit appear to have been delivered and that they
appear to comply on their face with the requirements of such Standby Letter
of Credit. Any action taken or omitted to be taken by the Issuing Lender
under or in connection with any Standby Letter of Credit, if taken or
omitted in the absence of gross negligence or willful misconduct, shall not
create for the Issuing Lender any resulting liability to any Lender.
(iii) Upon the request of any Lender, the Issuing Lender shall
furnish to such Lender copies of any Standby Letter of Credit to which the
Issuing Lender is party and such other documentation relating to such
Standby Letter of Credit as may reasonably be requested by such Lender.
(iv) As between the Borrowers on the one hand and the Issuing
Lender and the Lenders on the other hand, the Borrowers assume all risks of
the acts and omissions of, or misuse of the Standby Letters of Credit by
the respective beneficiaries of such Standby Letters of Credit. Without
limiting the generality of the foregoing, neither the Issuing Lender nor
any other Lender shall be responsible (except in the case of its gross
negligence or willful misconduct) for the following:
26
<PAGE>
(A) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any documents submitted by any party in connection
with the application for and issuance of or any drawing under such
Standby Letters of Credit, even if it should in fact prove to be in
any respects invalid, insufficient, inaccurate, fraudulent or forged;
(B) the validity or sufficiency of any instrument transferring
or assigning or purporting to transfer or assign any such Standby
Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason;
(C) failure of the beneficiary of any such Standby Letter of
Credit to comply fully with conditions required in order to draw upon
such Standby Letter of Credit, other than material conditions or
instructions that expressly appear in such Standby Letter of Credit;
(D) errors, omissions, interruptions or delays in the
transmission or delivery of any messages by mail, cable, telegraph,
telecopier, telex or otherwise, whether or not they are encoded;
(E) errors in interpretation of technical terms;
(F) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any such Standby
Letter of Credit or the proceeds thereof;
(G) the misapplication by the beneficiary of any such Standby
Letter of Credit of the proceeds of any drawing of any such Standby
Letter of Credit; or
(H) any consequences arising from causes beyond the control of
the Issuing Lender, including without limitation any acts of
governments.
(v) The obligations of the Lenders to make payments to the Agent
for the account of the Issuing Lender with respect to Standby Letters of
Credit shall be irrevocable and not subject to any qualification or
exception whatsoever and shall be made in accordance with the terms and
conditions of this Agreement under all circumstances, including, without
limitation, any of the following circumstances:
27
<PAGE>
(A) any lack of validity or enforceability of this Agreement or
any of the other Loan Documents;
(B) the existence of any claim, setoff, defense or other right
which the Borrowers may have at any time against a beneficiary named
in a Standby Letter of Credit, any transferee of any Standby Letter of
Credit (or any Person for whom any such transferee may be acting), the
Agent, the Issuing Lender, any Lender, or any other Person, whether in
connection with this Agreement, any Standby Letter of Credit, the
transactions contemplated herein or any unrelated transactions;
(C) any draft, certificate or any other document presented under
the Standby Letter of Credit shall prove to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein shall
prove to be untrue or inaccurate in any respect;
(D) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents;
(E) the occurrence of any Event of Default or Potential Event of
Default; or
(F) the termination of this Agreement or any Commitment.
(e) Standby Letter of Credit Drawings Constitute Revolving Loans.
------------------------------------------------------------
The Issuing Lender shall promptly notify the Agent, and the Agent shall promptly
notify each Lender, in each case by telecopy or telex or other customary form of
teletransmission, of any drawing under any Standby Letter of Credit (each
drawing, a "Drawing"). Each Drawing shall immediately be deemed to be and for
all purposes of this Agreement shall constitute a Revolving Loan hereunder in
the amount of such drawing. Each Lender shall promptly and unconditionally
pay to the Agent for the account of the Issuing Lender an amount equal to such
Lender's Pro Rata Share of such Drawing in same day funds. Such payment shall
be made to the Agent at the Agent Lending Office. If the Agent delivers such
notice to such Lender prior to 2:00 P.M. (Eastern time) on any Business Day,
such Lender shall make its required payment on the same Business Day. If and to
the extent such Lender shall not have made available to the Agent for the
account of the Issuing Lender such Lender's Pro Rata Share of such Drawing, such
Lender agrees to pay to the Agent for the account of the Issuing Lender,
promptly upon demand, such amount, together with interest thereon, for each day
from such date until the date such amount is paid to the Agent for the Account
of the Issuing Lender at
28
<PAGE>
the Federal Funds Rate plus 100 basis points. The failure of any Lender to make
available to the Agent for the Account of the Issuing Lender its Pro Rata Share
of any Drawing shall not relieve any other Lender of its obligation hereunder to
make available to the Agent for the Account of the Issuing Lender its Pro Rata
Share of any Drawing on the date so required; provided, however, that no Lender
-------- -------
shall be responsible for the failure of any other Lender to make available to
the Agent for the account of the Issuing Lender such other Lender's Pro Rata
Share of such Drawing.
Section 2.4 Swing Line Loan Subfacility.
---------------------------
(a) Swing Line Subfacility. Subject to the terms and conditions
----------------------
hereof, Crestar Bank, in its individual capacity (as such, the "Swing Line
Lender"), shall, in its sole and absolute discretion from and after the
Effective Date until one Business Day prior to the Maturity Date, make certain
revolving credit loans (each, a "Swing Line Loan" and, collectively, the "Swing
Line Loans") to the Borrowers; provided, however, that (i) the aggregate
-------- ------- -
principal amount of all Swing Line Loans shall at no time exceed $10,000,000
(such amount, the "Swing Line Subfacility"), and (ii) the sum of the aggregate
--
amount of all Revolving Loans (whether bearing interest at the Base Rate or
Applicable LIBOR Rate) plus the aggregate amount of all Swing Line Loans plus
----
the aggregate amount of all Standby Letters of Credit shall at no time exceed
the Aggregate Commitment.
(b) The Swing Line Note; Maturity. The Swing Line Loans made by the
-----------------------------
Swing Line Lender pursuant hereto shall be evidenced by a separate Swing Line
Note. The Swing Line Note shall be issued on or before the Effective Date and
shall bear interest for the period from the date of the initial funding of any
Swing Line Loan until paid in full on the unpaid principal amount thereof. The
Swing Line Lender is hereby authorized to record in its books and records
(without making any notation on the Swing Line Note or any schedule thereto) the
amount and date of funding of each Swing Line Loan made by it, and the amount
and date of each payment or prepayment of any Swing Line Loan. No failure to so
record nor any error in so recording shall affect the obligations of the
Borrowers to repay the actual outstanding principal amount of the Swing Line
Loans, with interest thereon, as provided in this Agreement. The aggregate
principal amount of the Swing Line Loans shall be payable on the Maturity Date,
unless sooner accelerated pursuant to the terms of this Agreement.
(c) Swing Line Loan Borrowing Procedure. Whenever the Borrowers
-----------------------------------
desire to borrow Swing Line Loans under this Section 2.4, the Borrowers shall
deliver to the Swing Line Lender irrevocable written notice (each such notice, a
"Swing Line Borrowing Notice"), and the Swing Line Lender may, in its sole and
absolute discretion
29
<PAGE>
and upon such other arrangements as shall be specifically agreed to by the Swing
Line Lender and the Borrowers, make a Swing Line Loan to the Borrowers on the
date (which shall be a Business Day), at the time and in the amount so agreed;
provided, however, that (i) the principal amount of any Swing Line Loan made
- -------- ------- -
hereunder shall not be less than $1,000,000.00 (and shall be in multiples of
$250,000.00) and (ii) an individual Swing Line Loan shall be offered by the
--
Swing Line Lender for a period of not less than 1 but not more than 29 days (any
such period, a "Swing Line Period").
(d) Interest on Swing Line Loans. Subject to the provisions of
----------------------------
clause (e) of this Section 2.4, in the event that the Swing Line Lender shall
make any Swing Line Loan pursuant to Section 2.4 hereof, the aggregate principal
amount of Swing Line Loans outstanding from time to time shall bear interest at
a rate per annum equal to the Base Rate for the applicable Swing Line Period.
(e) Repayment of Swing Line Loans. Each Swing Line Loan made by the
-----------------------------
Swing Line Lender hereunder shall be due and payable upon the expiration of the
Swing Line Period relating to such Swing Line Loan. The Swing Line Lender may,
at any time and in its sole and absolute discretion, by written notice to the
Borrowers and the Agent (which shall promptly deliver a copy thereof to the
other Lenders), demand repayment of its Swing Line Loans then outstanding by way
of a Revolving Loan borrowing (a "Mandatory Borrowing"), in which case the
Borrower shall be deemed to have requested a Revolving Loan borrowing in the
amount of the then outstanding Swing Line Loans which shall bear interest at the
Base Rate; provided, however, that, in the following circumstances, any such
-------- -------
demand shall also be deemed to have been given one Business Day prior to each of
(i) the Maturity Date, (ii) the occurrence of any Event of Default described in
- --
clause (g), (h) or (i) of Section 7.1 hereof, (iii) upon acceleration of the
Obligations hereunder, whether on account of an Event of Default described in
clause (g), (h) or (i) of Section 7.1 or any other Event of Default, and (iv)
the exercise of remedies in accordance with the provisions of Section 7.1
hereof. Each Lender hereby irrevocably agrees to make such Revolving Loans
promptly upon any such request or deemed request on account of a Mandatory
Borrowing, in the amount (but in proportion to each Lender's Pro Rata Share) and
in the manner specified in the preceding sentence and on the same such date
notwithstanding that (A) the amount of the Mandatory Borrowing may not comply
- --------------------
with the minimum amount for borrowings of Revolving Loans otherwise required
hereunder, (B) whether any conditions specified in Section 4.2 are then
satisfied, (C) whether a Default or an Event of Default then exists, (D) failure
of any such request or deemed request for Revolving Loans to be made by the time
otherwise required in Section 2.2 hereof, (E) the date of such Mandatory
Borrowing, or (F) any reduction in the Revolving Loan Commitment or termination
of the Commitments relating thereto immediately prior to such Mandatory
Borrowing or
30
<PAGE>
contemporaneously therewith. In the event that any Mandatory Borrowing cannot
for any reason be made on the date otherwise required above (including, without
limitation, as a result of the commencement of a proceeding in bankruptcy with
respect to the Borrowers), then each Lender hereby agrees that it shall
forthwith purchase (as of the date the Mandatory Borrowing would otherwise have
occurred, but adjusted for any payments received from the Borrowers on or after
such date and prior to such purchase) from the Swing Line Lender such
participations in the then outstanding Swing Line Loans as shall be necessary to
cause each such Lender to share in such Swing Line Loans ratably based upon its
respective Pro Rata Share of the Revolving Loan Commitment (determined before
giving effect to any termination of the Revolving Loan Commitments pursuant to
the last paragraph of Section 7.1), provided that (x) all interest payable on
--------
the Swing Line Loans shall be for the account of the Swing Line Lender until the
date as of which the respective participation of each other Lender is purchased,
and (y) at the time any purchase of participations pursuant to this sentence is
actually made, the purchasing Lender shall be required to pay to the Swing Line
Lender interest on the principal amount of such participation purchased for each
day from and including the day upon which the Mandatory Borrowing would
otherwise have occurred to but excluding the date of payment for such
participation, at the rate equal to, if paid within two (2) Business Days of the
date of the Mandatory Borrowing, the Federal Funds Rate, and thereafter at a
rate equal to the Base Rate.
(f) Optional Prepayment of Swing Line Loans. Subject to the
---------------------------------------
provisions of this clause (f) and Section 3.9 hereof, the Borrowers may, at
their sole option, prepay the principal amount of the Swing Line Loans in whole
or in part (in an amount of $250,000 or more and in multiples of $250,000) at
any time and from time to time, without premium or penalty. In respect of each
Optional Prepayment of a Swing Line Loan proposed to be made by the Borrowers,
the right of the Borrowers to make such Optional Prepayment is subject to the
Agent's receipt from the Borrowers, no later than 12:00 P.M. on the Business Day
specified therein as the date on which such Optional Prepayment is to be made,
of a written notice (which shall be irrevocable) specifying (i) that the
-
Borrowers desire to prepay such Swing Line Loan, (ii) the principal amount of
--
such Optional Prepayment, and (iii) the date (which shall be a Business Day) on
---
which such Optional Prepayment will be made. Any Optional Prepayment of a Swing
Line Loan, which has not been converted to a Revolving Loan, made by the
Borrowers as permitted hereunder shall be paid to the Agent for the account of
the Swing Line Lender no later than 12:00 P.M. (Eastern Time) on the applicable
prepayment date.
31
<PAGE>
ARTICLE III
INTEREST, FEES AND REPAYMENT
Section 3.1 Interest on the Revolving Loans
-------------------------------
(a) Base Rate. The initial Revolving Loan and, except as provided
---------
pursuant to clause (b) of this Section 3.1, the aggregate principal amount of
the Revolving Loans outstanding from time to time shall bear interest at a rate
per annum equal to the Base Rate until the entire principal amount of the
Revolving Loans shall have been repaid. Any change in the rate of interest on
the Revolving Loans resulting from a change in the Base Rate shall be effective
as of the opening of business on the day on which such change is effective.
(b) LIBOR Rate. In the event the Borrowers shall effect a LIBOR
----------
Conversion in accordance with the provisions of Section 3.8 of this Agreement or
obtain a Revolving Loan that shall bear interest initially at the Applicable
LIBOR Rate as provided in Section 2.2(a) hereof, the aggregate principal amount
of the Revolving Loans that are the subject of such LIBOR Conversion or
Borrowing Notice, as the case may be, shall bear interest at a rate per annum
equal to the Applicable LIBOR Rate. Any change in the Applicable LIBOR Rate
resulting from a change in the Consolidated Leverage Ratio shall be effective
five (5) Business Days after receipt of Borrowers' financial statements
reflecting such ratio; provided, however, that if such financial statements are
-------- -------
not delivered when due, then the highest Applicable LIBOR Rate shall apply.
Section 3.2 Regulatory Changes. If, after the date of this
------------------
Agreement, any Regulatory Change:
(a) shall subject any Lender to any tax, duty or other charge with
respect to its obligation to make or maintain any Loan or its Commitment, or
shall change the basis of taxation of payments to such Lender of the principal
of or interest on the Loans or in respect of any other amounts due under this
Agreement in respect of its obligation to make any Loan or maintain its
Commitment (except for changes in the rate of tax on the overall net income of
such Lender); or
(b) shall impose, modify or deem applicable any reserve, assessment,
special deposit, capital adequacy, capital maintenance or similar requirement
against assets of, deposits with or for the account of, or credit extended by,
such Lender or shall impose on such Lender any other condition affecting (i) the
obligation of the Lender to make or maintain the Loans or its Commitment, or
(ii) the Revolving Notes or
32
<PAGE>
the Swing Line Note; and the result of any of the foregoing is to increase the
cost to such Lender of making or maintaining any Loan or maintaining its
Commitment or to reduce the amount of any sum received or receivable by such
Lender under, or the rate of return attributable to, this Agreement or under the
Revolving Notes or the Swing Line Note, such Lender shall, within 30 days after
the effective date of such Regulatory Change, provide written notice to the
Borrowers of such Regulatory Change (it being agreed by the parties hereto that
if such notice is given after 30 days' of the effective date of such Regulatory
Change, the Borrowers shall be liable to the Lenders for the additional amounts
payable pursuant to this Section 3.2 only to the extent such additional amounts
accrue from and after the date of the giving of such notice), together with a
certificate describing in reasonable detail such increase or reduction, as the
case may be, then, within 30 days after delivery of such notice by such Lender
to the Borrowers if such Regulatory Change shall impose costs in excess of those
costs, or reduce the amount of any such sum or rate of return below the amount
or rate, applicable on the date of this Agreement, the Borrowers, shall pay to
the Agent for the account of such Lender for the account of such Lender such
additional amount or amounts as will compensate such Lender for such increase or
reduction. A certificate of such Lender setting forth the basis for the amount
of said increase or reduction, as the case may be, shall be conclusive in the
absence of manifest error.
Section 3.3 Interest After Due Date. In the event the Borrowers
-----------------------
fail to make any payment of the principal amount of or interest on any of the
Revolving Loans or Swing Line Loans, or of the Facility Fee, the Administrative
Fee, the L/C Fee or the L/C Fronting Fee, in each case within four (4) Business
Days after due (whether by demand, acceleration or otherwise), the Borrowers,
shall pay to the Agent for the account of the Lenders interest on such unpaid
amount, payable from time to time on demand, from the expiration of such four
(4) Business Day period following the date such amount shall have become due to
the date of payment thereof, accruing on a daily basis, at a per annum rate (the
"Default Rate") equal to the sum of (a) the greater of the Base Rate and
Applicable LIBOR Rate determined on and, in the case of any continuing default,
from time to time after the date of such default plus (b) two percent (2%).
----
Section 3.4 Payment and Computations.
------------------------
(a) Payments. All payments required or permitted to be made to the
--------
Agent, to the Agent for the account of the Lenders, or to any Lender under this
Agreement or under any Note shall be made in Dollars (i) if to the Agent, at the
-
Lending Office of the Agent in immediately available funds and (ii) if to any
--
Lender, to it in immediately available funds at an account specified by such
Lender in writing to the
33
<PAGE>
Borrowers. If payments are not received by the fourth Business Day following the
due date, the Borrowers hereby irrevocably instruct and authorize the Agent to
effect each payment of interest on the Loans as of the close of business on the
fourth Business Day following each Interest Payment Date, and of each payment of
the Facility Fee and the Administrative Fee due as of the close of business on
the fourth Business Day following the applicable Fee Payment Date, by effecting
Revolving Loans bearing interest at the Base Rate in an amount sufficient to
make such payments. If the amount of such payments is greater than the aggregate
Lender Availability, the Borrowers hereby irrevocably instruct and authorize the
Agent to effect such payments by debiting the Borrowers' Account on such
Interest Payment Date or Fee Payment Date, as the case may be, with the
aggregate amount thereof, in each case, after giving effect to the crediting to
the Borrowers' Account of the proceeds of the Revolving Loan, if any, made on
such Interest Payment Date or Fee Payment Date, as the case may be, in
accordance with Section 2.1(b) of this Agreement. The Agent shall provide to the
Borrowers an invoice showing the amount of such Revolving Loan or debit, as the
case may be, and the manner in which it was calculated.
(b) Computations. Interest on the unpaid portion of the Revolving
------------
Loans, the Swing Line Loans, the Facility Fee and the Administrative Fee shall
each be calculated for the actual number of days (including the first day but
excluding the last day) elapsed and shall be computed on the basis of a year of
360 days.
(c) Interest and Fee Payment Dates. The Facility Fee and interest on
------------------------------
the Loans shall be payable in arrears (i) in the case of the Revolving Loans and
-
Swing Line Loans, on each Interest Payment Date and (ii) in the case of the
--
Facility Fee, on each Fee Payment Date. The Administrative Fee and the L/C
Fronting Fee shall be payable in advance on each Fee Payment Date. The L/C Fee
shall be payable in arrears as provided in Section 2.3(b) hereof.
(d) Application of Payments; Apportionment.
--------------------------------------
(i) Unless a Lender shall be in default of its obligations to
advance any Revolving Loan or reimburse the Agent as provided herein, all
payments and prepayments of principal and interest in respect of
outstanding Revolving Loans and all payments of fees (other than the
Administrative Fee and the L/C Fronting Fee) and all other payments in
respect of any other Obligations (other than with respect to Swing Line
Loans) shall be allocated among (and paid over promptly after receipt
thereof to) such of the Lenders as are entitled thereto in proportion to
their respective Pro Rata Shares. All payments and prepayments of
principal and interest and other amounts in respect of the Swing
34
<PAGE>
Line Loans that have not been converted to Revolving Loans, and all
payments of the Administrative Fee and the L/C Fronting Fee, shall be
allocated only to the Swing Line Lender.
(ii) Upon the occurrence and during the continuance of an Event
of Default, the Agent shall, unless otherwise specified by the Required
Lenders as provided in the last paragraph of this clause (ii), apply all
payments in respect of any Obligations:
(A) first to pay interest on and then principal of any portion
of the Loans which the Agent may have advanced on behalf of any Lender
for which the Agent has not then been reimbursed by such Lender or the
Borrowers;
(B) second, to pay Obligations in respect of any fees, expense
reimbursement or indemnities due to the Agent;
(C) third, to pay Obligations in respect of any fees, expense
reimbursement, indemnities, increased costs or breakage then due to
the Lenders, pro rata;
(D) fourth, to the ratable payment of overdue interest or late
charges, if any, then due the Lenders;
(E) fifth, to the ratable payment of interest due in respect of
the Revolving Loans and Swing Line Loans;
(F) sixth, to the ratable payment or prepayment of principal due
in respect of the Revolving Loans and Swing Line Loans; and
(G) seventh, to the ratable payment of all other Obligations;
provided, however, that no Lender which shall be in default of its obligations
- -------- -------
to fund Revolving Loans or reimburse the Agent as provided herein shall be
entitled to its ratable share of payments in respect of any Obligations prior to
the payment to all non-defaulting Lenders of all amounts due such Lenders as
provided herein.
The order of priority set forth in this Section 3.4(d)(ii) is set
forth solely to determine the rights and priorities of the Agent and the Lenders
as among themselves. The order of priority set forth in clauses (C) through (G)
of this Section 3.4(d)(ii) may at any time and from time to time be changed by
the Required Lenders without necessity of notice to or consent of or approval by
the Borrowers, or any other Person.
35
<PAGE>
The order of priority set forth in clauses (A) and (B) of this Section
3.4(d)(ii) may be changed only with the prior written consent of the Agent.
Section 3.5 Payment at Maturity. Any outstanding principal amount
-------------------
of the Revolving Notes or the Swing Line Note theretofore not repaid, together
with any accrued and unpaid Facility Fee, Administrative Fee, L/C Fee or L/C
Fronting Fee, any accrued and unpaid interest thereon, together with any other
amounts due and payable in accordance with the provisions hereof (including
pursuant to Section 9.10 hereof) shall be due and payable in full on the
Maturity Date (unless sooner accelerated pursuant to the terms hereof), and this
Agreement shall not terminate until all Obligations shall have been paid in
full.
Section 3.6 Prepayments; Certain Early Repayments.
-------------------------------------
(a) Mandatory Prepayment of Loans and Standby Letters of Credit.
-----------------------------------------------------------
(i) Upon the termination of this Agreement pursuant to the first
sentence of Section 9.3 of this Agreement (supervening illegality), the
Borrowers shall on the Prepayment Date (x) prepay the Loans in full
-
together with interest accrued on the aggregate principal amount of the
Loans to the Prepayment Date, and (y) pay to the Agent, for the account of
-
the Lenders all other amounts payable pursuant to Sections 3.9 and 9.3 of
this Agreement.
(ii) If at any time the Total Outstanding Amount shall be greater
than the Aggregate Commitment, the Borrowers shall, without notice from the
Lender, prepay that portion of the Loans and/or the Standby Letters of
Credit, as the case may be, in an amount equal to such excess.
(b) Optional Prepayments of Revolving Loans. Subject to the terms and
---------------------------------------
conditions of clause (c) below and Section 3.9 hereof, the Borrowers may, at
their sole option, prepay the principal amount of the Revolving Loans (whether
bearing interest at the Base Rate or Applicable LIBOR Rate) in whole or in part
(in an amount of $500,000 or more and in multiples of $100,000) at any time and
from time to time, without premium or penalty.
(c) Optional Prepayment Procedure. In respect of each Optional
-----------------------------
Prepayment of Revolving Loans (whether bearing interest at the Base Rate or
Applicable LIBOR Rate) proposed to be made by the Borrowers, the right of the
Borrowers to make such Optional Prepayment is subject to the Agent's receipt
from the Borrowers, no later than 10:00 A.M. (Eastern Time) on the Business Day
specified therein as the date on which such Optional Prepayment is to be made
(unless such
36
<PAGE>
Optional Prepayment shall relate to LIBOR Loans, in which case such notice shall
be given no later than 10:00 A.M. (Eastern time) at least three (3) Business
Days prior to the date of prepayment, of a written notice (which shall be
irrevocable) specifying (i) that the Borrowers desire to prepay the Revolving
-
Loans, (ii) the principal amount of such Optional Prepayment, and (iii) the date
-- ---
(which shall be a Business Day or, if such Optional Prepayment relates to a
LIBOR Loan, a LIBOR Business Day) on which such Optional Prepayment will be
made. Any Optional Prepayment of Revolving Loans made by the Borrowers as
permitted hereunder shall be paid to the Agent for the account of the Lenders no
later than 12:00 P.M. (Eastern Time) on the applicable prepayment date (except
that any prepayment of a LIBOR Loan shall be paid no later than 10:00 A.M.
(Eastern Time) on the applicable prepayment date).
Section 3.7 Facility Fee, Administrative Fee, and Letter of Credit
------------------------------------------------------
Fees.
- ----
(a) Facility Fee. For each Fiscal Quarter (or part thereof) during
------------
the period from the Effective Date until the Maturity Date, the Borrowers shall
pay to the Agent for the account of the Lenders pro rata based upon each
Lender's Pro Rata Share of the Revolving Loan Commitment, a Facility Fee (the
"Facility Fee") determined based upon the Aggregate Commitment without regard to
outstanding amounts of Revolving Loans and Standby Letters of Credit. The
Facility Fee shall be computed at a rate per annum equal to the Applicable
Facility Fee. The Facility Fee shall be due and payable in arrears on the Fee
Payment Date to which such Facility Fee relates and on the Maturity Date, and
shall be calculated on the basis of a 360 day year and the actual days elapsed.
(b) Administrative Fee. The Borrowers shall pay to the Agent, as
------------------
compensation for the services of the Agent hereunder, a fee (the "Administrative
Fee") in an amount separately agreed to by the Borrowers, Crestar Bank and the
Agent in that certain letter agreement dated June 18, 1998 (the "Administrative
Fee Letter"). The Administrative Fee payable by the Borrowers as contemplated by
this clause (b) shall be due on the applicable Fee Payment Date (and the
Borrowers shall not be entitled to any credit if any Lender as to which such fee
shall have been paid ceases to be a Lender hereunder for the entire year in
respect of which such fee shall have been due and payable; provided that if the
--------
Agent resigns as such during any year as to which the Administrative Fee has
been paid by the Borrowers, the Agent shall reimburse the Borrowers for the
portion of such Administrative Fee related to the period for which the Agent
will not continue to serve as Agent, calculated on the basis of a 360-day year
and the actual days elapsed).
37
<PAGE>
(c) Letter of Credit Fees. The Borrowers shall pay the L/C Fee and
---------------------
the L/C Fronting Fee in accordance with the provisions of Section 2.3(b) hereof.
Section 3.8 LIBOR Conversion
----------------
(a) Conversion. So long as no Event of Default or Potential Event of
----------
Default shall have occurred and be continuing, the Borrowers shall have the
right to convert all or part of the outstanding Revolving Loans bearing interest
at the then Base Rate to loans bearing interest at the then Applicable LIBOR
Rate (such conversion, a "LIBOR Conversion"); provided, however, that (i) the
-------- -------
LIBOR Period to which such LIBOR Conversion shall relate will not extend beyond
the Maturity Date and (ii) there shall not be outstanding at any one time more
than eight (8) LIBOR Loans. In order to effect a LIBOR Conversion, the
Borrowers shall give the Agent irrevocable written notice (such notice, a "LIBOR
Conversion Notice") prior to 10:00 A.M. (Eastern time), at least three LIBOR
Business Days prior to the first day of the LIBOR Period to which such LIBOR
Conversion shall apply, stating that (i) the Borrowers wish to effect a LIBOR
Conversion, (ii) the aggregate principal amount of outstanding Revolving Loans
which the Borrowers wish to bear interest at the Applicable LIBOR Rate (it being
understood and agreed that no LIBOR Conversion shall be permitted in an amount
less than $3,000,000.00 and shall be in multiples of $500,000.00), (iii) the
applicable LIBOR Period being elected by the Borrowers (it being understood that
no change in LIBOR with respect to any LIBOR Loans may be effected during any
applicable LIBOR Period) and (iv) the Business Day on which the LIBOR Period is
to be effective.
(b) Notice of LIBOR to Borrowers. In the event the Borrowers have
----------------------------
requested a LIBOR Conversion, the Agent shall give written notice to the
Borrowers and the Lenders of LIBOR as promptly as reasonably possible after such
rate is determined. The Agent's determination of LIBOR shall be conclusive in
the absence of manifest error.
(c) Successive Notice of LIBOR Conversion. Subject to the provisions
-------------------------------------
of clause (a) of this Section 3.8, the Borrowers may, by executing a LIBOR
Conversion Notice at least three LIBOR Business Days prior to the first day of
the LIBOR Period to which such LIBOR Conversion Notice shall apply, execute
successive LIBOR Conversions with respect to any Revolving Loan then outstanding
and bearing interest at the Base Rate together with any then outstanding LIBOR
Loans the LIBOR Period in respect of which is scheduled to expire on or before
the start of the LIBOR Period specified in such LIBOR Conversion Notice. If,
with respect to any LIBOR Loans, the Agent shall not have received a LIBOR
Conversion Notice for the next immediately succeeding LIBOR Period which
complies with the provisions of clause (a) of this Section 3.8, such LIBOR
38
<PAGE>
Loans shall, immediately upon the expiration of the then current LIBOR Period
and without any notice to the Borrowers, bear interest at the Base Rate in
accordance with the provisions of Section 3.1(a) of this Agreement.
(d) Market Disruption, etc. In the event that the Agent (i) shall
----------------------
have determined (which determination shall be conclusive and binding upon the
Borrowers) that by reason of circumstances affecting the London interbank market
either adequate or reasonable means do not exist for ascertaining LIBOR elected
by the Borrowers pursuant to the terms hereof or (ii) the Agent shall have
determined (which determination shall be conclusive and binding on the
Borrowers) that the applicable LIBOR will not adequately and fairly reflect the
cost to the Agent of maintaining or funding loans bearing interest based on such
LIBOR rate, with respect to any portion of the Revolving Loans that the
Borrowers have requested be made as a LIBOR Loan (each, an "Affected Advance"),
the Agent shall promptly notify the Borrowers (by telephone or otherwise, to be
promptly confirmed in writing), with a copy to the Lenders, of such
determination. If the Agent shall give such notice, (x) any Affected Advances
shall be made as advances which shall bear interest at the Base Rate, and (y)
any outstanding LIBOR Loan shall, from and after the last day of the then
current LIBOR Period applicable thereto, bear interest at the Base Rate or, if
requested by Borrowers in accordance with Section 3.8(a) and the disruption
referred to in clause (i) or (ii) of this Section 3.8(d), as the case may be, is
no longer in existence, at the Applicable LIBOR Rate following conversion in
accordance with Section 3.8(a). Until any notice under clause (i) or (ii) of
this Section 3.8(d) has been withdrawn by the Agent, no amounts outstanding or
to be advanced hereunder shall bear interest based upon LIBOR.
Section 3.9 Breakage, etc. In the event of the prepayment of any
--------------
LIBOR Loan (whether by way of acceleration or otherwise or due to an Optional
Prepayment of any LIBOR Loan pursuant to Section 3.6(b) hereof), the Borrowers
shall pay to the Agent for the account of each Lender whose LIBOR Loan has been
so prepaid any loss or expense which such Lender may incur or sustain directly
as a result of such prepayment, including without limitation, an amount equal to
(a) an amount of interest which would have accrued on the amount so prepaid for
the period beginning on the date of such prepayment and ending on the last day
of the applicable LIBOR Period (such period, the "Breakage Period"), at the
Applicable LIBOR Rate minus (b) the amount of interest (as reasonably determined
by each affected Lender) which would have accrued to such Lender on such amount
by placing such amount on deposit for the Breakage Period with leading banks in
the London interbank market, in each case, as evidenced by a certificate
delivered to the Borrowers by each affected Lender, which certificate shall be
binding upon the Borrowers in the absence of manifest error.
39
<PAGE>
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1 Conditions Precedent The Revolving Loan Commitment of
--------------------
the Lenders hereunder shall become effective only on the day (the "Effective
Date") on which all of the following additional conditions precedent shall have
been fulfilled to the satisfaction of the Lenders; provided, however, that in
-------- -------
the event the Effective Date shall have not occurred on or prior to August 15,
1998, the Lenders shall have no further obligations hereunder:
(a) The Agent, on behalf of the Lenders, shall have received from the
Borrowers the following instruments, agreements, certificates and payments, as
the case may be, on or prior to the Effective Date:
(i) A Revolving Note, dated the Effective Date, payable to
the order of each of Lender in the amount of such Lender's Pro Rata Share
of the Revolving Loan Commitment and duly executed by the Borrowers;
(ii) A Swing Line Note, dated the Effective Date, payable to
the order of Crestar Bank in the amount of $10,000,000.00 and duly executed
by the Borrowers;
(iii) An opinion or opinions of counsel to the Borrowers, in
form and substance satisfactory to the Lenders;
(iv) A certified copy of the resolutions of the Board of
Directors of each of the Borrowers authorizing the execution and delivery
of this Agreement and/or the other Loan Documents to which they are a
party;
(v) A copy of the charter documents and by-laws of each of
the Borrowers and any Subsidiaries thereof, together with all amendments
thereto, certified by the Secretaries of the applicable Borrower or
Subsidiary as being true, complete and correct and in effect as of the
Effective Date;
(vi) By wire transfer of immediately available funds, the
Borrowers shall have paid to the Agent, on behalf of the Agent and the
Lenders, as applicable, the underwriting fee payable to the Agent and the
Lenders in accordance with the Administrative Fee Letter, which fee shall
be nonrefundable;
40
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(vii) A certificate of an Authorized Officer of each of the
Borrowers, dated the Effective Date, certifying that the matters contained
in clauses (b), (c) and (d) of Section 4.2 hereof are true and correct;
(viii) A certificate of an Authorized Officer of the Borrowers,
dated the Effective Date, certifying, in form and substance satisfactory to
the Lenders, the Borrowers' compliance with Section 6.1(i) hereof, having
attached to such certificate a summary in reasonable detail of the
Borrowers' and their Subsidiaries' insurance coverage. Upon request of the
Lenders, the Borrowers shall deliver an insurance report of an independent
insurance broker as to due compliance with Section 6.1(i) hereof; and
(ix) The results of a search, upon the records maintained with
the appropriate Secretary of State and county or city recorder offices of
all jurisdictions deemed advisable by the Lenders, regarding liens, if any,
on file with such offices and naming any of the Borrowers or any Subsidiary
as a debtor, which results shall be satisfactory to the Lenders.
(b) The Parent Borrower Public Offering shall have been completed by
August ___, 1998 [5 business days after signing and deposit in escrow] and
resulted in the Parent Borrower's receipt of net proceeds of not less than
$300,000,000;
(c) The Parent Borrower shall have acquired OHI and Operating
Borrower on terms satisfactory to the Agent, which terms shall not include the
incurrence of more than $105,000,000 of Indebtedness in connection with such
acquisition (other than Indebtedness not to exceed $5,000,000 in the aggregate
representing any balance of intercompany amounts due from Operating Borrower to
Union Pacific Corporation that may result from the closing of such acquisition);
(d) The Borrowers shall have delivered to the Lenders (i) the Final
Prospectus and (ii) the unaudited consolidated financial statements of the
Borrowers' and their Consolidated Subsidiaries as of June 30, 1998, together
with, in each case, an officer's certificate, dated the Effective Date, from an
Authorized Officer of each of the Borrowers, stating that, to their personal
knowledge after having performed such due diligence as would customarily be
performed by a corporate officer in their position, such Prospectus and
unaudited financial statements, if any, attached thereto as of the Effective
Date do not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading;
41
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(e) All legal matters incident to this Agreement shall be
satisfactory to counsel for the Lenders, and the Borrowers shall have reimbursed
the Lenders for their fees and expenses and the reasonable fees and expenses of
the Lenders' counsel in connection with the preparation or review, as the case
may be, of the Loan Documents and all matters incident thereto (it being
understood that such statement may not reflect the final statement of fees and
expenses incurred by the Lenders' counsel in connection with such preparation or
review);
(f) The Borrowers shall have disclosed to the Lenders promptly from
time to time any material developments or changes in the Borrowers and their
Subsidiaries', taken as a whole, business, assets, results of operations,
condition (financial or otherwise), including without limitation amendments to
their charter documents or the Parent Borrower's filings with the SEC and the
exhibits thereto, and any material amendments, changes or terminations of any
material contracts or the award of or loss of any material bid or proposal. Any
such material developments, changes or amendments shall not have had a material
adverse effect on the assumptions contained in the credit analysis of the
Borrowers performed by the Lenders prior to the execution of this Agreement or
resulted in a material adverse change since June 30, 1998 in the business,
assets, results of operations, condition (financial or otherwise) of the
Borrowers and their Subsidiaries, taken as a whole;
(g) All Schedules delivered hereunder by the Borrowers shall be in
form and substance satisfactory to the Lenders;
(h) By wire transfer of immediately available funds, the Agent shall
have received the Administrative Fee due and payable to the Agent pursuant to
the Administrative Fee Letter, which fee shall be nonrefundable; and
(i) The Lenders shall have received such other documents,
instruments, certificates, opinions, agreements and information as the Lenders
or their counsel shall reasonably request in their discretion in connection with
the consummation of the transactions contemplated by this Agreement (including,
without limitation, current consolidated financial statements of the Borrowers
and their Subsidiaries).
Section 4.2 Further Conditions Precedent to Loans and Standby
-------------------------------------------------
Letters of Credit. The obligation of the Agent, on behalf of the Lenders, to
- -----------------
make any Revolving Loan, and the obligation of the Swing Line Lender to make any
Swing Line Loan, and the obligation of the Issuing Lender to issue any Standby
Letter of Credit shall be subject to the fulfillment to the satisfaction of the
Lenders, in the case of Revolving
42
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Loans and Standby Letters of Credit, and the Swing Line Lender, in the case of
Swing Line Loans, of the further conditions precedent that, on the Funding Date
for such Revolving Loan or Swing Line Loan or the issuance date for such Standby
Letter of Credit, as the case may be:
(a) The Agent shall have received a Borrowing Notice (except as
otherwise provided in the last sentence of Section 2.2(a) of this Agreement) in
accordance with Section 2.2(a) or the Swing Line Lender shall have received a
Swing Line Borrowing Notice in accordance with Section 2.4(c) or the Issuing
Lender shall have received a request for a Standby Letter of Credit in
accordance with Section 2.3(c), as the case may be, in each case executed by an
Authorized Officer of the Borrowers (or other officer of the Borrowers
designated by such Authorized Officer as having authority to execute such
notice);
(b) The representations and warranties of the Borrowers contained in
Article V of this Agreement (except to the extent such representations or
warranties relate to a specific prior date) shall be true and correct as of such
Funding Date (or, in the case of Standby Letters of Credit, the date of issuance
thereof) as though made on and as of such Funding Date (or, in the case of
Standby Letters of Credit, the date of issuance thereof) (and, if any such
representation and warranty shall not be true and correct, the Borrowers shall
describe in writing to the Agent the nature of such misrepresentation and
warranty);
(c) No event shall have occurred and be continuing, or shall result
from such Revolving Loan or Swing Line Loan after giving effect to the
application of the proceeds therefrom or from the issuance of such Standby
Letter of Credit if the beneficiary thereof were to fully draw upon such Standby
Letter of Credit on the date of issuance, which constitutes an Event of Default
or would constitute a Potential Event of Default; and
(d) The Agent shall have received a certificate, addressed to the
Lenders (or, in the case of a Swing Line Loan, the Swing Line Lender), of an
Authorized Officer of the Borrowers, dated the date of the Borrowing Notice,
certifying that the matters contained in clauses (b) (if applicable) and (c) of
this Section 4.2 are true and correct.
43
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ARTICLE V
REPRESENTATIONS
In order to induce the Lenders and the Agent to enter into this
Agreement and make the Loans contemplated by the terms hereof, each of the
Borrowers represents and warrants with respect to itself and its Subsidiaries,
as the context shall require, as of the date hereof and as of the Effective Date
that:
Section 5.1 Existence, Power and Authority. The Borrowers and each
------------------------------
Subsidiary thereof are corporations duly incorporated, validly existing and in
good standing under the laws of the jurisdictions of their incorporation, with
full corporate power and authority to carry on their business as currently
conducted and to own or hold under lease their property; the Borrowers and
each Subsidiary thereof are duly qualified to do business as a foreign
corporation in good standing in each other jurisdiction in which the conduct of
their business or the maintenance of their property requires them to be so
qualified and where the failure to be so qualified would have a material adverse
effect on the financial condition, business or operation of the Borrowers or
such Subsidiary; and the Borrowers and their Subsidiaries have full corporate
power and authority to execute and deliver the Loan Documents to which they are
a party and to carry out the transactions contemplated thereby.
Section 5.2 Authorization; Enforceable Obligations. As of the
--------------------------------------
Effective Date and thereafter, the Loan Documents to which the Borrowers and
their Subsidiaries are a party have been duly authorized, executed and delivered
by the Borrowers and such Subsidiaries and constitute legal, valid and binding
obligations of the Borrowers and such Subsidiaries, enforceable against the
Borrowers and such Subsidiaries in accordance with their respective terms
(except as such enforceability may be limited by general principles of the law
of equity or by any applicable bankruptcy, reorganization, insolvency,
moratorium or similar laws and laws affecting creditors' rights generally).
Section 5.3 No Legal Bar. The execution, delivery and performance
------------
by the Borrowers and their Subsidiaries of the Loan Documents to which they are
a party in accordance with their respective terms (a) do not violate the
articles of incorporation, by-laws or any preferred stock provision of the
Borrowers or such Subsidiaries, (b) do not violate or conflict with any law,
governmental rule or regulation, or any judgment, writ, order, injunction, award
or decree of any court, arbitrator, administrative agency or other Governmental
Authority applicable to the Borrowers or such Subsidiaries or any indenture,
mortgage, contract, agreement or other undertaking or instrument to which the
Borrowers or such Subsidiaries are a party or by which their respective property
44
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may be bound and/or (c) do not and will not result in the creation or imposition
of any Lien on any of their property pursuant to the provisions of any such
indenture, mortgage, contract, agreement or other undertaking or instrument.
Section 5.4 Consents. The execution, delivery and performance by
--------
the Borrowers of the Loan Documents to which they are a party does not require
any consent, which has not been obtained, of any other Person, including,
without limitation, stockholders of the Borrowers or any consent, license,
permit, authorization or other approval of, any giving of notice to, exemption
by, any registration, declaration or filing with, or any taking of any
other action in respect of, any court, arbitrator, administrative agency or
other Governmental Authority.
Section 5.5 Litigation. Except as set forth on Schedule 5.5 hereto,
----------
there is no action, suit, investigation or proceeding by or before any court,
arbitrator, administrative agency or other Governmental Authority pending or, to
the knowledge of the Borrowers, threatened (a) which involves any of the
transactions contemplated by this Agreement or (b) to which the Borrowers or any
Subsidiary thereof is a party and which could in the reasonable judgment of the
Borrowers materially adversely affect the financial condition, business or
operation of the Borrowers or any Subsidiary thereof.
Section 5.6 No Default. Except as set forth on Schedule 5.6 hereto
----------
in writing, as of the Effective Date neither any Borrower nor any Subsidiary
thereof is in default under any material order, writ, injunction, award or
decree of any court, arbitrator, administrative agency or other Governmental
Authority binding upon it or its property, or any material indenture, mortgage,
contract, agreement or other undertaking or instrument to which it is a party or
by which its property may be bound, and nothing has occurred which would
materially adversely affect the ability of any of the Borrowers or their
Subsidiaries to carry on their respective business or perform their respective
obligations under any such material order, writ, injunction, award or decree or
any such material indenture, mortgage, contract, agreement or other undertaking
or instrument.
Section 5.7 Financial Condition. The financial statements of the
-------------------
Borrowers and their Subsidiaries as of June 30, 1998, copies of which have been
furnished to the Lenders, were prepared in accordance with GAAP and are complete
and correct and fairly and accurately present the financial condition of the
Borrowers and their Subsidiaries (taken as a whole) as of their dates and the
results of their operations for the periods then ended, subject to normal year-
end adjustments. There has been no material adverse change in the financial
condition of the Borrowers (taken
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as a whole) or the results of their operations since the date of such financial
statements.
Section 5.8 Use of Proceeds. None of the proceeds of any Loan have
---------------
been or will be used to purchase or carry, or reduce or retire or refinance any
credit incurred to purchase or carry, any margin stock (within the meaning of
Regulations G, U and X of the Board of Governors of the Federal Reserve System)
or to extend credit to others for the purchasing or carrying of any margin
stock. Neither the Borrowers nor any of their Subsidiaries are engaged in
the business of extending credit for the purpose of purchasing or carrying any
margin stock.
Section 5.9 Borrowers Not Investment Companies. Neither the
----------------------------------
Borrowers nor any of their Subsidiaries are an "investment company", or a
company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
Section 5.10 Taxes. The Borrowers and their Subsidiaries have filed
-----
or caused to be filed all tax returns which are required by applicable law to be
filed by them and have paid or caused to be paid all taxes which have been shown
to be due and payable by such returns or tax assessments received by the
Borrowers or any Subsidiary thereof to the extent that such taxes have become
due and payable, except (a) for those taxes or tax assessments that are not
delinquent, (b) to the extent such taxes or tax assessments are being contested
in good faith and for the payment of which reserves required by GAAP have been
provided, and (c) in any given instance or in the aggregate do not involve a
potential tax liability in excess of $1,000,000.
Section 5.11 Subsidiaries. As of the Effective Date there will be
------------
no Affiliates or Subsidiaries (consolidated or otherwise, direct or indirect) of
the Borrowers other than (a) the Subsidiaries set forth on Schedule 5.11 hereto
and (b) in the case of Affiliates, certain other Persons disclosed in writing to
the Lenders prior to the date hereof. Except as set forth on Schedule 5.11, the
Borrowers are the holder (either directly or indirectly) of all of the
outstanding shares of Capital Stock of each Subsidiary.
Section 5.12 Permits, Licenses, Etc. Each of the Borrowers and each
----------------------
Subsidiary possesses all permits, licenses, franchises, trademarks, trade names,
copyrights and patents necessary to the conduct of its business as presently
conducted, except where the failure to possess the same would not have a
material effect on the financial condition, operations or assets of Borrowers
and their Subsidiaries taken as a whole.
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Section 5.13 Compliance With Laws.
---------------------
(a) Compliance - General. Each of the Borrowers and their Subsidiaries
--------------------
are in compliance in all material respects with all Regulations required by
applicable law for it to conduct its business (including obtaining all
authorizations, consents, approvals, orders, licenses, exemptions from, and
making all filings or registrations or qualifications with, any court or
governmental department, public body or authority, commission, board, bureau,
agency, instrumentality or other Governmental Authority), the noncompliance with
which could have a material adverse effect on the business, operations, assets
or condition (financial or otherwise) of the Borrowers and their Subsidiaries
taken as a whole.
(b) Hazardous Wastes, Substances and Petroleum Products.
---------------------------------------------------
(i) The Borrowers and each Subsidiary: (x) have received all
permits and filed all material notifications necessary to carry on their
respective business(es) under, and (y) are in compliance in all material
respects with, all Environmental Control Statutes.
(ii) Neither the Borrowers nor any Subsidiary has given any
written or oral notice, nor has it failed to give required notice, to the
Environmental Protection Agency or any state or local agency with regard to
any actual or imminently threatened Release of Hazardous Substances on
properties owned, leased or operated by Borrowers or any Subsidiary or used
in connection with the conduct of its business and operations, which
Release of Hazardous Substance could have a material adverse effect on the
business, operations, assets or condition of the Borrowers and their
Subsidiaries taken as a whole.
(iii) Neither the Borrowers nor any Subsidiary has received
notice that it is potentially responsible for costs of clean-up or
remediation of any actual or imminently threatened Release of Hazardous
Substances pursuant to any Environmental Control Statute, which costs could
have a material adverse effect on the business, operations, assets or
condition of the Borrowers and their Subsidiaries taken as a whole.
(iv) To the knowledge of the Borrowers, no real property owned or
leased by the Borrowers or any Subsidiary is in material violation of any
Environmental Control Statutes, no Hazardous Substances are present on such
real property that would give rise to a material liability under applicable
Environmental Control Statutes, and neither the Borrowers nor any
Subsidiary has been identified in any litigation, administrative
proceedings or investigation
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as a potentially responsible party for any liability under any
Environmental Control Statutes that could have a material adverse effect on
the business, operations, assets or condition of the Borrowers and their
Subsidiaries taken as a whole.
Section 5.14 OHI. As of the Effective Date one hundred percent
---
(100%) of the outstanding Capital Stock of OHI will be owned by Parent Borrower,
and OHI will in turn own one hundred percent (100%) of the outstanding Capital
Stock of Operating Borrower. Except for the ownership of Capital Stock of
Operating Borrower, as of the Effective Date OHI will not own any assets and
will not engage in any business activities.
Section 5.15 Amounts Owed to or from Affiliates; Intercompany
------------------------------------------------
Agreements.
- ----------
(a) Affiliates. Except as disclosed on Schedule 5.15, as of the
----------
Effective Date there will not be outstanding and unpaid any debt, loan, advance,
guaranty or investment (i) by any Borrower or any Subsidiary to or for the
benefit of any Subsidiary or Affiliate of Borrower or (ii) to any Borrower or
any Subsidiary from any Subsidiary or Affiliate of Borrower (collectively,
"Intercompany Debt"), and there will not have been paid (x) by any Borrower to
or for the benefit of any Affiliate of Borrowers or (y) to any Borrower or any
Subsidiary from any Subsidiary or Affiliate of Borrowers, any amount for
management, administrative, operational, consulting, brokerage or other
services. As of the Effective Date, neither any Borrower nor any Subsidiary
will have prepaid to or for the benefit of any Subsidiary or Affiliate of
Borrowers any Intercompany Debt or amount for management, administrative,
operational, consulting, brokerage or other services.
(b) Intercompany Agreements. Except as disclosed on Schedule 5.15
-----------------------
hereto, as of the Effective Date there will not be any agreements between any
Borrower or any Subsidiary and any Subsidiary or Affiliate of Borrowers relating
to the extension of any funds to any Borrower, the sharing of any costs among
Borrowers and any Subsidiary or Affiliate of Borrowers or the provision of any
management, administrative, operational, consulting, brokerage or other services
to Borrowers ("Intercompany Agreements").
Section 5.16 Maintenance of Insurance. The Borrowers and their
-------------------------
Subsidiaries maintain insurance with financially sound and reputable insurance
companies or associations in such amounts and covering such risks as are usually
48
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carried by companies engaged in the same or a similar business and similarly
situated, which insurance may provide for reasonable deductibility from coverage
thereof.
Section 5.17 Properties. Each Borrower and each of their
----------
Subsidiaries has such title to the real property owned by it as is necessary or
desirable to the conduct of its business and valid and legal title to all of its
material personal property and assets, subject to the Permitted Liens.
Section 5.18 Change. No material adverse change has occurred in the
------
business, operations, property, financial condition or prospects of the
Borrowers and their Subsidiaries since June 30, 1998.
Section 5.19 Outstanding Letters of Credit, Suretyship Agreements and
--------------------------------------------------------
Similar Arrangements. Except as disclosed on Schedule 5.19, there are no
- --------------------
outstanding letters of credit, suretyship agreements or similar arrangements in
respect of which one or more of the Borrowers or any of their Subsidiaries have
reimbursement or indemnification obligations. Schedule 5.19 includes a
description of the amounts and principal terms, or copies of, all such letters
of credit, suretyship agreements and similar arrangements.
Section 5.20 Disclosure Generally. All written information, reports
--------------------
and other papers and data produced by or on behalf of the Borrowers or any
Subsidiary and furnished to the Lenders were, at the time they were so
furnished, and, except to the extent that they have been updated or supplemented
by additional written information, reports or other papers and data produced by
the Borrowers or any Subsidiary and furnished to the Lenders on or before the
Effective Date, are, as of the Effective Date, complete and correct in all
material respects to the extent necessary to give the recipient a true and
accurate knowledge of the subject matter. No document furnished or written
statement made to the Agent or the Lenders by the Borrowers or any Subsidiary in
connection with the negotiation, preparation or execution of this Agreement or
any of the Loan Documents contains any untrue statement of a fact material to
the creditworthiness of the Borrowers or any of their Subsidiaries or omits to
state a fact necessary in order to make the statements contained therein not
misleading in any material respect.
Section 5.21 Year 2000 Compliance. The Borrowers have (a) initiated
--------------------
a review and assessment of all areas within their and each of the Subsidiaries'
business and operations (including those affected by suppliers and vendors) that
could be adversely affected by the risk that computer applications used by the
Borrowers or any of their Subsidiaries (or their suppliers and vendors) may be
unable to recognize and
49
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perform properly date-sensitive functions involving certain dates prior to and
any date after December 31, 1999 (the "Year 2000 Problem"), (b) developed a plan
and timeline for addressing the Year 2000 Problem on a timely basis, and (c) to
date, implemented that plan in accordance with that timetable. The Borrowers
reasonably believe that all computer applications (including those of their
suppliers and vendors) that are material to them or any of their Subsidiaries'
business and operations will on a timely basis be able to perform properly date-
sensitive functions for all dates before and after January 1, 2000 (such
compliance, "Year 2000 Compliant"), except to the extent that a failure to do so
could not reasonably be expected to have a material adverse effect on the
Borrowers and their Subsidiaries, taken as a whole.
ARTICLE VI
COVENANTS
Section 6.1 Affirmative Covenants. The Borrowers covenant and
---------------------
agree for themselves and their Subsidiaries (in which case the Borrowers shall
cause such Subsidiaries to take or refrain from taking the actions described
below) that, so long as this Agreement shall remain in effect or any Obligation
shall remain unpaid:
(a) Information. The Borrowers shall deliver to the Agent and each
-----------
Lender:
(i) Audited Annual Financials. As soon as available but within
-------------------------
ninety-five (95) days of the end of each fiscal year of the Borrowers
ending December 31 (each such year, a "Fiscal Year"), a full and complete
set of the annual audited consolidated financial statements (including
statements of financial condition, income, cash flows and changes in
shareholders' equity), together with all notes thereto, of the Borrowers
and their Consolidated Subsidiaries prepared in accordance with GAAP and
certified by an independent accounting firm of national recognition
reasonably acceptable to the Required Lenders (which certificate shall be
accompanied by an unqualified opinion of such accounting firm of such
statements).
(ii) Quarterly Financial Statements. As soon as available but
------------------------------
within fifty (50) days following the end of each of the Borrowers' Fiscal
Quarters, internally prepared consolidated financial statements of the
Borrowers and their Consolidated Subsidiaries (including a balance sheet,
income statement and statement of cash flows). The financial statements
required to be delivered
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under this clause (ii) shall be accompanied by a certificate of an
Authorized Officer of the Borrowers to the effect that the information
contained therein is true and accurate as of the date of such certificate.
(iii) Exchange Act and Securities Act Filings. Within five (5)
---------------------------------------
days following the filing with the SEC, copies of all filings by it or any
of its Subsidiaries under the Exchange Act (including reports on Forms 10-
Q, 10-K and 8-K) and registration statements filed with the SEC under
either the Securities Act or the Exchange Act. The Parent Borrower shall
deliver to each Lender and the Agent copies of all of the Parent Borrower's
Annual Reports and Proxy Statements and, at the request of such Lender, any
other shareholder communication.
(iv) No Default. Within fifty (50) calendar days after the
----------
end of each of the first three Fiscal Quarters of each Fiscal Year and
within ninety-five (95) calendar days after the end of each Fiscal Year, a
certificate signed by an Authorized Officer of Parent Borrower certifying
that, to the best of such officer's knowledge, after due inquiry, (x) the
Borrowers and each Subsidiary have complied with all covenants, agreements
and conditions in each Loan Document, and (y) no event has occurred and is
continuing which constitutes an Event of Default or Potential Default, or
describing each such event and the remedial steps being taken by Borrower.
(v) Compliance. Within forty-five (45) calendar days after
----------
the end of each of the first three Fiscal Quarters of each Fiscal Year and
within ninety (90) calendar days after the end of each Fiscal Year, a
certificate signed by an Authorized Officer of Parent Borrower
demonstrating compliance with all financial covenants (including all
relevant calculations) and representations contained in this Agreement as
of the end of such period. Such certificate will be in such form as the
Agent may reasonably request from time to time. Upon the request of the
Agent, the Authorized Officer shall provide any and all reports, audits,
and such other information upon which said officer may have relied in
signing such certificate.
(vi) ERISA. Within fifteen (15) Business Days of filing, all
-----
reports and forms filed with respect to all Benefit Plans, except as filed
in the normal course of business and that would not result in an adverse
action to be taken under ERISA, and details of related information of a
Reportable Event.
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(vii) Material Changes. Within five (5) Business Days of the
----------------
occurrence thereof, notice of any litigation, administrative proceeding,
investigation, business development, or change in financial condition which
could reasonably be expected to have an effect of $5,000,000 or more on
the business, operations, assets or condition (financial or otherwise) of
the Borrowers and their Subsidiaries taken as a whole.
(viii) Other Information. All material press releases promptly
------------------
following release. In addition, promptly upon request by the Agent or the
Lenders from time to time, the Parent Borrower shall provide such other
information and reports regarding the operations, business affairs,
prospects and financial condition of Borrowers and their Subsidiaries as
the Agent or the Lenders may reasonably request.
(b) Financial Covenants.
-------------------
(i) Consolidated Indebtedness to Consolidated Cash Flow Ratio.
---------------------------------------------------------
The Borrowers and their Subsidiaries, taken as a whole, shall maintain, for
(and at all times during) each Fiscal Quarter beginning with the Fiscal
Quarter ending June 30, 1998 (the "Initial Fiscal Quarter"), a ratio of
Consolidated Indebtedness to Consolidated Cash Flow of not greater than
3.00 to 1.00. For purposes of this clause (b)(i), Consolidated
Indebtedness shall include the present value (discounted at 10%) of the
future minimum operating lease requirements of the Borrowers and their
Consolidated Subsidiaries. The ratio contemplated by this clause (b)(i)
shall be computed on a rolling four quarter basis and shall include the
Fiscal Quarter for which such ratio shall be determined plus the
immediately preceding three Fiscal Quarters.
(ii) Consolidated Fixed Charge Ratio. The Borrowers and their
-------------------------------
Subsidiaries, taken as a whole, shall at all times maintain, for (and at
all times during) each Fiscal Quarter beginning with the Initial Fiscal
Quarter, a ratio of (x) Consolidated Cash Flow to (y) interest charges plus
rental expenses under operating leases of not less than 3.25 to 1.00. The
ratio contemplated by this clause (b)(ii) shall be computed on a rolling
four quarter basis and shall include the Fiscal Quarter for which such
ratio shall be determined plus the immediately preceding three Fiscal
Quarters.
(iii) Consolidated Tangible Net Worth Ratio. The Borrowers and
-------------------------------------
their Subsidiaries, taken as a whole, shall maintain, for (and at all times
during) each Fiscal Quarter beginning with the Initial Fiscal Quarter, a
Consolidated
52
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Tangible Net Worth of not less than (w) eighty-five percent (85%) of
Consolidated Tangible Net Worth as of the Effective Date plus (x) eighty-
----
five percent (85%) of the net proceeds resulting from any exercise of the
underwriters' overallotment option in connection with the Parent Borrower
Public Offering plus (y) fifty percent (50%) of Consolidated Net Income
----
(computed on a cumulative basis for each Fiscal Quarter during the term of
this Agreement, from the Initial Fiscal Quarter to the date of
determination plus (z) one hundred percent (100%) of the net proceeds from
----
the issuance for cash of any Capital Stock of the Borrowers, after the
later of the Effective Date and the closing of any exercise of the
underwriters' overallotment option in connection with the Parent Borrower
Public Offering.
(c) Proceeds. The Borrowers shall use the proceeds of the Loans and
--------
the Standby Letters of Credit for the Permitted Uses and for no other purpose.
(d) Payment of Debts and Taxes. The Borrowers and their
--------------------------
Subsidiaries shall pay all debts, liabilities, taxes, assessments and other
governmental charges when due in the ordinary course; provided, however, that no
-------- -------
such debt, liability, tax, assessment or other governmental charge need be paid
if such is being contested in good faith by appropriate legal proceedings and if
such reserves or other appropriate provision, if any, as shall be required by
GAAP shall have been made therefor.
(e) ERISA. (i) The Borrowers and their Subsidiaries shall comply in
-----
all material respects with the provisions of ERISA to the extent applicable to
any Benefit Plan maintained for the employees of the Borrowers, any Subsidiary
or any ERISA Affiliate; (ii) do or cause to be done all such acts and things
that are required to maintain the qualified status of each Benefit Plan and tax
exempt status of each trust forming part of such Benefit Plan; (iii) not incur
any material Accumulated Funding Deficiency or any material liability to the
PBGC; (iv) permit any event to occur (x) as described in Section 4042 of ERISA
or (y) which may result in the imposition of a Lien on its properties or assets;
and (v) notify Lenders in writing promptly after it has come to the attention of
senior management of the Borrowers of the assertion or threat of any Reportable
Event or other event described in Section 4042 of ERISA (relating to the
soundness of a Benefit Plan) or the PBGC's ability to assert a material
liability against it or impose a lien on any Borrower's, any Subsidiary's, or
any ERISA Affiliate's properties or assets; and (f) refrain from engaging in any
Prohibited Transactions or actions causing possible liability under Section 502
of ERISA.
(f) Conduct and Maintenance of Business. The Borrowers and their
-----------------------------------
Subsidiaries shall continue to engage in business of the same general type as
now
53
<PAGE>
conducted by the Borrowers and their Subsidiaries. The Borrowers and their
Subsidiaries will conduct and manage their respective businesses and affairs in
the ordinary course, and shall take all steps necessary and reasonable for the
purpose of preserving the value of their respective businesses and assets.
(g) Preservation of Corporate Existence. The Borrowers and their
-----------------------------------
Subsidiaries shall at all times preserve and keep in full force and effect their
respective corporate existence and their respective rights, privileges, licenses
and franchises which are necessary in the normal conduct of their business.
(h) Books and Records. The Borrowers and their Subsidiaries shall
-----------------
at all times keep and maintain complete and accurate books, accounts and records
of their operations and affairs in accordance with GAAP and customary and sound
business practices, and shall permit each Lender and the Agent and their
respective officers, employees, agents and representatives to, from time to time
upon reasonable notice, have access to its place of business, examine such
books, accounts and records and make copies thereof and discuss the affairs and
finances of the Borrowers or their Subsidiary with any of their respective
officers or directors.
(i) Insurance. The Borrowers and their Subsidiaries shall maintain
---------
in full force and effect policies of insurance with responsible and reputable
insurance companies or associations in such amounts as are within an acceptable
range for and covering such risks as are usually and customarily insured against
by companies engaged in similar businesses and owning similar properties in the
same general area in which the Borrowers and their Subsidiaries are engaged.
(j) Compliance with Laws. The Borrowers and their Subsidiaries
--------------------
shall comply with all applicable Regulations a breach of which could have a
material adverse effect on the financial condition or business of the Borrowers
and their Consolidated Subsidiaries (taken as a whole).
(k) Compliance with Loan Documents. The Borrowers and their
------------------------------
Subsidiaries shall comply with the terms and agreements contained in each Loan
Document to which they are a party.
(l) Lending Relationship with the Agent. The Borrowers shall
-----------------------------------
maintain with the Agent the Borrowers' Account.
(m) Ownership of Operating Borrower. The Parent Borrower will at all
-------------------------------
times own directly, or indirectly through Parent Borrower's ownership of one
hundred
54
<PAGE>
percent (100%) of each class of Capital Stock of OHI, all of the shares of each
class of Capital Stock of the Operating Borrower.
(n) Notice of Default. The Borrowers shall, promptly after becoming
-----------------
aware thereof, deliver to each Lender and the Agent notice of any Event of
Default and Potential Event of Default.
(o) Notice of Environmental Claims. The Borrowers shall deliver to
------------------------------
each Lender and the Agent a copy of any notice or other communication (i)
alleging any material violation by the Borrowers or their Subsidiaries of any
Environmental Control Statutes or (ii) under which the Borrowers or their
Subsidiaries shall admit to any such material violation. Each copy of any such
notice shall be delivered to the Lenders and the Agent promptly following the
receipt or issuance thereof by the Borrowers or such Subsidiary.
(p) Payments Pari Passu. Under applicable laws in force from time
-------------------
to time, the claims and rights of the Lenders and the Agent against the
Borrowers and their Subsidiaries under the Loan Documents will not be
subordinate to, and will rank at least pari passu with, the claims and rights of
each other unsecured creditor of the Borrowers and their Subsidiaries.
(q) Year 2000 Compliance. The Borrowers will promptly notify the
--------------------
Agent in the event the Borrowers discover or determine that any computer
application (including those of their suppliers and vendors) that is material to
them or any of their Subsidiaries' business and operations will not be Year 2000
Compliant on a timely basis, except to the extent that such failure could not
reasonably be expected to have a material adverse effect upon the Borrowers and
their Subsidiaries, taken as a whole.
(r) Further Assurances. The Borrower shall do such further acts and
------------------
things and execute and deliver to the Agent such additional assignments,
agreements, powers and instruments, as the Lenders may reasonably require or
reasonably deem advisable to carry into affect the purposes of this Agreement or
to better assure and confirm unto them their rights, powers and remedies
hereunder.
Section 6.2 Negative Covenants. The Borrowers covenant and agree
------------------
for themselves and their Subsidiaries (in which case the Borrowers shall cause
such Subsidiaries to take or refrain from taking the actions described below),
that, so long as this Agreement shall remain in effect or any Obligation shall
remain unpaid:
55
<PAGE>
(a) Liens. The Borrowers and their Subsidiaries shall not,
-----
directly or indirectly, create, incur, assume, grant, pledge or permit to exist
any Lien on the property or assets of the Borrowers and their Subsidiaries other
than Permitted Liens.
(b) Indebtedness. Neither the Borrowers nor any of their
------------
Subsidiaries shall, directly or indirectly, create, incur, assume or otherwise
become or remain directly or indirectly liable with respect to, any
Indebtedness, other than:
(i) the Indebtedness incurred by the Borrowers hereunder and
evidenced by the Revolving Notes and the Swing Line Note;
(ii) the Indebtedness evidenced by the Standby Letters of
Credit, if any, issued by the Lenders in accordance with Section 2.3
hereof;
(iii) Indebtedness of the type secured by Permitted Liens which
does not exceed (in each case and in the aggregate and as to the Borrowers
and their Subsidiaries, taken as a whole) the respective amounts set forth
in the definition of Permitted Liens;
(iv) Indebtedness in the form of (x) any guarantee, suretyship
agreement, or similar arrangement effecting the assumption of a debt or
obligation of the Borrowers or any Subsidiary as to which one or more of
the Borrowers or any Consolidated Subsidiary has a reimbursement or
indemnification obligation, or the endorsement of any promissory note or
other instrument of obligation of any other Subsidiary thereof, in each
case which is entered into in the ordinary course of the Borrower's or
Subsidiary's business and are necessary and beneficial in connection with
the operation thereof, or (y) any guarantee, suretyship agreement, or
similar arrangement effecting the assumption of a debt or obligation of any
Person (other than the Borrowers or a Subsidiary thereof) as to which one
or more of the Borrowers or any Subsidiary has a reimbursement or
indemnification obligation, or the endorsement of any promissory note or
other instrument of obligation of any Person (other than the Borrowers or a
Subsidiary thereof), in each case which is entered into in the ordinary
course of the Borrower's or Subsidiary's business, are necessary and
beneficial in connection with the operation thereof and the aggregate
amount of all such guarantees, suretyship agreements, or other similar
arrangements shall not exceed in the aggregate $1,000,000.00;
(v) Indebtedness of the types described in clauses (ii) and
(iv) of this Section 6.2(b) that, together with any other letters of credit
issued for the account of one or more of the Borrowers or any Subsidiary
thereof as to which
56
<PAGE>
one or more of the Borrowers or any Subsidiary thereof have reimbursement
or indemnification obligations, does not exceed $85,000,000 in the
aggregate; and
(vi) Indebtedness in the form of trade debt, accounts payable
and other similar Indebtedness incurred in the ordinary course of the
Borrowers' or their Subsidiaries' business.
(c) Capital Stock. Without the prior written consent of the
-------------
Required Lenders, neither the Borrowers nor any Subsidiary thereof shall,
directly or indirectly, repurchase, redeem or retire any of their Capital Stock,
declare or pay any cash dividends on their Capital Stock, except that the
Borrowers may:
(i) declare and pay dividends or make other distributions on
their Capital Stock if the Borrowers would be in compliance with all
provisions of this Agreement, including without limitation the financial
ratios contained in Section 6.1 hereof after giving effect to the payment
or distribution thereof; and
(ii) repurchase, redeem or retire Capital Stock of the Parent
Borrower at an aggregate cost of up to (x) $4,000,000.00 per Fiscal Year
and (y) a total of $15,000,000 following the Effective Date.
(d) Loans. Neither the Borrowers nor any Subsidiary thereof shall,
-----
directly or indirectly, make any loans or advances to any corporate officers or
directors, or any employees, or any insiders or Affiliates or to any Subsidiary
of the Borrowers, other than:
(i) travel, relocation and other salary advances made in the
ordinary course of the Borrowers' or their Subsidiaries' business;
(ii) loan the proceeds of the Revolving Loans or Swing Line
Loans to any Subsidiary of the Borrowers for the purpose of financing the
acquisition of any Target as contemplated by, and in accordance with the
limitations contained in, Section 6.2(e) hereof; and
(iii) loans to any officer of the Borrowers and their
Subsidiaries for the purpose of enabling such officer to purchase
securities of the type described in Section 6.2(c)(ii) hereof, provided
--------
that the aggregate amount of all loans made pursuant to this clause and
outstanding from time to time shall not exceed $500,000.00.
57
<PAGE>
(e) No Merger or Acquisition. Without the prior written consent of
------------------------
the Required Lenders, neither the Borrowers nor any Subsidiary thereof shall
acquire, whether by stock or asset purchase, merger, consolidation or other
business combination, any corporation, partnership, limited liability company,
joint venture or other business organization that, as a result of such
transaction, becomes a Subsidiary of the Borrowers or one or more of their
Subsidiaries (any such entity, the "Target"); provided, however, that the
-------- -------
Borrowers or any direct or indirect Consolidated Subsidiary thereof may acquire,
either by way of stock or asset acquisition, merger, consolidation or otherwise,
one or more Targets involved in a line of business similar to the line of
business of the Borrowers if:
(i) for any calendar year during the term of this Agreement,
the aggregate consideration (whether such consideration shall consist of
stock, cash, the assumption of debt, or otherwise, and whether or not paid
at closing or deferred) (any such consideration, "Acquisition
Consideration") paid for all Targets acquired during such Fiscal Year shall
not exceed $50,000,000;
(ii) for any calendar year during the term of this Agreement,
the cash component (which, for the purposes of this clause (ii), shall
include all cash and cash equivalents and the assumption of debt, whether
or not paid at closing or deferred) of Acquisition Consideration paid for
all Targets acquired during such Fiscal Year shall not exceed $15,000,000;
(iii) the Borrowers and their Subsidiaries shall, after giving
effect to the acquisition of any such Target as provided above, be in
compliance with all of the terms of this Agreement including the financial
covenants described in Section 6.1(b) hereof as determined on a pro forma
basis;
(iv) such acquisition, merger, consolidation (or otherwise) is
not hostile or pursued by way of tender offer, proxy contest or other
contested manner (unless the Required Lenders shall have waived in writing
compliance with this clause (v));
(v) for any calendar year during the term of this Agreement
(including the calendar year beginning January 1, 1998), Targets that are
not organized under the laws of a state of the United States of America or
the District of Columbia or of Canada or any province thereof may not be so
acquired; and
(vi) three (3) Business Days prior to consummation thereof, the
Borrowers shall have delivered to the Agent (which shall promptly deliver a
copy
58
<PAGE>
to the Lenders) a certificate, executed by an Authorized Officer of
the Borrowers, demonstrating in sufficient detail compliance with the
financial covenants contained in this Section 6.2(e) and, further,
certifying that, after giving effect to the consummation of such
acquisition, merger, consolidation (or otherwise), the representations and
warranties of the Borrowers contained herein will be true and correct and
that the Borrowers, as of the date of such consummation, will be in
compliance with all other terms and conditions contained herein.
(f) Accounting Policies; Fiscal Year. The Borrowers and their
--------------------------------
Subsidiaries shall not, without the prior written consent of the Required
Lenders, make any material change in accounting policies or reporting practices
not required by GAAP as applied in the Borrowers' industry, including a change
in their Fiscal Year.
(g) Disposition of Assets. Neither the Borrowers nor any
---------------------
Subsidiary thereof shall, without the prior written consent of the Required
Lenders, sell, transfer or otherwise dispose of (including by way of a sale and
leaseback transaction) any its assets (whether real or personal) other than in
the ordinary and usual course of its business.
(h) Permitted Investments. Neither the Borrowers nor any
---------------------
Subsidiary thereof shall, without the prior written consent of the Required
Lenders, make any Investment except for Permitted Investments (it being
understood and agreed that this clause (h) shall not prohibit the investment in
any Target to the extent permitted by the provisions of Section 6.2(e) hereof).
ARTICLE VII
EVENTS OF DEFAULT
Section VII.1 Events of Default. If one or more of the following
-----------------
events or conditions (each, an "Event of Default") shall occur and be
continuing, that is to say:
(a) the Borrowers default in the payment of principal of any Revolving
Note or the Swing Line Note when due; or
(b) the Borrowers default in the payment of interest on any Loan, or
of the Facility Fee, the Administrative Fee, any L/C Fee, the L/C Fronting Fee,
or of any other fee, expense or other amount payable hereunder after the same
becomes due
59
<PAGE>
and payable for more than four (4) Business Days after notice thereof has been
given by the Agent to the Borrowers (which notice may be telephonic); or
(c) the Borrowers or any Subsidiary default in any payment of
principal of or interest on, or fees and expenses relating to any other
obligation for borrowed money beyond any period of grace provided with respect
thereto or in the performance of any other agreement, term or condition
contained in any instrument or agreement evidencing, securing, guaranteeing or
otherwise relating to any such obligation and shall not have cured such default
within any period of grace provided by such agreement and such obligation,
either individually or in the aggregate, is for an amount in excess of
$2,500,000 of the Indebtedness of the Borrowers; or
(d) any written representation or warranty made by the Borrowers in or
pursuant to this Agreement or any other Loan Document or in any other documents,
certificates, financial statements or reports furnished by the Borrowers or any
Subsidiary of any thereof in connection with the transactions contemplated
hereby shall prove to have been false or misleading in any material respect as
of the time made or furnished or deemed made or furnished; or
(e) (i) the Borrowers shall default in the performance or observance
of any covenant, condition or agreement contained in clause (a)(iii) (ix), (c),
(d), (e), (f), (g), (h), (i), (o) (p) or (r) of Section 6.1 and such default
shall remained unremedied for more than ten (10) Business Days, or (ii) the
Borrowers shall default in the performance or observance of any other covenant,
condition or agreement contained in Section 6.1 or any covenant, condition or
agreement contained in Section 6.2; or
(f) the Borrowers shall default in the performance or observance of
any other covenant, condition or provision hereof or in any other Loan Document
and such default shall not be remedied within thirty (30) days after written
notice thereof is received by the Borrowers from any Lender or the Agent; or
(g) a proceeding (other than a proceeding commenced by the Borrowers
or any Subsidiary thereof, as the case may be) shall have been instituted in a
court having jurisdiction in the premises seeking a decree or order for relief
in respect of the Borrowers or such Subsidiary in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or for the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of the Borrowers or such
Subsidiary or for any substantial part of its total assets, or for the winding-
up or liquidation of its affairs and such proceedings shall remain undismissed
or unstayed and in effect for a period of forty-five (45) consecutive
60
<PAGE>
days or such court shall enter a decree or order granting the relief sought in
such proceeding; or
(h) the Borrowers or any Subsidiary thereof, as the case may be, shall
commence a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, shall consent to the entry of an order
for relief in an involuntary case under any such law, or shall consent to the
appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official) of the Borrowers or
such Subsidiary or for any substantial part of their total assets, or shall make
a general assignment for the benefit of creditors, or shall fail generally to
pay their debts as they become due, or shall take any corporate action in
furtherance of any of the foregoing; or
(i) a judgment or order shall be entered against the Borrowers or any
Subsidiary thereof, by any court, and (i) in the case of a judgment or order for
the payment of money, either (a) such judgment or order shall continue
undischarged and unstayed for a period of thirty (30) days in which the
aggregate amount of all such judgments and orders exceeds $1,000,000.00 or (b)
enforcement proceedings shall have been commenced upon such judgment or order
and (ii) in the case of any judgment or order for other than the payment of
money, such judgment or order could, in the reasonable judgment of any Lender,
together with all other such judgments or orders, have a materially adverse
effect on the Borrowers and their Subsidiaries taken as a whole; or
(j) the representations set forth in Section 5.14 shall cease to be
true and correct; or
(k) (i) any Termination Event shall occur with respect to any Benefit
Plan, (ii) any Accumulated Funding Deficiency, whether or not waived, shall
exist with respect to any Benefit Plan, (iii) any Person shall engage in any
Prohibited Transaction involving any Benefit Plan, (iv) the Borrowers or any
ERISA Affiliate shall be in "default" (as defined in ERISA Section 4219(c)(5))
with respect to payments owing to a Multiemployer Benefit Plan as a result of
the Borrowers' or any ERISA Affiliate's complete or partial withdrawal (as
described in ERISA Section 4203 or 4205) from such Multiemployer Benefit Plan,
(v) the Borrowers or any ERISA Affiliate shall fail to pay when due an amount
that is payable by it to the PBGC or to a Benefit Plan under Title IV of ERISA,
or (vi) a proceeding shall be instituted by a fiduciary of any Benefit Plan
against the Borrowers or any ERISA Affiliate to enforce ERISA Section 515 and
such proceeding shall not have been dismissed within 30 days thereafter, except
that no event or condition referred to in clauses (i) through (vi) shall
constitute an Event of
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<PAGE>
Default if it, together with all other such events or conditions at the time
existing, has not had, and in the reasonable determination of the Required
Lenders will not have, a materially adverse effect on the Borrowers and their
Subsidiaries, taken as whole; or
(l) the occurrence of a Change in Control;
then, and upon any such event, the Agent, with the consent of the Required
Lenders, may (i) upon notice to the Borrowers declare the entire outstanding
principal amount, if any, of the Revolving Notes, the Swing Line Note, any and
all accrued and unpaid interest thereon, the aggregate amount outstanding under
all Standby Letters of Credit, any and all accrued and unpaid Facility Fee,
Administrative Fee, L/C Fees, the L/C Fronting Fee and any and all other amounts
payable by the Borrowers to the Lenders or the Agent under this Agreement or the
Revolving Notes or the Swing Line Note to be forthwith due and payable,
whereupon the entire outstanding principal amount, if any, of the Revolving
Notes and the Swing Line Note, together with any and all accrued and unpaid
interest thereon, the aggregate amount outstanding under all Standby Letters of
Credit, any and all accrued and unpaid Facility Fee, Administrative Fee, the
fees in respect of Standby Letters of Credit, and any and all other such amounts
and such reimbursement shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrowers; provided, however, that in the event
-------- -------
of the entry of an order for relief with respect to the Borrowers or their
Subsidiary under the Bankruptcy Code, any principal amount of the Revolving
Notes and the Swing Line Note then outstanding, together with any and all
accrued and unpaid interest thereon, the aggregate amount outstanding under all
Standby Letters of Credit, any and all accrued and unpaid Facility Fee,
Administrative Fee and any fee in respect of any Standby Letter of Credit, and
any and all such other amounts shall thereupon automatically become and be due
and payable without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived by the Borrowers; (ii) terminate or reduce the
Revolving Loan Commitment; and (iii) exercise any rights and remedies available
to it under any Loan Document or under applicable laws.
ARTICLE VIII
THE AGENT
Section 8.1 Appointment of Agent.
--------------------
62
<PAGE>
(a) Appointment Generally. Each of the Lenders hereby designates and
---------------------
appoints Crestar Bank as the Agent of such Lender under this Agreement and the
other Loan Documents, and each of the Lenders hereby irrevocably authorizes the
Agent to take such action on its behalf under the provisions of this Agreement
and the other Loan Documents and to exercise such powers as are set forth herein
and therein, together with such other powers as are incidental thereto. The
Agent agrees to act as such on the express conditions contained in this Article
VIII.
(b) Agent Acts for Lenders. The provisions of this Article VIII are
----------------------
solely for the benefit of the Agent and the Lenders and the Borrowers shall have
no right (including as third party beneficiary) to rely on or enforce any of the
provisions hereof. In performing its functions and other duties under this
Agreement and the other Loan Documents, the Agent shall act solely as agent for
the Lenders and does not assume and shall not be deemed to have assumed any
obligation toward or relationship of agency or trust with or for the Borrowers
or any of their Affiliates.
Section 8.2 Nature of Duties; Non-Reliance on Agent and other
-------------------------------------------------
Lenders.
- -------
(a) The Agent shall not have any duties or responsibilities except
those expressly set forth in this Agreement or in the other Loan Documents. The
duties of the Agent shall be mechanical and administrative in nature. The Agent
shall not have by reason of this Agreement or any other Loan Document a
fiduciary relationship in respect of any Lender and is not a trustee for the
Lenders. Nothing in this Agreement or any of the other Loan Documents, expressed
or implied, is intended to or shall be construed to impose upon the Agent any
obligations in respect of this Agreement or any of the other Loan Documents
except as expressly set forth herein and therein. If the Agent seeks the consent
or approval of the Lenders to the taking or refraining from taking of any action
hereunder, the Agent shall send notice thereof to each Lender. The Agent shall
promptly notify each Lender at any time the Required Lenders or all of the
Lenders, as the case may be, have instructed the Agent to act or refrain from
acting pursuant hereto. The Agent may execute any of its duties hereunder or
under any other Loan Document by or through agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such
duties. The Agent shall not be responsible for the negligence or misconduct of
any agents or attorneys-in-fact selected by it with reasonable care.
(b) Each Lender expressly acknowledges that neither the Agent nor any
of its officers, directors, employees, agents, attorneys-in-fact or Affiliates
has made any representations or warranties to it and that no act by the Agent
or any Affiliate thereof hereinafter taken, including any review of the affairs
of the Borrowers or any
63
<PAGE>
Subsidiary thereof, shall be deemed to constitute any representation or warranty
by the Agent to any Lender. Each Lender represents to the Agent that it has,
independently and without reliance upon the Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, assets, operations, property,
financial and other conditions, prospects and creditworthiness of the Borrowers
and their Subsidiaries and made its own decision to make its Loans and issue or
participate in the issuance of Standby Letters of Credit hereunder and enter
into this Agreement and the other Loan Documents to which it is a party. Each
Lender covenants that it will, independently and without reliance upon the Agent
or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement or
any other Loan Document to which it is a party, and to make such investigations
as it deems necessary to inform itself as to the business, assets, operations,
property, financial and other conditions, prospects and creditworthiness of the
Borrowers and their Subsidiaries. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
assets, property, financial and other conditions, prospects or creditworthiness
of the Borrowers and their Subsidiaries which may come into the possession of
the Agent or any of its officers, directors, employees, agents, attorneys-in-
fact or Affiliates.
Section 8.3 Rights, Exculpation, Etc. Neither the Agent nor any
------------------------
of its Affiliates nor any of their respective officers, directors, employees,
agents, attorneys or consultants shall be liable to any Lender for any action
taken or omitted by it or such Person hereunder or under any of the other Loan
Documents, or in connection herewith or therewith, except that (a) the Agent
shall be obligated on the terms set forth herein for performance of its express
obligations hereunder, and (b) neither the Agent nor any such other Person shall
have any liability hereunder or under any other Loan Document except to the
extent arising out of its own gross negligence or willful misconduct (as
determined by the final judgment of a court of competent jurisdiction). The
Agent shall not be liable for any apportionment or distribution of payments made
by it in good faith pursuant to the terms of this Agreement and if any such
apportionment or distribution is subsequently determined to have been made in
error the sole recourse of any Lender to whom payment was due, but not made,
shall be to recover from other Lenders any payment in excess of the amount to
which they are determined to have been entitled. The Agent shall not be
responsible to any Lender for any recitals, statements, representations or
warranties made by the Borrowers or Subsidiary thereof in this Agreement or in
any other Loan Document or in any other document, certificate report
64
<PAGE>
or financial statement delivered by the Borrowers or any Subsidiary thereof in
connection herewith or therewith or for the execution, effectiveness,
genuineness, validity, enforceability, collectibility, or sufficiency of this
Agreement or any of the other Loan Documents, or any of the transactions
contemplated thereby, or for the financial condition of the Borrowers or any of
their Subsidiaries. The Agent shall not be required to make any inquiry
concerning conditions of this Agreement or any of the Loan Documents or the
financial condition of the Borrowers or their Subsidiaries or the existence or
possible existence of any Potential Event of Default or Event of Default. The
Agent may at any time request instructions from the Lenders with respect to any
actions or approvals which by the terms of this Agreement or of any of the other
Loan Documents the Agent is permitted or required to take or to grant, and if
such instructions are promptly requested, the Agent shall be absolutely entitled
to refrain from taking any action or to withhold any approval and shall not
incur any liability whatsoever to any Person for refraining from any action or
withholding any approval under any of the Loan Documents until it shall have
received such instructions from the Required Lenders or, to the extent
specifically provided herein, all the Lenders or unless it shall first be
indemnified by the Lenders against any and all liability and expense which may
be incurred by it by reason of refraining to take any action or withholding any
approval. Without limiting the foregoing, no Lender shall have any right of
action whatsoever against the Agent as a result of the Agent acting or
refraining from acting under this Agreement or any of the other Loan Documents
in accordance with the instructions of the Required Lenders or, to the extent
specifically provided herein, all the Lenders, and such instructions shall be
binding upon all Lenders (including their successors and assigns).
Section 8.4 Reliance; Notice of Default.
---------------------------
(a) The Agent shall be entitled to rely upon any written notice,
statement, certificate, order, letter, cablegram, telegram, telecopy, telex or
teletype message, statement or other document or any telephone message believed
by it in good faith to be genuine and correct and to have been signed or made by
the proper Person, and with respect to all matters pertaining to this Agreement
or any of the other Loan Documents and its duties hereunder or thereunder, upon
advice of legal counsel (including counsel for the Borrowers), independent
public accountants and other experts selected by it with reasonable care. The
Agent may deem and treat each Lender as the owner of its interests hereunder for
all purposes unless and until the Agent shall have received a duly executed
instrument of assignment as contemplated by Section 9.8(c) hereof and the other
conditions to assignment, to the extent applicable, shall have been satisfied.
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(b) The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Event of Default or Potential Event of Default unless the
Agent has received notice from a Lender or the Borrowers referring to this
Agreement, describing such Event of Default or Potential Event of Default and
stating that such notice is a "notice of Event of Default" of "notice of
Potential Event of Default", as the case may be. The Agent shall take such
action with respect to such Event of Default or Potential Event of Default as
shall be reasonably directed by the Required Lenders.
Section 8.5 Indemnification. To the extent that the Agent is not
---------------
reimbursed and indemnified by the Borrowers or the Borrowers fail upon demand by
the Agent to perform their obligations to reimburse or indemnify the Agent, the
Lenders will severally reimburse and indemnify the Agent for and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by, or asserted against the Agent in any way
relating to or arising out of this Agreement or any of the other Loan Documents
or any action taken or omitted by the Agent under this Agreement or any of the
other Loan Documents, in proportion to each Lender's Pro Rata Share; provided,
--------
that no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's gross negligence or willful misconduct
(as determined by the final judgment of a court of competent jurisdiction). The
obligations of the Lenders under this Section 8.5 shall survive the payment in
full of the Revolving Loans and the Swing Line Loans and the termination of this
Agreement.
Section 8.6 The Agent Individually. With respect to its Pro Rata
----------------------
Share hereunder and the Revolving Loans, Swing Line Loans, if any, and Standby
Letters of Credit made by it, the Agent shall have and may exercise the same
rights and powers hereunder and is subject to the same obligations and
liabilities as and to the extent set forth herein for any other Lender. The
term "Lenders" or "Required Lenders" or any similar terms shall, unless the
context clearly otherwise indicates, include the Agent in its individual
capacity as a Lender. The Agent and its Affiliates may accept deposits from,
lend money to, and generally engage in any kind of banking, trust or other
business with the Borrowers as if it were not acting as Agent pursuant hereto.
Section 8.7 Successor Agent; Resignation of Agent.
-------------------------------------
(a) The Agent may resign from the performance of its functions and
duties hereunder at any time by giving at least twenty (20) days' prior written
notice to the Lenders and the Borrowers. In the event that the Agent gives
notice of its desire to resign from the performance of its functions and duties
as Agent, any such resignation
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shall take effect only upon (i) the repayment of any portion of the fees
received by the Agent required by Section 3.7(c) and (ii) the acceptance by a
successor Agent of appointment pursuant to clauses (b) and (c) below.
(b) The Required Lenders shall jointly appoint a successor Agent,
which shall be a Lender hereunder. A successor Agent that is not one of the
original Lenders under this Agreement shall be reasonably acceptable to the
Borrowers, such acceptance not to be unreasonably withheld, delayed or
conditioned. Unless the Borrowers object to the appointment of a successor Agent
within five (5) Business Days after receipt of notice thereof, the Borrowers
shall be conclusively presumed to have consented to the appointment of the
successor Agent.
(c) If a successor Agent shall not have been so appointed within said
twenty (20) day period, the retiring Agent shall then appoint a successor Agent
who shall serve as Agent until such time, if any, as the Lenders appoint a
successor Agent as provided above, it being understood and agreed that any
successor Agent so appointed by the retiring Agent pursuant to this clause (c)
need not be, notwithstanding the provisions of clause (b) above, a Lender
hereunder so long as such successor Agent is a commercial bank organized under
the laws of the United States of America or of any State thereof or of the
District of Columbia and has a combined capital and surplus of at least
$1,000,000,000.00.
(d) Upon the appointment of a successor Agent, the term "Agent" shall,
for all purposes of this Agreement and the other Loan Documents, thereafter
include such successor Agent, the retiring Agent shall be discharged from its
duties and obligations as Agent, as appropriate, under this Agreement and the
other Loan Documents and the successor Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the retiring
Agent, except that the retiring Agent shall reserve all rights as to obligations
accrued or due to it, in its capacity as such, at the time of such succession
and all rights (whenever arising) under Section 9.10 hereof.
Section 8.8 Certain Matters Requiring the Consent of all Lenders.
----------------------------------------------------
Subject to the provisions of Section 8.9(b) hereof, the consent of all the
Lenders shall be required for taking any of the following required or permitted
actions hereunder:
(a) any decrease or increase in any interest rate or margin applicable
to any Loan or in any fee payable hereunder, or change in the method of
computing the interest rate or margin applicable to any Loan or in any fee
payable hereunder;
(b) any change in the Maturity Date;
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(c) any increase in the Aggregate Commitment;
(d) any increase or decrease in the Commitment of any Lender;
(e) any change in the definition of Required Lenders;
(f) any assignment or delegation of Borrowers' Obligations and rights
hereunder;
(g) any change in the definition of Pro Rata Share;
(h) any amendment, modification or waiver of this Section 8.8; and
(i) any postponement of the date of payment of any principal, interest
or fees (other than the Administrative Fee, which may be postponed or waived at
the sole discretion of the Agent) due hereunder.
For the avoidance of doubt, all other actions, consents, waivers and amendments
permitted or required hereunder by the Lenders shall be by the Required Lenders
(unless such action, consent, waiver or amendment shall relate only to an
individual Lender, in which case such action may be taken by such Lender
individually).
Section 8.9 Defaulting Lenders Vote Not Counted. Whenever the
-----------------------------------
"Required Lenders" or "all the Lenders" shall be required or permitted to take
any action pursuant to the provisions of any Loan Document, for so long as a
Lender shall be in default of its obligation to advance its Pro Rata Share of
any Loan or advance any other funds to the Agent or any other Lender as required
hereunder:
(a) until the earlier of the cure of such default and the termination
of the Revolving Loan Commitment, the term Required Lenders for purposes of this
Agreement shall mean Lenders (excluding all Lenders whose default shall have
not been cured) whose Pro Rata Shares represent more than sixty-six and two-
thirds percent (66K%) of the aggregate Pro Rata Shares of such Lenders; and
(b) until the earlier of the cure of such default and the termination
of the Revolving Loan Commitment, the term "all the Lenders" for purposes of
this Agreement shall mean Lenders (excluding all Lenders whose default shall
have not been cured) whose Pro Rata Shares represent one hundred percent (100%)
of the aggregate Pro Rata Shares of such Lenders.
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ARTICLE IX
MISCELLANEOUS
Section 9.1 Amendments and Waivers; Cumulative Remedies. No delay
-------------------------------------------
or failure of any Lender or the Agent or the holder of any the Revolving Notes
or the Swing Line Note in exercising any right, power or privilege hereunder or
under any other Loan Document shall affect such right, power or privilege; nor
shall any single or partial exercise thereof or any abandonment or
discontinuance of steps to enforce such a right, power or privilege preclude any
further exercise thereof or of any other right, power or privilege. The rights
and remedies of any Lender or the Agent or any other holder of the Revolving
Notes or the Swing Line Note are cumulative and not exclusive of any rights or
remedies which any of them would otherwise have. Neither this Agreement or any
other Loan Document, nor any term, condition, representation, warranty, covenant
or agreement hereof or thereof, may be changed, waived, discharged or terminated
orally but only by an instrument in writing executed by the party against whom
such change, waiver, discharge or termination is sought. Any waiver, permit,
consent or approval of any kind or character (whether involving a breach,
default, provision, condition or term hereof or otherwise) on the part of any
Lender or the Agent or any other holder of any Note, or of the Borrowers under
this Agreement, or under any other Loan Document shall be effective only in the
specific instance and for the purpose for which given and only to the extent set
forth specifically in writing. No notice or demand given hereunder shall entitle
the recipient thereof to any other or further notice or demand in similar or
other circumstances.
Section 9.2 Survival of Representations and Warranties. All
------------------------------------------
representations, warranties, covenants and agreements of the Borrowers contained
herein or made in writing in connection herewith shall survive the execution and
delivery of this Agreement, the making of Loans hereunder and the issuance of
the Notes.
Section 9.3 Supervening Illegality . If, after the Effective Date,
----------------------
as the result of (a) the adoption of any law, rule or regulation by any
Governmental Authority, (b) any change in the existing laws, rules and
regulations of any Governmental Authority, (c) the issuance of any order or
decree by any Governmental Authority, (d) any change in the interpretation or
administration of any applicable law, rule, regulation, order or decree by any
Governmental Authority (including any central bank or similar agency) charged
with the interpretations or administration thereof, or (e) compliance by any
Lender with any request or directive (whether or not having the force of law) of
any Bank Governmental Body, it shall be unlawful or impossible for any
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Lender to maintain the Revolving Loans or the Swing Line Loans, such Lender
shall so notify the Borrowers and the Agent and such Lender, by giving the
Borrowers at least one hundred twenty (120) Business Days' prior written notice,
may require the Borrowers to prepay the aggregate principal amount of, and all
accrued and unpaid Facility Fee and all other fees and all accrued and unpaid
interest on, the Revolving Loans and the Swing Line Loans, as the case may be
(together with any other amounts that may become payable hereunder as a result
thereof, including all amounts pursuant to Section 9.10 of this Agreement), on a
Business Day (the "Prepayment Date") specified in such notice. If after the date
of this Agreement and prior to the initial Funding Date it shall become unlawful
for any Lender to make any Revolving Loans or Swing Line Loans hereunder or to
maintain its Commitment, this Agreement shall terminate forthwith with respect
to such Lender and neither such Lender nor the Borrowers shall have any further
rights or obligations under this Agreement, provided, however, that the
Borrowers, in the event of any termination pursuant to this second sentence of
Section 9.3, shall pay to such Lender the amount of all accrued and unpaid fees,
if any, together with all amounts then due pursuant to Section 9.10 hereof. If
it shall become unlawful for any such Lender to make any Revolving Loans or
Swing Line Loans as provided in this Section 9.3, the Revolving Loan Commitment
shall automatically be deemed to be decreased in the amount of such Lender's Pro
Rata Share, and the Commitment of each such other Lender shall be adjusted
accordingly.
Section 9.4 No Reduction in Payments. All payments due to the
------------------------
Lenders hereunder, and all other terms, conditions, covenants and agreements to
be observed and performed by the Borrowers hereunder, shall be made, observed or
performed by the Borrowers without any reduction or deduction whatsoever,
including any reduction or deduction for any set-off, recoupment, counterclaim
(whether sounding in tort, contract or otherwise) or tax.
Section 9.5 Stamp Taxes. The Borrowers agree to pay, and to save
-----------
each Lender harmless from all liability for, any State or Federal stamp,
transfer, documentary or similar taxes, assessments or charges (herein "Stamp
Taxes"), and any penalties or interest (excluding any penalties or interest
resulting from the willful misconduct or gross negligence of any Lender or the
Agent) with respect thereto, which may be assessed, levied, collected or imposed
by or upon such Lender, or otherwise become payable by such Lender, in
connection with the execution and delivery of this Agreement or the other Loan
Documents.
Section 9.6 Notices. Any notice, statement, request or demand
-------
required or permitted hereunder to be in writing may be given by telecopy,
telex, cable or other customary means of electronic communication or by
registered or certified mail (return
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receipt requested) or express courier, postage prepaid. All notices, statements,
requests and demands given to or made upon any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given or made, in
the case of telephonic notice (to the extent expressly permitted hereunder) when
made, or in the case of any other type of notice, when actually received, if:
to the Borrowers, to it at:
Overnite Corporation
1000 Semmes Avenue
P.O. Box 1216
Richmond, VA 23218
Attention: Patrick D. Hanley
Telephone: (804) 231-8000
Telecopy: (804) _____________
with a copy to:
Overnite Corporation
1000 Semmes Avenue
P.O. Box 1216
Richmond, VA 23218
Attention: General Counsel
Telephone: (804) ____________
Telecopy: (804) _____________
if to the Agent, to it at:
Crestar Bank
919 East Main Street
P.O. Box 26665
Richmond, VA 23219
Attention: Keith A. Hubbard
Telephone: (804) 782-5356
Telecopy: (804) 782-5413
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and if to any Lender, to it at its
address specified opposite its
name on the signature pages
hereto.
or such other address for notice as any party hereto may designate for itself in
a notice to the other party, except in cases where it is expressly provided
herein that such notice, statement, request or demand shall not be effective
until received by the party to whom it is addressed.
Section 9.7 Governing Law. THIS AGREEMENT AND THE OTHER LOAN
-------------
DOCUMENTS SHALL BE DEEMED TO BE CONTRACTS UNDER THE LAWS OF THE COMMONWEALTH OF
VIRGINIA AND, FOR ALL PURPOSES, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE COMMONWEALTH OF VIRGINIA WITHOUT REGARD TO THE CONFLICTS OF
LAWS PRINCIPLES.
Section 9.8 Successors and Assigns; Participations; Assignments.
---------------------------------------------------
(a) Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of and be enforceable by the respective permitted
successors and assigns of the parties hereto, provided that the Borrowers may
--------
not assign or transfer any of its interest hereunder without the prior written
consent of the Lenders and the Agent.
(b) Participations. Any Lender may sell participation in all or any
--------------
part of the Revolving Loans made by it or its Commitment or any other interest
herein or in its Revolving Note or in any other document delivered or instrument
delivered in connection herewith to another bank or other entity. In the case
of such participation by a Lender, (i) the participant shall not have any rights
under this Agreement or the applicable Revolving Note or any other document or
instrument delivered in connection herewith (the participant's rights against
such Lender in respect of such participation to be those set forth in the
agreement executed by such Lender in favor of the participant relating thereto),
(ii) all amounts payable by the Borrowers shall be determined as if such
Lender had not sold such participation and (iii) the Borrowers shall continue to
deal directly with such Lender with respect to the transactions contemplated
hereby.
(c) Assignments. Each Lender may assign any of its rights or
-----------
interests under the Loan Documents to one or more financial institutions,
provided that:
- --------
(i) each such assignment shall be in an amount not less than
$10,000,000.00 (or such lesser amount if, after giving effect to such
assignment
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and all other assignments by such Lender occurring substantially
simultaneously therewith, such assigning Lender shall hold no Commitment or
any Revolving Loan);
(ii) each such assignment by a Lender of its Commitment or
Revolving Loans shall be made in such manner so that the same portion of
such Lender's Commitment, Revolving Loans, Revolving Note and obligations
in respect of any Standby Letter of Credit is assigned to the respective
assignee Lender;
(iii) the assigning Lender shall pay to the Agent a one-time fee
in the amount of $3,000.00; and
(iv) the Parent Borrower and the Agent shall have consented to
such Assignment, which consent shall not be unreasonably withheld or
delayed; provided that no consent of the Parent Borrower shall be required
--------
for assignments (x) to a Lender or an Affiliate of a Lender or (y) during
the continuance of an Event of Default.
Upon execution and delivery by the assignee to the Borrowers and the Agent of an
instrument in writing pursuant to which such assignee agrees to be a "Lender"
hereunder (if not already a Lender) having the Commitment and Revolving Loans
specified in such assignment, and upon the consent of the Parent Borrower or the
Agent to the extent required above, the assignee shall have, to the extent of
such assignment, the rights, benefits and obligations of a Lender hereunder
holding the Commitment, Revolving Loans (or portions thereof) and Standby
Letters of Credit or deemed participations therein, as applicable, assigned to
it pursuant to such assignment (in addition to the Commitment, Revolving Loans
(or portions thereof) and Standby Letters of Credit or deemed participations
therein, as applicable, theretofore held by such assignee), and the assigning
Lender shall, to the extent of such assignment, be relieved from its Commitment
(or portion thereof) and other obligations hereunder so assigned.
Section 9.9 Affirmative Rate of Interest Permitted by Law. Nothing
---------------------------------------------
in this Agreement or in any Note shall require the Borrowers to pay interest to
the Agent for the account of the Lenders at a rate exceeding the maximum rate
permitted by applicable law to be charged or received by the Lenders, it being
understood that this Section 9.9 is not intended to make the criminal laws of
any jurisdiction applicable in circumstances in which they would not otherwise
apply. If the rate of interest specified herein, in any Revolving Note or in
the Swing Line Note would otherwise exceed the maximum rate so permitted to be
charged or received with respect to any amounts
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outstanding hereunder or under such Revolving Note or the Swing Line Note, the
rate of interest required to be paid to the Agent for the account of the Lenders
shall be automatically reduced to such maximum rate.
Section 9.10 Costs and Expenses; Indemnification.
-----------------------------------
(a) Without regard to whether the Effective Date shall have come into
existence or whether any Revolving Loan or Swing Line Loan or Standby Letter of
Credit shall have been made or issued hereunder, the Borrowers shall pay to each
Lender and the Agent, as the case may be, and reimburse each Lender and the
Agent for, as the case may be, and save each Lender and the Agent, as the case
may be, harmless from and indemnify each Lender and the Agent, as the case may
be, against losses from: (i) all out-of-pocket costs and expenses of the Agent
and the Lenders (including such costs and expenses incurred by the Agent on
behalf of the Lenders) in connection with the preparation, execution, delivery,
waiver, modification and amendment of this Agreement and any other Loan Document
(to the extent applicable) and any other document or instrument delivered in
connection with the transactions contemplated hereby, including, without
limitation, the reasonable fees and expenses of counsel for the Agent with
respect thereto, and (ii) all reasonable out-of-pocket costs and expenses, if
any (including, without limitation, reasonable counsel fees and expenses), of
the Agent in such capacity (including such costs and expenses incurred by the
Agent on behalf of the Lenders) in connection with the enforcement (whether
through negotiations, legal proceedings or otherwise) of this Agreement and any
other Loan Document and any other document or instrument delivered in connection
with the transactions contemplated hereby, including, for the avoidance of doubt
and without limitation, reasonable counsel fees and expenses in connection with
the enforcement of rights under this Section 9.10(a); provided, that,
--------
notwithstanding the foregoing, the Borrowers shall not be obligated to pay costs
and expenses referred to in this Section 9.10(a) to the extent that such costs
and expenses directly result from the gross negligence or willful misconduct of
a Lender or the Agent.
(b) The Borrowers shall jointly and severally indemnify and hold
harmless each Lender, the Agent and their respective affiliates, officers,
directors, employees, agents and advisors (each, an "Indemnified Person") from
and against, and pay and reimburse each Indemnified Person for, any and all
claims, damages, losses, liabilities and expenses (including, without
limitation, reasonable fees and disbursements of counsel) which may be incurred
by or asserted or awarded against any Indemnified Person in each case arising
out of or in connection with or by reason of, or in connection with the
preparation for a defense of, any investigation, litigation or proceeding
arising out of, related to or in connection with this Agreement, the
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Revolving Notes, the Swing Line Note and any other document or instrument
delivered in connection with the transactions contemplated hereby, whether or
not an Indemnified Person is a party hereto or thereto and whether or not the
Effective Date shall have come into existence or any Revolving Loan or Swing
Line Loan or Standby Letter of Credit has been made or issued under this
Agreement; provided, however, that the Borrowers shall have no obligation to
-------- -------
indemnify or hold harmless any Indemnified Person for liability or expenses to
the extent arising out of such Indemnified Person's gross negligence or willful
misconduct.
(c) All amounts payable by the Borrowers under this Section 9.10 shall
be immediately due upon written request by a Lender or Agent, as the case may
be, for the payment thereof. The obligations of the Borrowers under this
Section 9.10 shall survive the payment of the Revolving Notes and the Swing Line
Note.
Section 9.11 Set-Off; Suspension of Payment and Performance. Each
----------------------------------------------
Lender and the Agent is hereby authorized by the Borrowers, at any time and from
time to time, without notice (a) during any Event of Default, to set off
against, and to appropriate and apply to the payment of, the liabilities of the
Borrowers then due under this Agreement and any other Loan Document any and all
liabilities owing by any Lender or the Agent or any of their Affiliates to the
Borrowers (whether payable in Dollars or any other currency, whether matured or
unmatured and, in the case of liabilities that are deposits (including, without
limitation, any funds from time to time on deposit in the Borrowers' Account or
other account maintained with any Lender or the Agent Lender, whether general or
special, time or demand and however evidenced and whether maintained at a branch
or office located within or without the United States), and (b) during any Event
of Default, to suspend the payment and performance of such liabilities owing by
such Person or its Affiliates and, in the case of liabilities that are deposits,
to return as unpaid for insufficient funds any and all checks and other items
drawn against such deposits.
Section 9.12 Sharing of Collections, Proceeds and Set-Offs;
----------------------------------------------
Application of Payments.
- -----------------------
(a) If any Lender, by exercising any right of set-off, counterclaim,
foreclosure or otherwise, receives payment of principal or interest or other
amount due on any Loan or Standby Letter of Credit which is greater than the Pro
Rata Share of such Lender, the Lender receiving such proportionately greater
payment shall purchase such participations in the Loans and Standby Letter of
Credit reimbursement obligations held by the other Lenders, and such other
adjustments shall be made as may be required, so that all such payments shall be
shared by the Lenders on the basis of their
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respective Pro Rata Shares; provided that if all or any portion of such
--------
proportionately greater payment of such indebtedness is thereafter recovered
from, or must otherwise be restored by, such purchasing Lender, the purchase
shall be rescinded and the purchase price restored to the extent of such
recovery, but without interest being paid by such purchasing Lender. Borrowers
agree, to the fullest extent they may effectively do so under applicable law,
that any holder of a participation in a Loan or reimbursement obligation,
whether or not acquired pursuant to the foregoing arrangements, may exercise
rights of set-off or counterclaim and other rights with respect to such
participation as fully as if such holder of a participation were a direct
creditor of Borrowers in the amount of such participation. If under any
applicable bankruptcy, insolvency or other similar law, any Lender receives a
secured claim in lieu of a set-off to which this Section would apply, such
Lender shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders entitled
under this Section to share in the benefits of any recovery on such secured
claim.
(b) If an Event of Default or a Potential Event of Default shall have
occurred and be continuing, the Agent and each Lender and Borrowers agree that
all payments on account of the Loans and Standby Letters of Credit shall be
applied by the Agent and the Lenders as follows:
(i) First, to the Agent for any fees then due and payable to the
Agent under this Agreement until such fees are paid in full;
(ii) Second, to the Agent for any fees, costs or expenses
(including expenses described in Section 9.10) incurred by the Agent under
any of the Loan Documents or this Agreement, then due and payable and not
reimbursed by Borrowers or the Lenders until such fees, costs and expenses
are paid in full;
(iii) Third, to the Lenders for their Pro Rata Shares of the
Facility Fee then due and payable under this Agreement until such fee is
paid in full;
(iv) Fourth, to the Lenders for their respective shares of all
costs, expenses and fees then due and payable from Borrowers until such
costs, expenses and fees are paid in full;
(v) Fifth, to the Lenders for their Pro Rata Shares of all
interest then due and payable from Borrowers until such interest is paid in
full; and
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(vi) Sixth, to the Lenders for their Pro Rata Shares of the
principal amount of the Loans and reimbursement obligations with respect to
Standby Letters of Credit then due and payable from Borrowers until such
principal is paid in full, which percentage shares shall be calculated by
determining each Lender's Pro Rata Share.
Section 9.13 Lenders' Obligations Several; Independent Nature of
---------------------------------------------------
Lenders' Rights. The obligation of each Lender hereunder is several and not
- ---------------
joint, and no Lender shall be the agent of any other (except to the extent the
Agent is authorized to act as such hereunder). No Lender shall be responsible
for the obligation or commitment of any other Lender hereunder. In the event
that any Lender at any time should fail to make a Loan as herein provided, the
other Lenders, or any of them as may then be agreed upon, at their sole option,
may make the Loan that was to have been made by the Lender so failing to make
such Loan. Nothing contained in any Loan Document and no action taken by Agent
or any Lender pursuant hereto or thereto shall be deemed to constitute Lenders
to be a partnership, an association, a joint venture or any other kind of
entity. The amounts payable at any time hereunder to each Lender shall be a
separate and independent debt.
Section 9.14 Judicial Proceedings; Waiver of Jury Trial. Any
------------------------------------------
judicial proceeding brought against the Borrowers with respect to any Credit
Agreement Related Claim may be brought in any court of competent jurisdiction in
the Commonwealth of Virginia, and, by execution and delivery of this Agreement,
the Borrowers (a) accepts, generally and unconditionally, the nonexclusive
jurisdiction of such courts and any related appellate court and irrevocably
agrees to be bound by any judgment rendered thereby in connection with any
Credit Agreement Related Claim and (b) irrevocably waives any objection it may
now or hereafter have as to the venue of any such proceeding brought in such a
court or that such a court is an inconvenient forum. The Borrowers hereby
waives personal service of process and consents that service of process upon it
may be made by certified or registered mail, return receipt requested, at its
address specified or determined in accordance with the provisions of Section 9.6
of this Agreement, and service so made shall be deemed completed on the earlier
of (i) the receipt thereof and (ii) the fifth (5th) Business Day after such
service is deposited in the mail. Nothing herein shall affect the right of any
Lender, the Agent or any other Indemnified Person to serve process in any other
manner permitted by law or shall limit the right of any Lender, the Agent or any
other Indemnified Person to bring proceedings against the Borrowers in the
courts of any other jurisdiction. Any judicial proceeding by the Borrowers
against any Lender or the Agent involving any Credit Agreement Related Claim
shall be brought only in a court located in the Commonwealth of Virginia. THE
BORROWERS AND THE LENDERS AND THE AGENT HEREBY WAIVE
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TRIAL BY JURY IN ANY JUDICIAL PROCEEDING TO WHICH THEY ARE PARTIES INVOLVING ANY
CREDIT AGREEMENT RELATED CLAIM.
Section 9.15 Integration. This Agreement and the other Loan
-----------
Documents constitute the entire agreement of the Agent, the Lenders and the
Borrowers with respect to the subject matter hereof and thereof, and there are
no promises, undertakings, representations or warranties by the Agent or any
Lender relative to the subject matter hereof or thereof not expressly set forth
or referred to herein or in the other Loan Documents.
Section 9.16 Further Acts and Assurances. The Borrowers shall
---------------------------
promptly and duly execute and deliver to a Lender or the Agent, as the case may
be, and to such other persons as such Lender or the Agent shall designate, such
further instruments and shall take such further action as may be required by law
or as such Lender or the Agent may from time to time request in order more
effectively to carry out and accomplish the intent and purpose of this Agreement
and the other Loan Documents and to establish and protect the rights and
remedies created or intended to be created in favor of the Lender hereunder or
under any other Loan Document.
Section 9.17 No Fiduciary Relationship. The Borrowers acknowledges
-------------------------
that no provision of this Agreement or in any of the other Loan Documents, and
no course of dealing between any Lender or the Agent and any Borrowers shall be
deemed to create any fiduciary duty by the Agent or any Lender to the Borrowers.
Section 9.18 Severability. The provisions of this Agreement are
------------
severable, and if any clause or provision of this Agreement shall be held
invalid or unenforceable in whole or in part in any jurisdiction, then such
clause or provision shall, as to such jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without in any manner affecting the
validity or enforceability of such clause or provision in any other jurisdiction
or the remaining provisions hereof in any jurisdiction.
Section 9.19 Counterparts. This Agreement may be executed in any
------------
number of counterparts and by different parties hereto on separate counterparts,
each complete set of which, when so executed and delivered by all parties, shall
be an original, but all such counterparts shall together constitute but one and
the same instrument.
Section 9.20 Headings, Bold Type and Table of Contents. The
-----------------------------------------
section headings, subsection headings, and bold type used herein and the Table
of Contents hereto have been inserted for convenience of reference only and do
not constitute matters to be considered in interpreting this Agreement.
78
<PAGE>
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto
duly authorized, have executed this Agreement as of the day and year first above
written.
BORROWERS
OVERNITE CORPORATION
By:__________________________
Name:_____________________
Title:____________________
OVERNITE TRANSPORTATION COMPANY
By:__________________________
Name:_____________________
Title:____________________
AGENT
CRESTAR BANK
By:_________________________
Name: Keith A. Hubbard
Title: Senior Vice President
LENDERS
Address: CRESTAR BANK
919 East Main Street By:________________________
P.O. Box 26665 Name: Keith A. Hubbard
Richmond, VA 23219 Title: Senior Vice President
Attention: Keith A. Hubbard
Telephone: (804) 782-5356
Telecopier: (804) 782-5413
79
<PAGE>
Exhibit A to
Revolving Credit Agreement
FORM OF
REVOLVING NOTE
--------------
REVOLVING NOTE
U.S.$_________________ Dated: August __, 1998
FOR VALUE RECEIVED, the undersigned, Overnite Corporation, a Virginia
corporation, and Overnite Transportation Company, a Virginia corporation
(collectively, the "Borrowers"), hereby promise to pay on August __, 2003 (the
"Maturity Date") to the order of [CRESTAR BANK] (the "Lender") the principal
amount of the lesser of (x) __________ MILLION UNITED STATES DOLLARS
-
($___________) and (y) the aggregate amount of Revolving Loans made by the
-
Lender to the Borrowers pursuant to the Agreement (as hereinafter defined) and
remaining outstanding on such date. Capitalized terms used (but not defined) in
this Revolving Note shall have the meanings given to them in the Agreement (as
hereinafter defined).
The Borrowers promise to pay interest from the initial Funding Date of
such Revolving Loans until the Maturity Date on the principal amount of this
Revolving Note from time to time outstanding at the rate, and in the manner,
prescribed in the Agreement. Any principal amount of, or any interest accrued
on, this Revolving Note which is not paid on the date due shall bear interest
from such due date until paid in full at the Default Rate. In no event shall the
rate of interest borne by this Revolving Note at any time exceed the maximum
rate of interest permitted at that time under applicable law.
Payments of the principal amount of and interest on this Revolving
Note shall be made in lawful money of the United States of America to the
Lending Office of the Agent on behalf of the Lender as provided in the
Agreement.
1
<PAGE>
This Revolving Note is one of the Revolving Notes referred to in the
Credit Agreement, dated as of August __, 1998 (the "Agreement"), among the
Lender, the other financial institutions from time to time a party thereto, the
Borrowers and the Agent. The Lender is entitled to the rights and benefits of
the Agreement and the other Loan Documents. The Agreement, among other things,
contains provisions for optional and mandatory prepayments on account of the
principal of this Revolving Note by the Borrowers and for acceleration of the
maturity of this Revolving Note upon the terms and conditions therein specified.
THIS REVOLVING NOTE IS BEING ISSUED IN THE COMMONWEALTH OF VIRGINIA
AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE COMMONWEALTH OF VIRGINIA WITHOUT REGARD TO THE CONFLICTS OF LAWS
PRINCIPLES.
OVERNITE CORPORATION
By:________________________________________
Name:___________________________________
Title:__________________________________
OVERNITE TRANSPORTATION COMPANY
By:________________________________________
Name:___________________________________
Title:__________________________________
2
<PAGE>
Exhibit B to
Revolving Credit Agreement
FORM OF
SWING LINE NOTE
---------------
SWING LINE NOTE
U.S.$10,000,000 Dated: August __, 1998
FOR VALUE RECEIVED, the undersigned, Overnite Corporation, a Virginia
corporation, and Overnite Transportation Corporation, a Virginia corporation
(collectively, the "Borrowers"), hereby promise to pay on August __, 2003 (the
"Maturity Date") to the order of CRESTAR BANK (the "Lender") the principal
amount of the lesser of (x) TEN MILLION UNITED STATES DOLLARS ($10,000,000.00)
-
and (y) the aggregate amount of Swing Line Loans made by the Lender to the
-
Borrowers pursuant to the Agreement (as hereinafter defined) and remaining
outstanding on such date. Capitalized terms used (but not defined) in this
Swing Line Note shall have the meanings given to them in the Agreement (as
hereinafter defined).
The Borrowers promise to pay interest from the initial Funding Date of
such Swing Line Loans until the Maturity Date on the principal amount of this
Swing Line Note from time to time outstanding at the rate, and in the manner,
prescribed in the Agreement. Any principal amount of, or any interest accrued
on, this Swing Line Note which is not paid on the date due shall bear interest
from such due date until paid in full at the Default Rate. In no event shall the
rate of interest borne by this Swing Line Note at any time exceed the maximum
rate of interest permitted at that time under applicable law.
Payments of the principal amount of and interest on this Swing Line
Note shall be made in lawful money of the United States of America to the
Lending Office of the Agent on behalf of the Lender as provided in the
Agreement.
This Swing Line Note is the Swing Line Note referred to in the Credit
Agreement, dated as of August __, 1998 (the "Agreement"), among the Lender, the
1
<PAGE>
other financial institutions from time to time a party thereto, the Borrowers
and the Agent. The Lender is entitled to the rights and benefits of the
Agreement and the other Loan Documents. The Agreement, among other things,
contains provisions for optional and mandatory prepayments on account of the
principal of this Swing Line Note by the Borrowers and for acceleration of the
maturity of this Swing Line Note upon the terms and conditions therein
specified.
THIS SWING LINE NOTE IS BEING ISSUED IN THE COMMONWEALTH OF VIRGINIA
AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE COMMONWEALTH OF VIRGINIA WITHOUT REGARD TO THE CONFLICTS OF LAWS
PRINCIPLES.
OVERNITE CORPORATION
By:_____________________________________
Name:________________________________
Title:_______________________________
OVERNITE TRANSPORTATION COMPANY
By:______________________________________
Name:_________________________________
Title:________________________________
2
<PAGE>
Exhibit C to
Revolving Credit Agreement
FORM OF
BORROWING REQUEST
REVOLVING LOANS
_______________ ___, 1998
Crestar Bank, as Agent
919 East Main Street
P.O. Box 26665
Richmond, VA 23219
Attention: Keith A. Hubbard,
Senior Vice President
Ladies and Gentlemen:
Reference is made to the Credit Agreement dated as of August ___, 1998
as hereafter amended from time to time (the "Credit Agreement") among the
undersigned, the lenders from time to time parties thereto (the "Lenders") and
Crestar Bank, as Agent for the Lenders and for itself, providing for certain
Revolving Loans and Standby Letters of Credit subject to the terms and
conditions specified therein. Capitalized terms used herein and not otherwise
defined shall have the respective meanings assigned to such terms in the Credit
Agreement.
In accordance with the Credit Agreement the undersigned hereby request
that the Lenders [make, convert or renew] a Revolving Loan, in the aggregate
amount of $__________ [at least $3,000,000, in multiples of $500,000], to be
[made, converted or renewed] on _______________ ___, 19__. The undersigned
hereby request that such Revolving Loan be made as follows:
(a) Interest Rate Option
[Base Rate or Applicable LIBOR Rate]
1
<PAGE>
(b) LIBOR Period of LIBOR Loan (if applicable)
[One, two, three or six months]
The undersigned hereby certify that (a) since the date of the most
recent financial statements provided to the Lenders, there has been no material
adverse change in the Borrowers' or their Consolidated Subsidiaries' (taken as a
whole) financial condition or in the Borrowers' or their Consolidated
Subsidiaries' (taken as a whole) assets, (b) the representations and warranties
of the Borrowers contained in the Credit Agreement are true and correct as of
the date hereof as though made on and as of the date hereof, (c) no event has
occurred and is continuing, or shall result from the Revolving Loan requested
hereby after giving effect to the application of the proceeds therefrom, which
constitutes an Event of Default or would constitute a Potential Event of
Default, and (d) the amount of the requested Revolving Loan, when added to the
outstanding balances of the Revolving Loans and outstanding Standby Letters of
Credit, will not exceed the Aggregate Commitment on the date of such Loan.
Very truly yours,
OVERNITE CORPORATION
By:_____________________________________
Name:______________________________
Title:_____________________________
OVERNITE TRANSPORTATION COMPANY
By:_____________________________________
Name:______________________________
Title:_____________________________
2
<PAGE>
SCHEDULE I TO
THE REVOLVING CREDIT AGREEMENT
Name of Lender Commitment (in Dollars)
- -------------- -----------------------
Crestar Bank $______________________
-i-
<PAGE>
Schedule 1.1
Existing Liens
--------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
DEBTOR/ CREDITOR/ GENERAL DESCRIPTION GENERAL NATURE OUTSTANDING ANNUAL MATURITY
OBLIGOR OBLIGEE OF PROPERTY OF LIEN PRINCIPAL PRINCIPAL
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(e.g., Overnite (e.g., Capital
Transportation) Lease, mortgage,
purchase money
security interest)
- -------------------------------------------------------------------------------------------------------
</TABLE>
-i-
<PAGE>
Schedule 5.11
Subsidiaries
------------
-i-
<PAGE>
Schedule 5.5
Litigation
----------
-ii-
<PAGE>
Schedule 5.6
Defaults
--------
-iii-
<PAGE>
Schedule 5.15
Intercompany Debts and Intercompany Agreements
----------------------------------------------
-iv-
<PAGE>
Schedule 5.19
Letters of Credit, Suretyship Agreements and Similar Arrangements
-----------------------------------------------------------------
-v-
<PAGE>
SCHEDULES
---------
Schedule I -- Lender Commitments
Schedule 1.1 -- Existing Liens
Schedule 5.5 -- Litigation
Schedule 5.6 -- Defaults
Schedule 5.11 -- Subsidiaries
Schedule 5.15 -- Intercompany Debts and Intercompany Agreements
Schedule 5.19 -- Letters of Credit, Suretyship Agreements and
Similar Arrangements
EXHIBITS
--------
Exhibit A Form of Revolving Note
Exhibit B Form of Swing Line Note
Exhibit C Form of Borrowing Notice
-vi-
<PAGE>
EXHIBIT 10.2
OVERNITE CORPORATION
STOCK COMPENSATION PLAN
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
<S> <C>
ARTICLE I DEFINITIONS...............................................................1
1.01. Accounting Firm......................................................1
1.03. Affiliate............................................................1
1.04. Agreement............................................................1
1.05. Beneficial Owner.....................................................1
1.06. Board................................................................1
1.07. Change in Control....................................................1
1.08. Code.................................................................3
1.09. Committee............................................................3
1.10. Common Stock.........................................................3
1.11. Company..............................................................4
1.12. Control Change Date..................................................4
1.13. Corresponding SAR....................................................4
1.15. Exchange Act.........................................................4
1.16. Fair Market Value....................................................4
1.17. Initial Value........................................................4
1.18. Option...............................................................4
1.19. Participant..........................................................5
1.20. Performance Shares...................................................5
1.21. Person...............................................................5
1.22. Plan.................................................................5
1.23. Related Entity.......................................................5
1.24. Restoration Feature..................................................5
1.26. SAR..................................................................6
1.27. Stock Award..........................................................6
ARTICLE II PURPOSES.................................................................6
ARTICLE III ADMINISTRATION..........................................................6
ARTICLE IV ELIGIBILITY..............................................................7
ARTICLE V STOCK SUBJECT TO PLAN.....................................................7
5.01. Shares Issued........................................................8
5.02. Aggregate Limit......................................................8
5.03. Reallocation of Shares...............................................8
i
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ARTICLE VI OPTIONS..................................................................8
6.01. Award................................................................9
6.02. Option Price.........................................................9
6.03. Maximum Option Period................................................9
6.04. Nontransferability...................................................9
6.05. Transferable Options.................................................9
6.06. Employee Status.....................................................10
6.07. Exercise............................................................10
6.08. Payment.............................................................10
6.09. Change in Control...................................................11
6.10. Shareholder Rights..................................................11
6.11. Disposition of Stock................................................11
ARTICLE VII SARS...................................................................11
7.01. Award...............................................................11
7.02. Maximum SAR Period..................................................11
7.03. Nontransferability..................................................12
7.04. Transferable SARs...................................................12
7.05. Exercise............................................................12
7.06. Change in Control...................................................13
7.07. Employee Status.....................................................13
7.08. Settlement..........................................................13
7.09. Shareholder Rights..................................................13
ARTICLE VIII STOCK AWARDS..........................................................13
8.01. Award...............................................................13
8.02. Vesting.............................................................13
8.03. Employee Status.....................................................14
8.04. Change in Control...................................................14
8.05. Shareholder Rights..................................................14
ARTICLE IX PERFORMANCE SHARE AWARDS................................................15
9.01. Award...............................................................15
9.02. Earning the Award...................................................15
9.03. Payment.............................................................15
9.04. Shareholder Rights..................................................15
9.05. Nontransferability..................................................16
9.06. Transferable Performance Shares.....................................16
9.07. Employee Status.....................................................16
9.08. Change in Control...................................................16
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
ARTICLE X ADJUSTMENT UPON CHANGE IN COMMON STOCK...................................16
ARTICLE XI COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES...................17
ARTICLE XII GENERAL PROVISIONS.....................................................18
12.01. Effect on Employment and Service...................................18
12.02. Unfunded Plan......................................................18
12.03. Rules of Construction..............................................18
12.04. Tax Withholding....................................................19
12.05. Limitation on Benefits.............................................19
ARTICLE XIII AMENDMENT.............................................................20
ARTICLE XIV DURATION OF PLAN.......................................................20
ARTICLE XV EFFECTIVE DATE OF PLAN..................................................20
</TABLE>
iii
<PAGE>
OVERNITE CORPORATION
STOCK COMPENSATION PLAN
-----------------------
ARTICLE I
DEFINITIONS
-----------
1.01. ACCOUNTING FIRM
---------------
Accounting Firm means the independent accounting firm engaged to audit
the Company's financial statements.
1.02. ADMINISTRATOR
-------------
Administrator means the Committee and any delegate of the Committee that
is appointed in accordance with Article III.
1.03. AFFILIATE
---------
Affiliate has the meaning set forth in Rule 12b-2 of the General Rules
and Regulations under the Exchange Act, as amended from time to time.
1.04. AGREEMENT
---------
Agreement means a written agreement (including any amendment or
supplement thereto) between the Company and a Participant specifying the terms
and conditions of an award of Performance Shares or a Stock Award, Option or SAR
granted to such Participant.
1.05. BENEFICIAL OWNER
----------------
Beneficial Owner has the meaning set forth in Rule 13d-3 under the
Exchange Act, except that a Person shall not be deemed to be the Beneficial
Owner of any securities the holding of which is properly disclosed on a Form
13-G.
1.06. BOARD
-----
Board means the Board of Directors of the Company.
1.07. CHANGE IN CONTROL
-----------------
Change in Control means the occurrence of any of the events set forth in
any one of the following paragraphs:
1
<PAGE>
(1) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired
directly from the Company or its affiliates) representing 30% or more
of the combined voting power of the Company's then outstanding
securities, excluding any Person who becomes such a Beneficial Owner
in connection with a transaction described in clause (i) of paragraph
(3) below; or
(2) the following individuals cease for any reason to constitute
a majority of the number of directors then serving: individuals who,
on the date the Plan is adopted by the Board, constitute the Board
and any new director (other than a director whose initial assumption
of office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation,
relating to the election of directors of the Company) whose
appointment or election by the Board or nomination for election by
the Company's stockholders was approved or recommended by a vote of
at least two-thirds (2/3) of the directors then still in office who
either were directors on the date hereof or whose appointment,
election or nomination for election was previously so approved or
recommended, or
(3) there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with any
other corporation, other than (i) a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof) at
least 50% of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (ii) a merger or
consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no Person
2
<PAGE>
is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company (not including in the securities
Beneficially Owned by such Person any securities acquired directly
from the Company or its Affiliates) representing 50% or more of the
combined voting power of the Company's then outstanding securities;
or
(4) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the
Company's assets to an entity at least 50% of the combined voting
power of the voting securities of which is owned by stockholders of
the Company in substantially the same proportions as their ownership
of the Company immediately prior to such sale.
Notwithstanding the foregoing, a "Change in Control" shall not be
deemed to have occurred by virtue of the consummation of any transaction or
series of integrated transactions immediately following which the recordholders
of the common stock of the Company immediately prior to such transaction or
series of transactions continue to have substantially the same proportionate
ownership in an entity which owns all or substantially all of the assets of the
Company immediately following such transaction or series of transactions.
1.08. CODE
----
Code means the Internal Revenue Code of 1986, and any amendments
thereto.
1.09. COMMITTEE
---------
Committee means the Compensation Committee of the Board; provided,
however, that the Board shall serve as the Committee prior to the appointment of
the Compensation Committee.
1.10. COMMON STOCK
------------
Common Stock means the common stock of the Company.
3
<PAGE>
1.11. COMPANY
-------
Company means Overnite Corporation.
1.12. CONTROL CHANGE DATE
-------------------
Control Change Date means the date on which a Change in Control
occurs. If a Change in Control occurs on account of a series of transactions,
the Control Change Date is the date of the last of such transactions.
1.13. CORRESPONDING SAR
-----------------
Corresponding SAR means an SAR that is granted in relation to a
particular Option and that can be exercised only upon the surrender to the
Company, unexercised, of that portion of the Option to which the SAR relates.
1.14. EXCHANGE ACT
------------
Exchange Act means the Securities Exchange Act of 1934, as amended
from time to time.
1.15. FAIR MARKET VALUE
-----------------
Fair Market Value means, on any given date, the reported "closing"
price of a share of Common Stock in the over-the-counter market on such date as
reported by the National Association of Securities Dealers, Inc., or if the
Common Stock was not so traded on such day, then on the next preceding day that
the Common Stock was so traded.
1.16. INITIAL VALUE
-------------
Initial Value means, with respect to a Corresponding SAR, the option
price per share of the related Option and, with respect to an SAR granted
independently of an Option, the price per share of Common Stock as determined by
the Administrator on the date of the grant; provided, however, that the price
per share of Common Stock encompassed by the grant of an SAR shall not be less
than the Fair Market Value on the date of grant.
1.17. OPTION
------
Option means a stock option that entitles the holder to purchase from
the Company a stated number of shares of Common Stock at the price set forth in
an Agreement.
4
<PAGE>
1.18. PARTICIPANT
-----------
Participant means an employee of the Company or a Related Entity,
including an employee who is a member of the Board, who satisfies the
requirements of Article IV and is selected by the Administrator to receive an
award of Performance Shares, a Stock Award, an Option, an SAR, or a combination
thereof.
1.19. PERFORMANCE SHARES
------------------
Performance Shares means an award, in the amount determined by the
Administrator and specified in an Agreement, stated with reference to a
specified number of shares of Common Stock, that entitles the holder to receive
a payment for each specified share equal to the Fair Market Value of Common
Stock on the date of payment. In the discretion of the Administrator, a
Performance Share award may include the right to receive an additional payment
for the accumulated dividends that would have been paid on each specified share
as if such dividends had been invested in Common Stock on the dividend payment
date, from the date of grant to the date of payment.
1.20. PERSON
------
Person has the meaning set forth in Section 3(a)(9) of the Exchange
Act, as modified and used in Sections 13(d) and 14(d) of the Exchange Act except
that such term does not include (i) the Company, its Affiliates or any Related
Entity, (ii) a trustee or other fiduciary holding securities under an employee
benefit plan maintained by the Company or any Related Entity, (iii) any
underwriter temporarily holding securities pursuant to any offering of such
securities or (iv) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock in the Company.
1.21. PLAN
----
Plan means the Overnite Corporation Stock Compensation Plan.
1.22. RELATED ENTITY
--------------
Related Entity means any entity that directly or indirectly, through
one or more intermediaries, controls, or is controlled by, or is under common
control with, the Company.
1.23. RESTORATION FEATURE
-------------------
Restoration Feature means the right to receive a new option covering
the number of shares of Common Stock surrendered to the Company pursuant to the
exercise of an Option. The new Option shall have an exercise price equal to the
Fair Market Value on the date such shares of Common Stock were surrendered,
shall be
5
<PAGE>
exercisable six months after the date of grant and shall otherwise be subject to
the same terms and conditions as the related Option.
1.24. SAR
---
SAR means a stock appreciation right that entitles the holder to
receive, with respect to each share of Common Stock encompassed by the exercise
of such SAR, the lesser of (a) the excess, if any, of the Fair Market Value at
the time of exercise over the Initial Value, or (b) the Initial Value.
References to "SARs" include both Corresponding SARs and SARs granted
independently of Options, unless the context requires otherwise.
1.25. STOCK AWARD
-----------
Stock Award means Common Stock awarded to a Participant under Article
VIII.
ARTICLE II
PURPOSES
--------
The Plan is intended to assist the Company and Related Entities in
recruiting and retaining individuals with ability and initiative by enabling
such persons to participate in the future success of the Company and the Related
Entities and to associate their interests with those of the Company and its
shareholders. The Plan is intended to permit the grant of both Options
qualifying under Section 422 of the Code ("incentive stock options") and Options
not so qualifying, and the grant of SARs, Stock Awards and Performance Shares.
No Option that is intended to be an incentive stock option shall be invalid for
failure to qualify as an incentive stock option. The proceeds received by the
Company from the sale of Common Stock pursuant to this Plan shall be used for
general corporate purposes.
ARTICLE III
ADMINISTRATION
--------------
The Plan shall be administered by the Administrator. The Administrator
shall have authority to grant Stock Awards, Performance Shares, Options and SARs
upon such terms (not inconsistent with the provisions of this Plan), as the
Administrator may consider appropriate. Such terms may include conditions (in
addition to those contained in this Plan) on the exercisability of all or any
part of an Option or SAR or on the transferability or forfeitability of a Stock
Award or an award of Performance Shares, including by way of example and not of
limitation, conditions on which
6
<PAGE>
Participants may defer receipt of benefits under the Plan, requirements that the
Participant complete a specified period of employment with the Company or a
Related Entity, requirements that the Company achieve a specified level of
financial performance or that the Company achieve a specified level of financial
return. Notwithstanding any such conditions, the Administrator may, in its
discretion, accelerate the time at which any Option or SAR may be exercised, or
the time at which a Stock Award may become transferable or nonforfeitable or
both, or the time at which an award of Performance Shares may be settled or may
waive any of the conditions referred to above. In addition, the Administrator
shall have complete authority to interpret all provisions of this Plan; to
prescribe the form of Agreements; to adopt, amend, and rescind rules and
regulations pertaining to the administration of the Plan; and to make all other
determinations necessary or advisable for the administration of this Plan. The
express grant in the Plan of any specific power to the Administrator shall not
be construed as limiting any power or authority of the Administrator. Any
decision made, or action taken, by the Administrator in connection with the
administration of this Plan shall be final and conclusive. Neither the
Administrator nor any member of the Committee shall be liable for any act done
in good faith with respect to this Plan or any Agreement, Option, SAR, Stock
Award or award of Performance Shares. All expenses of administering this Plan
shall be borne by the Company, a Related Entity or a combination thereof.
The Committee, in its discretion, may delegate to one or more officers of
the Company all or part of the Committee's authority and duties with respect to
grants and awards to individuals who are not subject to the reporting and other
provisions of Section 16 of the Exchange Act. The Committee may revoke or amend
the terms of a delegation at any time but such action shall not invalidate any
prior actions of the Committee's delegate or delegates that were consistent with
the terms of the Plan.
ARTICLE IV
ELIGIBILITY
-----------
Any employee of the Company or a Related Entity (including a corporation
that becomes a Related Entity after the adoption of this Plan), is eligible to
participate in this Plan if the Administrator, in its sole discretion,
determines that such person has contributed or can be expected to contribute to
the profits or growth of the Company or a Related Entity. Directors of the
Company who are employees of the Company or a Related Entity may be selected to
participate in this Plan.
7
<PAGE>
ARTICLE V
STOCK SUBJECT TO PLAN
---------------------
5.01. SHARES ISSUED
-------------
Upon the award of shares of Common Stock pursuant to a Stock Award or
in settlement of an award of Performance Shares, the Company may issue shares of
Common Stock from its authorized but unissued Common Stock. Upon the exercise of
any Option or SAR the Company may deliver to the Participant (or the
Participant's broker if the Participant so directs), shares of Common Stock from
its authorized but unissued Common Stock.
5.02. AGGREGATE LIMIT
---------------
The maximum aggregate number of shares of Common Stock that may be
issued under this Plan, pursuant to the exercise of SARs and Options and the
grant of Stock Awards and the settlement of Performance Shares is 3,750,000
shares. The maximum aggregate number of shares that may be issued under this
Plan as Stock Awards and in settlement of Performance Shares, is 1,250,000
shares. The maximum aggregate number of shares that may be issued under this
Plan and the maximum number of shares that may be issued as Stock Awards and in
settlement of Performance Shares shall be subject to adjustment as provided in
Article X.
5.03. REALLOCATION OF SHARES
----------------------
If an Option is terminated, in whole or in part, for any reason other
than its exercise or the exercise of a Corresponding SAR, the number of shares
of Common Stock allocated to the Option or portion thereof may be reallocated to
other Options, SARs, Performance Shares and Stock Awards to be granted under
this Plan. If an SAR is terminated, in whole or in part, for any reason other
than its exercise or the exercise of a related Option, the number of shares of
Common Stock allocated to the SAR or portion thereof may be reallocated to other
Options, SARs, Performance Shares and Stock Awards to be granted under this
Plan. If an award of Performance Shares is terminated, in whole or in part, the
number of shares of Common Stock allocated to the Performance Shares or portion
thereof may be reallocated to other options, SARs, Performance Shares and Stock
Awards to be granted under this Plan. If a Stock Award is forfeited, in whole or
in part, for any reason, the number of shares of Common Stock allocated to the
Stock Award or portion thereof may be reallocated to other Options, SARs,
Performance Shares and Stock Awards to be granted under this Plan.
8
<PAGE>
ARTICLE VI
OPTIONS
-------
6.01. AWARD
-----
In accordance with the provisions of Article IV, the Administrator
will designate each individual to whom an Option is to be granted and will
specify the number of shares of Common Stock covered by each such award. An
Option may be granted with or without a Restoration Feature.
6.02. OPTION PRICE
------------
The price per share for Common Stock purchased on the exercise of an
Option shall be determined by the Administrator on the date of grant, but shall
not be less than the Fair Market Value on the date the Option is granted.
6.03. MAXIMUM OPTION PERIOD
---------------------
The maximum period in which an Option may be exercised shall be ten
years from the date such Option was granted. The terms of any Option may provide
that it has a term that is less than such maximum period.
6.04. NONTRANSFERABILITY
------------------
Except as provided in Section 6.05, each Option granted under this
Plan shall be nontransferable except by will or by the laws of descent and
distribution. In the event of any transfer of an Option (by the Participant or
his transferee), the Option and any Corresponding SAR that relates to such
Option must be transferred to the same person or persons or entity or entities.
Except as provided in Section 6.05, during the lifetime of the Participant to
whom the Option is granted, the Option may be exercised only by the Participant.
No right or interest of a Participant in any Option shall be liable for, or
subject to, any lien, obligation, or liability of such Participant.
6.05. TRANSFERABLE OPTIONS
--------------------
Section 6.04 to the contrary notwithstanding, if the Agreement
provides, an Option that is not an incentive stock option may be transferred by
a Participant to the Participant's children, grandchildren, spouse, one or more
trusts for the benefit of such family members or a partnership in which such
family members are the only partners, on such terms and conditions as may be
permitted under Securities Exchange Commission Rule 16b-3 as in effect from time
to time. The holder of an Option transferred pursuant to this section shall be
bound by the same terms and conditions that governed the Option during the
period that it was held by the Participant; provided, however, that such
transferee may not transfer the Option
9
<PAGE>
except by will or the laws of descent and distribution. In the event of any
transfer of an Option (by the Participant or his transferee), the Option and any
Corresponding SAR that relates to such Option must be transferred to the same
person or persons or entity or entities.
6.06. EMPLOYEE STATUS
---------------
For purposes of determining the applicability of Section 422 of the
Code (relating to incentive stock options), or in the event that the terms of
any Option provide that it may be exercised only during employment or within a
specified period of time after termination of employment, the Administrator may
decide to what extent leaves of absence for governmental or military service,
illness, temporary disability, or other reasons shall not be deemed
interruptions of continuous employment.
6.07. EXERCISE
--------
Subject to the provisions of this Plan and the applicable Agreement,
an Option may be exercised in whole at any time or in part from time to time at
such times and in compliance with such requirements as the Administrator shall
determine; provided, however, that incentive stock options (granted under the
Plan and all plans of the Company and its Related Entities) may not be first
exercisable in a calendar year for stock having a Fair Market Value (determined
as of the date an Option is granted) exceeding the limit prescribed by Code
section 422(d). An Option granted under this Plan may be exercised with respect
to any number of whole shares less than the full number for which the Option
could be exercised. A partial exercise of an Option shall not affect the right
to exercise the Option from time to time in accordance with this Plan and the
applicable Agreement with respect to the remaining shares subject to the Option.
The exercise of an Option shall result in the termination of any Corresponding
SAR to the extent of the number of shares with respect to which the Option is
exercised.
6.08. PAYMENT
-------
Unless otherwise provided by the Agreement, payment of the Option
price shall be made in cash or a cash equivalent acceptable to the
Administrator. Subject to rules established by the Administrator, payment of all
or part of the Option price may be made with shares of Common Stock which have
been owned by the Participant for at least six months and which have not been
used for another exercise during the prior six months. If Common Stock is used
to pay all or part of the Option price, the sum of the cash and cash equivalent
and the Fair Market Value (determined as of the day preceding the date of
exercise) of such shares must not be less than the Option price of the shares
for which the Option is being exercised.
10
<PAGE>
6.09. CHANGE IN CONTROL
-----------------
Section 6.07 to the contrary notwithstanding, each outstanding Option
shall be fully exercisable (in whole or in part at the discretion of the holder)
on and after a Control Change Date and during the period (i) beginning on the
first day after the commencement of a tender offer or exchange offer for shares
of Common Stock (other than an offer made by the Company); provided that shares
are acquired pursuant to such offer and (ii) ending on the thirtieth day
following the expiration of such offer.
6.10. SHAREHOLDER RIGHTS
------------------
No Participant shall have any rights as a shareholder with respect to
shares subject to his Option until the date of exercise of such Option.
6.11. DISPOSITION OF STOCK
--------------------
A Participant shall notify the Company of any sale or other
disposition of Common Stock acquired pursuant to an Option that was an incentive
stock option if such sale or disposition occurs (i) within two years of the
grant of an Option or (ii) within one year of the issuance of the Common Stock
to the Participant. Such notice shall be in writing and directed to the
Secretary of the Company.
ARTICLE VII
SARS
----
7.01. AWARD
-----
In accordance with the provisions of Article IV, the Administrator
will designate each individual to whom SARs are to be granted and will specify
the number of shares covered by each such award. In addition, no Participant may
be granted Corresponding SARs (under all incentive stock option plans of the
Company and its Affiliates) that are related to incentive stock options which
are first exercisable in any calendar year for stock having an aggregate Fair
Market Value (determined as of the date the related Option is granted) that
exceeds the limit prescribed by Code section 422(d).
7.02. MAXIMUM SAR PERIOD
------------------
The maximum period in which an SAR may be exercised shall be ten
years from the date such SAR was granted. The terms of any SAR may provide that
it has a term that is less than such maximum period.
11
<PAGE>
7.03. NONTRANSFERABILITY
------------------
Except as provided in Section 7.04, each SAR granted under this Plan
shall be nontransferable except by will or by the laws of descent and
distribution. In the event of any such transfer, a Corresponding SAR and the
related Option must be transferred to the same person or persons or entity or
entities. Except as provided in Section 7.04, during the lifetime of the
Participant to whom the SAR is granted, the SAR may be exercised only by the
Participant. No right or interest of a Participant in any SAR shall be liable
for, or subject to, any lien, obligation, or liability of such Participant.
7.04. TRANSFERABLE SARS
-----------------
Section 7.03 to the contrary notwithstanding, if the Agreement
provides, an SAR, other than a Corresponding SAR that is related to an incentive
stock option, may be transferred by a Participant to the Participant's children,
grandchildren, spouse, one or more trusts for the benefit of such family members
or a partnership in which such family members are the only partners, on such
terms and conditions as may be permitted under Securities Exchange Commission
Rule 16b-3 as in effect from time to time. The holder of an SAR transferred
pursuant to this section shall be bound by the same terms and conditions that
governed the SAR during the period that it was held by the Participant;
provided, however, that such transferee may not transfer the SAR except by will
or the laws of descent and distribution. In the event of any transfer of a
Corresponding SAR (by the Participant or his transferee), the Corresponding SAR
and the related Option must be transferred to the same person or person or
entity or entities.
7.05. EXERCISE
--------
Subject to the provisions of this Plan and the applicable Agreement,
an SAR may be exercised in whole at any time or in part from time to time at
such times and in compliance with such requirements as the Administrator shall
determine; provided, however, that a Corresponding SAR that is related to an
incentive stock option may be exercised only to the extent that the related
Option is exercisable and only when the Fair Market Value exceeds the option
price of the related Option. An SAR granted under this Plan may be exercised
with respect to any number of whole shares less than the full number for which
the SAR could be exercised. A partial exercise of an SAR shall not affect the
right to exercise the SAR from time to time in accordance with this Plan and the
applicable Agreement with respect to the remaining shares subject to the SAR.
The exercise of a Corresponding SAR shall result in the termination of the
related Option to the extent of the number of shares with respect to which the
SAR is exercised.
12
<PAGE>
7.06. CHANGE IN CONTROL
-----------------
Section 7.05 to the contrary notwithstanding, each outstanding SAR
shall be fully exercisable (in whole or in part at the discretion of the holder)
on and after a Control Change Date and during the period (i) beginning on the
first day after the commencement of a tender offer or exchange offer for shares
of Common Stock (other than one made by the Company); provided that shares are
acquired pursuant to such offer and (ii) ending on the thirtieth day following
the expiration of such offer.
7.07. EMPLOYEE STATUS
---------------
If the terms of any SAR provide that it may be exercised only during
employment or within a specified period of time after termination of employment,
the Administrator may decide to what extent leaves of absence for governmental
or military service, illness, temporary disability or other reasons shall not be
deemed interruptions of continuous employment.
7.08. SETTLEMENT
----------
At the Administrator's discretion, the amount payable as a result of
the exercise of an SAR may be settled in cash, Common Stock, or a combination of
cash and Common Stock. No fractional share will be deliverable upon the exercise
of an SAR but a cash payment will be made in lieu thereof.
7.09. SHAREHOLDER RIGHTS
------------------
No Participant shall, as a result of receiving an SAR, have any
rights as a shareholder of the Company until the date that the SAR is exercised
and then only to the extent that the SAR is settled by the issuance of Common
Stock.
ARTICLE VIII
STOCK AWARDS
------------
8.01. AWARD
-----
In accordance with the provisions of Article IV, the Administrator
will designate each individual to whom a Stock Award is to be made and will
specify the number of shares of Common Stock covered by each such award.
8.02. VESTING
-------
The Administrator, on the date of the award, may prescribe that a
Participant's rights in a Stock Award shall be forfeitable or otherwise
restricted for a period of
13
<PAGE>
time or subject to such conditions as may be set forth in the Agreement. By way
of example and not of limitation, the restrictions may postpone transferability
of the shares or may provide that the shares will be forfeited if the
Participant separates from the service of the Company and its Related Entities
before the expiration of a stated period or if the Company, a Related Entity,
the Company and its Related Entities or the Participant fails to achieve stated
performance objectives. The period that the shares are restricted shall be at
least three years; provided, however, that the period that the shares are
restricted shall be at least one year if the transferability, vesting or both is
subject to the satisfaction of performance objectives other than continued
employment.
8.03. EMPLOYEE STATUS
---------------
In the event that the terms of any Stock Award provide that shares
may become transferable and nonforfeitable thereunder only after completion of a
specified period of employment, the Administrator may decide in each case to
what extent leaves of absence for governmental or military service, illness,
temporary disability, or other reasons shall not be deemed interruptions of
continuous employment.
8.04. CHANGE IN CONTROL
-----------------
Sections 8.02 and 8.03 to the contrary notwithstanding, on and after
a Control Change Date or the first day following the commencement of a tender
offer or exchange offer for shares of Common Stock (other than one made by the
Company), provided that shares are acquired pursuant to such offer, each
outstanding Stock Award shall be transferable and nonforfeitable as of the
Control Change Date or the first day following such offer.
8.05. SHAREHOLDER RIGHTS
------------------
Prior to their forfeiture (in accordance with the applicable
Agreement and while the shares of Common Stock granted pursuant to the Stock
Award may be forfeited or are nontransferable), a Participant will have all
rights of a shareholder with respect to a Stock Award, including the right to
receive dividends and vote the shares; provided, however, that during such
period (i) a Participant may not sell, transfer, pledge, exchange, hypothecate,
or otherwise dispose of shares of Common Stock granted pursuant to a Stock
Award, (ii) the Company shall retain custody of the certificates evidencing
shares of Common Stock granted pursuant to a Stock Award, and (iii) the
Participant will deliver to the Company a stock power, endorsed in blank, with
respect to each Stock Award. The limitations set forth in the preceding sentence
shall not apply after the shares of Common Stock granted under the Stock Award
are transferable and are no longer forfeitable.
14
<PAGE>
ARTICLE IX
PERFORMANCE SHARE AWARDS
------------------------
9.01. AWARD
-----
In accordance with the provisions of Article IV, the Administrator
will designate each individual to whom an award of Performance Shares is to be
made and will specify the number of shares of Common Stock covered by each such
award.
9.02. EARNING THE AWARD
-----------------
The Administrator, on the date of the grant of an award, shall
prescribe that the Performance Shares, or a portion thereof, will be earned, and
the Participant will be entitled to receive payment pursuant to the award of
Performance Shares, only upon the satisfaction of performance objectives or such
other criteria as may be prescribed by the Administrator and set forth in the
Agreement. By way of example and not of limitation, the performance objectives
or other criteria may provide that the Performance Shares will be earned only if
the Participant remains in the employ of the Company or a Related Entity for a
stated period or that the Company, a Related Entity, the Company and its Related
Entities or the Participant achieve stated objectives. The performance period
shall be at least three years; provided, however, that the performance period
shall be at least one year if the Agreement provides that the Performance Shares
will be earned upon the satisfaction of stated performance objectives other than
continued employment. No payments will be made with respect to Performance
Shares unless, and then only to the extent that, the Administrator certifies
that such objectives have been achieved.
9.03. PAYMENT
-------
In the discretion of the Administrator, the amount payable when an award of
Performance Shares is earned may be settled in cash, by the issuance of Common
Stock or a combination of cash and Common Stock. A fractional share shall not
be deliverable when an award of Performance Shares is earned, but a cash payment
will be made in lieu thereof.
9.04. SHAREHOLDER RIGHTS
------------------
No Participant shall, as a result of receiving an award of Performance
Shares, have any rights as a shareholder until and to the extent that the award
of Performance Shares is earned and settled by the issuance of Common Stock.
After an award of Performance Shares is earned, if settled completely or
partially in Common Stock, a Participant will have all the rights of a
shareholder with respect to such Common Stock.
15
<PAGE>
9.05. NONTRANSFERABILITY
------------------
Except as provided in Section 9.06, Performance Shares granted under
this Plan shall be nontransferable except by will or by the laws of descent and
distribution. No right or interest of a Participant in any Performance Shares
shall be liable for, or subject to, any lien, obligation, or liability of such
Participant.
9.06. TRANSFERABLE PERFORMANCE SHARES
-------------------------------
Section 9.05 to the contrary notwithstanding, if the Agreement
provides, an award of Performance Shares may be transferred by a Participant to
the Participant's children, grandchildren, spouse, one or more trusts for the
benefit of such family members or a partnership in which such family members are
the only partners, on such terms and conditions as may be permitted under
Securities Exchange Commission Rule 16b-3 as in effect from time to time. The
holder of Performance Shares transferred pursuant to this section shall be bound
by the same terms and conditions that governed the Performance Shares during the
period that they were held by the Participant; provided, however that such
transferee may not transfer Performance Shares except by will or the laws of
descent and distribution.
9.07. EMPLOYEE STATUS
---------------
In the event that the terms of any Performance Share award provide
that no payment will be made unless the Participant completes a stated period of
employment, the Administrator may decide to what extent leaves of absence for
government or military service, illness, temporary disability, or other reasons
shall not be deemed interruptions of continuous employment.
9.08. CHANGE IN CONTROL
-----------------
Section 9.02 to the contrary notwithstanding, each outstanding
Performance Share award shall be earned as of a Control Change Date or the first
day following the commencement of a tender offer or exchange offer (other than
one made by the Company), provided that shares are acquired pursuant to such
offer. The amount payable for such Performance Shares shall be settled in cash
or Common Stock or a combination of cash and Common Stock as determined by the
Administrator in its discretion as soon as practicable after the Control Change
Date or the first day following such tender offer or exchange offer.
16
<PAGE>
ARTICLE X
ADJUSTMENT UPON CHANGE IN COMMON STOCK
--------------------------------------
The maximum number of shares as to which Options, SARs, Performance Shares
and Stock Awards may be granted under this Plan and the terms of outstanding
Stock Awards, Options, Performance Shares and SARs, shall be adjusted as the
Committee shall determine to be equitably required in the event that (a) the
Company (i) effects one or more stock dividends, stock split-ups, subdivisions
or consolidations of shares or (ii) engages in a transaction to which Section
424 of the Code applies or (b) there occurs any other event which, in the
judgment of the Committee necessitates such action. Any determination made
under this Article X by the Committee shall be final and conclusive.
The issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or property, or for
labor or services, either upon direct sale or upon the exercise of rights or
warrants to subscribe therefor, or upon conversion of shares or obligations of
the Company convertible into such shares or other securities, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the maximum
number of shares as to which Options, SARs, Performance Shares and Stock Awards
may be granted or the terms of outstanding Stock Awards, Options, Performance
Shares or SARs.
The Committee may make Stock Awards and may grant Options, SARs and
Performance Shares in substitution for performance shares, phantom shares, stock
awards, stock options, stock appreciation rights, or similar awards held by an
individual who becomes an employee of the Company or a Related Entity in
connection with a transaction or event described in the first paragraph of this
Article X. Notwithstanding any provision of the Plan (other than the limitation
of Section 5.02), the terms of such substituted Stock Awards or Option, SAR or
Performance Shares grants shall be as the Committee, in its discretion,
determines is appropriate.
ARTICLE XI
COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES
-----------------------------------------------------
No Option or SAR shall be exercisable, no Common Stock shall be issued, no
certificates for shares of Common Stock shall be delivered, and no payment shall
be made under this Plan except in compliance with all applicable federal and
state laws and regulations (including, without limitation, withholding tax
requirements), any listing agreement to which the Company is a party, and the
rules of all domestic stock exchanges on which the Company's shares may be
listed. The Company shall
17
<PAGE>
have the right to rely on an opinion of its counsel as to such compliance. Any
share certificate issued to evidence Common Stock when a Stock Award is granted,
a Performance Share is settled or for which an Option or SAR is exercised may
bear such legends and statements as the Administrator may deem advisable to
assure compliance with federal and state laws and regulations. No Option or SAR
shall be exercisable, no Stock Award or Performance Share shall be granted, no
Common Stock shall be issued, no certificate for shares shall be delivered, and
no payment shall be made under this Plan until the Company has obtained such
consent or approval as the Administrator may deem advisable from regulatory
bodies having jurisdiction over such matters.
ARTICLE XII
GENERAL PROVISIONS
------------------
12.01. EFFECT ON EMPLOYMENT AND SERVICE
--------------------------------
Neither the adoption of this Plan, its operation, nor any documents
describing or referring to this Plan (or any part thereof), shall confer upon
any individual any right to continue in the employ or service of the Company or
a Related Entity or in any way affect any right or power of the Company or a
Related Entity to terminate the employment or service of any individual at any
time with or without assigning a reason therefor.
12.02. UNFUNDED PLAN
-------------
The Plan, insofar as it provides for grants, shall be unfunded, and
the Company shall not be required to segregate any assets that may at any time
be represented by grants under this Plan. Any liability of the Company to any
person with respect to any grant under this Plan shall be based solely upon any
contractual obligations that may be created pursuant to this Plan. No such
obligation of the Company shall be deemed to be secured by any pledge of, or
other encumbrance on, any property of the Company.
12.03. RULES OF CONSTRUCTION
---------------------
Headings are given to the articles and sections of this Plan solely
as a convenience to facilitate reference. The reference to any statute,
regulation, or other provision of law shall be construed to refer to any
amendment to or successor of such provision of law.
18
<PAGE>
12.04. TAX WITHHOLDING
---------------
Each Participant shall be responsible for satisfying any income and
employment tax withholding obligation attributable to participation in this
Plan. In accordance with procedures established by the Administrator, a
Participant may surrender shares of Common Stock, or receive fewer shares of
Common Stock than otherwise would be issuable, in satisfaction of all or part of
that obligation.
12.05. LIMITATION ON BENEFITS
----------------------
(a) Despite any other provision of this Plan, if the Accounting
Firm determines that receipt of benefits or payments under this Plan would
subject a Participant to tax under Code section 4999, it must determine whether
some amount of the benefits or payments would meet the definition of a "Reduced
Amount." If the Accounting Firm determines that there is a Reduced Amount, the
total benefits and payments must be reduced to such Reduced Amount, but not
below zero.
(b) If the Accounting Firm determines that the benefits and
payments should be reduced to the Reduced Amount, the Company must promptly
notify the Participant of that determination, including a copy of the detailed
calculations by the Accounting Firm. All determinations made by the Accounting
Firm under this section are binding upon the Company and the Participant.
(c) It is the intention of the Company and the Participant to
reduce the benefits and payments under this Plan only if the aggregate Net After
Tax Receipts to the Participant would thereby be increased. As a result of the
uncertainty in the application of Code section 4999 at the time of the initial
determination by the Accounting Firm under this section, however, it is possible
that amounts will have been paid or distributed under the Plan to or for the
benefit of a Participant which should not have been so paid or distributed
("Overpayment") or that additional amounts which will not have been paid or
distributed under the Plan to or for the benefit of a Participant could have
been so paid or distributed ("Underpayment"), in each case, consistent with the
calculation of the Reduced Amount. If the Accounting Firm, based either upon the
assertion of a deficiency by the Internal Revenue Service against the Company or
the Participant which the Accounting Firm believes has a high probability of
success or controlling precedent or other substantial authority, determines that
an Overpayment has been made, any such Overpayment must be treated for all
purposes as a loan ab initio for which the Participant must repay the Company
together with interest at the applicable federal rate under Code section
7872(f)(2); provided, however, that no such loan may be deemed to have been made
and no amount shall be payable by Participant to the Company if and to the
extent such deemed loan and payment would not either reduce the amount on which
Participant is subject to tax under Code section 1 or 4999 or generate a refund
of such taxes. If the Accounting Firm, based upon controlling precedent or other
substantial authority, determines that an Underpayment has occurred, the
Accounting Firm must promptly notify the Administrator of the amount
19
<PAGE>
of the Underpayment and such amount, together with interest at the applicable
federal rate under Code section 7872(f)(2), must be paid to the Participant.
(d) For purposes of this section, (i) "Net After Tax Receipt" means the
Present Value of a payment or benefit under this Plan net of all taxes imposed
on Participant with respect thereto under Code sections 1 and 4999, determined
by applying the highest marginal rate under Code section 1 which applied to the
Participant's taxable income for the immediately preceding taxable year; (ii)
"Present Value" means the value determined in accordance with Code section
280G(d)(4); and (iii) "Reduced Amount" means the smallest aggregate amount of
all payments or benefit under this Plan which (a) is less than the sum of all
payments or benefit under this Plan and (b) results in aggregate Net After Tax
Receipts which are equal to or greater than the Net After Tax Receipts which
would result if the aggregate payments or benefit under this Plan were any other
amount less than the sum of all payments or benefit under this Plan.
ARTICLE XIII
AMENDMENT
---------
The Board may amend or terminate this Plan from time to time; provided,
however, that no amendment may become effective until shareholder approval is
obtained if (i) the amendment increases the aggregate number of shares of Common
Stock that may be issued under the Plan (other than an adjustment pursuant to
Article XI) or (ii) the amendment changes the class of individuals eligible to
become Participants. No amendment shall, without a Participant's consent,
adversely affect any rights of such Participant under any Stock Award,
Performance Share award, Option or SAR outstanding at the time such amendment is
made.
ARTICLE XIV
DURATION OF PLAN
----------------
No Stock Award, Performance Share award, Option or SAR may be granted under
this Plan more than ten years after the earlier of the date the Plan is adopted
by the Board or the date that the Plan is approved in accordance with Article
XV. Stock Awards, Performance Share awards, Options and SARs granted before
that date shall remain valid in accordance with their terms.
20
<PAGE>
ARTICLE XV
EFFECTIVE DATE OF PLAN
----------------------
Options, SARs and Performance Shares may be granted under this Plan upon
its adoption by the Board, provided that no Option, SAR or Performance Shares
shall be effective or exercisable unless this Plan is approved by a majority of
the votes cast by the Company's shareholders, voting either in person or by
proxy, at a duly held shareholders' meeting at which a quorum is present or by
unanimous consent. Stock Awards may be granted under this Plan, upon the later
of its adoption by the Board or its approval by shareholders in accordance with
the preceding sentence.
21
<PAGE>
EXHIBIT 10.3
STOCK PURCHASE AND INDEMNIFICATION AGREEMENT
--------------------------------------------
THIS STOCK PURCHASE AND INDEMNIFICATION AGREEMENT (the "Agreement") is made
and entered into this _______ day of August, 1998 by and among UNION PACIFIC
CORPORATION, a Utah corporation ("UPC"), OVERNITE CORPORATION, a Virginia
corporation ("Overnite"), OVERNITE HOLDING, INC., a Delaware corporation
("OHI"), and OVERNITE TRANSPORTATION COMPANY, a Virginia corporation ("OTC").
WHEREAS, Overnite intends to issue and sell the shares of its common stock,
par value $0.01 per share (the "Overnite Shares"), through an initial public
offering (the closing of which is hereinafter referred to as the "Offering");
and
WHEREAS, in connection with the Offering, Overnite has filed a registration
statement with the Securities and Exchange Commission under the Securities Act
of 1933, as amended (the "1933 Act"); and
WHEREAS, immediately following the Offering, Overnite intends to purchase
all of the issued and outstanding common stock of OHI, par value $0.01 per share
(the "OHI Shares"), from UPC (the "Acquisition"), with the result that Overnite
will become a publicly-owned company and OHI will become a wholly-owned, direct
subsidiary of Overnite; and
WHEREAS, OTC is a wholly-owned, direct subsidiary of OHI and immediately
following the Acquisition will become a wholly-owned, indirect subsidiary of
Overnite; and
WHEREAS, the parties hereto desire to enter into this Agreement in order to
provide for the Acquisition and the indemnification against certain costs and
liabilities which may be incurred in connection with the Offering, the
Acquisition and the above-mentioned registration statement, including any
prospectus included therein, and their respective businesses both prior to and
after the Offering and Acquisition.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties hereto agree as follows:
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1. Definitions. As used in this Agreement, the following terms shall
-----------
have the following meanings (such meanings to be equally applicable to both the
singular and plural versions of the terms below):
The term "Affiliate" shall have the meaning accorded to such term in Rule
12b-2 of the General Rules and Regulations under the Securities Exchange Act of
1934, as in effect on the date hereof.
The term "Bank Credit Agreement" shall mean the $200 million Revolving
Credit Agreement, dated as of August ___, 1998, among Overnite, the Banks named
therein and Crestar Bank, as Agent for the Banks;
The term "Business Day" shall mean a day of the year on which banks are not
required or authorized to close in New York City, Nebraska or Virginia.
The term "Closing" shall mean the closing of the Offering and the
Acquisition.
The term "Code" shall mean the Internal Revenue Code of 1986, as amended.
The term "Guarantee" shall mean all guarantees, surety and performance
bonds, payment or reimbursement obligations relating to insurance arrangements,
letters of credit and other arrangements pursuant to which UPC guarantees or
secures any Overnite Liability or which otherwise potentially impose liability
on UPC with respect to the businesses, operations or assets conducted or owned
or formerly conducted or owned by the Overnite Group, and which are in effect as
of the Closing.
The term "Liabilities" shall mean all debts, liabilities and obligations,
actual or contingent, liquidated or unliquidated, accrued or unaccrued, known or
unknown, whenever and however arising, including all costs and expenses
(including fees and disbursements of counsel) relating thereto, and including
without limitation debts, liabilities and obligations arising in connection with
any actual or threatened claim, action, suit, arbitration, inquiry, proceeding
or investigation by or before any court, governmental or other regulatory or
administrative agency or commission or any arbitration panel.
The term "Overnite Group" shall mean Overnite and all Affiliates of
Overnite following the Closing, including without limitation OHI and OTC, and
all subsidiaries of OTC on or prior to the Closing, and any or each of such
entities individually and collectively, and jointly and severally.
The term "Overnite Liabilities" shall mean all Liabilities (other than
Liabilities for Taxes
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except as provided below in this definition) at any time arising out of or
relating to the businesses, operations or assets conducted or owned or formerly
conducted or owned at any time by, and the current or former employees of, the
Overnite Group. In the case of an "employee benefit plan," as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), maintained or formerly maintained by the Overnite Group for its
employees or former employees, "Overnite Liabilities" shall include all
liabilities for any benefits due and payable under the terms of such plans as
well as any Taxes, penalties, interest or other charges imposed by any
governmental agency with respect to the maintenance and administration of such
plans. Further, in case of any employee benefit plan maintained or formerly
maintained by the UPC Group in which employees or former employees of the
Overnite Group have participated, "Overnite Liabilities" shall be limited to the
portion of the liability, Tax, penalty, interest or other charge attributable to
employees or former employees of the Overnite Group, or in the event that a
liability, Tax, penalty, interest or other charge is not attributable to
specific employees or former employees, "Overnite Liabilities" shall be limited
to the portion of the liability, Tax, penalty, interest or other charge that
bears the same relationship to the whole thereof as the benefit liabilities
under such plan attributable to employees or former employees of the "Overnite
Group" bears to all such benefit liabilities under the plan, and any costs
(including reasonable counsel fees) imposed upon or incurred by the "Overnite
Group" in connection with such liability shall be allocated in the same manner.
"Overnite Liabilities" shall also include any Liabilities arising from or
relating to (i) the conversion of any share of UPC retention stock or any option
to purchase shares of UPC cmmon stock into one or more shares of Overnite
retention stock or options to purchase shares of Overnite common stock and (ii)
amounts payable to employees of the Overnite Group as deferred compensation
under the UPC Executive Incentive Plan.
The term "Overnite Securities Liabilities" shall mean any Liability under
the 1933 Act, the Securities Exchange Act of 1934, as amended (the "1934 Act"),
or any other federal or state securities law or regulation, at common law or
otherwise, arising out of the Offering, including without limitation any such
Liability arising out of or based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in a registration statement filed
under federal or state securities
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laws in connection with the Offering, or in any amendment or supplement thereto
(a "Registration Statement"), or in any prospectus or other communication
relating to the Offering or in any amendment or supplement thereto (a
"Prospectus"), or (ii) the omission or alleged omission to state in a
Registration Statement or Prospectus a material fact required to be stated
therein or necessary to make the statements made therein not misleading;
provided, however, that the foregoing definition shall not extend or apply to
any Liability that arises out of or is based upon any untrue statement or
alleged untrue statement of a material fact contained in, or an omission or
alleged omission to state a material fact required to be stated (or necessary to
make the statement not misleading) in (A) the information set forth under the
captions "Prospectus Summary - Background to the Offering" and "The Acquisition"
in the Prospectus to the extent related to the actions or intentions of UPC, or
(B) information otherwise set forth in the Prospectus to the extent related to
UPC's ownership of the capital stock of OHI (the "UPC Information").
The term "Taxes" shall mean any and all taxes (including interest,
penalties and additions to tax), premiums, fees and charges (including sales,
use, excise, value added, personal property and other taxes) imposed by any
federal, state or local or government tax authority in the United States of
America or by any foreign government or taxing authority.
The term "Transaction Costs" shall mean the following fees and expenses
incurred in connection with the Offering and Acquisition: (i) the fees and
expenses of Hunton & Williams and Richards, Layton & Finger, (ii) the fees and
expenses of Deloitte & Touche LLP, including without limitation fees and
expenses incurred in connection with the audit of financial statements for the
Overnite Group, (iii) the fees and expenses of Price Waterhouse LLP incurred in
connection with the valuation of Overnite Group assets, (iv) the fees and
expenses of Towers Perrin and Buck Consultants incurred for actuarial services
performed in connection with the Offering and Acquisition, (v) any underwriters'
discounts or commissions, (vi) all organization expenses of Overnite, including
without limitation all fees, expenses, Taxes, assessments and other costs and
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expenses associated with its incorporation in the State of Virginia and its
qualification to do business in any jurisdiction, (vii) all Securities and
Exchange Commission, National Association of Securities Dealers, Inc., and other
filing fees, all "blue sky" fees and expenses and all stock exchange fees and
expenses, (viii) all transfer taxes, if any, in connection with the issuance and
sale of Overnite Shares in the Offering and the sale of OHI Shares to Overnite
in the Acquisition, (ix) all printing fees and expenses and (x) all transfer
agent and registration fees and expenses.
The term "UPC Group" shall mean UPC and all Affiliates of Union Pacific
Corporation (other than any member of the Overnite Group), and any or each of
such entities individually and collectively and jointly and severally.
The term "UPC Liabilities" shall mean all Liabilities (other than
Liabilities for Taxes except as provided below in this definition) at any time
arising out of or relating to the businesses, operations or assets conducted or
owned or formerly conducted or owned by, and the current or former employees of,
the UPC Group; provided that in no event shall UPC Liabilities include any
Overnite Liabilities, any Overnite Securities Liabilities, any liabilities on
any Guarantee, or the Transaction Costs covered by the indemnification set forth
in Section 4 of this Agreement. In the case of an "employee benefit plan," as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), maintained or formerly maintained by the UPC Group for its
employees or former employees in which no employee or former employee of the
Overnite Group has participated, "UPC Liabilities" shall include all liabilities
for any benefits due and payable under the terms of such plans as well as any
Taxes, penalties, interest or other charges imposed by any governmental agency
with respect to the maintenance and administration of such plans. Further, in
case of any employee benefit plan maintained or formerly maintained by the UPC
Group in which employees or former employees of the Overnite Group have
participated, "UPC Liabilities" shall be limited to the portion of the
liability, Tax, penalty, interest or other charge attributable to employees or
former employees of the UPC Group, or in the event that a liability, Tax,
penalty,
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interest or other charge is not attributable to specific employees or former
employees, "UPC Liabilities" shall be limited to the portion of the liability,
Tax, penalty, interest or other charge that bears the same relationship to the
whole thereof as the benefit liabilities under such plan attributable to
employees or former employees of the UPC Group bears to all such benefit
liabilities under the plan, and any costs (including reasonable counsel fees)
imposed upon or incurred by theUPC Group in connection with such liability shall
be allocated in the same manner.
The term "UPC Securities Liabilities" shall mean any Liability under the
1933 Act, the 1934 Act or any other federal or state law or regulation, at
common law or otherwise, arising out of the Offering, and arising out of or
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in a Registration Statement or Prospectus or (ii) the omission or
alleged omission to state in a Registration Statement or Prospectus a material
fact required to be stated therein or necessary to make the statements made
therein not misleading, but only to the extent that such Liability arises out of
or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission concerning UPC Information.
2. Purchase and Sale of OHI Shares. (a) UPC agrees that, immediately
_____ --------------------------------
following the Offering, it will sell, transfer and deliver to Overnite, and
Overnite agrees that it will purchase from UPC, free and clear of all liens,
claims, encumbrances, security interests, options, charges and restrictions of
any kind, all of the outstanding OHI Shares for an aggregate cash purchase price
("Purchase Price") of $__________ million./1/
(b) The Closing shall be held at the offices of Cravath, Swaine & Moore,
Worldwide Plaza, 825 Eighth Avenue, New York, NY, or such other place as the
parties may agree. The Acquisition shall not occur unless the Offering first
occurs. At the Closing, (i) Overnite shall pay
______________________
/1/ THIS AMOUNT WILL BE THE GROSS PROCEEDS OF THE OFFERING, LESS UNDERWRITING
DISCOUNTS, PLUS $105 MILLION.
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the Purchase Price to UPC by wire transfer of immediately available funds to an
account designated by UPC, (ii) UPC shall deliver to Overnite certificates
representing the OHI Shares, duly endorsed in blank or accompanied by one or
more stock powers duly endorsed in blank and in proper form for transfer, (iii)
Overnite shall deliver to UPC for filing the fully-executed Section 338 Election
Forms (as defined in Section 12(b) hereof), and (iv) Overnite and UPC shall each
take such further actions and deliver such other documents as may be reasonably
requested by the other party to complete the Acquisition.
(c) Immediately prior to the Closing, the net intercompany balance
reflecting advances between UPC on the one hand, and OTC or OHI on the other,
shall be forgiven and cancelled. To the extent that such net intercompany
balance is less than $148.068 million, Overnite shall make an additional cash
payment to UPC in the amount of such difference. To the extent that such net
intercompany balance is greater than $148.068 million, UPC shall make a cash
payment to Overnite in the amount of such difference. Overnite hereby expressly
consents to the forgiveness and cancellation of such net intercompany balance.
The amount, if any, required under this Section 2(c) shall be payable within 5
Business Days of the date of the Closing.
3. UPC Representations and Warranties. UPC hereby represents and
-----------------------------------
warrants, as of the Closing, to Overnite, OHI and OTC as follows:
(a) UPC is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, and has full corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery of this Agreement by UPC and
the performance of its obligations hereunder have been duly and validly
authorized by all necessary corporate action on the part of UPC, and this
Agreement has been duly and validly executed and delivered by UPC.
(b) This Agreement constitutes the legal, valid and binding
obligation of UPC,
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enforceable against UPC in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, moratorium, reorganization or other similar
laws affecting creditors' rights and remedies generally and general principles
of equity.
(c) Neither the execution and delivery of this Agreement by UPC, nor the
performance of its obligations hereunder, nor the consummation of the
transactions contemplated hereby, will (i) violate any applicable law to which
UPC is subject, (ii) violate or conflict with any provision of the charter or
by-laws of UPC, or (iii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any notice under, any
agreement, contract, lease, license or instrument to which UPC is a party or by
which it is bound or to which any of its assets is subject, except in each case
for any violation, conflict, breach, default, acceleration, termination,
modification, cancellation or failure to give notice which will not have a
material adverse effect on the ability of UPC to consummate the transactions
contemplated by this Agreement. UPC is not required to give any notice to, make
any filing with, or obtain any authorization, consent or approval of any
governmental entity in order for UPC to consummate the transactions contemplated
by this Agreement, except for any failure to give notice, or to file or obtain
any authorization, consent or approval which would not have an adverse effect on
the ability of UPC to consummate the transactions contemplated by this
Agreement.
(d) There are no outstanding shares of capital stock of OHI other than the
100 OHI Shares held of record and owned beneficially by UPC. UPC owns and holds
of record and beneficially such OHI Shares free and clear of any and all liens,
claims, encumbrances, security interests, options, charges and restrictions of
any kind, other than restrictions on transfer of the OHI Shares imposed under
applicable Federal or State securities laws. All of the OHI Shares have been
duly authorized and are validly issued, fully paid and nonassessable. UPC is not
a party to, and is not otherwise subject to or bound by, any voting trusts,
proxies, or other agreements or
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understandings with respect to the voting of any capital stock of OHI, other
than the rights of Overnite under this Agreement. Except for the rights of
Overnite under this Agreement, there are no outstanding options, warrants or
rights to purchase or acquire, or otherwise entitling the holder thereof to
participate in or otherwise receive any payment based on the value of, any
securities of OHI (including the OHI Shares).
(e) The authorized capital stock of OTC consists of 40 million shares of
common stock, $1.00 par value per share (the "OTC Shares"), of which 1,000 OTC
Shares are validly issued and outstanding, fully paid and nonassessable. OHI is
the sole registered and beneficial holder of the outstanding OTC Shares. None
of the OTC Shares have been issued in violation of, and none of the OTC Shares
is subject to, any preemptive or subscription rights. Except for the OTC
Shares, there are no shares of capital stock or other equity securities of OTC
outstanding. There are no outstanding warrants, options, agreements,
convertible or exchangeable securities or other commitments (other than this
Agreement) pursuant to which UPC or OHI is or may become obligated to sell,
purchase or return any shares of capital stock or other securities of OTC.
3A. Representations and Warranties of Overnite, OHI and OTC.
---- -------------------------------------------------------
Overnite, OHI and OTC hereby represent and warrant, as of the Closing, to UPC as
follows:
(a) Each of Overnite, OHI and OTC is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation, and
each of Overnite, OHI and OTC has full corporate power and authority to execute
and deliver this Agreement and to perform its obligations hereunder. The
execution and delivery of this Agreement by Overnite, OHI and OTC and the
performance by each of them of their respective obligations hereunder have been
duly and validly authorized by all necessary corporate action on the part of
such party, and this Agreement has been duly and validly executed and delivered
by such party.
(b) This Agreement constitutes the valid, legal and binding obligation of
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Overnite, OHI and OTC, enforceable against each of such parties in accordance
with its terms, except as limited by applicable bankruptcy, insolvency,
moratorium, reorganization or other similar laws affecting creditors' rights and
remedies generally and general principles of equity.
(c) Neither the execution and delivery of this Agreement by Overnite, OHI
or OTC, nor the performance of their respective obligations hereunder, nor the
consummation of the transactions contemplated hereby, will (i) violate any
applicable law to which Overnite, OHI or OTC is subject, (ii) violate or
conflict with any provision of the charter or by-laws of Overnite, OHI or OTC or
(iii) conflict with, result in a breach of, constitute a default under, result
in the acceleration of, create in any party the right to accelerate, terminate,
modify or cancel, or require any notice under any agreement, contract, lease,
license or instrument to which Overnite, OHI or OTC is a party or by which it is
bound or to which any of its assets is subject, except in each case for any
violation, conflict, breach, default, acceleration, termination, modification,
cancellation or failure to give notice which will not have a material adverse
effect on the ability of Overnite, OHI or OTC to consummate the transactions
contemplated by this Agreement. Neither Overnite, OHI nor OTC is required to
give any notice to, make any filing with, or obtain any authorization, consent
or approval of any governmental entity in order for Overnite, OHI or OTC to
consummate the transactions contemplated by this Agreement, except for any
failure to give notice, or to file or obtain any authorization, consent or
approval which would not have a material adverse effect on the ability of
Overnite, OTC or OHI to consummate the transactions contemplated by this
Agreement.
(d) Overnite acknowledges that the OHI Shares being acquired by it
hereunder have not been registered under the 1933 Act or registered or qualified
under applicable state securities laws. The OHI Shares purchased by Overnite
pursuant to this Agreement are being acquired for investment only and not with a
view towards any public distribution thereof, and Overnite will not offer to
sell or otherwise dispose of the OHI Shares so acquired by it in violation of
any of the registration requirements of the 1933 Act or any comparable state
laws.
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4. Indemnification by Overnite. The Overnite Group shall release,
---------------------------
indemnify, defend and hold harmless the UPC Group and the respective directors,
officers, employees, agents and representatives thereof from and against any and
all losses, claims, damages, liabilities, demands, suits and actions (by any
person), including all reasonable attorneys' fees and disbursements and other
costs and expenses incurred in connection therewith (collectively,
"Indemnifiable Losses"), relating to, resulting from, or arising out of (a) any
Overnite Liabilities, (b) any Overnite Securities Liabilities, (c) any fees and
expenses described in clauses (i), (v), (vi), (vii), (viii), (ix) and (x) of the
definition of Transaction Costs, and (d) any failure by the Overnite Group to
comply with the terms and conditions of this Agreement or any other agreement
executed in connection with the Offering or the Acquisition. No payment by
Overnite pursuant to clauses (a) or (b) of the foregoing sentence shall be
required until such time as the aggregate amount which would be so payable under
such clauses exceeds $25,000, and at such time the entire aggregate amount (and
not only the excess over $25,000) will become payable.
5. Indemnification by the UPC Group. The UPC Group shall release,
--------------------------------
indemnify, defend and hold harmless the Overnite Group and the respective
directors, officers, employees, agents and representatives thereof from and
against any and all Indemnifiable Losses relating to, resulting from, or arising
out of (a) any UPC Liabilities, (b) any UPC Securities Liabilities, (c) any fees
and expenses described in clauses (ii), (iii) and (iv) of the definition of
Transaction Costs, and (d) any failure by UPC to comply with the terms and
conditions of this Agreement or any other agreement executed in connection with
the Offering or the Acquisition. No payment by UPC pursuant to clauses (a) or
(b) of the foregoing sentence shall be required until such time as the aggregate
amount which would be so payable under such clauses exceeds $25,000, and at such
time the entire aggregate amount (and not only the excess over $25,000) will
become payable.
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6. Guarantees, Bonds, Etc. The Overnite Group shall use all reasonable
-----------------------
efforts to obtain promptly the release of UPC, or the substitution of any member
of the Overnite Group for UPC, on all Guarantees. The Guarantees shall include,
but not be limited to, the agreements listed in Schedule A hereto, and any
renewals thereof or substitutions therefor. UPC shall cooperate with the
Overnite Group in obtaining such releases or substitutions, provided that it
shall not be required to incur any non-de minimis liability or unreimbursed
expense in doing so. The Overnite Group agrees to indemnify, defend and hold
harmless the UPC Group, and the directors, officers, employees, agents and
representatives thereof, from and against any Indemnifiable Losses relating to,
resulting from, or arising out of, any Guarantee. UPC shall be subrogated to the
rights of any beneficiary of a Guarantee against the Overnite Group to the
extent that UPC is required to make any payment under such Guarantee. UPC agrees
not to unilaterally terminate or withdraw any Guarantee and agrees to abide by
the terms of the Guarantees if, to UPC's knowledge after reasonable inquiry,
such termination, withdrawal or non-compliance would cause more than a de-
minimis liability to the Overnite Group or result in the Overnite Group's
default under or violation of the terms of any agreement with a third party.
7. Collateral. (a) So long as the Guaranty relating to the Japanese
-----------
Lease Financing, identified as Item 1 on Schedule A hereto, remains in effect or
otherwise continues to apply to UPC, Overnite agrees that it shall meet the
financial covenants which are contained in Article VI of the Bank Credit
Agreement as if such covenants were set forth in this Agreement. During the
period that Overnite is required to comply with the foregoing covenants under
the terms hereof, the Overnite Group shall promptly notify UPC if it ever fails
to comply with any such covenant, and shall furnish to UPC such information
respecting the condition or operations, financial or otherwise, of the Overnite
Group, as UPC may from time to time reasonably request.
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(b) In the event that the Overnite Group fails to comply with Section 5(a),
UPC may request, and the Overnite Group shall promptly deposit with UPC,
Collateral (as defined below) having a value equal to the maximum amount then
payable upon termination of the Japanese Leveraged Lease referred to above,
including any repayment of debt or equity investment required in connection with
such termination. For purposes of this Agreement, the term ACollateral@ shall
mean (i) cash; (ii) U.S. Treasury Bills maturing not more than 180 days from the
date of delivery thereof by the Overnite Group to UPC; (iii) commercial paper
(other than the commercial paper of a party hereto or its Affiliates)
denominated in U.S. dollars, provided that such commercial paper (A) continues
to be rated at least "A-1" by Standard & Poor's Corporation and AP-1" by Moody's
Investors Service Inc., or the equivalent ratings by two nationally recognized
investment rating services, or, if unrated, is guaranteed by a company having
outstanding commercial paper that is so rated, (B) remains readily marketable
and is not convertible into capital stock, and (C) matures not more than 180
days from the date of delivery to UPC; (iv) an irrevocable standby letter of
credit, in a form and issued by a bank reasonably acceptable to UPC; and (v) any
payments or other distributions received with respect to any of the aforesaid
Collateral. For purposes of this Agreement, non-cash Collateral shall be valued
at market value, except that any letters of credit shall be valued at the face
amount thereof. The Overnite Group shall deposit any Collateral no later than
one Business Day following the date UPC's request therefor is received, into one
or more accounts identified by UPC which reasonably identify the Overnite
Group's ownership interest and UPC's security interest in such Collateral.
(c) If on any Business Day the value of the aggregate Collateral then on
deposit exceeds the Collateral required to be on deposit pursuant to this
Agreement, then UPC, within one Business Day of the Overnite Group's demand
therefor, shall return such excess amount of Collateral to the Overnite Group;
provided, however, that UPC shall not be required to return Collateral that it
would otherwise be obligated to return to the extent any claims have been
asserted against UPC
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for payment under the Guaranty referred to in Section 7(a) above or if the
Overnite Group has failed to make any indemnity payment required under this
Agreement with respect to such Guaranty. UPC may, at its option, satisfy its
obligation under this Section 7(c) through the return of cash or non-cash
Collateral, or both.
(d) The Overnite Group shall earn interest on its cash Collateral from and
including the date of deposit to but excluding the date such Collateral is
returned at a rate per annum equal to the rate at which the account designated
by UPC actually bears interest (UPC to use reasonable efforts to obtain the
highest interest rate for liquid deposits in such amount from time to time
offered by its bank). Such interest shall be calculated in accordance with the
usual practices of the bank at which such account is established. UPC shall
remit interest to an account designated by the Overnite Group within three
Business Days of its demand therefor; provided that such payment shall not be
required more frequently than on a quarterly basis.
(e) In the event the Collateral requirements of this Section 7 are
applicable, as security for the payment of all amounts due or that may become
due by the Overnite Group to or on behalf of UPC in accordance with this
Agreement with respect to the Guaranty referred to in Section 7(a), above, the
Overnite Group hereby grants to UPC a security interest in all Collateral and
all payments thereon and proceeds thereof, and additions thereto and
substitutions therefor, which are and may hereafter be delivered or otherwise
transferred to UPC by the Overnite Group in accordance with the provisions of
this Agreement, and the Overnite Group hereby agrees to take all actions
reasonably requested by UPC in order to perfect the security interest granted
hereunder. UPC may apply Collateral on deposit with it pursuant to this Section
7 to satisfy the indemnity obligations of the Overnite Group with respect to the
Guaranty referred to in Section 7(a), above, if and when payment of such amounts
has not been made or received.
8. Third Party Claims. (a) If any person entitled to indemnification
------------------
under this
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Agreement (an "Indemnitee") receives notice of the assertion of any
claim or of the commencement of any action or proceeding by any person that is
not a party to this Agreement or a subsidiary of any such party (a "Third Party
Claim") against such Indemnitee, the Indemnitee shall promptly provide written
notice thereof (including a description of the Third Party Claim and an estimate
of any Indemnifiable Losses (which estimate shall not be conclusive as to the
final amount of such Indemnifiable Losses)) to the party required to provide
indemnification under this Agreement (the "Indemnifying Party") within 10
calendar days after the Indemnitee's receipt of notice of such Third Party
Claim. Any delay by the Indemnitee in providing such written notice shall not
relieve the Indemnifying Party of any liability for indemnification hereunder
except to the extent that the rights of the Indemnifying Party are materially
prejudiced by such delay.
(b) The Indemnifying Party shall have the right to participate in or,
by giving written notice to the Indemnitee, to assume the defense of any Third
Party Claim at such Indemnifying Party's expense and by such Indemnifying
Party's own counsel (which shall be reasonably satisfactory to the Indemnitee),
and the Indemnitee will cooperate in good faith in such defense. The Indemnitee
may retain its own counsel with respect to such Third Party Claims, but the
Indemnifying Party shall not be liable for any legal expenses incurred by the
Indemnitee after the Indemnitee has received notice of the Indemnifying Party's
intent to assume the defense of a Third Party Claim, unless the named parties to
such Third Party Claim (including any impleaded parties) include both the
Indemnifying Party and the Indemnitee and representation of both parties by the
same counsel would be inappropriate due to actual or potential differing
interests between them. If the Indemnifying Party fails to take steps reasonably
necessary to diligently pursue the defense of such Third Party Claim within 10
days of receipt of notice from the Indemnitee that such steps are not being
taken, the Indemnitee may assume its own defense and the Indemnifying Party
shall be liable for the reasonable costs thereof.
(c) The Indemnifying Party may settle any Third Party Claim which it
has
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elected to defend so long as the written consent of the Indemnitee to such
settlement is first obtained (which consent shall not be unreasonably withheld).
The Indemnified Party shall not settle any Third Party Claim without the written
consent of the Indemnifying Party unless the Indemnifying Party elects not to
defend such Third Party Claim.
(d) In the event that a Third Party Claim involves a proceeding as to
which both the UPC Group and the Overnite Group may be Indemnifying Parties, the
parties hereto agree to cooperate in good faith in a joint defense of such Third
Party Claim.
(e) Notwithstanding subsections (b), (c), and (d) of this Section 8,
the provisions of Article IV, V, and VI of that certain Tax Allocation Agreement
entered into by Union Pacific Corporation, Overnite, OHI, and OTC of even date
herewith (the "Tax Allocation Agreement") shall control and supercede this
Agreement with respect to any Third Party Claim by a taxing authority.
9. Contribution. If the indemnification provided for in this Agreement
------------
with respect to Overnite Securities Liabilities or UPC Securities Liabilities is
for any reason held by a court or other tribunal to be unavailable on policy
grounds or otherwise, the UPC Group and the Overnite Group shall contribute to
the Indemnifiable Losses in such proportion as to reflect each party's relative
fault in connection with such Indemnifiable Losses. The relative fault of the
parties shall be determined by reference to, among other things, whether the
conduct or information giving rise to the Indemnifiable Losses is attributable
to the UPC Group or the Overnite Group and each party's relative intent, access
to information and opportunity to prevent or correct the Indemnifiable Losses.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any person who is
not guilty of fraudulent misrepresentation.
-16-
<PAGE>
10. Cooperation. So long as any books, records and files retained by the
-----------
UPC Group or the Overnite Group relating to the present or past businesses,
operations or assets of the Overnite Group remain in existence and available,
the UPC Group and the Overnite Group shall have the right upon prior written
notice to inspect and copy the same at any time during business hours for any
proper purpose, provided that such right will not extend to any books, records
and files, disclosure of which in accordance herewith would result in a waiver
of the attorney-client, work product or other privileges which permit non-
disclosure of otherwise relevant material in litigation or other proceedings, or
which are subject on the date hereof and at the time inspection is requested to
a non-disclosure agreement with a third party and a waiver cannot reasonably be
obtained, provided that, in the case of material requested of the Overnite
Group, such request relates only to the businesses, operations or assets of the
Overnite Group as constituted on or prior to Closing or books, records and files
reasonably required by the UPC Group for tax, accounting or financial reporting
purposes or to enforce its rights under this Agreement or any other agreement
executed by the Overnite Group and the UPC Group in connection with the Offering
or Acquisition. The UPC Group and the Overnite Group agree that they shall not
destroy any such books, records or files without reasonable notice to the other
party or if such party receives within 10 days of such notice any reasonable
objection from the other party to such destruction. Except in the case of
dispute between the parties hereto, the UPC Group and the Overnite Group shall
cooperate with one another in a timely manner in any administrative or judicial
proceeding involving any matter affecting the actual or potential liability of
either party hereunder. Such cooperation shall include, without limitation,
making available to the other party during normal business hours all books,
records and information, and officers and employees (without substantial
disruption of operations or employment) necessary or useful in connection with
any inquiry, audit, investigation or dispute, any litigation or any other matter
requiring any such books, records, information, officers or employees for any
reasonable business purpose. The party requesting or otherwise entitled to any
-17-
<PAGE>
books, records, information, officers or employees pursuant to this Section 10
shall bear all reasonable out-of-pocket costs and expenses (except for salaries,
employee benefits and general overhead) incurred in connection with providing
such books, records, information, officers or employees. Notwithstanding the
foregoing, the provisions of this Section 10 shall not affect the rights and
obligations of the parties under the Tax Allocation Agreement.
11. Section 338 Elections and Related Matters. (a) Overnite agrees
-----------------------------------------
(i) to make timely joint elections with UPC under Section 338(h)(10) of the Code
and the regulations thereunder with respect to the Acquisition and the deemed
acquisition of OTC (the "Section 338(h)(10) Elections"), and (ii) to make (or to
cause the appropriate affiliate or affiliates of Overnite to make) any and all
similar elections available under any applicable state or local law with respect
to the Acquisition and the deemed acquisition of OTC (the "Section 338(h)(10)
Subelections"). Overnite further agrees (x) to cause to be made express
elections under Section 338(g) of the Code and the regulations thereunder to the
extent necessary to allow the Section 338(h)(10) Elections to be made (the
"Section 338(g) Elections"), and (y) to make any and all similar elections
available under any applicable state or local law, to the extent necessary to
allow any Section 338(h)(10) Subelection to be made (the "Section 338(g)
Subelections").
(b) As requested from time to time by UPC (whether before, at, or
after the Closing), Overnite shall assist UPC in, and shall provide the
necessary information to UPC in connection with, the preparation of Internal
Revenue Service Form 8023, Elections Under Section 338 For Corporations Making
Qualified Stock Purchases, and any comparable or related forms required under
any applicable state or local law, and the required schedules or statements
thereto (the "Section 338 Election Forms") relating to the Section 338(h)(10)
Elections and the Section 338(g) Elections and any Section 338(h)(10)
Subelections and any Section 338(g) Subelections. Without limiting the
generality of the preceding sentence and with respect to each Section 338
Election Form
-18-
<PAGE>
delivered by UPC to Overnite on or before the Closing, Overnite shall, no later
than the Closing, cause each such Section 338 Election Form to be duly executed
by Overnite or an affiliate of Overnite, as appropriate, and shall deliver the
same to UPC at the Closing. If UPC determines at or after the Closing that any
change is to be made in a Section 338 Election Form previously executed by
Overnite or an affiliate of Overnite and delivered by Overnite to UPC, then UPC
may prepare a new Section 338 Election Form and deliver such new Section 338
Election Form to Overnite, and Overnite shall cause such Section 338 Election
Form to be duly executed by Overnite or an affiliate of Overnite, as
appropriate, and shall promptly deliver such executed Section 338 Election Form
to UPC.
(c) UPC shall timely file (or cause to be filed) the Section 338
Election Forms on behalf of UPC and Overnite, and shall provide notice of such
filing to Overnite. UPC and Overnite shall thereafter take any and all actions
necessary or appropriate to effect the timely filing of any other Section 338
Election Forms required to be filed for any applicable state or local tax
purposes.
(d) With respect to the filings described in Section 11 (c) above,
Overnite, OHI, OTC and UPC will (i) treat as valid the Section 338(h)(10)
Elections and the Section 338(g) Elections with respect to the Acquisition and
the deemed acquisition of OTC, and any Section 338(h)(10) Subelections and any
Section 338(g) Subelections, (ii) not take any action inconsistent with such
treatment, and (iii) timely file, or cause to be filed, all tax returns affected
by such filings in a manner consistent with the Section 338(h)(10) Elections and
the Section 338(g) Elections and any Section 338(h)(10) Subelections and any
Section 338(g) Subelections (including but not limited to attaching such Section
338 Election Forms and the schedules related thereto to the appropriate tax
returns in the manner prescribed by applicable regulations or other applicable
law).
(e) Overnite, OHI, and OTC, on the one hand, and UPC, on the other
hand, shall cooperate and consult with each other in good faith in order to
reach a mutually acceptable agreement with respect to the allocation of the
Purchase Price among the assets of Overnite, OHI,
-19-
<PAGE>
and OTC for purposes of the Section 338 Election Forms.
12. Use of Union Pacific Name; Shield. The Overnite Group hereby agrees
---------------------------------
that it will not use or authorize or permit any other person to use the name
"Union Pacific," including any logo, trademark or design containing such name,
or the Union Pacific shield or similar design, at any time after the 30/th/ day
following the Closing.
13. Assignment. Neither party may assign any of its rights or delegate
----------
any of its duties under this Agreement without first obtaining the prior written
consent of the other party, which may be withheld by such other party in its
absolute discretion. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their successors and permitted assigns.
14. Notices. All notices and other communications to be given hereunder
-------
shall be in writing and delivered in person or mailed postage prepaid or sent by
telegram or other facsimile transmission to the following addresses:
If to UPC:
Union Pacific Corporation
1717 Main Street
Suite 5900
Dallas, Texas 75201
Attn: Senior Vice President and General Counsel
Telecopy No.: (214)743-5741
If to Overnite, OHI or OTC:
Overnite Corporation
1000 Semmes Avenue
Richmond, VA 23224-2246
Attn: Senior Vice President and Chief Financial Officer
Telecopy No.: (804) 231-8501
-20-
<PAGE>
or to such other addresses as either party may designate in writing. All notices
or communications shall be effective upon receipt.
15. No Third Party Beneficiaries. The provisions of this Agreement are
----------------------------
intended solely to establish the relative rights and responsibilities between
the UPC Group and the Overnite Group, and except as set forth in the provisions
of this Agreement which expressly provide for the indemnification of members of
the UPC Group or the Overnite Group, or the respective directors, officers,
employees, agents and representatives thereof, nothing in this Agreement,
express or implied, is intended or will be construed to confer upon or give any
person other than the parties hereto and their respective successors and
permitted assigns any rights, remedies or obligations under or by reason of this
Agreement or any transaction contemplated hereby.
16. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with laws of the State of New York, without giving effect to the
principles of conflicts of law thereof.
17. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which when so executed shall be deemed an original and all
of which shall together constitute but one and the same instrument.
18. Entire Agreement. This Agreement constitutes the entire agreement of
----------------
the parties with respect to the subject matter hereof and supersedes all prior
agreements and understandings, oral or written, with respect to such matters.
This Agreement may not be amended or otherwise modified except by a written
instrument duly executed and delivered by all parties. No failure or delay by
any party in exercising any right, power or privilege hereunder shall operate as
a waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right,
power or privilege.
19. Severability. The provisions of this Agreement are severable, and
------------
should any
-21-
<PAGE>
provision hereof be void, voidable or unenforceable under any applicable law,
such provision shall not affect or invalidate any other provision of this
Agreement, which shall continue to govern the relative rights and duties of the
parties as though such void, voidable or unenforceable provision were not a part
hereof.
20. Incorporation of Schedules. The Schedules identified in and attached
--------------------------
to this Agreement are hereby incorporated by reference and made a part hereof.
-22-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
UNION PACIFIC CORPORATION
By: _____________________________
Title: ___________________________
OVERNITE CORPORATION
By: _____________________________
Title: ___________________________
OVERNITE HOLDING, INC.
By: _____________________________
Title: ___________________________
OVERNITE TRANSPORTATION COMPANY
By: _____________________________
Title: ___________________________
-23-
<PAGE>
SCHEDULE A
TO
Indemnification Agreement, dated as of August ____, 1998
among
Union Pacific Corporation ("UPC"),
Overnite Corporation,
Overnite Holding, Inc. ("OHI") and Overnite Transportation Company ("OTC")
1. Union Pacific Guaranty Agreement, dated as of March 18, 1994, between
Richmond Truck Lease Co., Ltd. and UPC concerning the Japanese leveraged
lease financing of trucks.
2. Guaranty, dated October 29, 1993, by UPC of OTC's self-insured worker's
compensation obligations in Pennsylvania.
3. Guaranty, dated December 28, 1993, by UPC of OTC's self-insured worker's
compensation obligations in Missouri.
4. Guaranty, dated July 21, 1995, by UPC of OTC's self-insured worker's
compensation obligations in West Virginia.
5. Guaranty, dated June 28, 1988, by UPC of OTC's self-insured worker's
compensation obligations in Alabama.
6. Guaranty, dated June 28, 1988, by UPC of OTC's self-insured worker's
compensation obligations in North Carolina.
7. Indemnity Agreement, made the 1/st/ day of January, 1991 by and between
National Union Fire Insurance Company of Pittsburgh and UPC, and any letter
of credit, surety bond, or other security provided by UPC pursuant thereto.
A-1
<PAGE>
EXHIBIT 10.4
SERVICES AGREEMENT
------------------
THIS SERVICES AGREEMENT (the "Agreement") is made and entered into as of
the _______ day of August, 1998 by and between Union Pacific Corporation, a Utah
corporation ("UPC"), and Overnite Corporation, a Virginia corporation
("Overnite").
WHEREAS, Overnite intends to issue and sell or cause to be issued and sold
all of its outstanding common stock through an initial public offering (the
closing of which is hereafter referred to as the "Offering"); and
WHEREAS, immediately following the Offering, Overnite intends to purchase
all of the issued and outstanding common stock of Overnite Holding, Inc., a
Delaware corporation ("OHI"), from UPC (the "Acquisition"), with the result that
Overnite will become a publicly-owned company and OHI will become a wholly-
owned, direct subsidiary of Overnite; and
WHEREAS, Overnite Transportation Company, a Virginia corporation ("OTC"),
is a wholly-owned, direct subsidiary of OHI and immediately following the
Acquisition will become a wholly-owned, indirect subsidiary of Overnite; and
WHEREAS, UPC has historically provided to its subsidiaries, including OHI
and OTC, certain corporate and administrative services more particularly
described hereinafter; and
WHEREAS, UPC and Overnite desire that UPC continue to provide such services
following the Offering and Acquisition pursuant to the terms and conditions of
this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties hereto agree as follows:
1. Services. Following the Offering and Acquisition, UPC will provide or
--------
cause to be provided to Overnite and its subsidiaries , those corporate and
administrative services described in Exhibit A hereto (the "Services"). The
scope of the Services shall be adjusted by the parties as needed to conform to
good business practice and the requirements of applicable laws, regulations and
tariffs, and as otherwise agreed to by the parties.
2. Charges for Services. (a) In consideration for the Services provided
--------------------
or caused to be provided, Overnite agrees to pay the following charges to UPC:
<PAGE>
(i) Charges for Services performed by UPC through a third party
(other than a subsidiary of UPC) shall be equal to the final invoiced costs
charged by such third party to perform those Services. With respect to all
other Services not to be provided through such a third party, UPC and
Overnite will negotiate in good faith fees to be charged on a quarterly or
one-time basis depending on the Services to be provided. Fees for Services
provided directly by UPC or a subsidiary of UPC shall, unless specifically
addressed in Exhibit A hereto, be based on the estimated costs of providing
such Services, which shall include a reasonable allocation of direct and
indirect overhead costs (including, without limitation, employee salaries,
benefits and other costs and reasonable travel and other out-of-pocket
expenses expected to be incurred in connection therewith).
(ii) So long as any Services are provided hereunder, UPC and Overnite
will review all fees negotiated hereunder and the scope of Services being
provided on a quarterly basis. If either party believes that the actual
cost of providing the Services represented by such fees will vary by at
least 10% of the then current cost of providing such Services, the parties
hereto will negotiate in good faith new fees reflecting such variation.
All new fees shall apply prospectively only and no adjustment will be made
to fees payable with respect to a preceding quarter.
(iii) If any additional Services are included hereunder, or if the
scope or nature of Services provided at any time under this Agreement
changes significantly, the parties hereto will negotiate in good faith new
fees based on the estimated cost of providing such additional or revised
Services, as contemplated in Section 2(a)(i).
3. Payments. (a) UPC shall submit to Overnite by the 10th working
--------
day of each quarter an invoice for all charges associated with Services provided
during the preceding quarter, including any other amounts payable in respect of
the preceding quarter. All invoices shall describe in reasonable detail the
Services provided and the charges associated therewith, any related adjustments
and any other amounts that are payable. Except as provided in subparagraph (b)
below, Overnite shall remit payment in full for all charges invoiced on or
before the last working day of the month in which the invoice is received.
Payment of all invoices shall be made by wire transfer of
-2-
<PAGE>
immediately available funds to an account or accounts designated by UPC. Any
late payment shall bear interest at the rate of 1% per month or fraction thereof
until paid.
(b) In the event of a dispute as to an invoiced amount, Overnite
shall promptly pay all undisputed amounts, but shall be entitled to withhold
amounts in dispute, and shall promptly notify UPC of such dispute and the basis
therefor. The parties agree to provide each other with sufficient records and
information to resolve such dispute and, without limiting the rights and
remedies of the parties hereunder, to negotiate in good faith a resolution
thereto. Notwithstanding this clause (b), the late payment interest provision in
Section 3(a) shall apply to all such withheld amounts that are ultimately
determined to be due.
4. Term of Agreement. The term of this Agreement shall commence
-----------------
immediately following the Offering and Acquisition and shall continue thereafter
unless terminated by agreement of the parties hereto. Notwithstanding the
foregoing, this Agreement shall become terminable, upon not less than 30 days'
prior written notice (i) with respect to any Services or any part thereof, at
any time by Overnite, or (ii) in whole or in part with respect to any Services,
at any time by UPC on or after the 18th month following the Offering except for
Services or any part thereof described in Item 6 to Exhibit A hereto which may
be terminated at any time by UPC following 30 days prior written notice.
Termination under this Paragraph 4 or otherwise shall have no effect on the
obligations of the parties to provide Services prior to the effective date of
such termination or to make payments in respect of charges incurred in
connection therewith or which relate to events occurring prior to such date.
5. Performance of Services. (a) UPC shall perform the Services or cause
-----------------------
the Services to be performed with the same degree of care, skill and prudence
customarily exercised for its own operations. It is understood and agreed that
the Services will be substantially identical in nature and quality to the
Services performed by UPC for OTC and its subsidiaries during the year prior to
the commencement of the term of this Agreement, except as required by Overnite's
becoming a public company after the Offering.
(b) Each party acknowledges that the Services will be provided only
with respect to the businesses of Overnite and its subsidiaries as such
businesses exist immediately following the Offering and Acquisition or as
otherwise mutually agreed by the parties. Services will not be
-3-
<PAGE>
requested for the benefit of any entity other than Overnite and its
subsidiaries. Overnite agrees that it will use the Services only in accordance
with all applicable federal, state and local laws, regulations and tariffs and
in accordance with the reasonable conditions, rules, regulations and
specifications which are or may be set forth in any manuals, materials,
documents or instructions of UPC. UPC reserves the right to take all actions,
including the termination of any Services or part thereof, in order to assure
that the Services are provided in accordance with any applicable laws,
regulations and tariffs.
(c) Any input or information needed by either party to perform or
utilize the Services pursuant to the provisions of this Agreement shall be
provided by the other party or its subsidiaries, as the case may be, in a manner
consistent with the practices employed by the parties during the year prior to
the Offering. Should the failure by Overnite to provide such input or
information render the performance of the Services impossible or unreasonably
difficult, UPC may, upon reasonable notice, refuse to provide such Services.
6. Liability and Indemnification. Except as provided below, UPC shall
-----------------------------
have no liability under this Agreement for damage or loss of any type suffered
by Overnite or its subsidiaries or any third party as a result of the
performance or non-performance of the Services. Each party shall indemnify,
defend and hold the other party harmless from and against all damages, losses
and out-of-pocket expenses (including fees and disbursements of counsel) caused
by or arising out of any willful breach or gross negligence by such indemnifying
party in the performance or non-performance of any obligation or agreement
contained herein or by the willful misconduct of such indemnifying party. In the
event of a claim against UPC by a third party, Overnite shall indemnify, defend
and hold UPC harmless from and against all damages, losses and out-of-pocket
expenses (including fees and disbursements of counsel) caused by or arising out
of the performance or non-performance of the Services, except where caused by
the willful breach or negligence of UPC or UPC's willful misconduct.
Notwithstanding any other provision of this Agreement, UPC shall have no
liability for the acts or omissions of any third party (other than a subsidiary
of UPC) that provides Services hereunder so long as UPC has not been grossly
negligent in the selection of such third party. For purposes of this section,
Services shall include services performed by UPC pursuant to the Tax Allocation
Agreement, dated August __, 1998, between UPC and Overnite, OHI and OTC.
-4-
<PAGE>
7. Confidentiality. The parties each agree to hold in trust and maintain
---------------
confidential, and, except as required by law or applicable rules and regulations
promulgated thereunder or by court order or other legal process, not to disclose
to others without first obtaining the prior written approval of the other party,
any information received by it from the other party or developed or otherwise
obtained by it under this Agreement, including all information resulting from
the provision or utilization of the Services hereunder (collectively, the
"Information"). At the time of termination of this Agreement in whole or in
part, each party shall, within 90 days after the effective date of such
termination, return to each other all written Information that it obtained and
shall not retain or allow any third party to retain photocopies or other
reproductions of such Information, provided that (i) the parties may retain any
Information to the extent reasonably needed to comply with applicable tax,
accounting or financial reporting requirements or to resolve any legal issues
identified at the time of termination, and (ii) in the case of a partial
termination of this Agreement, the parties may retain any Information required
to perform or utilize any remaining Services covered by this Agreement.
Alternatively, each party may, upon receipt of the written consent of the other
party, destroy such Information instead of returning the same pursuant to the
foregoing sentence. The obligations set forth in this Paragraph 7 shall not
apply to any Information which is shown by either party to be or have become
knowledge generally available to the public other than through the acts or
omissions of such party.
8. Assignment. Neither party shall assign or transfer any of its rights
----------
or delegate any of its obligations under this Agreement without first obtaining
the prior written consent of the other party, which consent may be withheld by
such other party in its sole discretion; provided that UPC shall be permitted to
cause any Services to be provided on UPC's behalf through one or more third
parties selected by UPC; and provided further that the selection of any third
party by UPC shall be subject to the prior written consent of Overnite (which
shall not be unreasonably withheld or delayed) unless such third party shall
have provided the same or similar Services to UPC or its affiliates at any time
during the 12 months immediately preceding the Offering. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
successors and permitted assigns.
-5-
<PAGE>
9. Notices. All notices and other communications to be given hereunder
-------
shall be in writing and delivered in person, mailed postage prepaid or sent by
telegram or other facsimile transmission to the following addresses:
Union Pacific Corporation
1717 Main Street
Suite 5900
Dallas, Texas 75201
ATTN: Vice President and Controller
Telecopy No.: (214) 743-5794
Overnite Corporation
1000 Semmes Avenue
Richmond, VA 23224-2246
ATTN: Senior Vice President and Chief Financial Officer
Telecopy No.: (804) 231-8501
or to such other addresses as either party may designate in writing. All
notices or communications given by personal delivery or mail shall be effective
upon receipt. Notice given by telecopier or telegram shall be effective upon
receipt if received during the recipient's normal business hours, or at the
beginning of the recipient's next business day after receipt if not received
during the recipient's normal business hours.
10. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of New York, without giving effect to the
principles of conflicts of laws thereof .
11. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which when so executed shall be deemed an original but all
of which shall together constitute but one and the same instrument.
12. Entire Agreement. This Agreement constitutes the entire agreement of
----------------
the parties with respect to the subject matter hereof and supersedes all prior
agreements and understandings, oral or written, with respect thereto. This
Agreement may not be amended or otherwise modified except by a written
instrument duly executed by both parties. No failure or delay by any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any
-6-
<PAGE>
other right, power or privilege.
13. Severability. The provisions of this Agreement are severable and
------------
should any provisions hereof be void, voidable or unenforceable under any
applicable law, such provision shall not affect or invalidate any other
provision of this Agreement, which shall continue to govern the relative rights
and duties of the parties as though such void, voidable or unenforceable
provision were not a part hereof.
-7-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
UNION PACIFIC CORPORATION
By:______________________________________
Title:___________________________________
OVERNITE CORPORATION
By:______________________________________
Title:___________________________________
-8-
<PAGE>
Exhibit A
---------
Description of Services
-----------------------
1. Financial Reporting and Accounting Research - UPC will assist in the
-------------------------------------------
preparation of quarterly and annual financial statements and related disclosures
in SEC and shareholder documents for Overnite as well as all SEC-required
filings. UPC will also provide assistance in researching the impact of new and
proposed accounting standards on Overnite and advice on appropriate accounting
treatment for proposed transactions or other issues.
2. Internal Auditing - UPC will assist in the structuring of internal
-----------------
audits of Overnite related to internal accounting and administrative controls
over corporate assets as well as reviews of operational and financial
management.
3. Compensation Plans - UPC will assist Overnite through periodic
-------------
consulting regarding the design and implementation of its stock and executive
compensation plans, including its management and executive incentive plans.
4. Insurance - UPC will assist Overnite in structuring and negotiating
---------
the terms of a property and liability insurance program.
5. Legal - UPC will provide legal assistance and advice to Overnite on
-----
corporate, SEC and financial matters.
6. Governmental Relations - UPC will make one person in its Washington,
----------------------
D.C. office available to Overnite to provide lobbying and legislative affairs
services at the Federal Congressional and Executive levels and advice regarding
political action committees and attendance at political fund raisers; provided
that such person shall be required to devote no more than one-half of such
person's normal work time to providing such Services and such person will not be
required to provide Services which, in the sole judgement of UPC's Vice
President-Government Affairs, are or would be in conflict with or detrimental to
the interests of the UPC Group. Overnite will pay for the Services provided in
this paragraph 6 an amount equal to $12,500 per month, but will not be charged
for any overhead, supplies, and equipment used by such person in performing
Services hereunder, including without limitation any office, fax machine,
telephone, secretarial support and reasonable entertainment expenses. In
addition UPC's Vice President - Government Affairs agrees to request lobbying
firms currently on retainer to UPC to provide services at their hourly rate to
Overnite without requiring any additional or separate retainer, but UPC will
have no obligation to Overnite if such firms refuse to provide such services.
<PAGE>
7. Proxy Statement -- UPC will provide assistance in the coordination
---------------
and preparation by Overnite of any Proxy Statement including the calculation and
accumulation of certain components of compensation administered by UPC prior to
the Offering.
A-2
<PAGE>
EXHIBIT 10.5
TAX ALLOCATION AGREEMENT
BY AND AMONG
UNION PACIFIC CORPORATION,
OVERNITE CORPORATION,
OVERNITE HOLDING, INC.,
AND
OVERNITE TRANSPORTATION COMPANY
DATED AS OF _____________, 1998
<PAGE>
TABLE OF CONTENTS
Page
----
<TABLE>
<S><C> <C>
ARTICLE I - DEFINITIONS AND OTHER PROVISIONS...............................2
Section 1.1 Overnite Consolidated Group................................2
Section 1.2 UPC Consolidated Group.....................................3
Section 1.3 Combined Consolidated Group................................3
Section 1.4 Code.......................................................3
Section 1.5 Environmental Tax..........................................3
Section 1.6 Federal Income Tax.........................................3
Section 1.7 Item.......................................................3
Section 1.8 Minimizing Tax Liabilities.................................3
Section 1.9 Miscellaneous Taxes........................................4
Section 1.10 Party.....................................................4
Section 1.11 Taxes.....................................................4
Section 1.12 Timing Item; Turnaround...................................4
Section 1.13 Unitary Income Tax........................................5
Section 1.14 UPC Division; Division....................................5
Section 1.15 Actual Loss...............................................5
Section 1.16 1991 Agreement............................................6
ARTICLE II - FILING OF CONSOLIDATED RETURNS
AND ELECTIONS...........................................................6
Section 2.1 Consolidated Return........................................6
Section 2.2 Filing Information.........................................7
Section 2.3 Elections..................................................7
ARTICLE III - TAX ALLOCATIONS AND EFFECTS OF
ASSET RESTRUCTURING.....................................................8
Section 3.1 Consolidated Federal Income Tax; Environmental Tax.........8
Section 3.2 Unitary Income Taxes......................................10
Section 3.3 Miscellaneous Taxes.......................................11
ARTICLE IV - TAX PAYMENTS AND SETTLEMENTS.................................11
Section 4.1 Estimated and Current Taxes...............................11
Section 4.2 Future Settlements........................................13
Section 4.3 Payments/Refunds..........................................13
Section 4.4 Billing Disputes with Taxing Authorities..................14
ARTICLE V - AUDITS, AMENDED RETURNS, AND LITIGATION.......................14
Section 5.1 Conduct of Audits; Amended Returns........................14
Section 5.2 Protest; Litigation.......................................16
Section 5.3 Opinion Procedure.........................................17
Section 5.4 Adjustments...............................................20
</TABLE>
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ARTICLE VI - COOPERATION ON RECORDS.......................................21
Section 6.1 Furnish Books and Records.................................21
Section 6.2 Notice of Audits..........................................21
Section 6.3 Record Retention..........................................22
Section 6.4 Cost of Producing Records.................................22
ARTICLE VII - INDEMNIFICATIONS...........................................22
Section 7.1 Federal Income, Environmental, and Unitary Income
Taxes.................................................................22
Section 7.2 Miscellaneous Taxes.......................................23
ARTICLE VIII - DISPUTES...................................................23
Section 8.1 Accounting Firm...........................................23
Section 8.2 Resolution of Dispute.....................................24
Section 8.3 Binding Resolution........................................24
Section 8.4 Costs of Dispute Resolution...............................24
ARTICLE IX - MISCELLANEOUS................................................25
Section 9.1 Sharing of Information....................................25
Section 9.2 Confidentiality...........................................25
Section 9.3 Successors................................................25
Section 9.4 Governing Law.............................................26
Section 9.5 Headings..................................................26
Section 9.6 Notices...................................................26
Section 9.7 Services..................................................27
Section 9.8 Severability..............................................28
Section 9.9 Effective Date; Termination...............................28
Section 9.10 Counterparts.............................................28
Section 9.11 Entire Agreement; Termination of Prior Agreements........28
APPENDIX I - ALLOCATION OF FEDERAL INCOME TAX LIABILITIES AND
BENEFITS ATTRIBUTABLE TO SPECIFIC TAX ITEMS.............................I-1
Net Operating Losses (NOLs).............................................I-1
Capital Gains and Losses................................................I-2
Section 1231 Gains and Losses...........................................I-3
Charitable Contribution Deductions......................................I-5
Dividends-Received Deduction............................................I-5
Alternative Minimum Tax (AMT) and
Minimum Tax Credit (AMT Credit).......................................I-6
Credit for Producing Fuel from a Nonconventional
Source (Fuel Credit)..................................................I-7
Investment Tax Credit (ITC) and Investment Tax Credit
Recapture (ITC Recapture).............................................I-7
i.Credit for Increasing Research Activities (R&D Credit)................I-8
j.Targeted Jobs Credit..................................................I-8
Credit for Federal Tax on Gasoline and Special Fuels....................I-9
</TABLE>
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Enhanced Oil Recovery Credit (EOR Credit)..................................I-9
m.Foreign Tax Credits...................................................I-9
n.Interest on Tax Deficiencies and Refund Claims.......................I-10
Penalties; Additions to Tax............................................I-10
Unspecified Items......................................................I-11
APPENDIX II - ALLOCATION OF UNITARY INCOME TAX
LIABILITIES AND BENEFITS.................................................II-1
APPENDIX III - ADDITIONAL SERVICES......................................III-1
</TABLE>
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TAX ALLOCATION AGREEMENT
-------------------------
THIS AGREEMENT is entered into as of __________, 1998, between Union
Pacific Corporation ("UPC"), a Utah corporation, on behalf of itself and the
other members of the UPC Consolidated Group (as hereinafter defined), Overnite
Corporation, a Virginia corporation, Overnite Holding, Inc., a Delaware
corporation ("Overnite Holding"), and Overnite Transportation Company, a
Virginia corporation ("Overnite").
WHEREAS, UPC and Overnite Holding were parties to a certain Tax Allocation
Agreement between them dated as of January 1, 1991 (the "1991 Agreement")
setting forth and confirming certain matters relating to the inclusion of
Overnite Holding, Overnite, and certain other companies in the UPC consolidated
federal and state unitary income tax returns; the allocation of tax liabilities
for periods during which Overnite Holding, Overnite and other companies were or
had been subsidiaries of UPC; the administration of tax audits and proceedings;
and the principles embodied in tax allocation policies then in effect between
UPC and Overnite Holding and Overnite, after their revision per Article III and
Appendices I and II of the 1991 Agreement to accommodate then recent changes in
the tax law; and
WHEREAS, the 1991 Agreement provides that it may be amended only by written
agreement of UPC and Overnite Holding; and
WHEREAS, in connection with the initial public offering of Overnite
1
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Corporation (the "IPO"), Overnite Holding will become a wholly-owned subsidiary
of Overnite Corporation; and
WHEREAS, UPC, Overnite Corporation, Overnite Holding, and Overnite desire
to amend and restate the 1991 Agreement to reflect the IPO and for other
reasons;
NOW, THEREFORE, the parties hereto, intending to be legally bound, agree
that the 1991 Agreement is amended and restated in full as follows:
ARTICLE I
---------
DEFINITIONS AND OTHER PROVISIONS
--------------------------------
1.1 Overnite Consolidated Group. For all periods through the date that
---------------------------
Overnite Holding becomes a wholly-owned subsidiary of Overnite Corporation, the
term "Overnite Consolidated Group" means Overnite Holding and the other
corporations and the passthrough entities included in that term as defined in
the 1991 Agreement. For all periods thereafter, the term "Overnite Consolidated
Group" means Overnite Corporation and all other corporations that are members
of the affiliated group of corporations (within the meaning of section 1504 of
the Code) of which Overnite Corporation is the common parent, together with
any passthrough entities (including single member partnerships and limited
liability companies) in which Overnite Corporation or any member of such
affiliated group is a member, and any other corporations which may become
members of such affiliated group or were members of such affiliated group in the
past and any
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passthrough entities in which Overnite Corporation or any member of such
affiliated group may become or was a member.
1.2 UPC Consolidated Group. UPC is the common parent of an affiliated
----------------------
group of corporations which, excluding members of the Overnite Consolidated
Group, is referred to herein as the "UPC Consolidated Group".
1.3 Combined Consolidated Group. The group of corporations composed of the
---------------------------
Overnite Consolidated Group and the UPC Consolidated Group is referred to herein
as the "Combined Consolidated Group".
1.4 Code. The Internal Revenue Code of 1986, as amended (including the
----
corresponding provisions of any subsequent federal tax laws) is referred to
herein as the "Code". All references to provisions of the Code shall include any
temporary or final Treasury Regulations thereunder.
1.5 Environmental Tax. The environmental tax imposed under section 59A of
-----------------
the Code is referred to herein as the "Environmental Tax".
1.6 Federal Income Tax. Except as the context otherwise requires, the term
------------------
"Federal Income Tax" as used in this Agreement refers to the taxes imposed under
sections 1, 11, 47, 55, 531, and 1201 of the Code.
1.7 Item. The term "Item" of a party means any tax attribute, item of
----
income, loss, deduction, preference, or credit attributable to the assets or
activities of that party.
1.8 Minimizing Tax Liabilities. Except as the context otherwise requires,
--------------------------
to "Minimize" or "Minimizing" the tax liabilities of a consolidated group shall
mean minimizing the present value of the aggregate liabilities of such group
(including all of its members) for such tax or taxes in all periods discounted
at a rate of ten percent (10%) per
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annum, determined under all the facts and circumstances known (or reasonably
anticipated) at the date such minimization is being tested and taking into
account the anticipated out-of-pocket costs of resolving administrative disputes
and litigation with the taxing authorities and the likelihood of prevailing.
1.9 Miscellaneous Taxes. All taxes other than consolidated Federal Income
-------------------
Tax, the Environmental Tax, or Unitary Income Taxes (including but not limited
to all federal excise taxes; windfall profits taxes; value added taxes;
nonunitary state income taxes; nonunitary state franchise taxes; nonunitary
local taxes; real property taxes; personal property taxes; severance taxes;
single business taxes; gross receipts taxes; state or local sales, use, or
excise taxes; employment and payroll taxes and premiums; and all foreign
(federal, local, or provincial) taxes) are referred to herein as "Miscellaneous
Taxes".
1.10 Party. The term "Party" means either UPC on the one hand or Overnite
-----
Corporation, Overnite Holding, and Overnite on the other hand together or
individually as the context requires; and the term "Parties" means both UPC on
the one hand and Overnite Corporation, Overnite Holding, and Overnite on the
other hand.
1.11 Taxes. Except as the context otherwise requires, the terms "tax" or
-----
"tax liability" or "tax benefit" as used in this Agreement include any
penalties, additions to tax, and interest associated with any such tax and, when
used by itself, the term "tax liability" includes both tax liabilities and tax
benefits.
1.12 Timing Item; Turnaround. The term "Timing Item" refers to an Item
-----------------------
where any change in the period or periods over which the Item is includible in
or deductible from taxable income or creditable against tax will result in an
offsetting adjustment
4
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("Turnaround") that may be realized in another period or periods.
1.13 Unitary Income Tax. State or local taxing jurisdictions' consolidated
------------------
income taxes; unitary or combined reporting income taxes; or consolidated,
unitary, or combined reporting franchise taxes are referred to herein as
"Unitary Income Tax".
(a) Unitary Group. All members of the Combined Consolidated Group or
-------------
portions of such members and all other entities contained in a collective
business unit identified by a state or local taxing jurisdiction as the basis
for its Unitary Income Tax assessment and for which a Unitary Income Tax return
is filed or due, are referred to herein as a "Unitary Group".
(b) Nexus. A presence of property (owned or rented), payroll,
-----
employment of individuals, sales, or other factors which cause a Division's
activities to be subject to Unitary Income Tax in a particular taxing
jurisdiction is referred to herein as a "Nexus".
1.14 UPC Division; Division. Each grouping of members of the Combined
----------------------
Consolidated Group (and portions thereof), excluding the Overnite Consolidated
Group, whose financial results are or have been reported separately on the
consolidated uniform financial reports prepared by the UPC Corporate Accounting
Department is referred to herein as a "UPC Division". (For example, as of
January 1, 1991, there were seven Divisions: Corporate, Overnite, Railroad,
Realty, Resources, Technologies, and USPCI.) A UPC Division or the Overnite
Consolidated Group is referred to herein as a "Division".
1.15 Actual Loss. The term "Actual Loss" as used in this Agreement shall be
-----------
the net amount of all taxes actually incurred by a party as a result of an
action (or failure to act) by another party with respect to matters described in
this Agreement, taking into account the anticipated out-of-pocket costs of
resolving administrative disputes and
5
<PAGE>
litigation with the taxing authorities over the action or failure to act and the
likelihood of prevailing (based on the assumption that the taxing authorities
would challenge the desired tax treatment). Such tax resulting from such action
(or failure to act) shall be calculated using the allocated Federal Income Tax,
Environmental Tax, or Unitary Income Tax liability for the appropriate tax
jurisdiction, net of the present value of reasonably anticipated related future
offsetting tax benefits (based upon the tax law in effect at the time of
computation) discounted at a rate of ten percent (10%) per annum.
1.16 1991 Agreement. Determinations under this Agreement made prior to its
--------------
amendment and restatement as of the date first set forth above shall remain
unchanged.
ARTICLE II
FILING OF CONSOLIDATED
RETURNS AND ELECTIONS
---------------------
2.1 Consolidated Return. For all periods through the date that Overnite
-------------------
Holding becomes a wholly-owned subsidiary of Overnite Corporation, UPC shall, to
the extent permitted by law, include the Overnite Consolidated Group in the
consolidated Federal Income Tax and Environmental Tax returns and the Unitary
Income Tax returns which UPC files for the Combined Consolidated Group. UPC
shall have the right to obtain extensions of time to file these returns as it
deems necessary. These returns shall be prepared by UPC and Overnite
Corporation and shall be filed in a timely manner. Overnite Corporation shall
have responsibility and control with respect to determining tax return positions
for Overnite Corporation Items in such returns, provided this is consistent with
lawfully Minimizing the aggregate Federal Income Tax, Environmental Tax, and
6
<PAGE>
Unitary Income Tax liabilities of the Combined Consolidated Group.
2.2 Filing Information.
------------------
(a) Unless an extension is agreed to by UPC, Overnite Corporation shall
supply UPC with completed consolidated Federal Income Tax and Environmental Tax
returns for the Overnite Consolidated Group and the data and information
necessary to prepare the Unitary Income Tax returns to be filed by UPC under
this Agreement for the prior calendar year, with appropriate components of the
information necessary for the preparation of such returns, all to be provided
pursuant to reasonable timetables and instructions from UPC.
(b) UPC shall provide Overnite Corporation with a copy of the prior year's
UPC Consolidated Form 1120, separate Form 1120 pro forma return for the Overnite
Consolidated Group, Unitary Income Tax returns, and any appropriate detail or
supporting schedules for any period in which such returns include items of the
Overnite Consolidated Group as soon as practicable after filing thereof.
2.3 Elections. The members of the UPC and Overnite Consolidated Groups
---------
shall execute and file elections pursuant to section 338(h)(10) of the Code (and
corresponding state elections) with respect to Overnite Corporation's purchase
of Overnite Holding and Overnite Holding's deemed purchase of Overnite; and
shall execute and file any and all other consents, elections, or other similar
documents and shall maintain in effect previously filed elections, consents, or
other similar documents necessary or appropriate to effect the filing of the
consolidated Federal Income Tax and Unitary Income Tax returns for the Combined
Consolidated Group for all periods in a manner which lawfully Minimizes the
aggregate Federal Income Tax, Environmental
7
<PAGE>
Tax, and Unitary Income Taxes for the Combined Consolidated Group.
ARTICLE III
TAX ALLOCATIONS
3.1 Consolidated Federal Income Tax; Environmental Tax.
---------------------------------------------------
(a) The Overnite Consolidated Group's share of consolidated Federal Income
Tax and Environmental Tax liabilities for the tax periods beginning on or after
January 1, 1991, shall be allocated in accordance with subsections (b) and (c)
hereof.
(b) The Overnite Consolidated Group's Federal Income Tax liability, or tax
benefit in the event of a loss, shall be determined jointly by UPC and Overnite
Corporation based upon separate Items of the Overnite Consolidated Group to the
extent such Items were included in the Combined Consolidated Group's tax returns
as filed or finally adjusted and resulted in either a marginal tax cost or
benefit to the Combined Consolidated Group. In general, the Federal Income Tax
cost or benefit to be allocated to the Overnite Consolidated Group shall be
equal to the difference between the Federal Income Tax actually payable by the
Combined Consolidated Group for a period and the amount of Federal Income Tax
which would have been payable by the Combined Consolidated Group for such period
if the Overnite Consolidated Group Items for such period had not been included
in the Combined Consolidated Group's tax returns for such period, provided that
the allocation principles enumerated in Appendix I to this Agreement shall
control to the extent such principles are inconsistent with the foregoing.
Except as otherwise specifically provided in this Agreement, for all periods
when UPC owns directly or indirectly 100% of the outstanding stock of Overnite
Holding or
8
<PAGE>
Overnite, the computation of the Overnite Consolidated Group's Federal Income
Tax liability or tax benefit shall not reflect any limitations it would have
suffered or benefits it would have realized if it had filed its return on a
stand-alone basis, but rather shall reflect its allocation of Federal Income Tax
costs or benefits actually realized, either as originally reported or adjusted
upon audit, amended return, or ultimate settlement, or otherwise realized by the
Combined Consolidated Group for any period.
(c) The Overnite Consolidated Group's Environmental Tax liability shall be
determined jointly by UPC and Overnite Corporation and shall be equal to the
amount of Environmental Tax which would be owed by the Overnite Consolidated
Group on a stand-alone basis.
(d) Notwithstanding the foregoing, all items of income, gain, loss, or
deduction attributable to UPC's sale of the stock of Overnite Holding to
Overnite Corporation after the IPO pursuant to that certain Stock Purchase and
Indemnification Agreement between the Parties (the "Purchase Agreement"), and
the deemed sales of Overnite Holding's assets and Overnite's assets pursuant to
elections under Section 338(h)(10) of the Code shall be allocated to the UPC
Consolidated Group, except as set forth in the next following sentence. Any
item of income or gain attributable to pre-IPO contingent liabilities of the
Overnite Consolidated Group which become payable or are otherwise accrued at or
after the IPO and result in additional amounts realized under Section 338 of the
Code shall be allocated to the Overnite Consolidated Group except to the extent
the UPC Consolidated Group receives the benefit of corresponding and offsetting
deductions.
3.2 Unitary Income Taxes.
--------------------
9
<PAGE>
(a) The Overnite Consolidated Group's share of Unitary Income Tax
liabilities for the tax periods beginning on or after January 1, 1991, shall be
allocated in accordance with subsections (b) and (c) hereof.
(b) The total Unitary Income Tax liability due to a taxing jurisdiction
where members of the Overnite Consolidated Group are included in a Unitary Group
with members of the UPC Consolidated Group shall be determined jointly by UPC
and Overnite Corporation and then allocated to the constituent Divisions in such
Unitary Group in accordance with the allocation principles enumerated in
Appendix II to this Agreement. Nexus both for purposes of the determination of
the Unitary Income Tax Liability in a particular jurisdiction and for purposes
of the allocation of such liability to constituent Divisions in the Unitary
Group shall be determined jointly by UPC and Overnite Corporation. Should a
particular taxing jurisdiction subsequently determine Nexus differently from a
determination previously used, the Unitary Income Tax liability shall be
governed by such taxing jurisdiction's sustained or agreed upon final
determination, and any additional Unitary Income Tax liabilities arising
therefrom shall be allocated among the constituent Divisions in the Unitary
Group in accordance with the allocation principles enumerated in Appendix II to
this Agreement.
(c) Notwithstanding the foregoing, all items of unitary income, gain, loss,
or deduction attributable to UPC's sale of the stock of Overnite Holding to
Overnite Corporation after the IPO pursuant to the Purchase Agreement, and the
deemed sales of Overnite Holding's assets and Overnite's assets pursuant to
elections under Section 338(h)(10) of the Code (or the corresponding provisions
of state or local law) shall be allocated to the UPC Consolidated Group, except
as set forth in the next following
10
<PAGE>
sentence. Any item of income or gain attributable to pre-IPO contingent
liabilities of the Overnite Consolidated Group which become payable or are
otherwise accrued at or after the IPO and result in additional amounts realized
under Section 338 of the Code (or the corresponding provisions of state or local
law) shall be allocated to the Overnite Consolidated Group except to the extent
the UPC Consolidated Group receives the benefit of corresponding and offsetting
deductions.
3.3 Miscellaneous Taxes. All liabilities for Miscellaneous Taxes shall
-------------------
remain the sole responsibility of the particular entity which incurred or whose
predecessor incurred the liability or whose activities (or predecessors'
activities) resulted in the liability, provided, however, that the IPO and
related transactions (including elections under Section 338(h)(10) of the Code
or the corresponding provisions of state or local law) shall not be considered
an activity of UPC for purposes of determining responsibility for Miscellaneous
Taxes. Likewise, any additional Miscellaneous Taxes imposed, or refunds
received, as a result of audits, claims, amended returns, or any other reason
shall be the sole property or liability of the entity which incurred the
liability (or its successor) or is entitled to the refund or claim by operation
of law or under the terms of this Agreement.
ARTICLE IV
----------
TAX PAYMENTS AND SETTLEMENTS
----------------------------
4.1 Estimated and Current Taxes.
---------------------------
(a) Overnite Corporation shall provide to UPC the separate tax data
necessary to determine the Overnite Consolidated Group's share of estimated
Federal Income Tax,
11
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Environmental Tax, and Unitary Income Tax ("Estimated Tax Payment") on such
schedule as is prescribed by UPC so that Estimated Tax Payments can be computed
and allocated in a timely fashion. On or before the due date for each Estimated
Tax Payment, UPC shall provide to Overnite Corporation a statement of the
Overnite Consolidated Group's allocable share of the Estimated Tax Payment to be
made. On or before such due date, Overnite Corporation shall pay to UPC the
amount of the Estimated Tax Payment identified in such statement.
(b) Overnite Corporation shall provide to UPC the separate tax data
necessary to determine the share of the prior-year consolidated Federal Income
Tax, Environmental Tax, and Unitary Income Tax liability allocable to members of
the Overnite Consolidated Group. Within 60 days of filing the tax returns, UPC
shall provide to Overnite Corporation a final statement of the Overnite
Consolidated Group's share of the actual prior-year consolidated Federal Income
Tax, Environmental Tax, and Unitary Income Tax liability. If the amount of the
Overnite Consolidated Group's prior-year tax liabilities exceeds the prior-year
Estimated Tax Payments previously remitted by members of the Overnite
Consolidated Group, Overnite Corporation shall pay to UPC the amount of such
excess. If the amount of the Overnite Consolidated Group's prior-year tax
liabilities is less than the prior-year Estimated Tax Payments previously
remitted by members of the Overnite Consolidated Group, UPC shall pay to
Overnite Corporation the amount of such difference. All such calculations shall
be made in accordance with Article III of this Agreement.
4.2 Future Settlements. UPC shall give Overnite Corporation reasonable
------------------
advance notice when any tax payment in connection with audit assessments, refund
12
<PAGE>
claims, or amended returns is due from, or payable to, Overnite Corporation
under this Agreement. Overnite Corporation shall pay to UPC an amount equal to
the tax liabilities attributable to including the Overnite Consolidated Group in
the Combined Consolidated Group to the extent such tax liabilities were not
reflected in payments previously made by the members of the Overnite
Consolidated Group. UPC shall pay to Overnite Corporation an amount equal to the
tax benefits attributable to including the Overnite Consolidated Group in the
Combined Consolidated Group, to the extent that such tax benefits were not
previously paid to (or reflected in payments by) members of the Overnite
Consolidated Group. To the extent that all Items attributable to members of the
Overnite Consolidated Group for a tax period are finally settled or resolved but
a final settlement or resolution has not been reached with the taxing authority
because Items not attributable to members of the Overnite Consolidated Group
have not been settled or resolved, UPC shall pay Overnite Corporation its share
of such tax benefits, or Overnite Corporation shall pay UPC the Overnite
Consolidated Group's share of such tax liabilities, after the final settlement
or resolution of all such Items attributable to members of the Overnite
Consolidated Group. All such calculations shall be made in accordance with
Article III of this Agreement.
4.3 Payments/Refunds. Payments under this Agreement shall be made not
----------------
later than 11:00 a.m. (New York City time) on the day when due in U.S. dollars
by wire transfer of immediately available funds to the account designated for
that purpose by UPC or Overnite Corporation. Unless a different time is
specified for payment hereunder, such payments shall be due fifteen days after
appropriate notice is given that such payment is due. Whenever such payments
shall be stated to be due on a day other than a
13
<PAGE>
day on which banks are not required or authorized to close in New York City (a
"Business Day"), such payment shall be made on the next succeeding Business Day.
If an amount due hereunder shall not have been paid when due, such amount shall
bear interest from the date such payment is due, to but excluding the date of
payment of such amount, at a rate per annum equal to ten percent (10%). Interest
shall be calculated on the basis of a year of 365 or 366 days for the actual
number of days elapsed and compounded quarterly.
4.4 Billing Disputes with Taxing Authorities. Where a taxing authority has
----------------------------------------
made or makes assessments, abatements, credits, refunds, or similar items or
posts payments, assessments, abatements, credits, refunds, or similar items on
or against one Party's tax account which are properly attributable hereunder to
the other Party's activities, the Parties shall cooperate with each other and
work together to resolve the billing discrepancies with the appropriate taxing
authority. Where the billing discrepancies cannot be resolved with the
appropriate taxing authority, the Parties shall make each other whole as if the
taxing authority had correctly posted the accounts of the Parties.
ARTICLE V
---------
AUDITS, AMENDED RETURNS, AND LITIGATION
---------------------------------------
5.1 Conduct of Audits; Amended Returns.
----------------------------------
(a) UPC shall have responsibility and control with respect to the conduct
of audit examinations, extending the statute of limitations and choice of forum
in connection with
14
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audit examinations, and the filing of administrative refund claims or amended
returns for the Combined Consolidated Group and any member thereof (and for any
passthrough entity in which a member of the Combined Consolidated Group has an
interest) for consolidated Federal Income Tax, Environmental Tax, and Unitary
Income Tax liabilities for all periods beginning before the IPO. UPC shall
exercise such responsibility and control in a manner which lawfully Minimizes
the tax liabilities of the Combined Consolidated Group. UPC shall not exercise
such responsibility and control to jeopardize tax positions, elections, or other
items of the Overnite Consolidated Group, provided this is consistent with
lawfully Minimizing the tax liabilities of the Combined Consolidated Group.
(b) The Parties shall cause all members of the Combined Consolidated Group,
and any passthrough entities in which a member has an interest, fully to
cooperate with each other during the course of any audit. UPC shall keep
Overnite Corporation advised of, and shall honor all reasonable requests by
Overnite Corporation to be involved in, the preparation of such claims and
amended returns and the audit process to the extent Overnite Consolidated Group
Items or issues are involved.
(c) If Overnite Corporation shall determine that it is desirable for UPC,
Overnite Corporation, or a member of the Overnite Consolidated Group to file a
non-routine claim for refund or amended return with respect to any taxable
period beginning before the IPO, Overnite Corporation shall prepare and submit
such proposed claim to UPC, together with a reasoned legal analysis of the
merits of the proposed claim and a statement setting forth when the statute of
limitations on filing such claim will expire, in sufficient time for UPC to
consider and act on such proposed claim.
15
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(d) Overnite Corporation may request that UPC not contest, or discontinue
the contest of, a consolidated Federal Income Tax, Environmental Tax, or Unitary
Income Tax issue relating to an Item of the Overnite Consolidated Group or its
members. UPC shall comply with such request only if it determines, in its sole
and absolute discretion, that doing so would have no adverse effect upon the UPC
Consolidated Group.
5.2 Protest; Litigation. If the consolidated Federal Income Tax,
-------------------
Environmental Tax, or Unitary Income Tax liability of the Combined Consolidated
Group (or any member thereof) or any other matter involving the Internal Revenue
Service with respect to any taxable period beginning before the IPO becomes or
has the potential to become the subject of litigation in any court or subject to
protest or any other administrative proceeding (including but not limited to
requests for rulings or technical advice memoranda), the decision to institute
the litigation or proceeding, the choice of forum, and the overall conduct of
the litigation or proceeding shall be the responsibility of, and shall be
controlled by, UPC. Such responsibility and control shall be exercised in a
manner which lawfully Minimizes the tax liabilities of the Combined Consolidated
Group. The Parties shall cause all members of the Combined Consolidated Group,
and any passthrough entities in which a member has an interest, fully to
cooperate with each other during the course of the litigation or proceeding. UPC
shall keep Overnite Corporation advised of, and shall honor all reasonable
requests by Overnite Corporation to be involved in, all litigation or
proceedings to the extent that Overnite Consolidated Group Items or issues are
involved.
5.3 Opinion Procedure.
-----------------
(a) UPC shall hold Overnite Corporation harmless in the manner provided in
16
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Section 5.3(e) of this Agreement if
(i) without Overnite Corporation's consent, UPC adjusts, compromises,
or settles (or directs Overnite Corporation to adjust, compromise, or
settle) a consolidated Federal Income Tax, Environmental Tax, or Unitary
Income Tax issue relating to an Item of the Overnite Consolidated Group or
its members;
(ii) UPC fails to file (or directs Overnite Corporation not to file) a
claim for refund or amended return submitted to UPC pursuant to Section
5.1(d) of this Agreement; or
(iii) over Overnite Corporation's written objection UPC takes (or
directs Overnite Corporation to take) a consolidated Federal Income Tax,
Environmental Tax, or Unitary Income Tax return position relating to an
Item of the Overnite Consolidated Group or its members,
provided (x) with respect to clause (i) above a legal opinion is obtained that
the adjustment, compromise, or settlement does not reasonably reflect both the
likelihood of prevailing if the issue were fully and fairly litigated to a final
determination and the anticipated costs of resolving administrative disputes and
litigation with the taxing authorities, or (y) with respect to clauses (ii) and
(iii) above a legal opinion is obtained that Overnite Corporation's tax position
on the issue is more likely than not to prevail and to Minimize Tax Liabilities,
using the procedure (in the case of either (x) or (y) above) set forth in
Section 5.3(b) of this Agreement. This Section 5.3 shall not apply to an
adjustment, compromise, settlement, or return position which is preliminary to
commencing a refund claim or litigation in which such issue will be contested.
Article VIII of this Agreement shall not apply to any issue as to which a Party
invokes this
17
<PAGE>
opinion procedure.
(b) If the Parties cannot agree within a reasonable time whether a return
position should be taken, or whether UPC should adjust, compromise, or settle an
Overnite Consolidated Group Item or file a claim for refund or amended return,
either Party can invoke the following opinion procedure as to such issue by
giving notice to the other. Within thirty (30) days of either Party's notice,
the Parties shall agree upon and simultaneously notify an outside law firm which
has recognized expertise in the field of taxation. Within thirty (30) days of
such notice to the law firm, the Parties shall supply to the law firm all
written support and supplementary documents which each Party deems necessary to
support its contention that the proposed adjustment, compromise, or settlement
does (or does not) reasonably reflect the likelihood of prevailing or that its
tax position on the issue under Section 5.3(a)(ii) or (iii) above is (or is not)
more likely than not to prevail. Either Party may discuss the issues with the
law firm prior to its decision, provided the other Party is given the
opportunity to be present. Within sixty (60) days of such notice to the law
firm,
(i) with respect to an adjustment, compromise, or settlement described
in clause (i) of Section 5.3(a), the law firm shall deliver to both Parties
either (x) the law firm's reasoned opinion that such adjustment,
compromise, or settlement reasonably reflects both the likelihood of
prevailing on the issue if the issue were fully and fairly litigated to a
final determination and the anticipated costs of resolving administrative
disputes and litigation with the taxing authorities, or (y) if such
adjustment, compromise, or settlement is not such a reflection, the law
firm's reasoned opinion as to the likelihood (expressed as a percentage) of
18
<PAGE>
prevailing on the issue if fully and fairly litigated to a final
determination and the law firm's good faith estimate of the anticipated
costs (expressed in dollars) of resolving administrative disputes and
litigation with the taxing authorities; or
(ii) with respect to a claim for refund, amended return, or return
position described in clauses (ii) or (iii) of Section 5.3(a), the law firm
shall either (x) deliver its reasoned opinion to both Parties that, if the
issue were fully and fairly litigated to a final determination, Overnite
Corporation's tax position on the issue more likely than not would prevail,
or (y) notify the Parties that the law firm cannot so opine. In the case of
(x) above, the law firm shall also render its reasoned opinion as to the
likelihood (expressed as a percentage) of prevailing on the issue if fully
and fairly litigated to a final determination and the law firm's good faith
estimate of the anticipated costs (expressed in dollars) of resolving
administrative disputes and litigation with the taxing authorities. If in
the opinion of the law firm an expedited decision is necessary or advisable
to protect either Party's rights, the law firm shall accelerate the dates
for submissions and decision so as to protect the rights of the Parties. If
the Parties so agree, inside tax counsel may be utilized instead of an
outside law firm without affecting the remainder of this opinion procedure.
(c) The Party whose position does not prevail under Section 5.3(b) shall
pay the fees and costs of the outside law firm used for the opinion procedure,
notwithstanding any contrary provision of this Agreement.
(d) The determination made by the law firm (or inside tax counsel, as the
case may be) under Section 5.3(b) shall be conclusive and binding on the Parties
and shall not
19
<PAGE>
be subject to appeal, except in the case of manifest mathematical
error.
(e) To the extent that the opinion procedure of this Section 5.3 is invoked
as to an Item (including but not limited to a Timing Item) and Overnite
Corporation prevails but Overnite Corporation's position with respect to the
Item is not adopted or implemented by UPC, the following reclassifications and
treatments shall occur for all purposes of this Agreement, including but not
limited to allocating tax costs or benefits related to such Item between the
Parties under Article III:
(i) Overnite Corporation shall not be allocated the amount of any tax
cost attributable to failure to adopt or implement Overnite Corporation's
position with respect to the Item; and
(ii) the benefit of the Turnaround of a Timing Item that is subject to
the opinion procedure shall be reclassified and specially treated as a UPC
Consolidated Group Item.
In the application of this Section 5.3(e), the principles contained in the
definition of the term Actual Loss shall apply.
(f) At any time, the Parties may (by written agreement) waive any portion
or all of this opinion procedure and reclassify or reallocate any Items as to
which a dispute arises within the contemplation of Section 5.3(b).
5.4 Adjustments. UPC and Overnite Corporation shall settle payments or
-----------
reimbursements of the portion of consolidated Federal Income Tax, Environmental
Tax, and Unitary Income Tax deficiencies or refunds relating to the Overnite
Consolidated Group resulting from audits of or the filing of applications for
refunds or amended returns for all periods calculated in accordance with Section
4.2 of this Agreement.
20
<PAGE>
ARTICLE VI
----------
COOPERATION ON RECORDS
----------------------
6.1 Furnish Books and Records. The Parties shall furnish or cause to be
-------------------------
furnished to each other upon request, as promptly as practicable, such
information (including access to books, work papers, and other records) and
assistance as are reasonably necessary for the filing of any return, for the
preparation for or conduct of any audit, and for the prosecution or defense of
any claim, suit, or proceeding relating to any proposed tax adjustment. The
Parties shall cooperate with each other in the conduct of any audit or other
similar proceedings and each shall execute and deliver (or cause to be executed
and delivered) such documents (including but not limited to powers of attorney,
returns, elections, and consents) as are necessary to carry out the intent of
this Agreement. Overnite Corporation shall indemnify UPC for any Actual Loss
suffered by the UPC Consolidated Group due to any failure of Overnite
Corporation to comply with requests by UPC for the execution or delivery of
documents or for information held by Overnite Corporation. UPC shall indemnify
Overnite Corporation for any Actual Loss suffered by Overnite Corporation due to
any failure of UPC to comply with requests by Overnite Corporation for the
execution or delivery of documents or for information held by UPC.
6.2 Notice of Audits. Each Party shall promptly give notice to the other
----------------
of any examination, audit, inquiry, litigation, or proposed or actual assessment
by a federal, state, or local taxing authority covering any potential tax
liability where one Party may have a right to demand payment for such tax from,
or be indemnified by, the other Party.
6.3 Record Retention. The UPC and Overnite Consolidated Groups shall
----------------
21
<PAGE>
comply with the record retention provisions of the Code, as interpreted by
Treasury Regulations and relevant administrative rulings of the Internal Revenue
Service. Neither the UPC nor the Overnite Consolidated Groups shall destroy, or
permit the destruction of, any records that may relate to any tax liability or
other payment of the Combined Consolidated Group without the other's written
consent. If any such records are willfully or negligently destroyed or permitted
to be destroyed after the date of this Agreement without such consent, the Party
destroying or permitting the destruction of such records shall indemnify the
other Party for any Actual Loss suffered by the other Party due to inability to
produce the records.
6.4 Cost of Producing Records. Each Party shall bear all of its own costs
-------------------------
reasonably incurred in connection with producing any records for the other Party
under this Agreement.
ARTICLE VII
-----------
INDEMNIFICATIONS
----------------
7.1 Federal Income, Environmental, and Unitary Income Taxes. Overnite
-------------------------------------------------------
Corporation, Overnite Holding, and Overnite jointly and severally indemnify and
hold the UPC Consolidated Group harmless from the share of consolidated Federal
Income Tax, Environmental Tax, and Unitary Income Taxes allocable to the
Overnite Consolidated Group for all periods, as determined under Article III
hereof. UPC indemnifies and holds Overnite Corporation, Overnite Holding, and
Overnite harmless from the share of consolidated Federal Income Tax,
Environmental Tax, and Unitary Income Taxes
22
<PAGE>
allocable to the UPC Consolidated Group for all periods, as determined under
Article III hereof or under the provisions of the 1991 Agreement.
7.2 Miscellaneous Taxes. Overnite Corporation, Overnite Holding, and
-------------------
Overnite jointly and severally indemnify and hold the UPC Consolidated Group
harmless from the Miscellaneous Taxes of the Overnite Consolidated Group for all
periods, as determined under Section 3.3 hereof. UPC indemnifies and holds
Overnite Corporation, Overnite Holding, and Overnite harmless from the
Miscellaneous Taxes of the UPC Consolidated Group for all periods, as determined
under Section 3.3 hereof.
ARTICLE VIII
------------
DISPUTES
--------
8.1 Accounting Firm. If the Parties are unable to agree on the amount
---------------
which is allocable or due to one Party from the other under this Agreement, or
on whether an action or failure to act has the effect of Minimizing taxes, then
either Party may invoke this procedure by giving notice to the other. Upon
receipt of such notice, the Parties shall select and notify a single public
accounting firm to resolve the dispute. If the Parties cannot agree on a single
firm within ten (10) days, they shall each select a nationally recognized public
accounting firm, which may include the public accounting firm which regularly
opines on either Party's financial statements ("Auditor"). Those two firms shall
jointly select and notify, within ten (10) days, a third independent nationally
recognized public accounting firm, which shall not be the Auditor of either
Party, to resolve the dispute. This Article VIII shall not apply to any issue as
to which a Party has invoked the
23
<PAGE>
opinion procedure of Section 5.3 hereof.
8.2 Resolution of Dispute. The chosen public accounting firm (the
---------------------
"Arbitrator") shall be provided with written arguments by each Party and all
supporting documents which each Party deems necessary within thirty (30) days of
selection of the Arbitrator. Each Party shall provide the other Party with
copies of all written arguments, documents, and correspondence submitted to the
Arbitrator. Either Party may discuss the issues with the Arbitrator provided the
other Party is given the opportunity to be present. Within sixty (60) days of
selection of the Arbitrator, the Arbitrator may request each Party to respond to
the written arguments provided by the other Party. The Arbitrator may also set a
date, time, and place for oral arguments. Within sixty (60) days of any oral
arguments or the last written arguments, whichever is later, the arbitrator
shall notify the Parties of its decision. If in the opinion of the Arbitrator an
expedited decision is necessary to protect either Party's rights, the Arbitrator
shall accelerate the dates for submissions, arguments, and decision so as to
protect the rights of the Parties.
8.3 Binding Resolution. The determination made by the Arbitrator under
------------------
Section 8.2 hereof shall be conclusive and binding upon the Parties and shall
not be subject to appeal, except in the case of manifest mathematical error.
8.4 Costs of Dispute Resolution. The Parties shall share equally in all
---------------------------
fees and costs of the Arbitrator.
24
<PAGE>
ARTICLE IX
----------
MISCELLANEOUS
-------------
9.1 Sharing of Information. Each Party shall provide the other Party with
----------------------
all relevant tax accounting information and portions of returns, elections,
amended returns, claims for refund, consents, and extensions of the statute of
limitations which each files on behalf of the Combined Consolidated Group (or
any members thereof) for any periods which are reasonably requested.
9.2 Confidentiality. The Parties agree that, except as otherwise expressly
---------------
agreed in writing, any information furnished to the other Party pursuant to this
Agreement is confidential. Except to the extent required for the proper filing
of returns or resolving a dispute, audit, or litigation, the Parties covenant
not to disclose, and not to permit disclosure of, such information to persons
other than their own auditors or tax advisors.
9.3 Successors. This Agreement is being entered into by the Parties on
----------
behalf of themselves and each member of the UPC Consolidated Group and the
Overnite Consolidated Group, respectively. This Agreement shall bind each member
of the UPC Consolidated Group and the Overnite Consolidated Group, and shall
continue to bind each such member whether or not it remains affiliated with UPC
or Overnite Corporation, as the case may be, and shall be deemed to have been
readopted and affirmed on behalf of any corporation which, subsequent to the
date hereof, becomes a member of the UPC Consolidated Group or the Overnite
Consolidated Group. UPC and Overnite Corporation shall, upon the written request
of the other, cause any of their respective subsidiaries formally to ratify and
execute this Agreement. This Agreement shall be binding upon and
25
<PAGE>
inure to the benefit of any successor to the Parties (by merger, consolidation,
liquidation, acquisition of assets, or otherwise) to the same extent as if the
successor had been an original party to this Agreement.
9.4 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of New York, without regard to the
conflict-of-laws principles thereof.
9.5 Headings. The table of contents and headings in this Agreement are for
--------
convenience only and shall not be deemed for any purpose to constitute a part of
or to affect the interpretation of this Agreement.
9.6 Notices. Except as otherwise specifically provided in this Agreement
-------
or agreed to in writing by UPC and Overnite Corporation, all notices, claims,
requests, demands and other communications under this Agreement shall be in
writing and shall be deemed to have been duly given either (i) when transmitted
by telecopy or electronic mail, receipt of which is acknowledged by telecopy or
electronic mail, provided a confirming copy is simultaneously mailed (registered
or certified mail, postage prepaid, return receipt requested) or (ii) three days
after being mailed (registered or certified mail, postage prepaid, return
receipt requested), addressed as follows:
(a) If to UPC: Assistant Vice President-Taxes
Union Pacific Railroad Company
1416 Dodge Street
Omaha, NE 68179
Telecopier No: (402) 271-5972
(b) If to Overnite Corporation: Executive Director-Tax
Overnite Corporation
1000 Semmes Avenue
26
<PAGE>
Richmond, VA 23224-2246
Telecopier No.: (804)-231-8500
or to such other person or address as the party to whom the communication is to
be given may have most recently furnished by notice to the other party.
9.7 Services. Overnite Corporation shall reimburse UPC for all services
--------
rendered by UPC to Overnite Corporation in connection with this Agreement. For
purposes of this Section 9.7, services shall include, but not be limited to,
legal and accounting services and the services of consultants and expert
witnesses.
Charges for services performed by a third party shall be equal to the final
invoiced costs charged by such third party to UPC to perform those services. For
all other services, UPC and Overnite Corporation shall negotiate in good faith
the fees to be charged by UPC and shall include a reasonable allocation of
direct and indirect costs (including but not limited to employee salaries,
benefits, and other costs) incurred in connection therewith. Until such fees
are negotiated, such fees shall be $______ per hour for attorneys' time and
$______ per hour for non-attorneys' time (in each case, prorated for fractions
of an hour) until the end of 1998 and shall thereafter be adjusted for increases
in the Consumer Price Index.
UPC shall submit quarterly invoices to Overnite Corporation for the
services provided by UPC to Overnite Corporation. Overnite Corporation shall
pay such charges in accordance with the provisions of Section 4.3 hereof.
In addition to the foregoing services, UPC shall render to Overnite
Corporation the additional services described in Appendix III of this Agreement
during the periods specified therein ("Additional Services") that Overnite
Corporation requests (orally or in
27
<PAGE>
writing) that UPC provide to it and Overnite Corporation shall reimburse UPC for
such Additional Services on the same basis as the foregoing services.
9.8 Severability. If any provision of this Agreement is held to be
------------
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the Parties to the maximum extent
practicable. In any event, all other provisions of this Agreement shall be
deemed valid, binding, and enforceable to their full extent.
9.9 Effective Date; Termination. Except as specifically provided to the
---------------------------
contrary in this Agreement, Articles II and III of this Agreement shall apply to
all taxable periods beginning on or after January 1, 1991, and Articles IV
through IX of this Agreement shall apply to all taxable periods. Unless
otherwise agreed in writing by the Parties, this Agreement shall remain in force
and be binding so long as the statutory period for assessments or refunds under
applicable law remains unexpired for any taxable period of UPC or Overnite
Corporation, Overnite Holding, and Overnite during which the Overnite
Consolidated Group was included in the Combined Consolidated Group or for any
period as to which either Party may have a claim against the other under this
Agreement.
9.10 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which when so executed shall be deemed an original but all
of which shall together constitute but one and the same instrument.
9.11 Entire Agreement; Termination of Prior Agreements. This Agreement
-------------------------------------------------
constitutes the entire agreement between the Parties concerning the subject
matter hereof and supersedes all prior agreements, written or oral, between or
among any member of
28
<PAGE>
the UPC Consolidated Group, on the one hand, and any member of the Overnite
Consolidated Group, on the other hand, with respect to any taxes. Any such prior
agreements are hereby terminated and canceled to the extent not incorporated
herein, and any rights or obligations existing thereunder are hereby fully and
finally settled without any payment by any party thereto. This Agreement may not
be terminated or amended except by written agreement executed by the Parties.
IN WITNESS WHEREOF, each of the parties to this Agreement, intending to be
legally bound, has caused this Agreement to be executed by its duly authorized
officer as of the date first above written.
UNION PACIFIC CORPORATION
By: ______________________________
Title: ______________________________
OVERNITE CORPORATION
By: ______________________________
Title: ______________________________
29
<PAGE>
OVERNITE HOLDING, INC.
By: ______________________________
Title: ______________________________
OVERNITE TRANSPORTATION COMPANY
By: ______________________________
Title: _______________________________
30
<PAGE>
APPENDIX I
----------
ALLOCATION OF FEDERAL INCOME TAX
LIABILITIES AND BENEFITS
ATTRIBUTABLE TO SPECIFIC TAX ITEMS
Pursuant to Section 3.1 of this Agreement, the Overnite Consolidated Group
shall be allocated its pro rata contribution of Federal Income Tax cost or
benefit (either as originally filed or as adjusted upon audit, amended return,
or ultimate settlement, or otherwise), including interest and penalties, as a
result of the Combined Consolidated Group's activities for the applicable
periods. In general, the Federal Income Tax cost or benefit to be allocated to
the Overnite Consolidated Group shall be equal to the difference between the
Federal Income Tax actually payable by the Combined Consolidated Group for a
period and the amount of Federal Income Tax which would have been payable by the
Combined Consolidated Group for such period if the Overnite Consolidated
Group's Items for such period had not been included in the Combined Consolidated
Group's tax returns for such period, provided that the allocation principles
enumerated below shall control, subject to Section 3.1(d), to the extent such
principles are inconsistent with the foregoing:
a. Net Operating Losses (NOLs). To the extent that the Overnite
---------------------------
Consolidated Group incurs an NOL, it shall be allocated the Federal Income Tax
benefit attributable to such loss when such benefit is realized (including
carrybacks) by the Combined
I-1
<PAGE>
Consolidated Group. If the Combined Consolidated Group does not fully utilize
the NOLs of all members of the Combined Consolidated Group for any period, the
Overnite Consolidated Group shall be allocated its pro rata share of the
Combined Consolidated Group's NOL benefit determined by multiplying such benefit
by a ratio the numerator of which is the NOL of the Overnite Consolidated Group
for such period and the denominator of which is the sum of the numerator and the
NOLs of any UPC Divisions which have an NOL for such period. The Overnite
Consolidated Group shall be allocated any tax benefit attributable to NOL
carryforwards when and to the extent the Combined Consolidated Group realizes
such benefit in a subsequent period as determined (on a first-in, first-out
basis) by applying the foregoing allocation principles in such subsequent
period.
b. Capital Gains and Losses. To the extent that the Overnite Consolidated
------------------------
Group realizes a net capital gain, the tax cost of such Item shall be determined
and allocated to the Overnite Consolidated Group at the applicable favorable
capital gain rate of tax, if any, for such Item for the period in question. To
the extent that the Overnite Consolidated Group realizes a net capital loss, the
Overnite Consolidated Group shall be allocated a tax benefit determined at the
applicable favorable capital gain rate, if any, but only when and to the extent
such net capital loss is fully utilized by the Combined Consolidated Group. To
the extent that the Combined Consolidated Group does not fully utilize the net
capital loss of the Combined Consolidated Group in any tax period, the net
capital loss of the Overnite Consolidated Group (for purposes of determining the
tax benefit) shall be limited to a pro rata share of the aggregate net capital
gains of the UPC Divisions which have net capital gains for the period, based on
a ratio the numerator of which is the net
I-2
<PAGE>
capital loss of the Overnite Consolidated Group for the period and the
denominator of which is the sum of the numerator and the net capital losses of
the UPC Divisions which have net capital losses for the period. The balance
shall be carried forward, and the Overnite Consolidated Group shall be allocated
the tax benefit when and to the extent the Combined Consolidated Group realizes
such benefit in a subsequent period as determined (on a first-in, first-out
basis) by applying the foregoing allocation principles in such subsequent
period.
c. Section 1231 Gains and Losses.
-----------------------------
(1) To the extent that the Overnite Consolidated Group realizes a net
section 1231 gain (within the meaning of section 1231 of the Code), the tax cost
attributable to such Item shall be determined and allocated at the applicable
favorable rate of tax, if any, for items of section 1231 gain income for the tax
period in question. Where the Overnite Consolidated Group realizes a net
section 1231 loss (within the meaning of section 1231 of the Code), but the
Combined Consolidated Group for the tax year in question realizes a net section
1231 gain, the tax benefit attributable to the Overnite Consolidated Group's
net section 1231 loss shall be determined and allocated at the applicable rate
of tax for items of section 1231 gain income for such year. Where the Overnite
Consolidated Group realizes a net section 1231 loss and the Combined
Consolidated Group also realizes a net section 1231 loss for the tax year in
question:
(i) The Overnite Consolidated Group's net section 1231 loss shall be
multiplied by a ratio the numerator of which is the Combined Consolidated
Group's net section 1231 loss and the denominator of which is the sum of the net
section 1231 losses of the Overnite Consolidated Group and those UPC Divisions
realizing net section 1231
I-3
<PAGE>
losses.
(ii) The tax benefit attributable to the Overnite Consolidated Group's
net section 1231 loss shall be determined and allocated in an amount equal to
the sum of (x) the tax benefit of the product determined in clause (i) above,
calculated at the applicable rate of tax for items of section 1231 loss for such
year, and (y) the tax benefit of the difference between the Overnite
Consolidated Group's net section 1231 loss and the product determined in clause
(i) above, calculated at the applicable rate of tax for items of section 1231
gain for such year.
(2) Notwithstanding the foregoing, to the extent that the Combined
Consolidated Group realizes a net section 1231 gain which is subject to the loss
recapture rules of section 1231 (c) of the Code, the additional tax associated
with the section 1231 loss recapture amount shall be borne by the members of the
Combined Consolidated Group which generated such net section 1231 losses during
the applicable look-back period. The net section 1231 losses which were
generated during the applicable look-back period and are the subject of loss
recapture in a post-1984 period shall be accounted for on a first-in, first-out
basis for purposes of sourcing the applicable period or periods to which such
loss recapture applies. To the extent that the loss recapture amount is sourced
from a year during the look-back period in which more than one Division had net
section 1231 losses, the Overnite Consolidated Group shall be allocated a pro-
rata share of such loss recapture amount determined by multiplying the sourced
loss recapture amount of the Combined Consolidated Group for the period in
question by a ratio the numerator of which is the Overnite Consolidated Group's
net section 1231 loss for the period and the denominator of which is the sum of
the numerator and the net section 1231 losses of the
I-4
<PAGE>
UPC Divisions having net section 1231 losses for such period.
d. Charitable Contribution Deductions. The Overnite Consolidated Group
----------------------------------
shall be allocated a charitable contribution deduction under section 170 of the
Code in an amount equal to the deduction realized by the Combined Consolidated
Group multiplied by a ratio the numerator of which is the charitable
contributions of the Overnite Consolidated Group and the denominator of which
is the sum of the numerator and the charitable contributions of the UPC
Consolidated Group for such period. To the extent that the Combined Consolidated
Group is limited on the amount of its consolidated charitable contribution
deduction in any period, the Overnite Consolidated Group shall be allocated any
tax benefit attributable to the excess charitable contributions when and if the
Combined Consolidated Group realizes such benefit in a subsequent period as
determined (on a first-in, first-out basis) by applying the foregoing allocation
principles in such subsequent period.
e. Dividends-Received Deduction. To the extent that the Overnite
----------------------------
Consolidated Group has received dividends qualifying for a dividends-received
deduction under sections 243, 244, or 245 of the Code and the Combined
Consolidated Group's dividends-received deduction is not limited, the Overnite
Consolidated Group shall be allocated the full allowable deduction (as limited
by subsection 246(c) or section 246A of the Code) based on the dividends it so
receives. If the Combined Consolidated Group's dividends-received deduction is
limited in any tax period pursuant to a provision of the Code other than
subsection 246(c) or section 246A, the dividends received deduction allocated to
the Overnite Consolidated Group shall be limited to an amount equal to the
allowable dividends-received deduction of the Combined Consolidated Group
multiplied by a ratio
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<PAGE>
the numerator of which is the sum of qualifying dividends received by the
Overnite Consolidated Group and the denominator of which is the sum of the
numerator and the qualifying dividends received by the UPC Consolidated Group.
f. Alternative Minimum Tax (AMT) and Minimum Tax Credit (AMT Credit).
-----------------------------------------------------------------
(1) AMT. If the Combined Consolidated Group incurs an AMT liability under
---
section 55 of the Code, the Overnite Consolidated Group shall be allocated a
pro rata share of the excess of AMT over the regular tax liability (the "AMT
Increment") for the Combined Consolidated Group determined by multiplying the
Combined Consolidated Group's AMT Increment by a ratio the numerator of which is
the Overnite Consolidated Group's AMT Increment computed on a stand-alone basis
and the denominator of which is the sum of such numerator and the AMT Increments
of each UPC Division (using zero for any UPC Division which would have no AMT
Increment) computed on a stand-alone basis.
(2) AMT Credit. To the extent that the Combined Consolidated Group utilizes
----------
an AMT Credit (including an AMT Credit attributable to a Fuel Credit carryover)
under section 53 of the Code against its regular tax liability for post-1987
periods, the applicable period to source such AMT Credit shall be determined on
a first-in, first-out basis. The Overnite Consolidated Group shall be allocated
a pro rata share of such AMT Credit utilized by the Combined Consolidated Group
which is attributable to each sourcing period, determined by multiplying such
AMT Credit by a ratio the numerator of which is the Overnite Consolidated
Group's AMT Increment (as determined under subsection (1) above) for the
applicable sourcing period and the denominator of which is the sum of such
numerator and the AMT Increment of each UPC Division (as determined
I-6
<PAGE>
under subsection (1) above, increased by any Fuel Credit carryover attributable
to that UPC Division) for such applicable sourcing period. Notwithstanding the
foregoing, the Overnite Consolidated Group shall not be allocated the benefit
from any AMT Credits which are attributable to any period ending prior to
January 1, 1998.
g. Credit for Producing Fuel from a Nonconventional Source (Fuel Credit).
--------------------------------------------------------------------
To the extent that the Combined Consolidated Group utilizes a Fuel Credit under
section 29 of the Code (other than AMT Credit which is attributable to a Fuel
Credit carryover, which shall be allocated under paragraph f above), the UPC
Consolidated Group shall be allocated all of such credit.
h. Investment Tax Credit (ITC) and Investment Tax Credit Recapture (ITC
--------------------------------------------------------------------
Recapture).
- ----------
(1 ) ITC. To the extent that the Overnite Consolidated Group has
---
generated ITC (under former section 38 of the Internal Revenue Code of 1954, as
amended) on qualified property, and to the extent that the Combined Consolidated
Group is not limited in its utilization of such ITC, whether attributable to the
current period or by way of a carryback or carryforward, the Overnite
Consolidated Group shall be allocated its full ITC based on its separate
qualified property. If the Combined Consolidated Group does not fully utilize
its ITC for any period, the Overnite Consolidated Group shall be allocated its
pro rata share of the Combined Consolidated Group's ITC benefit for such period
determined by multiplying such benefit by a ratio the numerator of which is the
ITC generated by the Overnite Consolidated Group for the period and the
denominator of which is the sum of the numerator and the ITC generated by all
UPC Divisions for the period. The Overnite Consolidated Group shall be
allocated any tax benefit attributable
I-7
<PAGE>
to ITC carryovers when and if the Combined Consolidated Group realizes such
benefit in a subsequent period as determined (on a first-in, first-out basis) by
applying the foregoing allocation principles in such subsequent period.
(2) ITC Recapture. To the extent that qualified property with respect to
-------------
which the Overnite Consolidated Group has been allocated an ITC benefit is
prematurely disposed of (other than in connection with a deemed sale under the
Purchase Agreement pursuant to an election under Section 338(h)(10) of the Code)
thereby triggering ITC Recapture under section 47 of the Code, such ITC
Recapture shall be fully allocated to the Overnite Consolidated Group in the
period in which such disposition occurs.
i. Credit for Increasing Research Activities (R&D Credit). To the extent
------------------------------------------------------
that the Overnite Consolidated Group has an increase in its qualified research
expenses over its base period research expenses (the "Excess R&D Amount") as
defined in section 41 of the Code, and to the extent that the Combined
Consolidated Group utilizes an R&D Credit for such period, the Overnite
Consolidated Group shall be allocated a pro rata share of the R&D Credit
utilized by the Combined Consolidated Group, based on a ratio the numerator of
which is the Overnite Consolidated Group's Excess R&D Amount computed on a
stand-alone basis for the period and the denominator of which is the sum of the
numerator and the Excess R&D Amounts of each UPC Division having an Excess R&D
Amount computed on a stand-alone basis for the same period.
j. Targeted Jobs Credit. To the extent that the Combined Consolidated Group
--------------------
utilizes a targeted jobs credit within the meaning of section 51 of the Code,
the Overnite Consolidated Group shall be allocated a pro rata share of such
credit determined by multiplying such credit by a ratio the numerator of which
is the Overnite Consolidated
I-8
<PAGE>
Group's allowable targeted jobs credit computed on a stand-alone basis and the
denominator of which is the sum of the numerator and the allowable targeted jobs
credits of each UPC Division computed on a stand-alone basis.
k. Credit for Federal Tax on Gasoline and Special Fuels. To the extent that
----------------------------------------------------
the Combined Consolidated Group utilizes a credit for federal tax on gasoline
and special fuels under section 34 of the Code, such credit shall be allocated
to the Division which generated it.
1. Enhanced Oil Recovery Credit (EOR Credit). To the extent that the
-----------------------------------------
Combined Consolidated Group generated EOR Credits (within the meaning of
section 43 of the Code), whether attributable to the current period or by way of
a carryback or carryforward, the UPC Consolidated Group shall be allocated all
of such EOR Credit.
m. Foreign Tax Credits. The Overnite Consolidated Group shall be allocated
-------------------
the benefit of any foreign tax credits (under section 27 of the Code) realized
by the Combined Consolidated Group which are attributable to foreign taxes paid
by members of the Overnite Consolidated Group. If the Combined Consolidated
Group's utilization of foreign tax credits is limited in any tax period pursuant
to a provision of the Code, the Overnite Consolidated Group shall be allocated a
pro rata share of the foreign tax credit in an amount equal to the Combined
Consolidated Group's utilized foreign tax credit multiplied by a ratio the
numerator of which is the foreign tax credit of the Overnite Consolidated Group
for such period and the denominator of which is the sum of the numerator and the
foreign tax credits of each UPC Division for such period. The tax benefit of any
unused foreign tax credit of the Overnite Consolidated Group shall be allocated
when and if the Combined Consolidated Group realizes such benefit in a
I-9
<PAGE>
subsequent period as determined (on a first-in, first-out basis) by applying the
foregoing allocation principles in such subsequent period.
n. Interest on Tax Deficiencies and Refund Claims. To the extent that the
----------------------------------------------
allocated tax liability of the Overnite Consolidated Group is increased, or its
allocated benefit is reduced, for any period, interest expense at the applicable
underpayment rates under section 6621 of the Code (or such higher interest rate
as is chargeable by the relevant taxing authority) for the periods in question
shall be allocated to the Overnite Consolidated Group. To the extent that the
allocated tax liability of the Overnite Consolidated Group is reduced, or its
allocated benefit is increased, for any period, interest income at the
applicable overpayment rates under section 6621 of the Code (or such lower
interest rate as is payable by the relevant taxing authority) for the periods in
question shall be allocated to the Overnite Consolidated Group.
o. Penalties; Additions to Tax. Penalties and additions to tax assessed
---------------------------
against the Combined Consolidated Group arising from Items allocated to (or tax
deficiencies, tax adjustments, or other matters related to) the Overnite
Consolidated Group shall be directly allocated to the Overnite Consolidated
Group. If penalties or additions to tax assessed against the Combined
Consolidated Group arise from Items allocated to (or tax deficiencies, tax
adjustments, or other matters related to) both the UPC Consolidated Group and
the Overnite Consolidated Group, the Overnite Consolidated Group shall be
allocated the amount of penalties or additions to tax which would have been
assessed against the Overnite Consolidated Group on a stand-alone basis.
Notwithstanding the foregoing, if the amount of penalties or additions to tax
assessed is limited because the Overnite Consolidated Group is included in the
Combined Consolidated Group, the
I-10
<PAGE>
Overnite Consolidated Group shall be allocated a pro rata share of the penalties
or additions to tax actually assessed determined by multiplying the amount of
such penalties or additions to tax by a ratio, the numerator of which is the
amount of penalties or additions to tax which would have been assessed against
the Overnite Consolidated Group on a stand-alone basis and the denominator of
which is the sum of the numerator and the amount of penalties or additions to
tax which would have been assessed against UPC on a stand-alone basis. Interest
on penalties and additions to tax shall be allocated to the party which is
allocated the penalties or additions to tax to which such interest relates.
p. Unspecified Items. To the extent that an Item arises during a tax period
-----------------
with respect to the Overnite Consolidated Group that is included in the
Combined Consolidated Group's Federal Income Tax return but limited by reason of
a certain Code provision, regulation, ruling, or case law, and the allocation
provisions of this Appendix I do not specifically address the proration of such
Item, then the Parties shall attempt to agree on an equitable proration formula
within a reasonable period of notice of such issue. In the event no agreement is
reached, UPC shall apply the following principles in resolving such dispute:
(i) The consolidated tax cost or benefit of an unspecified Item should be
allocated in proportion to the relative contribution of such unspecified Item by
the UPC Divisions and the Overnite Consolidated Group.
(ii) The amount of the allocation should be based on the actual
consolidated tax cost or benefit associated with such Item, rather than any
hypothetical costs or benefits
I-11
<PAGE>
which would arise if both the UPC Consolidated Group and the Overnite
Consolidated Group had filed separate returns on a stand-alone basis.
(iii) The proration formula selected to allocate the tax cost or benefit
associated with such Item should be determined in a manner consistent with the
allocation procedures adopted herein for that specified Item most similar to the
unspecified Item in dispute. Failing resolution of the dispute on such basis, a
proration formula should be adopted which results in an equitable allocation of
the consolidated Item after taking into account the basis for the limitation
associated with the particular Code provision, regulation, ruling, or case law
dealing specifically with such unspecified Item.
I-12
<PAGE>
APPENDIX II
-----------
ALLOCATION OF
UNITARY INCOME TAX
LIABILITIES AND BENEFITS
Pursuant to Section 3.2 of this Agreement, the Overnite Consolidated
Group, or any member thereof, shall be allocated a pro rata share of any Unitary
Income Tax cost or benefit, including interest and penalties (either as
originally reported or as adjusted upon audit, amended return, or ultimate
settlement, or otherwise), arising by reason of its activities' being included
in a Unitary Income Tax return with activities of the UPC Consolidated Group or
any member thereof. In order to ascertain the Overnite Consolidated Group's
allocated tax cost or benefit of such Unitary Income Tax Return in a particular
jurisdiction for a particular tax period, the following determinations and
allocation principles shall apply, subject to Section 3.2(c):
Step 1. A hypothetical stand-alone Unitary Income Tax liability or benefit
------
before application of NOLs and before credits ("Stand-alone Liability or
Benefit") for each Division in the Unitary Group shall be determined and
allocated to each Division. Divisions reporting a loss shall receive a benefit.
In the computation of each Division's Stand-alone Liability or Benefit, the
principles set forth in Section 3.1 and Appendix I of this Agreement with
respect to the computation and allocation of Federal Income Tax liability shall
be applied to the extent not inconsistent with Step 2 below, and all
limitations, modifications, allocation and apportionment methods, and elections
utilized
II-1
<PAGE>
in the Unitary Income Tax return as filed or adjusted shall govern the
computation of Divisions' Stand-alone Liability or Benefit.
Step 2. The total of the Divisions' Stand-alone Liabilities (reduced by
------
Stand-alone Benefits) as calculated in Step 1 shall be subtracted from the total
actual Unitary Income Tax liability before credits. The difference shall be
allocated to increase or reduce the Stand-alone Liability or Stand-alone Benefit
of each Division in an amount determined by multiplying such difference by a
ratio the numerator of which is the absolute value of such Division's Stand-
alone Liability or Benefit and the denominator of which is the sum of the
absolute values of each Division's Stand-alone Liability or Benefit.
Notwithstanding the foregoing, the portion of such difference which does not
exceed any NOL of the Unitary Group for the period (and the benefit, when
realized, of the NOL carryover or carryback associated with such portion) shall
be allocated to those Divisions which have a Stand-alone Benefit in an amount
determined by multiplying such portion by a ratio the numerator of which is such
Division's Stand-alone Benefit and the denominator of which is the sum of each
Division's Stand-alone Benefits. The benefit of any other NOL carryovers or
Carrybacks shall be allocated when realized based upon the ratio described in
the second sentence of this paragraph using Stand-alone Liabilities and Benefits
attributable to the period in which such NOL was generated.
Step 3. Credits shall be allocated when realized to the Division which
------
generated the credits.
II-2
<PAGE>
APPENDIX III
ADDITIONAL SERVICES
DESCRIPTION OF SERVICES TIME PERIOD
- ----------------------- -----------
Annual analysis of consolidated Federal Until expiration of this
Income Tax, Environmental Tax and Unitary Agreement
Income Tax audit exposure as it relates to
settlement of all tax periods beginning
before the IPO.
Support with the "Corp Tax" system Until all consolidated Federal
Income Tax, Environmental Tax
and Unitary Income Tax
returns are filed for the
short period ending on or
before the IPO
Continuity and consultation on ERISA Until 6 months after the IPO
issues pending at the time of the IPO
Continuity and consultation on litigation Until 6 months after the IPO
in progress related to Massachusetts state
income tax for the years 1988-93 and a
dispute in progress related to Oklahoma
IRP registration for the years 1993-94
Continuity and consultation on state Until 6 months after the IPO
income tax issues related to the corporate
structure of Overnite Corporation
Transition support on property tax issues Until 2 months after the IPO
equivalent to 75% of one full-time position
Transition support on property tax issues From 2 months until 4 months
equivalent to 25% of one full-time position after the IPO
III-1
<PAGE>
EXHIBIT 10.6
COMPUTER AND INFORMATION TECHNOLOGY AGREEMENT
MISCELLANEOUS SERVICES
----------------------
THIS COMPUTER AND INFORMATION TECHNOLOGY AGREEMENT -MISCELLANEOUS
SERVICES (the "Agreement") is made and entered into as of the ____ day of
August, 1998 (the "Effective Date"), by and between UNION PACIFIC CORPORATION, a
Utah corporation ("UPC"), and OVERNITE CORPORATION, a Virginia corporation
("Overnite").
WHEREAS, Overnite intends to issue and sell or cause to be issued and
sold all of its outstanding common stock, through an initial public offering
(the closing of which is hereafter referred to as the "Offering"); and
WHEREAS, immediately following the Offering, Overnite intends to
purchase all of the issued and outstanding common stock of Overnite Holding,
Inc., a Delaware corporation ("OHI"), from UPC (the "Acquisition"), with the
result that Overnite will become a publicly-owned company and OHI will become a
wholly-owned, direct subsidiary of Overnite; and
WHEREAS, Overnite Transportation Company, a Virginia corporation
("OTC"), is a wholly-owned, direct subsidiary of OHI and immediately following
the Acquisition will become a wholly-owned, indirect subsidiary of Overnite;
and
WHEREAS, UPC, through its Union Pacific Technologies Division ("UPT")
and through its wholly-owned subsidiary, Union Pacific Railroad Company
("UPRR"), has provided and continues to
- 1 -
<PAGE>
provide to its subsidiaries, including OTC, certain miscellaneous services,
including the services described herein; and
WHEREAS, UPC and Overnite desire that UPC continue to provide such
miscellaneous services following the Offering pursuant to the terms and
conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties hereto agree as follows:
1. Miscellaneous Services. UPC, through UPT and UPRR, has provided and
-----------------------
currently provides certain miscellaneous services to OTC, including the
following (collectively the "Miscellaneous Services"):
A. Gateway Services. UPT has provided and currently provides OTC
-----------------
with certain gateway services, consisting of value added network ("VAN")
services that are used in connection with the sending and receiving of standard
electronic data interchange ("EDI") documents and non-standard EDI documents,
including storing and retrieving data from EDI mailboxes for direct connect
customers of Overnite and its subsidiaries, sending and receiving data among
other VANs, programming services when needed or when requested by Overnite or
its subsidiaries, and support for communications equipment located in St. Louis,
Missouri (the
- 2 -
<PAGE>
"Gateway Services").
B. AutoFax Services. UPT has provided and currently provides OTC
-----------------
with certain AutoFax services, through which UPT facilitates and supports OTC's
sending and receiving of customer fax messages, by providing a certain server,
located in St. Louis, Missouri, by providing a bank of fax modems located in St.
Louis, Missouri, and by providing telephone line service for the transmission of
fax messages to their final destinations (the "AutoFax Services").
C. Videoconferencing Equipment and Services. UPT has provided and
-----------------------------------------
currently provides OTC with certain leased videoconferencing equipment, located
at OTC's headquarters in Richmond, Virginia, which videoconferencing equipment
can be used with conference rooms in St. Louis, Missouri, Omaha, Nebraska, and
Dallas, Texas, along with certain videoconferencing services in connection with
the videoconferencing equipment (the "Videoconferencing Equipment and
Services").
D. Automated Voice Response Services. UPT has provided and
----------------------------------
currently provides OTC with certain automated voice response services, through
which UPT facilitates and supports OTC's operating components of V-link (the
"AVR Services").
E. Lotus Notes Electronic Mail Environments. UPT has
-----------------------------------------
- 3 -
<PAGE>
provided and currently provides OTC with Lotus Notes electronic mail
environments that OTC uses in its ongoing business operations. UPC agrees to
cooperate with OTC to facilitate separation of OTC's Lotus Notes electronic mail
environments so that the separation may be completed by December 31, 1998, and
Overnite and its subsidiaries can continue their ongoing business operations and
electronic mail processes.
2. Continued Provision of Miscellaneous Services. UPC shall provide or
----------------------------------------------
cause to be provided the Miscellaneous Services to Overnite and its subsidiaries
pursuant to the terms and conditions set forth herein. UPC shall provide
Miscellaneous Services of at least the same nature and quality as the similar
services that it has provided to OTC during the year prior to the Effective Date
of this Agreement, and shall perform the Miscellaneous Services with at least
the same degree of care, skill, and prudence that it exercises for its own
operations. In addition, UPC shall provide the Gateway Services in conformity
with present commercial service levels.
3. Term. UPC shall provide the Miscellaneous Services from the Effective
-----
Date through December 31, 1999. Notwithstanding the foregoing and with the
exception of Videoconferencing Equipment and Services, Overnite shall have the
- 4 -
<PAGE>
option to terminate this Agreement as to one or more of the particular
Miscellaneous Services by providing UPC with sixty (60) days' written notice
thereof. Overnite may terminate the Videoconferencing Equipment and Services at
any time by providing UPC with written notice. If Overnite elects to terminate
Videoconferencing Equipment and Services prior to the end of the current lease
between UPC and Overnite for the Videoconferncing Equipment and Services,
Overnite agrees to pay remaining outstanding lease payments on the
Videoconferencing Equipment. Upon payment of such sums, all title to the
Videoconferencing Equipment shall pass to Overnite. UPC agrees to assist
Overnite with the transitioning of Miscellaneous Services at rates set forth in
Section 4 of this Agreement. Overnite shall have the option to extend this
Agreement and the provision of the Miscellaneous Services hereunder through
December 31, 2000 by providing UPC with written notice of such intent on or
before June 30, 1999. In the event that Overnite does not exercise its option to
extend, then this Agreement shall terminate on December 31, 1999. In the event
that Overnite does exercise its option to extend, then this Agreement shall
terminate on December 31, 2000.
4. Fees. Rates for 1998 for the Miscellaneous Services shall be at
-----
current rates. Rates thereafter shall be set
- 5 -
<PAGE>
pursuant to the agreement of the parties.
5. Billing and Payment. Each month during the term of this Agreement and
--------------------
in the first month after termination of this Agreement (or any extension
thereof), UPC shall submit to Overnite an invoice containing the estimated
charges for the Miscellaneous Services for the then current month and containing
a detailed statement, for the prior month, of all of the charges for
Miscellaneous Services. Overnite shall remit payment in full for the estimated
charges, reflecting any adjustments for prior months' charges, by wire transfer
of immediately available funds to an account designated by UPC, on or prior to
the later of: (a) five (5) business days after receipt of such invoices, or (b)
the end of the then current month. Overnite shall notify UPC of any dispute as
to an invoiced amount and the basis therefor. In the event of a dispute as to
the invoiced amount, Overnite shall pay all undisputed amounts but shall be
entitled to withhold amounts in dispute. In the event of such a dispute, the
parties agree to provide each other with records and information relating to
such dispute and, without limiting their rights and remedies, to negotiate in
good faith to attempt to resolve such dispute.
Any late payment shall be subject to any costs of collection
(including reasonable legal fees) and shall bear
- 6 -
<PAGE>
interest at the rate of one percent (1%) per month or a fraction thereof until
paid. UPC shall not commence suit on collection of late payment prior to
providing seven (7) days notice of its intent to commence suit to Overnite.
6. Multi-Century Compliance. UPC represents that it is taking all
------------------------
reasonable steps in an effort to make each item of hardware, software and
firmware created, modified, upgraded, revised, developed, or delivered
hereunder, or equipment and products containing such hardware, software or
firmware, accurately process date data (including without limitation
calculating, comparing and sequencing), within, from, into and between centuries
(including without limitation the twentieth and twenty-first centuries),
including leap year calculations. UPC does not, by this Section, warrant that
each item of hardware, software and firmware created, modified, upgraded,
revised, developed, or delivered hereunder, or equipment and products containing
such hardware, software or firmware are Year 2000 compliant.
7. Confidentiality. For purposes hereof, "Confidential Information"
----------------
means any information, in any form or medium, which relates to any component of
a party's business and which is not a matter of public record or generally known
to the public,
- 7 -
<PAGE>
including, without limitation, information relating to inventions; patent,
trademark, and copyright applications; improvements; know-how; specifications;
drawings; cost and pricing data; process flow diagrams; customer and supplier
lists; bills; ideas; concepts; financial information; plans, practices, and
procedures; agreements, documents, or instruments involving the party; and any
information or materials deemed or designated as confidential or proprietary by
the party. Each party agrees that during and after the term of this Agreement
(or any extension thereof), unless specifically authorized by the other party in
a prior writing, it shall not, directly or indirectly, disclose the other
party's Confidential Information to any person or entity, or use the other
party's Confidential Information for its benefit. In the event that a party is
requested or required to disclose the other party's Confidential Information in
connection with any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process, that party will promptly notify the
other party of the request or requirement so that the other party may seek an
appropriate protective order. If, in the absence of a protective order, a party,
on the advice of counsel, is compelled by any tribunal to disclose the other
party's Confidential Information, that party shall use its best
- 8 -
<PAGE>
efforts to obtain an order or other assurance that confidential treatment will
be accorded to such Confidential Information required to be disclosed. Promptly
upon request, or upon termination of this Agreement for any reason, each party
shall return to the other party or destroy, as requested by the other party, any
materials in its possession or control that contain, embody, or reflect the
other party's Confidential Information.
8. Assignment. Neither party shall assign or transfer any of its rights
-----------
or obligations under this Agreement except with the prior written consent of the
other party, which consent may be withheld by such other party in its sole
discretion. This Agreement shall be binding upon and shall inure to the benefit
of the parties and their successors and permitted assigns. Notwithstanding any
other provision in this Agreement, UPC shall not be prohibited from selling or
divesting itself of UPT in any manner prior to the expiration of this Agreement,
provided that, in such event, this Agreement, and all rights and obligations
hereunder be assigned to and assumed by UPT and its affiliates.
9. Liability and Indemnification. Except as provided specifically in the
-----------------------------
Agreement, UPC shall have no liability under this Agreement for damage or loss
of any type suffered by Overnite or its subsidiaries or any third party as a
result of
- 9 -
<PAGE>
the performance or non-performance of the services provided under this
Agreement. Each party shall indemnify, defend and hold the other party harmless
from and against all damages, losses and out-of-pocket expenses (including fees
and disbursements of counsel) caused by or arising out of any willful breach or
gross negligence by such indemnifying party in the performance or non-
performance of any obligation or agreement contained herein or by the willful
misconduct of such indemnifying party. In the event of a claim against UPC by a
third party, Overnite shall indemnify, defend and hold UPC harmless from and
against all damages, losses and out-of-pocket expenses (including fees and
disbursements of counsel) caused by or arising out the performance or non-
performance of any obligation or agreement contained herein except where caused
by the willful breach, negligence, or willful misconduct of UPC. Notwithstanding
any other provision of this Agreement, UPC shall have no liability for the acts
or omissions of any third party (other than a subsidiary of UPC) that provides
services under this Agreement so long as UPC has not been grossly negligent in
the selection of such third party. In the event Overnite believes UPC is not
performing its obligations under this Agreement in accordance with the standards
agreed upon by the parties, Overnite shall so
- 10 -
<PAGE>
notify UPC. UPC agrees to cooperate with Overnite to address such performance
issues and to bring UPC's performance into conformance with such standards.
10. Licenses and Permits. Overnite, at Overnite's sole expense, shall be
--------------------
responsible for obtaining all necessary software licenses and/or permits
required for the performance of Miscellaneous Services as a result of the
Offering and Acquisition and OTC's and Overnite's corporate status. Failure by
Overnite to obtain any necessary licenses and/or permits will not give rise to a
cause of action under this Agreement against UPC (including contract, tort or
warranty). UPC will cooperate in good faith to assist Overnite with securing
all necessary licenses and/or permits.
11. Miscellaneous.
--------------
A. Notices. All notices and other communications hereunder shall be
--------
in writing and shall be delivered in person, mailed, delivered by
courier service, or sent by facsimile to the following:
- 11 -
<PAGE>
(i) If to UPC:
---------
Union Pacific Technologies
7930 Clayton Road
St. Louis, Missouri 63117-1368
Fax No.(314) 768-5886
ATTN: President and CEO
With a copy to:
--------------
Union Pacific Corporation
1717 Main Street, Suite 5900
Dallas, Texas 75201
Fax No.: (214) 743-5794
ATTN: Vice President and Controller
Union Pacific Railroad Company
1416 Dodge Street
Omaha, Nebraska 68179-0001
Fax No.: (402) 271-6444
ATTN: Senior Vice President,
Information Technologies
(ii) If to Overnite:
--------------
Overnite Corporation
1000 Semmes Avenue
Richmond, Virginia 23224-2246
Fax No.: (804) 231-8501
ATTN: Senior Vice President and Chief
Financial Officer
or to such other addresses as either party may designate in writing. All
notices or communications given by personal delivery, mail, or courier service
shall be effective upon receipt if received during the recipient's normal
business hours. Notice given by facsimile shall be effective upon receipt if
received during the recipient's normal business hours, or at the
- 12 -
<PAGE>
beginning of the recipient's next business day if not received during the
recipient's normal business hours.
B. Governing Law. This Agreement shall be governed by and construed
--------------
in accordance with the laws of the State of
- 13 -
<PAGE>
Missouri, without giving effect to the principles of conflicts of laws thereof.
C. Counterparts. This Agreement may be executed in any number of
-------------
counterparts, each of which when so executed shall be deemed an original but all
of which shall together constitute but one and the same instrument.
D. Headings. The headings and captions set forth in this Agreement
---------
are for convenience of reference only and shall not affect the construction or
interpretation hereof.
E. Severability. The provisions of this Agreement are severable.
-------------
Should any provision of this Agreement be void, voidable, or unenforceable, this
shall not affect or invalidate any other provisions of this Agreement, which
shall continue to govern the relative rights and obligations of the parties as
though such void, voidable, or unenforceable provision were not a part hereof.
F. Entire Agreement; Modification; Waiver. This Agreement
---------------------------------------
constitutes the entire agreement of the parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings, whether
oral or written, with respect thereto. This Agreement may not be modified or
amended except by a subsequent written instrument duly executed by both
- 14 -
<PAGE>
parties. No failure or delay by any party in exercising any right, power, or
privilege hereunder shall operate as a waiver thereof. Nor shall any single or
partial exercise thereof preclude any other or further exercise of any other
right, power, or privilege.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the Effective Date first written above.
UNION PACIFIC CORPORATION
By:________________________________________
Print Name:________________________________
Title:_____________________________________
OVERNITE CORPORATION
By:________________________________________
Print Name:________________________________
Title:_____________________________________
- 15 -
<PAGE>
COMPUTER AND INFORMATION TECHNOLOGY AGREEMENT
DEVELOPMENT STAFF SERVICES
--------------------------
THIS COMPUTER AND INFORMATION TECHNOLOGY AGREEMENT -DEVELOPMENT STAFF
SERVICES (the "Agreement") is made and entered into as of the ____ day of
August, 1998 (the "Effective Date"), by and between UNION PACIFIC CORPORATION, a
Utah corporation ("UPC"), and OVERNITE CORPORATION, a Virginia corporation
("Overnite").
WHEREAS, Overnite intends to issue and sell or cause to be issued and
sold all of its outstanding common stock, through an initial public offering
(the closing of which is hereafter referred to as the "Offering"); and
WHEREAS, immediately following the Offering, Overnite intends to
purchase all of the issued and outstanding common stock of Overnite Holding,
Inc., a Delaware corporation ("OHI"), from UPC (the "Acquisition"), with the
result that Overnite will become a publicly-owned company and OHI will become a
wholly-owned, direct subsidiary of Overnite; and
WHEREAS, Overnite Transportation Company, a Virginia corporation
("OTC"), is a wholly-owned, direct subsidiary of OHI and immediately following
the Acquisition will become a wholly-owned, indirect subsidiary of Overnite; and
WHEREAS, UPC, through its Union Pacific Technologies Division ("UPT")
and through its wholly-owned subsidiary, Union
- 16 -
<PAGE>
Pacific Railroad Company ("UPRR") has provided and continues to provide to its
subsidiaries, including OTC, certain computer and information technology
services, including the services described herein; and
WHEREAS, UPC and Overnite desire that UPC continue to provide such
computer and information technology services following the Offering and
Acquisition pursuant to the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties hereto agree as follows:
1. Development Staff Services. UPC, through UPT and UPRR, has provided
---------------------------
and currently provides certain employees and contractors who work under the
direction of OTC and provide the following computer and information technology
services: support of key development projects, on-going maintenance support for
mainframe and distributed applications, Year 2000 compliance, and other ad hoc
projects and services as requested by Overnite and its subsidiaries (the
"Development Staff Services"). UPC shall continue to provide the Development
Staff Services pursuant to the terms and conditions set forth herein. UPC will
provide Development Staff Services of at least the same nature and quality as
the similar services that it has provided to OTC
- 17 -
<PAGE>
during the year prior to the Effective Date of this Agreement, and shall perform
the Development Staff Services with at least the same degree of care, skill, and
prudence that it exercises for its own operations.
2. Development Staff Personnel. UPC shall provide the Development Staff
----------------------------
Services using the full-time and part-time Development Staff Personnel
identified and agreed to by UPC and Overnite, as long as the identified
Development Staff Personnel are employees or contractors in good standing with
UPC and the employees or contractors elect to remain at their current positions
assigned to OTC or Overnite. UPC will encourage Development Staff Personnel to
remain at such present positions and will work with Overnite to establish
incentive programs to retain the employees, provided, however, that no
Development Staff Personnel shall be prohibited from accepting any position
posted on UPC's, UPRR's or UPT's Job Bulletin Board. Notwithstanding the
foregoing, Overnite shall have discretion to reduce the number of Development
Staff Personnel as set forth in Section 5.
3. Supervision/Reporting. Development Staff Personnel shall report to
----------------------
and work under the supervision of Overnite, which shall have discretion to
direct and manage all aspects of the Development Staff Personnel's work,
including but not limited to
- 18 -
<PAGE>
requiring technical training for Development Staff Personnel. Expense for
technical training of the Development Staff Personnel required by Overnite shall
be borne by Overnite. Development Staff Personnel shall devote all of their work
efforts to the Development Staff Services, and shall not participate in work or
projects other than the Development Staff Services, except with the prior
written consent of Overnite.
4. Replacement of Development Staff Personnel. In the event that
-------------------------------------------
Development Staff Personnel terminate or indicate an intention to terminate
their employee or contractor status as Development Staff Personnel during the
term of this Agreement (or any extension thereof), UPC shall promptly notify
Overnite in writing. After receipt of such written notice, Overnite will advise
UPC as to whether or not Overnite will request UPC to provide replacement
Development Staff Personnel. In the event that Overnite requests UPC to provide
replacement Development Staff Personnel, UPC shall identify qualified candidates
to Overnite, and shall provide Overnite with an opportunity to review and
interview, and approve or disapprove, such candidates.
5. Reduction of Development Staff Personnel. At any time during the term
-----------------------------------------
of this Agreement (or any extension thereof), Overnite shall have discretion to
reduce the number of Development Staff Personnel by providing UPC with sixty
(60)
- 19 -
<PAGE>
days' written notice or, in the event of a contractor, notice consistent with
UPC's contract with contractor, of the numbers and/or identities of Development
Staff Personnel to be removed from provision of the Development Staff Services.
Overnite's election to reduce the number of Development Staff Personnel shall
result in a permanent reduction in the number of Development Staff Personnel to
be provided by UPC under this Agreement. Requests by Overnite for additional
personnel for Development Staff Services shall be made pursuant to the
Miscellaneous Services Agreement between UPC and Overnite.
6. Overnite's Right to Offer Employment. During and after the term of
-------------------------------------
this Agreement (or any extension thereof), Overnite shall have the right and
ability to offer employment and/or independent contractor positions to
Development Staff Personnel of its choosing.
7. Initial Term; Optional Extension. UPC shall provide the Development
---------------------------------
Staff Services from the Effective Date through December 31, 1999. Overnite
shall have the option to extend this Agreement and the provision of the
Development Staff Services hereunder through December 31, 2000 by providing UPC
with written notice of such intent on or before June 30, 1999. In the event
- 20 -
<PAGE>
that Overnite does not exercise its option to extend, then this Agreement shall
terminate on December 31, 1999. In the event that Overnite does exercise its
option to extend, then this Agreement shall terminate on December 31, 2000.
8. Compensation. Overnite shall compensate UPC for provision of the
-------------
Development Staff Services as follows:
A. Salaries and Fees of Development Staff Personnel. Overnite shall
-------------------------------------------------
reimburse UPC for Development Staff Personnel, subject to the following
conditions: Overnite's reimbursement to UPC shall be for actual salaries, fees,
overhead and benefits, in the same manner as presently billed by UPC to Overnite
for these services. Through the term of this Agreement (and any extension
thereof), salaries, fees, overhead and benefits of Development Staff Personnel
shall reflect UPC's actual costs for providing Development Staff Services to
Overnite.
B. Merit Increases. Prior to the award of any merit increases,
----------------
Overnite and UPC shall cooperate in good faith to determine which Development
Staff Personnel shall receive such merit increases.
C. Travel and Other Travel-Related Business Expenses. Overnite shall
--------------------------------------------------
reimburse UPC for the actual, necessary, and reasonable travel and other travel-
related business expenses incurred by Development Staff Personnel in performing
the Development Staff Services, provided that UPC provides Overnite with a
statement reflecting such expenses in the same manner as
- 21 -
<PAGE>
presently provided to Overnite under current billing practices. Overnite shall
notify UPC of any dispute as to an invoiced travel expense or other travel-
related business expense and the basis therefor. In the event of a dispute, the
parties agree to provide each other with records and information relating to
such dispute and, without limiting their rights and remedies, to negotiate in
good faith to attempt to resolve such dispute.
D. Rates for Ad Hoc Technical Services. To the extent that Overnite
------------------------------------
requests UPC to provide and UPC has resources to provide ad hoc technical
services, including AVR, systems programming and Lotus Notes support services,
Overnite shall reimburse UPC for the actual salaries, fees, overhead and
benefits for such ad hoc technical services, in the same manner as presently
billed by UPC to Overnite for these services. Through the term of this Agreement
(and any extension thereof), salaries, fees, overhead and benefits related to
providing ad hoc technical services shall reflect UPC's actual costs for
providing such ad hoc technical services to Overnite.
9. Billing and Payment. Each month during the term of this Agreement and
--------------------
in the first month after termination of this Agreement (or any extension
thereof), UPC shall submit to Overnite an invoice containing the estimated
charges for the Development Staff Services for the then current month and
- 22 -
<PAGE>
containing a detailed statement, for the prior month, of all of the charges for
Development Staff Services as set forth in Section 8. Overnite shall remit
payment in full for the estimated charges, reflecting any adjustments for prior
months' charges, by wire transfer of immediately available funds to an account
designated by UPC, on or prior to the later of: (a) five (5) business days after
receipt of such invoices, or (b) the end of the then current month. Overnite
shall notify UPC of any dispute as to an invoiced amount and the basis therefor.
In the event of a dispute as to the invoiced amount, Overnite shall pay all
undisputed amounts but shall be entitled to withhold amounts in dispute. In the
event of such a dispute, the parties agree to provide each other with records
and information relating to such dispute and, without limiting their rights and
remedies, to negotiate in good faith to attempt to resolve such dispute.
Any late payment shall be subject to any costs of collection
(including reasonable legal fees) and shall bear interest at the rate of one
percent (1%) per month or a fraction thereof until paid. UPC shall not commence
suit on collection of late payment prior to providing seven (7) days notice of
its intent to commence suit to Overnite.
10. The EDGE Technology and the Work Product. Any products, solutions,
-----------------------------------------
inventions, improvements, concepts, ideas,
- 23 -
<PAGE>
or work product made, conceived, or developed by Development Staff Personnel in
connection with the Development Staff Services during the term of this
Agreement, including any proprietary rights therein (the "Work Product"), are
and shall be the sole and exclusive property of Overnite. In addition, UPC
agrees that Overnite shall own the existing products set forth in the Technical
Specification Schedule A (the "EDGE Technology"). UPC agrees to and hereby does
assign to Overnite all right, title, and interest in and to the Work Product and
the EDGE Technology, including but not limited to all copyrights, patents,
trademarks, goodwill, trade secrets, and other proprietary rights therein. If
necessary, UPC shall assist Overnite in securing, documenting, memorializing,
recording, registering, perfecting, and protecting its rights in the Work
Product the EDGE Technology, including but not limited to executing documents,
assisting with applications for patents, copyright registrations, and trademark
registrations, and assisting in enforcement activities. Notwithstanding the
foregoing, UPC is granted a non-exclusive license for the unlimited use of the
Work Product or the EDGE Technology for commercial and internal business
operations, including use by a third party, upon the earlier of either the
expiration of the original term of this Agreement or December 31, 1999. In the
event UPC uses the Work Product or EDGE Technology
- 24 -
<PAGE>
for commercial operations, UPC shall not identify the Work Product or the EDGE
Technology using EDGE marks, or any other marks used by Overnite, or any
confusingly similar name or mark. Overnite shall not assert any claim or action
against UPC arising because of UPC's use of the Work Product or the EDGE
Technology under a name other than the EDGE Technology or any other name used by
Overnite to identify the Work Product and the EDGE Technology, as set forth in
this section.
11. Confidentiality. For purposes hereof, "Confidential Information"
----------------
means any information, in any form or medium, which relates to any component of
a party's business and which is not a matter of public record or generally known
to the public, including, without limitation, information relating to
inventions; patent, trademark, and copyright applications; improvements; know-
how; specifications; drawings; cost and pricing data; process flow diagrams;
customer and supplier lists; bills; ideas; concepts; financial information;
plans, practices, and procedures; agreements, documents, or instruments
involving the party; and any information or materials deemed or designated as
confidential or proprietary by the party. Each party agrees that during and
after the term of this Agreement (or any extension thereof), unless specifically
authorized by the other party in a prior writing, it shall not, directly or
indirectly,
- 25 -
<PAGE>
disclose the other party's Confidential Information to any person or entity, or
use the other party's Confidential Information for its benefit. In the event
that a party is requested or required to disclose the other party's Confidential
Information in connection with any legal proceeding, interrogatory, subpoena,
civil investigative demand, or similar process, that party will promptly notify
the other party of the request or requirement so that the other party may seek
an appropriate protective order. If, in the absence of a protective order, a
party, on the advice of counsel, is compelled by any tribunal, to disclose the
other party's Confidential Information, that party shall use its best efforts to
obtain an order or other assurance that confidential treatment will be accorded
to such Confidential Information required to be disclosed. Promptly upon
request, or upon termination of this Agreement for any reason, each party shall
return to the other party or destroy, as requested by the other party, any
materials in its possession or control that contain, embody, or reflect the
other party's Confidential Information.
12. Liability and Indemnification. Except as provided specifically in the
-----------------------------
Agreement, UPC shall have no liability under this Agreement for damage or loss
of any type suffered by Overnite or its subsidiaries or any third party as a
result of the performance or non-performance of the services provided under
- 26 -
<PAGE>
this Agreement. Each party shall indemnify, defend and hold the other party
harmless from and against all damages, losses and out-of-pocket expenses
(including fees and disbursements of counsel) caused by or arising out of any
willful breach or gross negligence by such indemnifying party in the performance
or non-performance of any obligation or agreement contained herein or by the
willful misconduct of such indemnifying party. In the event of a claim against
UPC by a third party, Overnite shall indemnify, defend and hold UPC harmless
from and against all damages, losses and out-of-pocket expenses (including fees
and disbursements of counsel) caused by or arising out the performance or non-
performance of any obligation or agreement contained herein except where caused
by the willful breach, negligence, or willful misconduct of UPC. Notwithstanding
any other provision of this Agreement, UPC shall have no liability for the acts
or omissions of any third party (other than a subsidiary of UPC) that provides
services under this Agreement so long as UPC has not been grossly negligent in
the selection of such third party. In the event Overnite believes UPC is not
performing its obligations under this Agreement in accordance with the standards
agreed upon by the parties, Overnite shall so notify UPC. UPC agrees to
cooperate with Overnite to address performance issues and to bring UPC's
performance into
- 27 -
<PAGE>
conformance with such standards.
14. Assignment. Neither party shall assign or transfer any of its rights
-----------
or obligations under this Agreement except with the prior written consent of the
other party, which consent may be withheld by such other party in its sole
discretion. This Agreement shall be binding upon and shall inure to the benefit
of the parties and their successors and permitted assigns. Notwithstanding any
other provision in this Agreement, UPC shall not be prohibited from selling or
divesting itself of UPT prior to the expiration of this Agreement, provided
that, in such event, this Agreement, and all rights and obligations hereunder be
assigned to and assumed by UPT and its affiliates.
15. Licenses and Permits. To the extent applicable, Overnite, at
--------------------
Overnite's sole expense, shall be responsible for obtaining all necessary
software licenses and/or permits required for the performance of Development
Staff Services as a result of the Offering and Acquisition and OTC's and
Overnite's corporate status. UPC shall notify Overnite in the event that any
third party vendors request additional licenses or fees associated with UPC
providing Development Staff Services to Overnite. Failure by Overnite to obtain
any necessary licenses and/or permits will not give rise to a cause of action
under this Agreement against UPC (including contract, tort or warranty). UPC
will cooperate in
- 28 -
<PAGE>
good faith to assist Overnite with securing all necessary licenses and/or
permits.
16. Miscellaneous.
--------------
A. Notices. All notices and other communications hereunder shall be
--------
in writing and shall be delivered in person, mailed, delivered by courier
service, or sent by facsimile to the following:
(i) If to UPC:
---------
Union Pacific Technologies
7930 Clayton Road
St. Louis, Missouri 63117-1368
Fax No. (314) 768-5886
ATTN: Executive Vice President
With a copy to:
--------------
Union Pacific Corporation
1717 Main Street, Suite 5900
Dallas, Texas 75201
Fax No.: (214) 743-5794
ATTN: Vice President and Controller
- 29 -
<PAGE>
(ii) If to Overnite:
--------------
Overnite Corporation
1000 Semmes Avenue
Richmond, Virginia 23224-2246
Fax No.: (804) 231-8501
ATTN: Senior Vice President and Chief
Financial Officer
or to such other addresses as either party may designate in writing. All
notices or communications given by personal delivery, mail, or courier service
shall be effective upon receipt if received during the recipient's normal
business hours. Notice given by facsimile shall be effective upon receipt if
received during the recipient's normal business hours, or at the beginning of
the recipient's next business day if not received during the recipient's normal
business hours.
B. Governing Law. This Agreement shall be governed by and construed
--------------
in accordance with the laws of the State of Missouri, without giving effect to
the principles of conflicts of laws thereof.
C. Counterparts. This Agreement may be executed in any number of
-------------
counterparts, each of which when so executed shall be deemed an original but all
of which shall together constitute but one and the same instrument.
D. Headings. The headings and captions set forth in this Agreement
---------
are for convenience of reference only and shall
- 30 -
<PAGE>
not affect the construction or interpretation hereof.
E. Severability. The provisions of this Agreement are severable.
-------------
Should any provision of this Agreement be void, voidable, or unenforceable, this
shall not affect or invalidate any other provisions of this Agreement, which
shall continue to govern the relative rights and obligations of the parties as
though such void, voidable, or unenforceable provision were not a part hereof.
F. Entire Agreement; Modification; Waiver. This Agreement
---------------------------------------
constitutes the entire agreement of the parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings, whether
oral or written, with respect thereto. This Agreement may not be modified or
amended except by a subsequent written instrument duly executed by both parties.
No failure or delay by any party in exercising any right, power, or privilege
hereunder shall operate as a waiver thereof. Nor shall any single or partial
exercise thereof preclude any other or further exercise of any other right,
power, or privilege.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the Effective Date first written above.
UNION PACIFIC CORPORATION
- 31 -
<PAGE>
By:_______________________________
Print Name:________________________________
Title:_____________________________________
OVERNITE CORPORATION
By:________________________________________
Print Name:________________________________
Title:_____________________________________
- 32 -
<PAGE>
COMPUTER AND INFORMATION TECHNOLOGY AGREEMENT
RESOURCE SHARING SERVICES
-------------------------
THIS COMPUTER AND INFORMATION TECHNOLOGY AGREEMENT -RESOURCE SHARING
SERVICES (the "Agreement") is made and entered into as of the ____ day of
August, 1998 (the "Effective Date"), by and between UNION PACIFIC CORPORATION, a
Utah corporation ("UPC"), and OVERNITE CORPORATION, a Virginia corporation
("Overnite").
WHEREAS, Overnite intends to issue and sell or cause to be issued and
sold all of its outstanding common stock, through an initial public offering
(the closing of which is hereafter referred to as the "Offering"); and
WHEREAS, immediately following the Offering, Overnite intends to
purchase all of the issued and outstanding common stock of Overnite Holding,
Inc., a Delaware corporation ("OHI"), from UPC (the "Acquisition"), with the
result that Overnite will become a publicly-owned company and OHI will become a
wholly-owned, direct subsidiary of Overnite; and
WHEREAS, Overnite Transportation Company, a Virginia corporation
("OTC"), is a wholly-owned, direct subsidiary of OHI and immediately following
the Acquisition will become a wholly-owned, indirect subsidiary of Overnite; and
WHEREAS, UPC, itself and through its Union Pacific Technologies
Division ("UPT") and through its wholly-owned
- 33 -
<PAGE>
subsidiary, Union Pacific Railroad Company ("UPRR"), has provided and continues
to provide to its subsidiaries, including OTC, certain resource sharing
services, including the services described herein; and
WHEREAS, UPC and Overnite desire that UPC continue to provide such
resource sharing services following the Offering and Acquisition pursuant to the
terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties hereto agree as follows:
1. Resource Sharing Services. UPC, through UPT and UPRR, has provided
--------------------------
and currently provides to OTC certain resource sharing services in connection
with a certain research and development project (the "Research and Development
Project"), and in connection with certain human resources systems applications
and accounting systems applications currently in St. Louis, Missouri,(the "Human
Resources Systems Applications" and "Accounting Systems Applications"),
including but not limited to on-line support, telephone support, and
troubleshooting (collectively the "Resource Sharing Services").
2. Continued Provision of Resource Sharing Services. UPC shall provide
-------------------------------------------------
or cause to be provided the Resource Sharing
- 34 -
<PAGE>
Services to Overnite and its subsidiaries pursuant to the terms and conditions
set forth herein. UPC shall provide Resource Sharing Services of at least the
same nature and quality as the similar services that it has provided to OTC
during the year prior to the Effective Date of this Agreement, and shall provide
and perform the Resource Sharing Services with at least the same degree of care,
skill, and prudence that it exercises for its own operations.
3. Human Resources Systems Applications and Accounting Systems
-----------------------------------------------------------
Applications: Services; Transfer; Transition Services. UPC shall provide the
- -------------------------------------------------------
Resource Sharing Services in connection with the Human Resources Systems
Applications and Accounting Systems Applications from the Effective Date through
December 31, 1998. Included in such services, UPC shall provide sufficient
professional staff, knowledgeable and experienced in the Human Resources Systems
Applications and Accounting Systems Applications, to provide online support and
telephone support to Overnite for at least the hours of 9:00 a.m. to 5:00 p.m.
Eastern Standard (or Daylight Savings) Time, and to promptly provide additional
support if necessary or if requested by Overnite, through December 31, 1998. As
part of the Resource Sharing Services, UPC shall take all reasonable steps to
facilitate, no later than December 31, 1998, that the Human Resources Systems
- 35 -
<PAGE>
Applications and Accounting Systems Applications are fully Year 2000 compliant,
in accordance with Section 7. In connection with the transfer of the Human
Resources Systems Applications and Accounting Systems Applications, UPC shall
continue to provide the Resource Sharing Services (the "Transition Services") to
Overnite as requested by Overnite, through December 31, 1998. On or before
September 1, 1998, UPC and Overnite or its subsidiaries shall discuss in good
faith whether UPC will continue to provide Transition Services to Overnite after
December 31, 1998, and the terms and conditions of such services. In the event
the Transition Services are not continued after December 31, 1998, UPC shall
cooperate with Overnite to facilitate the assignment and transfer of Human
Resources Systems Applications and Accounting Systems Applications, together
with the licenses therefor and any source code, documentation, and other
materials related thereto, to Overnite. Overnite is granted a non-exclusive
license to use any products, solutions, inventions, improvements, concepts,
ideas, or work product made, conceived, or developed by UPC in connection with
the Resource Sharing Services strictly as a part of, and in conjunction with,
Overnite's internal business operations and for no other purpose, including use
by a third party.
4. Research and Development Project. UPC has funded and
---------------------------------
- 36 -
<PAGE>
continues to fund a Research and Development Project, in which Overnite or its
subsidiaries are participating, relating to line haul optimization. UPC shall
continue to fund, participate in, and allow Overnite or its subsidiaries to
participate in the Research and Development Project through the duration of the
budgeted amount for the Research and Development Project, to be agreed upon
between Overnite and UPC. Overnite, and its subsidiaries, are granted a non-
exclusive license to use any products, solutions, inventions, improvements,
concepts, ideas, or work product made, conceived, or developed by UPC in
connection with the Resource Sharing Services, to the extent that UPC is able
and has the right to grant a non-exclusive license, strictly as a part of, and
in conjunction with, Overnite's and its subsidiaries internal business
operations and for no other purpose, including use by a third party.
5. Licenses and Permits. To the extent applicable, Overnite, at
---------------------
Overnite's sole expense, shall be responsible for obtaining all necessary
software licenses and/or permits required for performance of Resource Sharing
Services as a result of the Offering and Acquisition and OTC's and Overnite's
corporate status. UPC shall notify Overnite in the event that any third party
vendors request additional licenses or fees associated with UPC providing
Resource Sharing Services to Overnite. Failure by
- 37 -
<PAGE>
Overnite to obtain any necessary licenses and/or permits will not give rise to a
cause of action under this Agreement against UPC (including contract, tort or
warranty). UPC will cooperate in good faith to assist Overnite with securing all
necessary licenses and/or permits.
6. Fees. UPC shall charge no fees related to the Resource Sharing
-----
Services through December 31, 1998. Fees for any services provided hereunder
subsequent to December 31, 1998 will be subject to negotiation between the
parties. On or before September 1, 1998, UPC and Overnite or its subsidiaries
will discuss in good faith whether to continue all or part of any of the
services described in this Agreement.
7. Multi-Century Compliance. UPC represents that it is taking all
------------------------
reasonable steps through December 31, 1998, in an effort to make each item of
hardware, software and firmware created, modified, upgraded, revised, developed,
or delivered hereunder, or equipment and products containing such hardware,
software or firmware, accurately process date data (including without limitation
calculating, comparing and sequencing), within, from, into and between centuries
(including without limitation the twentieth and twenty-first centuries),
including leap year calculations. UPC does not, by this Section, warrant that
any item of hardware, software or firmware created,
- 38 -
<PAGE>
modified, upgraded, revised, developed, or delivered hereunder, or equipment and
products containing such hardware, software or firmware are Year 2000 compliant.
8. Confidentiality. For purposes hereof, "Confidential Information"
----------------
means any information, in any form or medium, which relates to any component of
a party's business and which is not a matter of public record or generally known
to the public, including, without limitation, information relating to
inventions; patent, trademark, and copyright applications; improvements; know-
how; specifications; drawings; cost and pricing data; process flow diagrams;
customer and supplier lists; bills; ideas; concepts; financial information;
plans, practices, and procedures; agreements, documents, or instruments
involving the party; and any information or materials deemed or designated as
confidential or proprietary by the party. Each party agrees that during and
after the term of this Agreement, unless specifically authorized by the other
party in a prior writing, it shall not, directly or indirectly, disclose the
other party's Confidential Information to any person or entity, or use the other
party's Confidential Information for its benefit. In the event that a party is
requested or required to disclose the other party's Confidential Information in
connection with any legal proceeding, interrogatory, subpoena, civil
investigative demand,
- 39 -
<PAGE>
or similar process, that party will promptly notify the other party of the
request or requirement so that the other party may seek an appropriate
protective order. If, in the absence of a protective order, a party, on the
advice of counsel, is compelled by any tribunal to disclose the other party's
Confidential Information, that party shall use its best efforts to obtain an
order or other assurance that confidential treatment will be accorded to such
Confidential Information required to be disclosed. Promptly upon request, or
upon termination of this Agreement for any reason, each party shall return to
the other party or destroy, as requested by the other party, any materials in
its possession or control that contain, embody, or reflect the other party's
Confidential Information.
9. Assignment. Neither party shall assign or transfer any of its rights
-----------
or obligations under this Agreement except with the prior written consent of the
other party, which consent may be withheld by such other party in its sole
discretion. This Agreement shall be binding upon and shall inure to the benefit
of the parties and their successors and permitted assigns. Notwithstanding any
other provision in this Agreement, UPC shall not be prohibited from selling or
divesting itself of UPT in any manner prior to the expiration of the Agreement,
provided that, in such event, this Agreement, and all rights and obligations
- 40 -
<PAGE>
hereunder, be assigned to and assumed by UPT and its affiliates.
10. Liability and Indemnification. Except as provided specifically in the
-----------------------------
Agreement, UPC shall have no liability under this Agreement for damage or loss
of any type suffered by Overnite or its subsidiaries or any third party as a
result of the performance or non-performance of the services provided under this
Agreement. Each party shall indemnify, defend and hold the other party harmless
from and against all damages, losses and out-of-pocket expenses (including fees
and disbursements of counsel) caused by or arising out of any willful breach or
gross negligence by such indemnifying party in the performance or non-
performance of any obligation or agreement contained herein or by the willful
misconduct of such indemnifying party. In the event of a claim against UPC by a
third party, Overnite shall indemnify, defend and hold UPC harmless from and
against all damages, losses and out-of-pocket expenses (including fees and
disbursements of counsel) caused by or arising out the performance or non-
performance of any obligation or agreement contained herein except where caused
by the willful breach, negligence, or willful misconduct of UPC.
Notwithstanding any other provision of this Agreement, UPC shall have no
liability for the acts or omissions of any third party (other than a subsidiary
of UPC) that provides services under this Agreement so
- 41 -
<PAGE>
long as UPC has not been grossly negligent in the selection of such third party.
In the event Overnite believes UPC is not performing its obligations under this
Agreement in accordance with the standards agreed upon by the parties, Overnite
shall so notify UPC. UPC agrees to cooperate with Overnite to address such
performance issues and to bring UPC's performance into conformance with such
standards.
11. Miscellaneous.
--------------
A. Notices. All notices and other communications hereunder shall be
--------
in writing and shall be delivered in person,
- 42 -
<PAGE>
mailed, delivered by courier service, or sent by facsimile to the following:
(I) If to UPC:
---------
Union Pacific Technologies
7930 Clayton Road
St. Louis, Missouri 63117-1368
Fax No. (314) 768-5886
ATTN: Executive Vice President
With a copy to:
--------------
Union Pacific Corporation
1717 Main Street, Suite 5900
Dallas, Texas 75201
Fax No.: (214) 743-5794
ATTN: Vice President and Controller
(ii) If to Overnite:
--------------
Overnite Corporation
1000 Semmes Avenue
Richmond, Virginia 23224-2246
Fax No.: (804) 231-8501
ATTN: Senior Vice President and Chief
Financial Officer
or to such other addresses as either party may designate in writing. All
notices or communications given by personal delivery, mail, or courier service
shall be effective upon receipt if received during the recipient's normal
business hours. Notice given by facsimile shall be effective upon receipt if
received during the recipient's normal business hours, or at the beginning of
the recipient's next business day if not received during the recipient's normal
business hours.
- 43 -
<PAGE>
B. Governing Law. This Agreement shall be governed by and construed
--------------
in accordance with the laws of the State of Missouri, without giving effect to
the principles of conflicts of laws thereof.
C. Counterparts. This Agreement may be executed in any number of
-------------
counterparts, each of which when so executed shall be deemed an original but all
of which shall together constitute but one and the same instrument.
D. Headings. The headings and captions set forth in this Agreement
---------
are for convenience of reference only and shall not affect the construction or
interpretation hereof.
E. Severability. The provisions of this Agreement are severable.
-------------
Should any provision of this Agreement be void, voidable, or unenforceable, this
shall not affect or invalidate any other provisions of this Agreement, which
shall continue to govern the relative rights and obligations of the parties as
though such void, voidable, or unenforceable provision were not a part hereof.
F. Entire Agreement; Modification; Waiver. This Agreement
---------------------------------------
constitutes the entire agreement of the parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings, whether
oral or written, with respect thereto. This Agreement may not be modified or
amended
- 44 -
<PAGE>
except by a subsequent written instrument duly executed by both parties. No
failure or delay by any party in exercising any right, power, or privilege
hereunder shall operate as a waiver thereof. Nor shall any single or partial
exercise thereof preclude any other or further exercise of any other right,
power, or privilege.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the Effective Date first written above.
UNION PACIFIC CORPORATION
By:________________________________________
Print Name:________________________________
Title:_____________________________________
OVERNITE CORPORATION
By:________________________________________
Print Name:________________________________
Title:_____________________________________
- 45 -
<PAGE>
COMPUTER AND INFORMATION TECHNOLOGY AGREEMENT
DATA CENTER SERVICES
--------------------
THIS COMPUTER AND INFORMATION TECHNOLOGY AGREEMENT -DATA CENTER
SERVICES (the "Agreement") is made and entered into as of the ____ day of
August, 1998 (the "Effective Date"), by and between UNION PACIFIC CORPORATION, a
Utah corporation ("UPC"), and OVERNITE CORPORATION, a Virginia corporation
("Overnite").
WHEREAS, Overnite intends to issue and sell or cause to be issued and
sold all of its outstanding common stock, through an initial public offering
(the closing of which is hereafter referred to as the "Offering"); and
WHEREAS, immediately following the Offering, Overnite intends to
purchase all of the issued and outstanding common stock of Overnite Holding,
Inc., a Delaware corporation ("OHI"), from UPC (the "Acquisition"), with the
result that Overnite will become a publicly-owned company and OHI will become a
wholly-owned, direct subsidiary of Overnite; and
WHEREAS, Overnite Transportation Company, a Virginia corporation
("OTC"), is a wholly-owned, direct subsidiary of OHI and immediately following
the Acquisition will become a wholly-owned, indirect subsidiary of Overnite;
and
WHEREAS, UPC, through its Union Pacific Technologies Division ("UPT")
and through its wholly-owned subsidiary, Union Pacific Railroad Company
("UPRR"), has provided and continues to
- 46 -
<PAGE>
provide to its subsidiaries, including OTC, certain data center services,
including the services described herein; and
WHEREAS, UPC and Overnite desire that UPC continue to provide such
data center services following the Offering and Acquisition pursuant to the
terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties hereto agree as follows:
1. Data Center Services. UPC, through UPT and UPRR, has provided and
---------------------
currently provides to OTC certain data center processing services in support of
certain of OTC's business applications, which services are provided from UPRR's
St. Louis, Missouri data center, with disaster recovery provided in UPRR's
Omaha, Nebraska processing center, including the following services
(collectively the "Data Center Services"):
A. Computer Systems Operations. Usage and non-usage based services
----------------------------
for the current mainframe central processing unit ("CPU") and any successors,
applications services, decision support services and associated support
services, including but not limited to Direct Access Storage Devices ("DASD"),
print, tape mounts, and overhead.
B. Mainframe Disaster Recovery Services. Services to
-------------------------------------
- 47 -
<PAGE>
provide data redundancy and recovery of key business applications in the event
of a disaster.
2. Continued Provision of Data Center Services. UPC shall provide or
--------------------------------------------
cause to be provided the Data Center Services to Overnite and its subsidiaries
pursuant to the terms and conditions set forth herein. UPC shall provide Data
Center Services of at least the same quality as the similar services that it has
provided to OTC during the year prior to the Effective Date of this Agreement,
and shall provide and perform the Data Center Services with at least the same
degree of care, skill, and prudence that it exercises for its own operations.
The availability of the systems used in provision of the Data Center Services,
UPC's response times related to provision of the Data Center Services, and UPC's
disaster recovery services related to the Data Center Services shall meet or
exceed the standards to be agreed to between UPC and Overnite.
3. The EDGE Technology and the Work Product. Intellectual property
-----------------------------------------
rights in the EDGE Technology and the Work Product, as those terms are defined
in the Development Staff Services Agreement, are set forth in the Development
Staff Services Agreement dated the date hereof between the parties hereto (the
"Development Services Agreement"). UPC shall maintain the EDGE Technology and
the Work Product for a period of six (6) months
- 48 -
<PAGE>
after the term of this Agreement, or until it receives notice from Overnite to
send the EDGE Technology and the Work Product to Overnite or to otherwise
dispose of the EDGE Technology and the Work Product, whichever time period is
shorter. At such time UPC shall comply with Overnite's and/or OTC's instructions
relating thereto, subject to UPC's rights therein granted in Section 10 of the
Development Staff Services Agreement.
4. Upgrades Related to Data Center Services. UPC agrees to cooperate in
-----------------------------------------
good faith with Overnite to plan and evaluate upgrades related to the Data
Center Services described herein.
5. Initial Term; Optional Extension. UPC shall provide the Data Center
---------------------------------
Services from the Effective Date through December 31, 1999. Overnite shall have
the option to extend this Agreement and the provision of the Data Center
Services hereunder, or portions thereof, through December 31, 2000 by providing
UPC with written notice of such intent on or before June 30, 1999. In the event
that Overnite does not exercise its option to extend, then this Agreement shall
terminate on December 31, 1999. In the event that Overnite does exercise its
option to extend, then this Agreement shall terminate on December 31, 2000.
Notwithstanding the foregoing, Overnite shall have the option to assume the
Mainframe Disaster Recovery Services at the end of the 1998 calendar year by so
notifying UPC on or before September 1,
- 49 -
<PAGE>
1998.
6. Liability and Indemnification. Except as provided specifically in
-----------------------------
this Agreement, UPC shall have no liability under this Agreement for damage or
loss of any type suffered by Overnite or its subsidiaries or any third party as
a result of the performance or non-performance of the services provided under
this Agreement. Each party shall indemnify, defend and hold the other party
harmless from and against all damages, losses and out-of-pocket expenses
(including fees and disbursements of counsel) caused by or arising out of any
willful breach or gross negligence by such indemnifying party in the performance
or non-performance of any obligation or agreement contained herein or by the
willful misconduct of such indemnifying party. In the event of a claim against
UPC by a third party, Overnite shall indemnify, defend and hold UPC harmless
from and against all damages, losses and out-of-pocket expenses (including fees
and disbursements of counsel) caused by or arising out the performance or non-
performance of any obligation or agreement contained herein except where caused
by the willful breach, negligence, or willful misconduct of UPC.
Notwithstanding any other provision of this Agreement, UPC shall have no
liability for the acts or omissions of any third party (other than a subsidiary
of UPC) that provides services under this Agreement so
- 50 -
<PAGE>
long as UPC has not been grossly negligent in the selection of such third party.
In the event Overnite believes UPC is not performing its obligations under this
Agreement in accordance with the standards agreed upon by the parties, Overnite
shall so notify UPC. UPC agrees to cooperate with Overnite to address
performance issues and to bring UPC's performance into conformance with such
standards.
7. Fees. Overnite shall pay UPC for provision of the Data Center
-----
Services as follows:
A. Usage Based Services. Rates for 1998 for usage based services
---------------------
shall be at current rates. Rates thereafter shall be set pursuant to the
agreement of the parties.
B. Non-Usage Based Services. Rates for 1998 for non-usage based
-------------------------
services shall be at current rates. Rates thereafter shall be set pursuant to
the agreement of the parties.
8. Licenses and Permits. Overnite, at Overnite's sole expense, shall be
--------------------
responsible for obtaining all necessary software licenses and/or permits
required for performance of Data Center Services as a result of the Offering and
Acquisition and OTC's and Overnite's corporate status. UPC shall notify
Overnite in the event that any third party vendors request additional licenses
or fees associated with UPC providing Data Center Services to Overnite. Failure
by Overnite to obtain any
- 51 -
<PAGE>
necessary licenses and/or permits will not give rise to a cause of action under
this Agreement against UPC (including contract, tort or warranty). UPC will
cooperate in good faith to assist Overnite with securing all necessary licenses
and/or permits.
- 52 -
<PAGE>
9. Billing and Payment. Each month during the term of this Agreement and
--------------------
in the first month after termination of this Agreement (or any extension
thereof), UPC shall submit to Overnite an invoice containing the charges for the
Data Center Services for the then current month, consisting of both estimated
and actual charges, and containing a detailed statement, for the prior month, of
all of the charges for Data Center Services. Overnite shall remit payment in
full for the estimated charges, reflecting any adjustments for prior months'
charges, by wire transfer of immediately available funds to an account
designated by UPC, on or prior to the later of: (a) five (5) business days after
receipt of such invoices, or (b) the end of the then current month. Overnite
shall notify UPC of any dispute as to an invoiced amount and the basis therefor.
In the event of a dispute as to the invoiced amount, Overnite shall pay all
undisputed amounts but shall be entitled to withhold amounts in dispute. In the
event of such a dispute, the parties agree to provide each other with records
and information relating to such dispute and, without limiting their rights and
remedies, to negotiate in good faith to attempt to resolve such dispute.
Any late payment shall be subject to any costs of collection
(including reasonable legal fees) and shall bear interest at the rate of one
percent (1%) per month or a fraction
- 53 -
<PAGE>
thereof until paid. UPC shall not commence suit on collection of late payment
prior to providing seven (7) days notice of its intent to commence suit to
Overnite.
10. Multi-Century Compliance. UPC represents that it is taking all
------------------------
reasonable steps in an effort to make each item of hardware, software and
firmware created, modified, upgraded, revised, developed, or delivered
hereunder, or equipment and products containing such hardware, software or
firmware, accurately process date data (including without limitation
calculating, comparing and sequencing), within, from, into and between centuries
(including without limitation the twentieth and twenty-first centuries),
including leap year calculations. UPC does not, by this Section, warrant that
each item of hardware, software and firmware created, modified, upgraded,
revised, developed, or delivered hereunder, or equipment and products containing
such hardware, software or firmware are Year 2000 compliant.
11. Confidentiality. For purposes hereof, "Confidential Information"
----------------
means any information, in any form or medium, which relates to any component of
a party's business and which is not a matter of public record or generally known
to the public, including, without limitation information relating to inventions;
patent, trademark, and copyright applications; improvements;
- 54 -
<PAGE>
know-how; specifications; drawings; cost and pricing data; process flow
diagrams; customer and supplier lists; bills; ideas; concepts; financial
information; plans, practices, and procedures; agreements, documents, or
instruments involving the party; and any information or materials deemed or
designated as confidential or proprietary by the party. Each party agrees that
during and after the term of this Agreement (or any extension thereof), unless
specifically authorized by the other party in a prior writing, it shall not,
directly or indirectly, disclose the other party's Confidential Information to
any person or entity, or use the other party's Confidential Information for its
benefit. In the event that a party is requested or required to disclose the
other party's Confidential Information in connection with any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar process, that
party will promptly notify the other party of the request or requirement so that
the other party may seek an appropriate protective order. If, in the absence of
a protective order, a party, on the advice of counsel, is compelled by any
tribunal to disclose the other party's Confidential Information, that party
shall use its best efforts to obtain an order or other assurance that
confidential treatment will be accorded to such Confidential Information
required to be disclosed. Promptly upon request, or upon
- 55 -
<PAGE>
termination of this Agreement for any reason, each party shall return to the
other party or destroy, as requested by the other party, any materials in its
possession or control that contain, embody, or reflect the other party's
Confidential Information.
12. Assignment. Neither party shall assign or transfer any of its rights
-----------
or obligations under this Agreement except with obtaining the prior written
consent of the other party, which consent may be withheld by such other party in
its sole discretion. This Agreement shall be binding upon and shall inure to
the benefit of the parties and their successors and permitted assigns.
Notwithstanding any other provision in this Agreement, UPC shall not be
prohibited from selling or divesting itself of UPT prior to the expiration of
this Agreement, provided that, in such event, this Agreement, and all rights and
obligations hereunder be assigned to and assumed by UPT and its affiliates.
13. Miscellaneous.
--------------
A. Notices. All notices and other communications hereunder shall be
--------
in writing and shall be delivered in person, mailed, delivered by courier
service, or sent by facsimile to the following:
(i) If to UPC:
---------
Union Pacific Technologies
7930 Clayton Road
St. Louis, Missouri 63117-1368
- 56 -
<PAGE>
Fax No. (314) 768-5886
ATTN: President and CEO
With a copy to:
--------------
Union Pacific Corporation
1717 Main Street, Suite 5900
Dallas, Texas 75201
Fax No.: (214) 743-5794
ATTN: Vice President and Controller
Union Pacific Railroad Company
1416 Dodge Street
Omaha, Nebraska 68179-0001
Fax No.: (402) 271-6444
ATTN: Senior Vice President,
Information Technology
(ii) If to Overnite:
--------------
Overnite Corporation
1000 Semmes Avenue
Richmond, Virginia 23224-2246
Fax No.: (804) 231-8501
ATTN: Senior Vice President and Chief
Financial Officer
or to such other addresses as either party may designate in writing. All
notices or communications given by personal delivery, mail, or courier service
shall be effective upon receipt if received during the recipient's normal
business hours. Notice given by facsimile shall be effective upon receipt if
received during the recipient's normal business hours, or at the beginning of
the recipient's next business day if not received during the recipient's normal
business hours.
B. Governing Law. This Agreement shall be governed
--------------
- 57 -
<PAGE>
by and construed in accordance with the laws of the State of Missouri, without
giving effect to the principles of conflicts of laws thereof.
C. Counterparts. This Agreement may be executed in any number of
-------------
counterparts, each of which when so executed shall be deemed an original but all
of which shall together constitute but one and the same instrument.
D. Headings. The headings and captions set forth in this Agreement
---------
are for convenience of reference only and shall not affect the construction or
interpretation hereof.
E. Severability. The provisions of this Agreement are severable.
-------------
Should any provision of this Agreement be void, voidable, or unenforceable, this
shall not affect or invalidate any other provisions of this Agreement, which
shall continue to govern the relative rights and obligations of the parties as
though such void, voidable, or unenforceable provision were not a part hereof.
F. Entire Agreement; Modification; Waiver. This Agreement
---------------------------------------
constitutes the entire agreement of the parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings, whether
oral or written, with respect thereto. This Agreement may not be modified or
amended except by a subsequent written instrument duly executed by both
- 58 -
<PAGE>
parties. No failure or delay by any party in exercising any right, power, or
privilege hereunder shall operate as a waiver thereof. Nor shall any single or
partial exercise thereof preclude any other or further exercise of any other
right, power, or privilege.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the Effective Date first written above.
UNION PACIFIC CORPORATION
By:________________________________________
Print Name:________________________________
Title:_____________________________________
OVERNITE CORPORATION
By:________________________________________
Print Name:________________________________
Title:_____________________________________
- 59 -
<PAGE>
COMPUTER AND INFORMATION TECHNOLOGY AGREEMENT
TELECOMMUNICATION SERVICES
--------------------------
THIS COMPUTER AND INFORMATION TECHNOLOGY AGREEMENT -TELECOMMUNICATION
SERVICES (the "Agreement") is made and entered into as of the ____ day of
August, 1998 (the "Effective Date"), by and between UNION PACIFIC CORPORATION, a
Utah corporation ("UPC"), and OVERNITE CORPORATION, a Virginia corporation
("Overnite").
WHEREAS, Overnite intends to issue and sell or cause to be issued and
sold all of its outstanding common stock, through an initial public offering
(the closing of which is hereafter referred to as the "Offering"); and
WHEREAS, immediately following the Offering, Overnite intends to
purchase all of the issued and outstanding common stock of Overnite Holding,
Inc., a Delaware corporation ("OHI"), from UPC (the "Acquisition"), with the
result that Overnite will become a publicly-owned company and OHI will become a
wholly-owned, direct subsidiary of Overnite; and
WHEREAS, Overnite Transportation Company, a Virginia corporation
("OTC"), is a wholly-owned, direct subsidiary of OHI and immediately following
the Acquisition will become a wholly-owned, indirect subsidiary of Overnite;
and
WHEREAS, UPC has provided and continues to provide to its
subsidiaries, including OTC, certain telecommunication services, including the
services described herein; and
<PAGE>
WHEREAS, UPC and Overnite desire that UPC continue to provide such
telecommunication services following the Offering and Acquisition pursuant to
the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties hereto agree as follows:
1. Telecommunication Services. UPC has provided and currently
---------------------------
provides through service agreements and contracts with major telecommunication
providers certain voice and data communication services to OTC, including, but
not limited to, inbound and outbound long distance services, calling card
services, inbound 800 service, frame relay and other data networking services
(collectively the "Telecommunication Services").
2. Continued Provision of Telecommunication Services. UPC shall
--------------------------------------------------
provide or cause to be provided the Telecommunication Services to Overnite and
its subsidiaries pursuant to the terms and conditions set forth herein for the
term specified in Section 3. UPC shall provide or cause to be provided the
Telecommunication Services, and shall meet all terms and conditions of its
current agreements with major telecommunication providers, to maintain service
levels of at least the same nature and quality as the similar services that it
has provided or
2
<PAGE>
caused to be provided to OTC during the year prior to the Effective Date of this
Agreement, and UPC shall provide and perform or cause to be provided and
performed the Telecommunication Services with at least the same degree of care,
skill, and prudence that it exercises for its own operations. Overnite's volume
obligations and other specific commitments shall be as agreed to by the parties.
3. Term. Overnite and its subsidiaries will continue to purchase all
-----
Telecommunication Services used by Overnite exclusively from and through UPC
from the Effective Date through December 31, 2000. The Telecommunication
Services will be provided through UPC in accordance with the applicable
agreement or agreements, and any subsequent amendments thereto, between UPC and
the major telecommunication services provider; provided, however, that any such
proposed amendments which may affect the rights, obligations, or benefits of
Overnite, including but not limited to costs, services, and duration of
services, must be disclosed in advance to Overnite and can be implemented only
if agreed to in advance by Overnite.
4. Fees. Overnite will pay fees associated with the
-----
Telecommunication Services directly to the major telecommunication services
provider in accordance with the rate set forth in the applicable agreement or
agreements between UPC and the major telecommunication provider.
3
<PAGE>
5. Billing and Payment. UPC and Overnite agree to transfer all
--------------------
billing and order-related services related to the provision of Telecommunication
Services to Overnite no later than November 30, 1998. Subsequent to such
transfer, Overnite will deal directly with major telecommunication service
providers on all matters regarding service orders, billing, and payment of
charges related to Telecommunication Services. Prior to such transfer, each
month and in the first month after such transfer, UPC shall submit to Overnite
an invoice or invoices detailing, for the prior month, the fees for the
Telecommunication Services. Overnite shall remit payment in full for such
invoices, by wire transfer of immediately available funds to an account
designated by UPC, on or prior to the later of: (a) five (5) business days after
receipt of such invoices, or (b) the end of the then current month. Overnite
shall notify UPC of any dispute as to an invoiced amount and the basis therefor.
In the event of a dispute as to the invoiced amount, Overnite shall pay all
undisputed amounts but shall be entitled to withhold amounts in dispute. In the
event of such a dispute, the parties agree to provide each other with records
and information relating to such dispute and, without limiting their rights and
remedies, to negotiate in good faith to attempt to resolve such dispute.
Any late payment shall be subject to any costs of collection
(including reasonable legal fees) and shall bear interest at the
4
<PAGE>
rate of one percent (1%) per month or a fraction thereof until paid. UPC shall
not commence suit in collection of late payment prior to providing seven (7)
days notice of its intent to commence suit to Overnite.
6. Liability and Indemnification Provision. Except as provided
---------------------------------------
specifically in the Agreement, UPC shall have no liability under this Agreement
for damage or loss of any type suffered by Overnite or its subsidiaries or any
third party as a result of the performance or non-performance of the services
provided under this Agreement. Each party shall indemnify, defend and hold the
other party harmless from and against all damages, losses and out-of-pocket
expenses (including fees and disbursements of counsel) caused by or arising out
of any willful breach or gross negligence by such indemnifying party in the
performance or non-performance of any obligation or agreement contained herein
or by the willful misconduct of such indemnifying party. In the event of a
claim against UPC by a third party, Overnite shall indemnify, defend and hold
UPC harmless from and against all damages, losses and out-of-pocket expenses
(including fees and disbursements of counsel) caused by or arising out of the
performance or non-performance of any obligation or agreement contained herein
except where caused by the willful breach, negligence, or willful misconduct of
UPC. Notwithstanding any other provision of this Agreement, UPC shall
5
<PAGE>
have no liability for the acts or omissions of any third party (other than a
subsidiary of UPC) that provides services under this Agreement so long as UPC
has not been grossly negligent in the selection of such third party. In the
event Overnite believes UPC is not performing its obligations under this
Agreement in accordance with the standards agreed upon by the parties, Overnite
shall so notify UPC. UPC agrees to cooperate with Overnite to address
performance issues and to bring UPC's performance into conformance with such
standards.
7. Confidentiality. For purposes hereof, "Confidential
----------------
Information" means any information, in any form or medium, which relates to any
component of a party's business and which is not a matter of public record or
generally known to the public, including, without limitation, information
relating to inventions; patent, trademark, and copyright applications;
improvements; know-how; specifications; drawings; cost and pricing data; process
flow diagrams; customer and supplier lists; bills; ideas; concepts; financial
information; plans, practices, and procedures; agreements, documents, or
instruments involving the party; and any information or materials deemed or
designated as confidential or proprietary by the party. Each party agrees that
during and after the term of this Agreement (or any extension thereof), unless
specifically authorized by the other party in a prior writing, it shall not,
directly or indirectly,
6
<PAGE>
disclose the other party's Confidential Information to any person or entity, or
use the other party's Confidential Information for its benefit. In the event
that a party is requested or required to disclose the other party's Confidential
Information in connection with any legal proceeding, interrogatory, subpoena,
civil investigative demand, or similar process, that party will promptly notify
the other party of the request or requirement so that the other party may seek
an appropriate protective order. If, in the absence of a protective order, a
party, on the advice of counsel, is compelled by any tribunal to disclose the
other party's Confidential Information, that party shall use its best efforts to
obtain an order or other assurance that confidential treatment will be accorded
to such Confidential Information required to be disclosed. Promptly upon
request, or upon termination of this Agreement for any reason, each party shall
return to the other party or destroy, as requested by the other party, any
materials in its possession or control that contain, embody, or reflect the
other party's Confidential Information.
8. Assignment. Neither party shall assign or transfer any of its
-----------
rights or obligations under this Agreement except with the prior written consent
of the other party, which consent may be withheld by such other party in its
sole discretion. This Agreement shall be binding upon and shall inure to the
benefit of the parties and their successors and permitted assigns.
7
<PAGE>
9. Miscellaneous.
-------------
A. Notices. All notices and other communications hereunder shall be
--------
in writing and shall be delivered in person, mailed, delivered by courier
service, or sent by facsimile to the following:
(i) If to UPC:
---------
Union Pacific Corporation
1717 Main Street, Suite 5900
Dallas, Texas 75201
Fax No.: (214) 743-5794
ATTN: Vice President and Controller
With a copy to:
--------------
Union Pacific Railroad Company
1416 Dodge Street
Omaha, Nebraska 68179-0001
Fax No.: (402) 271-6444
ATTN: Senior Vice President,
Information Technology
(ii) If to Overnite:
--------------
Overnite Corporation
1000 Semmes Avenue
Richmond, Virginia 23224-2246
Fax No.: (804) 231-8501
ATTN: Senior Vice President and Chief
Financial Officer
or to such other addresses as either party may designate in writing. All
notices or communications given by personal delivery, mail, or courier service
shall be effective upon receipt if received during the recipient's normal
business hours. Notice given by facsimile shall be effective upon receipt if
received during the recipient's normal business hours, or at the
8
<PAGE>
beginning of the recipient's next business day if not received during the
recipient's normal business hours.
B. Governing Law. This Agreement shall be governed by and construed
--------------
in accordance with the laws of the State of Missouri, without giving effect to
the principles of conflicts of laws thereof.
C. Counterparts. This Agreement may be executed in any number of
-------------
counterparts, each of which when so executed shall be deemed an original but all
of which shall together constitute but one and the same instrument.
D. Headings. The headings and captions set forth in this Agreement
---------
are for convenience of reference only and shall not affect the construction or
interpretation hereof.
E. Severability. The provisions of this Agreement are severable.
-------------
Should any provision of this Agreement be void, voidable, or unenforceable, this
shall not affect or invalidate any other provisions of this Agreement, which
shall continue to govern the relative rights and obligations of the parties as
though such void, voidable, or unenforceable provision were not a part hereof.
F. Entire Agreement; Modification; Waiver. This Agreement
---------------------------------------
constitutes the entire agreement of the parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings, whether
oral or written, with
9
<PAGE>
respect thereto. This Agreement may not be modified or amended except by a
subsequent written instrument duly executed by both parties. No failure or delay
by any party in exercising any right, power, or privilege hereunder shall
operate as a waiver thereof. Nor shall any single or partial exercise thereof
preclude any other or further exercise of any other right, power, or privilege.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the Effective Date first written above.
UNION PACIFIC CORPORATION
By:________________________________________
Print Name:________________________________
Title:_____________________________________
OVERNITE CORPORATION
By:________________________________________
Print Name:________________________________
Title:_____________________________________
10
<PAGE>
EXHIBIT 10.7
PENSION PLAN AGREEMENT
----------------------
This PENSION PLAN AGREEMENT (the "Agreement") is made and entered as of the
30/th/ day of June, 1998 by and among UNION PACIFIC CORPORATION, a Utah
corporation ("UPC"), OVERNITE TRANSPORTATION COMPANY, a Virginia corporation
("OTC"), and OVERNITE CORPORATION, a Virginia corporation ("Overnite").
WHEREAS, UPC intends to sell all of the outstanding common stock of
Overnite Holding, Inc., a Delaware corporation and wholly owned subsidiary of
UPC, to Overnite (the "Sale") immediately following an initial public offering
of 100% of the common stock of Overnite (the closing of which is hereafter
referred to as the "IPO"); and
WHEREAS, UPC, OTC, and Overnite desire to enter into this Agreement in
order to establish the manner in which the assets of the Retirement Plan for
Employees of Overnite Transportation Company and Subsidiaries (hereafter
referred to as the "Overnite Plan") currently held in the master trust of which
Northern Trust Company is the trustee (hereinafter referred to as the "Master
Trust") will be transferred to a trust established by Overnite for the Overnite
Plan;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties hereto agrees as follows:
1. ESTABLISHMENT OF TRUST. Overnite shall establish a trust, in form and
----------------------
substance acceptable to UPC, which will be effective as of or prior to the IPO
and will be intended to qualify
<PAGE>
under section 401(a) of the Internal Revenue Code of 1986, as amended (the
"Code") for the Overnite Plan (hereinafter referred to as the "Overnite Trust").
2. ASSET TRANSFER. As soon as practicable after the IPO, UPC shall cause
--------------
the trustee of the Master Trust to transfer, in cash or in kind as determined by
UPC after consulting in good faith with Overnite with the goal of a generally
pro-rata division of assets, to the Overnite Trust an amount of assets (a) with
a value equal to the total fair market value of the assets of the Overnite Plan
as of June 30, 1998, and (b) adjusted to reflect earnings or losses on such
assets through the date of the transfer of the assets. UPC shall cause the
trustee of the Master Trust to segregate the assets of the Overnite Plan into a
sub-account of the Master Trust effective June 30, 1998.
3. COOPERATION. UPC, OTC, and Overnite agree to provide each other with
-----------
such records and information as may be necessary or appropriate to carry out
their respective obligations under this Agreement. UPC, OTC, and Overnite agree
to file all documents required as a result of the Sale and the IPO, including
but not limited to any notices of "reportable events" required by Section
4043(b) of the Employee Retirement Income Security Act of 1974, as amended.
4. ASSIGNMENT. No party may assign any of its rights or delegate any of its
----------
duties under this Agreement without first obtaining the prior written consent of
the other parties, which may be withheld by such other parties in their absolute
discretion. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their successors and permitted assigns.
5. NO THIRD PARTY BENEFICIARIES. Except as set specifically forth in the
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provisions of this Agreement, nothing in this Agreement, express or implied, is
intended or will be construed to
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confer upon or give to any person other than the parties hereto and their
respective successors and permitted assigns any rights, remedies or obligations
under or by reason of this Agreement or any transaction contemplated hereby.
6. GOVERNING LAW. This Agreement shall be governed by and construed in
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accordance with laws of the State of New York, without regard for the conflict-
of-laws principles thereof.
7. COUNTERPARTS. This Agreement may be executed in any number of
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counterparts, each of which when so executed shall be deemed an original and all
of which shall together constitute but one and the same instrument.
8. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of the
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parties with respect to the subject matter hereof. This Agreement may not be
amended or otherwise modified except by a written instrument duly executed and
delivered by all of the parties.
9. SEVERABILITY. The provisions of this Agreement are severable. Should
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any provision hereof be void, voidable or unenforceable under any applicable
law, such provision shall not affect or invalidate any other provision of this
Agreement, which shall continue to govern the relative rights and duties of the
parties as though such void, voidable or unenforceable provision were not a part
hereof.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
UNION PACIFIC CORPORATION
By: ______________________________
Title:
OVERNITE CORPORATION
By: ______________________________
Title:
OVERNITE TRANSPORTATION COMPANY
By: ______________________________
Title:
