<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
- --- Act of 1934
For the fiscal year ended June 30, 1999
OR
___ Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period __________ to ___________
Commission File Number 001-11763
TRANSMONTAIGNE INC.
Delaware 06-1052062
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2750 Republic Plaza, 370 Seventeenth Street
Denver, Colorado 80202
(Address, including zip code, of principal executive offices)
(303) 626-8200
(Telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- -------------------
Common Stock; $.01 par value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such report), and (2) has been subject to such filing requirements for
the past 90 days.
Yes [x] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [x]
State the aggregate market value of the voting stock held by non-affiliates of
the Registrant. The aggregate market value is computed by reference to the last
sale price of the Registrant's Common Stock on the American Stock Exchange on
September 10, 1999.
$188,006,000
The number of shares of the registrant's Common Stock outstanding on
September 10, 1999 was 30,487,024
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Definitive Proxy Statement relating to the 1999 Annual Meeting
of Shareholders of the registrant are incorporated by reference into Part III.
<PAGE>
TABLE OF CONTENTS
Item Page No.
Part I 1. Business 3
2. Properties 14
3. Legal Proceedings 14
4. Vote of Security Holders 14
Part II 5. Market for Common Stock 15
6. Selected Financial Data 16
Information Regarding Forward Looking Statements 19
7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 20
7A. Qualitative and Quantitative Disclosures About
Market Risk 43
8. Financial Statements and Supplementary Data 45
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosures 80
Part III 10. Directors and Executive Officers 80
11. Executive Compensation 80
12. Security Ownership of Certain Beneficial
Owners and Management 80
13. Certain Relationships and Related Transactions 80
Part IV 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 83
2
<PAGE>
PART I
ITEM 1. BUSINESS
General
TransMontaigne Inc. ("TransMontaigne") provides a broad range of integrated
transportation, terminaling, storage, supply, distribution, gathering,
processing and marketing services to producers, refiners, distributors,
marketers and industrial end-users of petroleum products, chemicals, other bulk
liquids, natural gas and crude oil in the downstream sector of the petroleum and
chemical industries. TransMontaigne is a holding company which conducts its
operations through wholly-owned subsidiaries primarily in the Mid-Continent,
Gulf Coast, Southeast, Mid-Atlantic, Northeast and Rocky Mountain regions of the
United States. TransMontaigne operations are divided into its logistical
petroleum services business segments which include pipelines; terminals, which
includes terminaling and storage services; supply, distribution and marketing of
refined petroleum products; and a natural gas services business segment which
includes the gathering, treating, processing, fractionating and marketing
natural gas liquids ("NGL") and natural gas. Segment information is presented in
the notes to the financial statements. TransMontaigne does not explore for, or
produce, crude oil or natural gas; and does not own crude oil or natural gas
reserves.
The executive offices of TransMontaigne, a Delaware corporation, are
located at 2750 Republic Plaza, 370 Seventeenth Street, Denver, CO 80202;
telephone number (303) 626-8200 and facsimile number (303) 626-8228.
3
<PAGE>
TransMontaigne's logistical petroleum services operations are headquartered
at 200 Mansell Court East, Suite 600, Roswell, GA 30076; telephone number (770)
518-3500 and facsimile number (770) 518-3567. TransMontaigne's natural gas
services are headquartered at 2750 Republic Plaza, 370 Seventeenth Street,
Denver, CO 80202; telephone number (303) 626-8282 and facsimile number (303)
626-8299.
Logistical Petroleum Services Segments
Through its wholly owned subsidiary, TransMontaigne Transportation Services
Inc., TransMontaigne provides refined petroleum product and crude oil
transportation, terminal and storage services to over 600 customers, including
most major oil companies and independent refiners in the United States.
TransMontaigne owns 790 miles of petroleum products and crude oil pipeline and
70 terminal, storage and delivery facilities in 19 states with a combined tank
storage capacity of 20,100,000 barrels in conjunction with major pipeline and
terminal systems owned by others in order to transport products to market
destinations and to conduct exchange transactions with major and independent
petroleum companies. Through its wholly owned subsidiary, TransMontaigne Product
Services Inc., TransMontaigne provides product services consisting of the bulk
purchase and sale of refined petroleum products and the wholesale marketing of
products at terminal truck loading rack locations, both of which are high
volume, low margin activities.
Pipelines
TransMontaigne owns and operates a 480-mile refined petroleum products
pipeline from Ft. Madison, Iowa through Chicago, Illinois to Toledo, Ohio (the
"NORCO pipeline") together with associated storage facilities located at
Hartsdale and East Chicago, Indiana and Toledo, Ohio and delivery facilities
located at Elkhart, Indiana and Chillicothe and Galesburg, Illinois. The NORCO
pipeline system is interconnected to all major mid-continent common carriers.
TransMontaigne also owns a 60% interest in a 67-mile refined petroleum products
pipeline operating from Mt. Vernon, Missouri to Rogers, Arkansas (the "Razorback
pipeline") together with an associated storage facility at Mt. Vernon. The
Razorback pipeline is the only refined petroleum products pipeline providing
transportation services to northwest Arkansas. TransMontaigne also owns and
operates a 220-mile
4
<PAGE>
crude oil gathering pipeline system, with 627,500 barrels of tank storage
capacity, located in east Texas (the "CETEX pipeline").
In general, a shipper owns the refined petroleum products or crude oil and
transfers custody of the products to the NORCO or Razorback pipelines, or the
crude oil to the CETEX pipeline, for shipment to a delivery location at which
point custody again transfers. Tariffs for the transportation service are
regulated and are charged by TransMontaigne to shippers based upon the
origination point on the pipelines to the point of product delivery. These
tariffs do not include fees for the storage of products at the NORCO and
Razorback pipeline storage facilities or crude oil at the CETEX pipeline storage
facilities. Fees for the terminaling and storage of products at TransMontaigne
terminals are separately charged when those facilities are utilized.
TransMontaigne's pipeline business depends in large part on the level of
demand for refined petroleum products in the markets served by the pipelines,
together with the ability and willingness of refiners and marketers having
access to the pipelines to supply that demand by shipments through these
pipelines. Competition is based primarily on pipeline operational
dependability, quality of customer service provided and proximity to end-users,
although product pricing at either the origin or terminal destination on a
pipeline may outweigh transportation cost considerations. TransMontaigne
believes that high capital costs, tariff regulation, environmental
considerations, problems in acquiring rights-of-way and TransMontaigne's
existing available capacity make it unlikely that additional competing pipeline
systems comparable in size to the NORCO and Razorback pipelines will be built in
the near term.
Terminals
TransMontaigne owned and operated terminals handling petroleum products
connect with product transportation systems, storage facilities and product
distribution locations. These terminals are located in Rogers, Arkansas; North
Little Rock, Arkansas; Peoria, Illinois; East Chicago, Indiana; Indianapolis,
Indiana; South Bend, Indiana; Mt. Vernon, Missouri; and Bryan, Ohio. The former
ITAPCO Terminal Corporations facilities handle petroleum products, chemicals and
other bulk liquids with transportation connections via pipelines, barges, rail
cars and trucks and are located in Brownsville,
5
<PAGE>
Texas; Evansville, Indiana; Cincinnati, Ohio; Greenville, Mississippi;
Henderson, Kentucky; New Albany, Indiana; Louisville, Kentucky; Arkansas City,
Arkansas; Cape Girardeau, Missouri; East Liverpool, Ohio; Owensboro, Kentucky;
Paducah, Kentucky; and Chippewa Falls, Wisconsin. The former Statia Terminal
Southwest terminal handles petroleum products, chemical and other bulk liquids
and is located in Brownsville, Texas. The former Louis Dreyfus Energy Corp.,
("LDEC"), terminals handle petroleum products with transportation connections
primarily through the Colonial and Plantation pipeline systems. These terminals
are located in Albany, Americus, Athens, Atlanta, Bainbridge, Griffin, Macon and
Rome, Georgia; Belton and Spartanburg, South Carolina; Birmingham and
Montgomery, Alabama; Charlotte and Greensboro, North Carolina; Collins and
Meridian, Mississippi; Knoxville and Chattanooga, Tennessee; Chesapeake and
Richmond, Virginia; Pensacola, Fort Lauderdale and Tampa, Florida; and
Philadelphia, Pennsylvania. The former SUNOCO terminal handles petroleum
products in barges, tankers and trucks and is located in Rensselaer, New York.
The Hess Southeastern Pipeline Network of terminals handle petroleum products
with transportation connections primarily through the Colonial and Plantation
pipeline systems. These terminals are located in Collins (2), and Purvis,
Mississippi; Doraville, Georgia; Belton and Spartanburg, South Carolina;
Charlotte, Selma (2) and Greensboro, North Carolina; and Montvale, Virginia.
Products terminal revenues are based on volumes handled, generally at a
standard industry fee. Terminal fees are not regulated. The terminals receive
petroleum products in bulk quantities from connecting pipeline systems and barge
dock facilities. Products are stored in bulk at the terminals and made
available to wholesale, shipment and exchange customers who transport the
products by truck to commercial and retail destinations and then to the end-
user. TransMontaigne markets refined petroleum products over truck loading
racks at owned terminals, as well as through exchanges with numerous companies
at other non-owned terminals located throughout the TransMontaigne distribution
area.
Chemicals and other bulk liquids terminal revenues are based upon the type
and volume of the liquids handled, including any special temperature
maintenance, labor intensive loading/off-loading requirements or other handling
services. These terminal fees are not regulated; are generally negotiated on an
individual contract basis with a term of one year or less; and typically are at
rates
6
<PAGE>
which exceed those for handling petroleum products due to the particular
nature of the items handled.
Storage of refined petroleum products, chemicals and other bulk liquids at
TransMontaigne-owned facilities pending delivery is an integral service
function. Storage fees are generally based on a per gallon rate or on tankage
capacity committed and will vary with the duration of the storage arrangement,
the product stored and special handling requirements. Storage fees are not
regulated.
Major and independent petroleum companies own terminal and storage
facilities which often have similar capabilities to those owned by independent
operators such as TransMontaigne, but generally do not provide terminaling and
storage services to third parties. In many instances, these companies are also
significant customers of TransMontaigne and frequently provide strong demand for
its terminals, particularly when TransMontaigne's terminals and storage
facilities have more cost effective locations near key transportation
connections and distribution points. These companies also utilize TransMontaigne
for terminaling and storage services when their proprietary facilities are
inadequate, either because of size constraints, the nature of the products,
chemicals and other bulk liquids stored or the need for specialized handling
requirements particularly when certain types of chemicals and other bulk liquids
are involved.
Ancillary services, including injection of shipper-furnished or
TransMontaigne-furnished additives, are also available for a fee at
TransMontaigne terminals.
Products Supply, Distribution and Marketing
TransMontaigne's supply, distribution and marketing efforts are enhanced by
its ownership and operation of products pipelines and terminals; a constant and
reliable supply of NGL from its natural gas gathering and processing operations;
and by its inventory positions in third-party common carrier pipeline systems.
TransMontaigne utilizes these assets to arbitrage location product price
differentials and transportation costs; to purchase substantial bulk volumes of
products for resale in the spot market or over truck loading racks; to take
advantage of opportunities presented by anticipated product
7
<PAGE>
price volatility arising from changing economic conditions, seasonal variations
and market supply and demand considerations; and to generate revenues from
regional and national industrial end-user and commercial wholesale storage and
forward sales marketing contracts of refined petroleum products.
TransMontaigne enters into product exchange transactions in order to
enhance operating margins in connection with its supply and distribution
activities. Exchanges are arranged through agreements under which
TransMontaigne agrees to buy and sell products that differ in terms of
geographic location, type of product or delivery schedule. Through such
exchanges, which are continuously monitored by TransMontaigne's real-time
management information and risk management systems, TransMontaigne seeks to
increase its overall operating margins by maximizing transportation, terminaling
and product sales revenues from each barrel of product sold while also
minimizing related storage, shipping and product costs.
TransMontaigne hedges significant quantities of its inventory by entering
into future physical delivery obligations with third parties or purchasing a
futures contract on the New York Mercantile Exchange ("NYMEX") in order to
maintain a substantially balanced position between product purchases and future
product sales or delivery obligations and in order to reduce risk exposure to
inventory which would be subject to price volatility.
Growth
TransMontaigne is seeking to grow its logistical petroleum services
business segments. TransMontaigne expects to grow by continuing to acquire
strategically located downstream facilities, as well as other value-added
business opportunities which are expected to contribute additional cash flow and
enhance net earnings. Growth by acquisition is expected to be complemented by
construction of new projects and expansion of existing facilities in specific
locations which are intended to develop and increase TransMontaigne's present
operating capabilities and business presence in the markets served.
8
<PAGE>
Natural Gas Services
TransMontaigne provides natural gas services through its wholly owned
subsidiary, Bear Paw Energy Inc. The natural gas services assets primarily
consist of 5 gathering and processing systems in 4 states with combined
throughput capacity of approximately 106 million cubic feet per day and over
2,900 miles of pipeline. The systems are named the Grasslands, Marmarth, Baker,
Lignite, and South Gillette systems.
The Grasslands system is the cornerstone of TransMontaigne's natural gas
gathering and processing facilities in the Williston Basin of the Rocky Mountain
region and enables TransMontaigne to provide service to oil and gas producers,
as well as to end-users of NGL and natural gas. Current throughput is
approximately 45 million cubic feet per day from over 1,200 active leases, which
is gathered through approximately 2,600 miles of low and high pressure gathering
lines. The majority of the wells connected to the Grasslands system primarily
produce crude oil. They also produce small volumes of natural gas which are
generally high in NGL content. The natural gas gathering lines cover the
Williston Basin areas of western North Dakota and eastern Montana. Additional
oil and gas wells can be connected to this entire system as successful drilling
continues. The Grasslands system is one of the largest natural gas gathering and
processing facilities in the Williston Basin.
The Marmarth system is an approximately 4 million cubic feet per day
capacity natural gas gathering, processing, and treating facility which gathers
natural gas at low pressure in southwestern North Dakota through approximately
32 miles of gathering pipeline. NGL are currently sold locally by truck after
being fractionated at the Baker facility. The Baker system located in eastern
Montana is an approximately 4 million cubic feet per day capacity natural gas
processing plant connected to a 35 mile gathering pipeline. The Baker system
also fractionates the Marmarth system NGL and provides processing for a major
oil company. The Lignite system is an approximately 8 million cubic feet per day
capacity natural gas processing and treating facility located in northern North
Dakota connected to approximately 165 miles of gathering pipeline. The South
Gillette system is an approximately 12 million cubic feet per day capacity
natural gas gathering system which gathers natural gas in the Powder River Basin
located in northeastern Wyoming through approximately 79 miles of
9
<PAGE>
gathering pipeline. In addition to the ownership of its 5 natural gas systems,
TransMontaigne manages 15 small natural gas gathering systems for a major
interstate pipeline company. TransMontaigne earns a fee for the management of
these systems and is compensated for any additional volumes which it connects to
them.
TransMontaigne has natural gas gathering facilities covering the eastern
quarters of Montana and Wyoming and the western quarter of North Dakota, from
the Canadian border to the South Dakota border, which should enhance
TransMontaigne's ability to provide a complete service package to North Dakota
and Montana producers, as well as to end-users of NGL and natural gas.
Growth
TransMontaigne continually seeks to identify additional dedicated natural
gas supplies in order to maintain or increase throughput levels to offset
natural production declines in dedicated volumes. Such natural gas supplies are
obtained by purchasing existing systems from third parties or by connecting
additional wells. The opportunity to connect new wells to existing facilities
is primarily affected by levels of drilling activity near TransMontaigne's
natural gas gathering systems.
In March 1999, TransMontaigne entered into an agreement with Pennaco Energy
("Pennaco") to provide gathering and compression services to a coal bed methane
gas exploration and development project in the Powder River Basin of
northeastern Wyoming. The agreement with Pennaco covers the South Gillette
contract area, which includes 17,000 gross leasehold acres and 365 potential
well locations, of which 105 wells have been connected to date. In September
1999, another agreement was signed with Pennaco to provide similar gathering and
compression services in the North Gillette area, increasing the total gross
leasehold acres to approximately 18,500 and over 400 potential well locations.
10
<PAGE>
ACQUISITIONS
On June 30, 1999, TransMontaigne acquired from Amerada Hess Corporation the
Hess Southeastern Pipeline Network ("Hess Terminals") of refined petroleum
product facilities for approximately $66,200,000 and related refined products
inventory for approximately $32,500,000 cash. The Hess Terminals, which are
interconnected to the Colonial and Plantation pipeline systems, includes
approximately 5.3 million barrels of tankage at 11 storage and terminal
facilities and 36 miles of proprietary pipelines.
On December 3, 1998, TransMontaigne acquired from SUNOCO, Inc. a petroleum
products terminal located on the Hudson River at Rensselaer, near of Albany, New
York for approximately $5,200,000 cash. The Rensselaer terminal facility
includes 510,000 barrels of storage capacity, 3 truck loading racks and a dock
capable of handling barges and ocean going tankers.
On October 30, 1998, TransMontaigne acquired all of the common stock of LDEC
for approximately $161,000,000, including $100,565,000 cash and 4.5 million
shares of TransMontaigne common stock valued at $60,435,000. In addition,
TransMontaigne acquired LDEC's working capital for $192,492,000 cash. The LDEC
acquisition included 24 refined petroleum products terminal and storage
facilities, of which 7 are wholly owned and 17 are owned jointly with BP Oil
Company, together with its supply, distribution and marketing business. These
facilities are located in 9 states in the Southern and Eastern regions of the
United States; have approximately 4.2 million barrels of TransMontaigne owned
storage capacity; and are supplied primarily by the Colonial and Plantation
pipeline systems. LDEC's supply, distribution and marketing business includes
over 350 service supply/exchange points nationwide. LDEC is a major shipper on
the Colonial pipeline which connects the Houston ship channel and associated
major refining complexes to the New York Harbor which is the NYMEX petroleum
products delivery point.
On July 28, 1998, TransMontaigne acquired all of the common stock of Statia
Terminals Southwest, Inc. ("Southwest Terminal") for $6,500,000 cash. The
acquisition included terminaling, storage and loading facilities for petroleum
products, chemicals and other bulk liquids at the Port of Brownsville, Texas
with over 1.65 million barrels of tank storage,
11
<PAGE>
12 truck rack loading bays, connections to barge and tanker loading facilities
and the exclusive use of 5 railroad spur lines with a total of 32 railroad car
loading spots.
TransMontaigne intends to continue to make strategic additions to and
expansions of its existing facilities in order to achieve greater regional
geographic presence, extend customer service opportunities, improve operating
efficiencies, increase cash flow, generate incremental net earnings and enhance
its competitive market position.
West Shore Pipe Line Company Investment
On September 18, 1998, TransMontaigne acquired for $29,219,000 cash the
15.38% common stock interest in West Shore Pipe Line Company ("West Shore")
owned by Atlantic Richfield Company. Effective December 31, 1998, TransMontaigne
acquired for $5,488,000 cash an additional 4.11% common stock interest in West
Shore owned by Equilon Pipeline Company, LLC and for $1,186,000 cash an
additional .89% common stock interest in West Shore owned by Texaco
Transportation and Trading Inc., both of which transactions closed in January
1999. West Shore ownership as of June 30, 1999 also includes Citgo, Marathon,
Equilon, Texaco, BP Amoco, Midwest (Union Oil), Mobil and Exxon. West Shore owns
a 600-mile common carrier petroleum products pipeline system which operates
between the Chicago refining corridor locations of East Chicago, Indiana; Blue
Island, Joliet and Lemont, Illinois; north through metropolitan Chicago,
Illinois; along the western edge of Lake Michigan to Milwaukee and Green Bay,
Wisconsin; and west to Rockford and Peru, Illinois, and Madison, Wisconsin. The
pipeline serves approximately 55 locations, including 4 refineries, the Chicago-
O'Hare and Milwaukee airports, and 49 refined petroleum products terminals in
the Chicago, Illinois area and the upper Mid-West region of the United States.
Environmental and Tariff Regulations
The operations of TransMontaigne are subject to federal, state and local
laws and regulations relating to protection of the environment. Future
regulation may impose additional requirements. Although TransMontaigne believes
that its operations are in material compliance with applicable environmental
laws and regulations, and TransMontaigne has not accrued any material amounts
for
12
<PAGE>
environmental compliance as of June 30, 1999, risks of substantial costs and
liabilities are inherent in pipeline, terminal and processing operations, and
there can be no assurance that significant costs and liabilities will not be
incurred in the future.
The interstate petroleum products pipeline operations of TransMontaigne are
subject to regulation by the Federal Energy Regulatory Commission (the "FERC")
under the Interstate Commerce Act (the "ICA") which requires, among other
things, that the rates set by the pipeline transportation tariffs be just and
reasonable and not unduly discriminatory. New and changed tariffs must be filed
with the FERC, which may investigate their lawfulness on shipper protest or its
own motion. The FERC may suspend the effectiveness of such tariffs and require
the pipeline to refund to shippers, with interest, any difference between the
level the FERC determines to be lawful and the filed tariffs under
investigation; the tariffs may also be challenged by litigation.
The intrastate crude oil pipeline operations of TransMontaigne are subject
to regulation by the Texas Railroad Commission. Like interstate regulation, the
Texas regulation requires that intrastate tariffs be filed with the Texas
Railroad Commission and allows shippers to challenge such tariffs.
Employees
The Company had 625 employees at September 10, 1999. No employees are
subject to representation by unions for collective bargaining purposes.
13
<PAGE>
ITEM 2. PROPERTIES
For information regarding TransMontaigne properties, see "General",
"Logistical Petroleum Services Segments" and "Natural Gas Services Segment"
sections under Item 1.
ITEM 3. LEGAL PROCEEDINGS
Not Applicable
ITEM 4. VOTE OF SECURITY HOLDERS
Not Applicable
14
<PAGE>
PART II
ITEM 5. MARKET FOR COMMON STOCK
The Common Stock is traded on the American Stock Exchange under the symbol
"TMG." The following table sets forth, for the periods indicated, the range of
high and low per share sale prices for Common Stock as reported on the American
Stock Exchange.
Low High
------ ------
May 1, 1997 through July 31, 1997 $14.88 $20.38
August 1, 1997 through October 31, 1997 $15.38 $20.00
November 1, 1997 through January 31, 1998 $13.00 $17.63
February 1, 1998 through April 30, 1998 $13.00 $14.63
May 1, 1998 through June 30, 1998 (1) $14.50 $17.06
July 1, 1998 through September 30, 1998 $ 9.88 $15.63
October 1, 1998 through December 31, 1998 $11.00 $16.00
January 1, 1999 through March 31, 1999 $10.38 $15.25
April 1, 1999 through June 30, 1999 $11.13 $14.75
_________
(1) In August, 1998, TransMontaigne adopted a fiscal year end of June 30.
On September 10, 1999, the last reported sale price for the Common Stock on
the American Stock Exchange was $11.4375. As of September 10, 1999, there were
approximately 406 stockholders of record of the Common Stock.
No dividends were declared or paid on the Common Stock during the periods
reported in the table above. TransMontaigne intends to retain future cash flow
for use in its business and has no current intention of paying dividends to its
common stockholders in the foreseeable future. Any payment of future dividends
to its common stockholders and the amounts thereof will depend upon
TransMontaigne's earnings, financial condition, capital requirements and other
factors deemed relevant by TransMontaigne's Board of Directors.
TransMontaigne's Credit Facility and Master Shelf
15
<PAGE>
Agreement, as well as instruments governing certain of its other indebtedness,
contain certain restrictions on the payment of dividends. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources."
ITEM 6. SELECTED FINANCIAL DATA
The following selected financial data for the fiscal years ended June 30,
1999, April 30, 1998, 1997, 1996 and 1995, is derived from applicable audited
consolidated financial statements. This selected financial data should be read
in conjunction with Management's Discussion and Analysis of Financial Condition
and Results of Operations, Item 7, and the consolidated financial statements and
notes thereto included in Item 8, "Financial Statements and Supplementary Data."
16
<PAGE>
TRANSMONTAIGNE INC.
Selected Financial Data
(thousands of dollars, except for per share amounts)
<TABLE>
<CAPTION>
Fiscal year ended Two months ended Fiscal years ended
June 30, June 30, April 30,
----------------- ---------------- ------------------------------------------------
1999 1998 1998 1997 1996 1995
----------------- ---------------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS DATA:
Revenues $ 3,047,061 315,533 1,967,506 1,166,665 533,107 324,591
Operating Income (Loss) 30,179 (2,586) 19,234 9,901 6,549 406
Net Earnings (Loss) 1,939 (2,663) 7,638 9,171 4,618 (3,218)
Preferred stock dividends (2,274) - - - - -
Net Earnings (Loss)
attributable to
common stockholders (335) (2,663) 7,638 9,171 4,618 (3,218)
Earnings (Loss)
Per Common Share
Basic (0.01) (0.10) 0.30 0.42 0.31 (1.32)
Diluted (0.01) (0.10) 0.29 0.41 0.30 (1.32)
Weighted average common
shares outstanding:
Basic 28,972 25,949 25,887 21,743 14,972 2,860
Diluted 28,972 25,949 26,680 22,544 15,154 2,860
STATEMENT OF CASH
FLOWS DATA:
Net Cash Provided
By (Used In):
Operating Activities $ (68,861) 3,672 (4,570) (9,586) (3,864) (237)
Investing Activities (467,040) (6,277) (66,131) (89,920) (4,181) (234)
Financing Activities 522,613 12 64,124 97,487 44,647 62
OTHER FINANCIAL
DATA:
EBITDA (1) $ 50,622 (523) 29,511 15,355 8,844 1,561
Capital Expenditures 137,556 6,455 66,634 92,294 4,124 748
<CAPTION>
June 30, April 30,
------------------------------------ ------------------------------------------------
1999 1998 1998 1997 1996 1995
----------------- ----------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET
DATA:
Working Capital $ 347,605 86,467 94,393 78,423 55,652 37,989
Total Assets 1,095,508 318,215 323,305 261,724 120,963 104,220
Long-Term Debt,
excluding current
maturities 495,672 128,971 128,970 64,774 28,949 36,946
Stockholders' Equity 376,051 145,266 147,804 138,972 57,819 28,471
</TABLE>
17
<PAGE>
(1) EBITDA is earnings (loss) before income tax plus interest expense,
amortization of deferred debt issuance costs, other financing costs and
depreciation and amortization. TransMontaigne believes that, in addition
to cash flow from operations and net earnings (loss), EBITDA is a useful
financial performance measurement for assessing operating performance since
it provides an additional basis to evaluate the ability of TransMontaigne
to incur and service debt and to fund capital expenditures. In evaluating
EBITDA, TransMontaigne believes that consideration should be given, among
other things, to the amount by which EBITDA exceeds interest costs for the
period; how EBITDA compares to principal repayments on debt for the period;
and how EBITDA compares to capital expenditures for the period. To evaluate
EBITDA, the components of EBITDA such as revenue and operating expenses and
the variability of such components over time, should also be considered.
EBITDA should not be construed, however, as an alternative to operating
income (loss) (as determined in accordance with generally accepted
accounting principles ("GAAP")) as an indicator of TransMontaigne's
operating performance or to cash flows from operating activities (as
determined in accordance with GAAP) as a measure of liquidity.
TransMontaigne's method of calculating EBITDA may differ from methods used
by other companies, and as a result, EBITDA measures disclosed herein may
not be comparable to other similarly titled measures used by other
companies.
18
<PAGE>
INFORMATION REGARDING FORWARD LOOKING STATEMENTS
This Annual Report on Form 10-K includes forward looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Although TransMontaigne believes that its
expectations are based on reasonable assumptions, it can give no assurance that
its goals will be achieved. Important factors which could cause actual results
to differ materially from those in the forward looking statements include:
. that TransMontaigne will expand its business
. that TransMontaigne will generate net operating margins from high sales
volumes
. that TransMontaigne will generate net operating margins affected by
price volatility of products purchased and sold
. that TransMontaigne will enter into transactions with counterparties
having the ability to meet their financial commitments to TransMontaigne
. that TransMontaigne will effectively hedge inventory positions
. that TransMontaigne will incur unanticipated costs in complying with
current and future environmental regulations
. that TransMontaigne will capitalize on the trend by other companies in
the oil and gas industry to divest assets and outsource certain services
. that TransMontaigne will acquire strategically located operating
facilities from third parties
. that TransMontaigne will replace the supply of dedicated natural gas
reserves gathered and processed by its facilities
. that TransMontaigne will generate working capital internally, or have
the ability to access debt and equity resources, to meet its capital
requirements
. that TransMontaigne will achieve Year 2000 compliance without incurring
material costs adversely impacting its operating results.
19
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
TransMontaigne provides a broad range of integrated transportation,
terminaling, storage, supply, distribution, gathering, processing and marketing
services to producers, refiners, distributors, marketers and industrial end-
users of petroleum products, chemicals, other bulk liquids, natural gas and
crude oil in the downstream sector of the petroleum and chemical industries.
TransMontaigne is a holding company which conducts its operations through
subsidiaries primarily in the Mid-Continent, Gulf Coast, Southeast, Mid-
Atlantic, Northeast and Rocky Mountain regions of the United States.
TransMontaigne operations are divided into its logistical petroleum services
business segments which include pipelines; terminals, which includes terminaling
and storage services; supply, distribution and marketing of refined petroleum
products; and a natural gas services business segment which includes the
gathering, treating, processing, fractionating and marketing natural gas liquids
("NGL") and natural gas. Segment information is presented in the notes to the
financial statements. TransMontaigne does not explore for, or produce, crude
oil or natural gas; does not own crude oil or natural gas reserves; and does not
own chemicals or other bulk liquids inventory.
TransMontaigne owns and operates refined petroleum products, chemicals,
other bulk liquids, crude oil and natural gas assets. TransMontaigne's refined
petroleum products, chemicals, other bulk liquids and crude oil assets consist
primarily of 3 pipeline systems with approximately 790 miles of petroleum
products and crude oil pipeline and 70 terminal, storage and delivery facilities
located in 19 states with a combined tank storage capacity of 20,300,000
barrels. TransMontaigne's natural gas gathering and processing assets consist of
5 gathering and processing systems in 4 states with combined throughput capacity
of 106 million cubic feet per day and over 2,900 miles of pipelines.
TransMontaigne also extensively utilizes refined petroleum products common
carrier pipelines and terminals owned by third parties in order to increase
product volumes shipped, marketed and sold to and exchanged with customers in
other locations. Management believes that the use of all these facilities should
allow TransMontaigne to significantly expand its geographic service area and the
integrated logistical services it provides.
20
<PAGE>
TransMontaigne has increased net operating margins to $64,944,000 and
$35,889,000 for the years ended June 30, 1999 and April 30, 1998, respectively,
by improving the performance of its facilities through selective capital
improvements, restructured operating and administrative functions, expanded
marketing of services and by implementing an operating plan together with
financial management systems which provide the foundation for its current
operations and future growth. In addition, new information systems, policies,
procedures and operating controls have been established and implemented; and
experienced managerial personnel have been added to improve operational
efficiencies in all service areas as well as to expand the products supply,
distribution and marketing area.
ACQUISITIONS
On June 30, 1999, TransMontaigne acquired from Amerada Hess Corporation the
Hess Terminals for approximately $66,200,000 cash and related refined products
inventory for approximately $32,500,000 cash. The Hess Terminals, which are
interconnected to the Colonial and Plantation pipeline systems, include
approximately 5.3 million barrels of tankage at 11 storage and terminal
facilities and 36 miles of proprietary pipelines.
On December 3, 1998, TransMontaigne acquired from SUNOCO, Inc. a petroleum
products terminal located on the Hudson River at Rensselaer, near Albany, New
York for approximately $5,200,000 cash. The Rensselaer terminal facility
includes 510,000 barrels of storage capacity, 3 truck loading racks and a dock
capable of handling both barges and ocean going tankers.
On October 30, 1998, TransMontaigne acquired all of the common stock of LDEC
for approximately $161,000,000, including $100,565,000 cash and 4.5 million
shares of TransMontaigne common stock valued at $60,435,000. In addition,
TransMontaigne acquired LDEC's working capital
21
<PAGE>
for $192,492,000 cash. The LDEC acquisition included 24 refined petroleum
products terminal and storage facilities, of which 7 are wholly owned and 17 are
owned jointly with BP Oil Company, together with its supply, distribution and
marketing business. These facilities are located in 9 states in the Southern and
Eastern regions of the United States; have approximately 4.2 million barrels of
TransMontaigne owned storage capacity; and are supplied primarily by the
Colonial and Plantation pipeline systems.
On September 18, 1998, TransMontaigne acquired for $29,219,000 cash the
15.38% common stock interest in West Shore owned by Atlantic Richfield Company.
Effective December 31, 1998, TransMontaigne acquired for $5,488,000 cash an
additional 4.11% common stock interest in West Shore owned by Equilon Pipeline
Company, LLC and for $1,186,000 cash an additional .89% common stock interest in
West Shore owned by Texaco Transportation and Trading Inc., both of which
transactions closed in January 1999.
On July 28, 1998, TransMontaigne acquired the Southwest Terminal for
$6,500,000 cash. The acquisition included terminaling, storage and loading
facilities for petroleum products, chemicals and other bulk liquids at the Port
of Brownsville, Texas with over 1.65 million barrels of tank storage, 12 truck
rack loading bays, connections to barge and tanker loading facilities and the
exclusive use of 5 railroad spur lines with a total of 32 railroad car loading
spots.
In November 1997, TransMontaigne acquired the common stock of the 17 ITAPCO
Terminal Corporations and certain related property and property interests for
approximately $32,000,000 cash. The acquisition included 17 bulk liquid storage
and distribution terminals located in 8 states having total tankage capacity in
excess of 3.3 million barrels, handling primarily refined petroleum products,
chemicals and other bulk liquids together with the related operations of the
terminals; and certain other assets.
22
<PAGE>
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED YEARS ENDED
JUNE 30, APRIL 30,
--------------------- ----------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
PIPELINE OPERATIONS
Volume (1) 24,403 19,578 19,580
Revenues (2) $ 15,328 13,252 12,196
Net Operating Margin (2) $ 7,224 7,206 6,671
Margin per Gallon $ 0.0070 0.0088 0.0081
TERMINAL OPERATIONS
Volume (1) 4,829,000 1,509,000 774,000
Refined petroleum products 4,812,000 1,492,000 774,000
Chemicals and other bulk liquids 17,000 17,000 -
Revenues (2) $ 41,046 13,882 5,387
Refined petroleum products $ 33,122 11,297 5,387
Chemicals and other bulk liquids $ 7,924 2,585 -
Net Operating Margin (2) $ 22,387 8,118 3,295
Margin per Gallon $ 0.0046 0.0054 0.0043
PRODUCTS SUPPLY, DISTRIBUTION AND
MARKETING OPERATIONS
Volume (1) 6,133,000 3,550,000 1,774,000
Revenues (2) $ 2,937,128 1,879,907 1,125,941
Net Operating Margin (2) $ 24,108 7,849 2,379
NATURAL GAS SERVICES OPERATIONS
Inlet Volume (3) 20,791 20,477 5,332
NGL Production (3) 105,775 98,359 27,219
Residue Production (3) 16,644 16,918 4,533
Revenues (2) $ 53,559 60,465 23,141
Net Operating Margin (2) $ 11,225 12,716 6,265
TOTAL OPERATIONS
Revenues (2) $ 3,047,061 1,967,506 1,166,665
Net Operating Margin (2) $ 64,944 35,889 18,610
Net Earnings (2) $ 1,939 7,638 9,171
</TABLE>
23
<PAGE>
(1) Pipeline volumes are expressed in thousands of barrels (42 gallons per
barrel). Terminal and products supply, distribution and marketing volumes
are expressed in thousands of gallons.
(2) Revenues, net operating margins, and net earnings are expressed in
thousands of dollars. Net operating margin represents (a) revenues less
operating expenses for pipeline and terminal operations; (b) revenues less
cost of refined petroleum products purchased and operating expenses for
products supply distribution, and marketing operations, and (c) revenues
less cost of natural gas gathered, processed and sold and operating
expenses for natural gas services operations.
(3) Natural gas inlet volumes are expressed in million cubic feet; NGL
production is expressed in thousands of gallons; and residue natural gas
production is expressed in million British Thermal Units.
Prior to the acquisition of the ITAPCO Terminal Corporations facilities in
November 1997 and the Grasslands Facilities in December 1996, TransMontaigne's
revenues were derived from the logistical petroleum services business segments
consisting primarily of transporting refined petroleum products (and to a lesser
extent crude oil) in pipelines; the storage and terminaling of refined petroleum
products; and the supply, distribution and marketing of refined petroleum
products. The storage and terminaling of chemicals and other bulk liquids
became a component of the terminal operating business segment following the
ITAPCO Terminal Corporations acquisition. Natural gas services became a
separate operating business segment with the acquisition of the Grasslands
Facilities.
Pipeline revenues are based on the volume of refined petroleum products or
crude oil transported and the distance from the origin point to the delivery
point. TransMontaigne's interstate pipeline systems transport refined petroleum
products and their tariffs are regulated by the FERC. TransMontaigne's
intrastate pipeline transports crude oil and its tariffs are not regulated by
the FERC, but are regulated by the Texas Railroad Commission.
Terminal revenues are based on the volume of refined petroleum products
handled at TransMontaigne terminal loading racks, generally at a standard per
gallon rate. Terminal fees are not regulated. Storage fees are generally based
on a per barrel rate or tankage capacity committed and
24
<PAGE>
will vary with the duration of the arrangement, the product stored and special
handling requirements, particularly when certain types of chemicals and other
bulk liquids are involved. Storage fees are not regulated.
Operating expenses of pipeline and terminal operations include wages and
employee benefits, utilities, communications, maintenance and repairs, property
taxes, rent, insurance, vehicle expenses, environmental compliance costs,
materials and supplies.
Products supply, distribution and marketing logistical services revenues
and fees are generated from bulk sales and exchanges of refined petroleum
products to major and large independent energy companies; wholesale distribution
and sales of refined petroleum products to jobbers and retailers; regional and
national industrial end-user and commercial wholesale storage and forward sales
marketing contracts of refined petroleum products; and tailored short and long-
term fuel margin and risk management logistical services arrangements to
wholesale, retail and industrial end-users. Refined petroleum products storage
and forward sales transactions enable TransMontaigne to purchase refined
petroleum products inventory; utilize proprietary and leased tankage as well as
line space controlled by TransMontaigne in major common carrier pipelines;
arbitrage location product prices differentials and transportation costs; store
the inventory; and, depending upon market conditions, lock-in margins through
sales in the futures cash market or NYMEX contracts. All energy related
contracts are marked to market with changes being recognized in operations.
Margin and risk management logistical services provide both TransMontaigne's
large and small volume customers an assured, ratable and cost effective short or
long-term delivered source of refined petroleum product supply through
proprietary pipelines and terminals as well as non-proprietary pipeline,
terminal, truck, rail and barge distribution channels. Bulk purchase and sale
transactions in quantities of 25,000 barrels to 50,000 barrels or more are
common. Wholesale distribution of refined petroleum products is conducted from
70 proprietary and 150 non-proprietary truck loading terminal, storage and
delivery locations.
Operating expenses of products supply, distribution and marketing operations
are primarily the cost of products purchased and also include transportation,
storage, terminaling, wages and employee benefits, property taxes, travel and
entertainment, and sales commission expenses.
25
<PAGE>
Natural gas gathering and processing revenues are based on the inlet volume
of natural gas purchased from producers under both percentage of proceeds and
fee based arrangements. Natural gas is gathered and processed into NGL
products, principally propane, butane and natural gasoline. These products are
transported by truck or pipeline to storage facilities from which they are
further transported and marketed by TransMontaigne to wholesalers and end-users.
Residue natural gas is delivered to and marketed through connections with third-
party interstate natural gas pipelines.
Operating expenses of natural gas gathering and processing operations
include wages and employee benefits, utilities, maintenance and repairs,
property taxes, rent, insurance, vehicle expenses, environmental compliance
costs, materials and supplies.
YEAR ENDED JUNE 30, 1999 COMPARED TO YEAR ENDED APRIL 30, 1998
In August 1998, TransMontaigne elected to change its fiscal year end to
June 30. The management discussion that follows compares the year ended June
30, 1999 to the year ended April 30, 1998. TransMontaigne did not recast
historical financial information to present the year ended June 30, 1998 because
the financial reporting systems in place at that time included certain
procedures which were completed only on an annual basis. Accordingly, it is
impractical to recast this financial information.
The net operating margin from pipeline operations for the current year was
$7,224,000 compared to $7,206,000 for the year ended April 30, 1998, an increase
of $18,000. The margin per gallon for the year ended June 30, 1999 of $.0070
decreased 20%, or $.0018. Pipeline volumes increased 25% and revenues increased
16% primarily due to increased joint tariff participation and short haul
movements in the East Chicago area which were offset by a 34% increase in
operating costs primarily due to increased payroll, major maintenance projects
and right of way clearing costs.
The net operating margin from terminal operations for the current year was
$22,387,000 compared to $8,118,000 for the year ended April 30, 1998, an
increase of 176%, or $14,269,000. The margin per gallon for the year ended June
30, 1999 of $.0046 decreased 15%, or $.0008. The increase in net operating
margin resulted from a significant increase in refined petroleum products
26
<PAGE>
volumes handled and revenues attributable to the addition of the ITAPCO Terminal
Corporations, Southwest, LDEC and Rensselaer terminals acquired in November
1997, July 1998, October 1998 and December 1998, respectively. These revenue
increases were partially offset by a 224% increase in terminal operating costs
primarily attributable to the LDEC terminals, Southwest Terminal, Rensselaer
Terminal, the ITAPCO Terminal Corporations terminals and expanded East Chicago
and Mt. Vernon terminal operations.
The net operating margin from products supply, distribution and marketing
operations for the year ended June 30, 1999 was $24,108,000 compared to
$7,849,000 for the year ended April 30, 1998, an increase of 207%, or
$16,259,000. Revenues were $2,937,128,000 for the year ended June 30, 1999
compared to $1,879,907,000 for the year ended April 30, 1998, an increase of
56%, or $1,057,221,000. These increases were primarily due to the inclusion of
LDEC operations for the eight months ended June 30, 1999.
Overall, the increased products supply, distribution and marketing volume
contributed directly to the increases in pipeline and terminal volumes. By
providing seamless integrated logistical services to customers through the
effective utilization of its proprietary pipeline and terminal facilities, and
the facilities owned and operated by third parties, as well as its significantly
expanded product supply, distribution and marketing capabilities,
TransMontaigne's aggregate net operating margin from the logistical petroleum
services operating business segments was $53,719,000 for the year ended June 30,
1999 compared to $23,173,000 for the year ended April 30, 1998, an increase of
132%, or $30,546,000.
The net operating margin from natural gas services operations for the year
ended June 30, 1999 was $11,225,000 compared to $12,716,000 for the year ended
April 30, 1998, a decrease of 12%, or $1,491,000. Revenues for the year ended
June 30, 1999 were $53,559,000 compared to $60,465,000 for the year ended April
30, 1998, a decrease of 11%, or $6,906,000. The net operating margin and
revenues were attributable primarily to the business activities of the
Grasslands Facilities. Net operating margin and revenues during the year ended
June 30, 1999 were negatively impacted by low NGL prices during the last six
months of 1998 and first five months of 1999, notwithstanding an approximate 8%
increase in NGL production.
27
<PAGE>
General and administrative expenses for the year ended June 30, 1999 were
$17,991,000 compared to $8,438,000 for the year ended April 30, 1998, an
increase of 113%, or $9,553,000. The increase was due primarily to additional
personnel costs, related employee benefits, increased office lease rentals,
increased communication expenses and expenses related to the relocation of
certain TransMontaigne employees to the Atlanta, Georgia office. These increases
were directly attributable to the continued expansion of TransMontaigne's
integrated logistical petroleum services and to the acquisition and operations
of LDEC and the ITAPCO Terminal Corporations. In addition, the increase includes
amortization of unearned compensation of $780,000.
Other income for the year ended June 30, 1999 included dividend income from
West Shore of $1,374,000 and Lion Oil Company ("Lion") of $374,000. Interest
income for the year ended June 30, 1999 was $1,921,000 compared to $2,059,000
for the year ended April 30, 1998, a decrease of 7%, or $138,000. The decrease
in interest income was due primarily to the decrease in interest bearing cash
balances held for future investments.
Interest expense represents interest on the TransMontaigne credit facility
borrowings and senior promissory notes which were used primarily to finance the
acquisitions of LDEC, West Shore, the Southwest Terminal, the Rensselaer
Terminal, the ITAPCO Terminal Corporations and the Grasslands Facilities, other
continuing capital expenditures and working capital to carry inventory and
accounts receivable. Also included is interest on the TransMontaigne senior
subordinated debentures. Amortization of deferred debt issuance costs includes
the amortization of costs paid in connection with the bank credit facility and
Master Shelf Agreement. Other financing costs includes commitment fees paid in
connection with the credit facility. Interest expense, amortization of deferred
debt issuance costs, and other financing costs during the year ended June 30,
1999 were $30,454,000 compared to $8,164,000 during the year ended April 30,
1998, an increase of 273%, or $22,290,000. The increase in interest expense of
$17,904,000 was due to an increase in average outstanding debt, primarily to
fund acquisitions and increased working capital requirements. Amortization of
deferred debt issuance costs increased $3,239,000 largely due to amortization of
costs incurred in securing a restructured BankBoston, N.A. credit facility and
additional costs associated with amending the Master Shelf Agreement.
28
<PAGE>
Earnings before income taxes for the year ended June 30, 1999 were
$3,394,000, compared to $13,130,000 for the year ended April 30, 1998, a
decrease of 74%, or $9,736,000. The decrease in earnings before income taxes
resulted from increased general and administrative expenses; additional
depreciation attributable to the acquisitions of LDEC and the ITAPCO Terminal
Corporations and expansion of natural gas services facilities; and interest
expense, primarily attributable to the financing of the LDEC, West Shore,
Southwest Terminal, Rensselaer Terminal and ITAPCO Terminal Corporations
acquisitions and increased working capital requirements; offset by increased net
operating margin contributions from products supply, distribution and marketing
operations primarily from the LDEC acquisition; and from terminal operations
primarily from the LDEC and ITAPCO Terminal Corporations acquisitions.
Income tax expense was $1,455,000 for the year ended June 30, 1999 which
represents an effective combined federal and state income tax rate of 42.9%.
Income tax expense was $5,492,500 for the year ended April 30, 1998 which
represents an effective combined federal and state income tax rate of 41.8%.
Preferred stock dividends on the Series A Convertible Preferred Stock were
$2,274,000 for the short period from the issuance dates of March 25, 1999 and
March 30, 1999 to June 30, 1999. The preferred stock dividends were paid June
30, 1999.
Net earnings were $1,939,000 for the year ended June 30, 1999, compared to
$7,638,000 for the year ended April 30, 1998, a decrease of 75%, or $5,699,000.
After preferred stock dividends, net earnings (loss) attributable to common
stockholders were $(335,000) and $7,638,000 for the years ended June 30, 1999
and April 30, 1998, respectively. Loss per common share for the year ended June
30, 1999 was $(.01) basic and $(.01) diluted based on 28,971,516 weighted
average basic and diluted shares outstanding compared to earnings per share of
$.30 basic and $.29 diluted for the year ended April 30, 1998.
29
<PAGE>
TWO MONTHS ENDED JUNE 30, 1998
In August 1998, TransMontaigne elected to change its fiscal year end to
June 30. The following addresses results of operations for the two months ended
June 30, 1998.
The net operating margin (loss) from pipeline; terminal and storage;
products supply and distribution; and natural gas services operations was
$1,652,000, $2,052,000, ($4,460,000) and $1,881,000, respectively, for the two
months ended June 30, 1998. The aggregate net operating margin was $1,125,000.
Included in TransMontaigne's net operating margin was a non-cash lower of cost
or market write down adjustment to inventory of $1,880,000.
General and administrative expenses for the two months ended June 30, 1998
were $1,938,000 and included additional personnel related costs and increased
office lease, regulatory reporting, travel, information systems and
communication expenses attributable to TransMontaigne's overall expansion of its
expanded integrated logistical petroleum services.
Loss before income taxes for the two months ended June 30, 1998 was
$4,066,000. The loss was primarily a result of depressed product prices which
caused negative product sales operating margins; increased general and
administrative expenses; additional depreciation attributable to the expansion
of natural gas services facilities and the acquisition of the ITAPCO Terminal
Corporations; and interest expense, primarily attributable to the financing of
the ITAPCO Terminal Corporations acquisition. Partially offsetting these factors
were the operating margin contribution from the ITAPCO Terminal Corporations
acquisition; the net operating margin contribution from the natural gas services
business segment attributable essentially to the Grasslands facilities; and the
increased net operating margin contribution from the pipeline operations
business segment.
30
<PAGE>
YEAR ENDED APRIL 30, 1998 COMPARED TO YEAR ENDED APRIL 30, 1997
The net operating margin from pipeline operations of $7,206,000 increased
8%, or $535,000, in fiscal year 1998 on essentially flat volumes. This increase
resulted primarily from a 9% increase in revenues of $1,056,000, primarily due
to a net increase in the volumes of higher tariff long haul pipeline shipments,
together with increases in joint tariff participation and terminal facility
rental income. This increase was partially offset by an 9% increase in
operating costs of $521,000 which was due to incremental power costs from
additional long haul shipment volumes as well as increased field personnel
costs, maintenance and vehicle expenses.
The net operating margin from terminal operations of $8,118,000 increased
146%, or $4,823,000, in fiscal year 1998 on revenues of $13,882,000, an increase
of 158%, or $8,495,000. This increase resulted from an overall 93% increase in
refined petroleum products volumes handled of 718,000,000 gallons and 17,000,000
gallons of chemical and other bulk liquids handled by the ITAPCO Terminal
Corporations facilities acquired in November 1997; additional volumes of
303,093,000 gallons at the East Chicago terminal facility acquired in December
1996; and new jet fuel contract volumes of 6,395,000 gallons at the
Indianapolis, Indiana terminal. These increases were offset in part by a 176%
increase in terminal operating costs largely attributable to the ITAPCO Terminal
Corporations facilities operations; expanded East Chicago terminal operations; a
new terminal lease; additional freight charges on products; and increased field
personnel costs and maintenance expenses.
The net operating margin from product sales in fiscal year 1998 was
$7,849,000, an increase of $5,470,000 or 230%. Revenues increased $753,966,000,
or 67%, on additional volume of 1,776,534,000 gallons of products sold, an
increase of 100%. The significant increase in volumes and revenues was
attributable to TransMontaigne's continuing and expanding supply, distribution
and marketing program. The higher net operating margin was positively impacted
by strategic bulk sales transactions during the last six months of the year.
Volatile refined petroleum product market conditions influenced by the
international political climate and atypical and erratic weather patterns,
however, drove product prices to unanticipated lows which adversely affected
fourth quarter products supply and distribution performance and resulted in a
lower of cost or market write down adjustment
31
<PAGE>
to inventory of $1,688,000 as of April 30, 1998. The inventory write down
adjustment was charged to product costs resulting in a decrease of $.0005 in net
operating margin per gallon sold during the year. Overall, however, the
increased product sales volume contributed to the substantial increase in
terminal throughput volumes, which resulted in increasing the related terminal
revenues for the year. By providing an integrated logistical service to
customers through the effective utilization of its transportation and terminal
facilities as well as its product supply, distribution and marketing
capabilities, TransMontaigne's aggregate net operating margin from the
logistical petroleum services business segments was $23,173,000 in fiscal year
1998, an increase of $10,828,000, or 88%, over fiscal year 1997.
The net operating margin from natural gas services operations of
$12,716,000 in fiscal year 1998 includes a full year of the business activities
of the Grasslands Facilities whereas fiscal year 1997 included only a four and
one-half month period. Net operating margin contributions from the Marmarth,
Baker, Lignite and Wiggins natural gas gathering and processing facilities, as
well as management fees from 15 small natural gas gathering systems, are also
included for a full year. Net operating margin during the latter part of the
current year was impacted by a steep decline in NGL prices, primarily propane,
notwithstanding an increase in natural gas inlet volumes per day.
General and administrative expenses increased $3,185,000, a 61% increase in
fiscal year 1998, primarily due to additional personnel costs. In addition,
office lease expense increased, as well as employee relocation, regulatory
reporting, travel, insurance, information systems and communication expenses.
These expense increases were directly attributable to the ITAPCO Terminal
Corporations operations and a full year of natural gas gathering and processing
operations included in fiscal year 1998, as well as expenses related to
TransMontaigne's expanded integrated logistical petroleum services.
Other income in fiscal year 1998 includes interest income of $2,059,000.
In fiscal year 1997 other income included TransMontaigne's share of Lion
earnings, net of related minority interests, of approximately $70,000 and
interest income of $1,777,000. The $282,000 increase in interest income in
fiscal year 1998 was due primarily to an increase in interest bearing cash
balances held for future investments.
32
<PAGE>
Interest expense represents interest on the TransMontaigne bank credit
facility and senior promissory notes which were used primarily to finance the
acquisitions of the ITAPCO Terminal Corporations in November, 1997 and
Grasslands Facilities in December, 1996, other continuing capital expenditures
and working capital to carry inventory and accounts receivable. Also included
is interest on TransMontaigne senior subordinated debentures. Amortization of
deferred debt issuance costs includes the amortization of costs paid in
connection with the bank credit facility and Master Shelf Agreement. Other
financing costs includes commitment fees paid in connection with the credit
facility. Interest expense, amortization of deferred debt issuance costs, and
other financing costs during fiscal year 1998 increased $3,748,000, or 85%, of
which $3,549,000 represented increased interest expense over fiscal year 1997
primarily due to an increase of approximately $51,500,000 in average outstanding
debt over fiscal year 1997.
Earnings before income taxes for fiscal year 1998 were $13,130,000, a 75%
increase of $5,647,000 over the $7,483,000 for fiscal year 1997. This
improvement was primarily a result of the aggregate increase in the logistical
petroleum services business segment net operating margin of $10,828,000,
including the additional contribution from the ITAPCO Terminal Corporations
acquisition and after the inventory write down adjustment; the positive impact
of the $6,451,000 increase in net operating margin contribution from the gas
gathering and processing business segment attributable to the inclusion of the
Grasslands Facilities operations for a full year; and additional interest income
of $282,000. These increases were partially offset by the $3,185,000 increase
in general and administrative expenses; increased depreciation and amortization
of $4,761,000, including $3,102,000 attributable to the Grasslands Facilities
and $653,000 attributable to the ITAPCO Terminal Corporations; and increased
interest expense of $3,549,000 primarily attributable to the financing of the
Grasslands Facilities and ITAPCO Terminal Corporations acquisitions.
Income tax expense for fiscal year 1998 of $5,492,500 represents an
effective 41.8% combined federal and state income tax rate. At April 30, 1997,
TransMontaigne determined that its net deferred tax assets would more likely
than not be realized and recognized a one-time income tax benefit of $2,275,000
reduced by state income taxes of $586,000 for a net income tax benefit of
$1,689,000.
33
<PAGE>
Net earnings of TransMontaigne for fiscal year 1998, after providing for
income taxes, were $7,638,000 compared to $9,171,000 for fiscal year 1997, a
decrease of 17%. Earnings per share for the year ended April 30, 1998 were $ .30
basic and $ .29 diluted based on 25,886,737 weighted average basic shares
outstanding and 26,679,503 weighted average diluted shares outstanding,
respectively. This compares to earnings per share of $ .42 basic and $ .41
diluted for fiscal 1997.
LIQUIDITY AND CAPITAL RESOURCES
The following summary reflects TransMontaigne's comparative net cash flows
for the years ended June 30, 1999, April 30, 1998 and 1997.
<TABLE>
<CAPTION>
Year Ended June 30, Years Ended April 30,
--------------------- ------------------------------------
1999 1998 1997
--------------------- ---------------- ----------------
<S> <C> <C> <C>
Net cash (used) by operating activities $ (68,861,000) (4,570,000) (9,586,000)
Net cash (used) by investing activities $ (467,040,000) (66,131,000) (89,920,000)
Net cash provided by financing activities $ 522,613,000 64,124,000 97,487,000
</TABLE>
Net cash used by operating activities of $68,861,000 for the year
ended June 30, 1999 was attributable primarily to increased inventories
including $32,500,000 of inventory included in the Hess Terminals acquisition,
and trade accounts receivable reduced by increased trade accounts payable and
inventory due under exchange agreements, net earnings before income taxes,
amortization of deferred debt issuance costs, and depreciation and amortization.
TransMontaigne's current ratio (current assets divided by current liabilities)
was 2.6 to 1.0 at June 30, 1999 compared to 3.1 to 1.0 at April 30, 1998.
Net cash used by investing activities was $467,040,000 during the year
ended June 30, 1999 as TransMontaigne continued its growth through construction
and improvements to existing operating facilities and the acquisitions of LDEC
($293,057,000 cash), Hess facilities ($66,200,000 cash), a 20.38% common stock
interest in West Shore ($35,893,000 cash), Southwest Terminal ($6,500,000 cash)
and Rensselaer Terminal ($5,200,000 cash). Net cash used by investing
activities was $66,131,000 during the year ended April 30, 1998 which included
approximately $32,000,000 for the
34
<PAGE>
ITAPCO Terminal Corporations acquisition, $3,174,000 of improvements to the
Grasslands Facilities and other natural gas assets; and enhancements to the
pipeline and terminal facilities.
Net cash provided by financing activities for the year ended June 30,
1999 of $522,613,000 primarily represented borrowings of $368,700,000 under
TransMontaigne's credit facility and proceeds of $170,115,000 from the issuance
of the Series A Convertible Preferred Stock which were used to fund the LDEC,
Hess facilities, West Shore, Southwest, Rensselaer acquisitions, as well as to
finance and capital expenditures. Net cash provided by financing activities for
the year ended April 30, 1998 of $64,124,000 represented borrowings under
TransMontaigne's credit facility primarily used to finance operations and
capital expenditures. At June 30, 1999, TransMontaigne had $704,000,000 of
aggregate borrowing capacity with availability of $206,310,000 under its credit
agreements.
On March 25, 1999 and March 30, 1999 TransMontaigne closed a private
placement of $170,115,000 of $1,000 Series A Convertible Preferred Stock Units.
Each unit consists of one share of 5% convertible preferred stock, convertible
into common stock at $15 per share, and 66.67 warrants, each warrant exercisable
to purchase six-tenths of a share of common stock at $14 per share. Dividends
are cumulative and payable quarterly. The dividend rate increases to an annual
rate of 16% for any convertible preferred stock outstanding after December 31,
2003. The convertible preferred stock is convertible any time and may be called
for redemption by TransMontaigne after the second year if the market price of
the common stock is greater than 175% of the conversion price at the date of the
call. Proceeds were used to reduce bank debt incurred in connection with the
LDEC acquisition and for general corporate purposes.
In June 1999, TransMontaigne closed a $600,000,000 credit facility led by
BankBoston, N.A. The credit facility includes a $400,000,000 revolving
component due December 31, 2003 and a $200,000,000 term component due June 30,
2006. The term component has quarterly principal payments required beginning in
September 2000. Borrowings under this credit facility bear interest at an
annual rate equal to the lender's Alternate Base Rate plus margins subject to a
Eurodollar Rate pricing option. The credit facility includes a $20,000,000 same
day revolving swing line under which advances may be drawn at an interest rate
comparable to the Eurodollar Rate. The proceeds from the
35
<PAGE>
credit facility were used to refinance existing bank debt and provide funds for
future acquisitions and other general corporate purposes.
At June 30, 1999, TransMontaigne had advances of $418,690,000 outstanding
under the bank credit facility utilizing the Eurodollar Rate loan pricing
option. The average interest rate at June 30, 1999 was 8.1%.
At June 30, 1999, TransMontaigne had outstanding under the Master Shelf
Agreement, $50,000,000 of 7.85% Senior Notes due April 17, 2003 and $25,000,000
of 7.22% Senior Notes due October 17, 2004. The Master Shelf Agreement was
amended as of June 29, 1999 in connection with the closing of the $600,000,000
credit facility.
The bank credit facility agreement and the Master Shelf Agreement contain a
negative pledge covenant by TransMontaigne and its subsidiaries and are secured
by the stock of the subsidiaries. The agreements also include financial
compliance tests relating to fixed charges coverage, leverage ratio,
consolidated tangible net worth, distributions and inventory positions. As of
June 30, 1999, TransMontaigne was in compliance with all such tests.
At June 30, 1999, TransMontaigne had working capital of $347,027,000;
availability under its bank credit facility of $181,310,000; and additional
borrowing capacity of $25,000,000 under the Master Shelf Agreement.
TransMontaigne believes that its current working capital position; future
cash provided by operating activities; proceeds from the private placement or
public offering of debt and common stock; available borrowing capacity under the
bank credit facility agreement and the Master Shelf Agreement; additional
borrowing allowed under those agreements; and its relationship with
institutional lenders and equity investors should enable TransMontaigne to meet
its current capital requirements.
EBITDA represents earnings before income taxes plus interest expense,
amortization of deferred debt issuance costs, other financing costs and
depreciation and amortization. EBITDA is
36
<PAGE>
used by management as part of its overall assessment of TransMontaigne's
performance by analyzing and comparing EBITDA between reporting periods.
Management believes that, in addition to cash flow from operations as well as
operating income and net earnings (determined in accordance with generally
accepted accounting principles) as indicators of operating performance, EBITDA
is used by the financial community to measure operating effectiveness and as a
method to evaluate the market value of companies like TransMontaigne. EBITDA is
also used to evaluate TransMontaigne's ability to incur and service debt and to
fund capital expenditures, although it is not considered in isolation or a
substitute for the other measurements of performance and liquidity.
EBITDA for the current year was $50,622,000, a 72% increase over EBITDA of
$29,511,000 for the prior year.
Working capital required to support TransMontaigne's business operations,
principally to carry accounts receivable and inventory, is provided by advances
from its credit facility. Interest expense related to working capital advances
is not included in the determination of EBITDA. For the years ended June 30,
1999 and April 30, 1998, interest expense attributable to working capital
advances was approximately $14,688,000 and $4,047,000, respectively.
Capital expenditures anticipated for the year ending June 30, 2000 are
estimated to be $100,000,000 for pipeline, terminal and natural gas gathering
and processing facilities, and assets to support these facilities and could
exceed that amount if additional facilities enhancement projects and possible
acquisitions being considered by TransMontaigne materialize. Future capital
expenditures will depend on numerous factors, including the availability,
economics and cost of appropriate acquisitions which TransMontaigne identifies
and evaluates; the economics, cost and required regulatory approvals with
respect to the expansion and enhancement of existing systems and facilities; the
customer demand for the services TransMontaigne provides; local, state and
federal governmental
37
<PAGE>
regulations; environmental compliance requirements; and the availability of debt
financing and equity capital on acceptable terms.
On February 17, 1999, TransMontaigne and Colonial Pipeline Company
("Colonial") signed a definitive agreement whereby TransMontaigne, in an
alliance with Colonial, will construct, own and operate a marine loading and
unloading facility on the Mississippi River near Baton Rouge, Louisiana which is
designed to handle multiple barge deliveries of all grades of petroleum products
transported within Colonial's pipeline system at rates in excess of 14,000
barrels per hour and inbound and outbound volumes exceeding 50,000 barrels per
day. Colonial will construct three pipelines to connect the TransMontaigne
marine facility for waterway deliveries along the Mississippi and Ohio Rivers,
as well as to receive barge deliveries for long haul Colonial system shipments,
and will also construct a related pump station between its Baton Rouge tank farm
and the TransMontaigne marine facility. TransMontaigne's estimated cost for the
marine facility is $9,300,000. The facility is anticipated to be operational in
the first calendar quarter of 2000.
YEAR 2000 MATTERS
Historically, certain computer software and computer based management
information systems ("Information Technology"), as well as certain hardware
containing embedded microcontrollers and microprocessors ("Embedded
Technology"), were designed to utilize a two-digit rather than a four-digit date
field and consequently may cause computers, computer controlled systems and
equipment with embedded technology to malfunction or incorrectly process data in
the Year 2000, resulting in significant system failures. TransMontaigne relies
on Information Technology, as well as Embedded Technology, to operate
instruments and equipment in conducting its normal business activities. Certain
of the Information Technology and Embedded Technology may not have been designed
to function properly with respect to the application of dating systems relating
to the Year 2000.
In response, TransMontaigne has developed a "Year 2000" Plan. While
achieving Year 2000 readiness does not mean correcting every Year 2000
limitation, critical systems, as well as relationships with third-party
customers, vendors and local, state and federal government agencies have been,
and continue to be, evaluated and are expected to be suitable for continued use
into and
38
<PAGE>
beyond the Year 2000. The Year 2000 Plan has been presented to the Board of
Directors and periodic progress updates regarding its implementation have been
provided. The purpose of the Year 2000 Plan is to define and provide a
continuing process for inventory, inventory assessment, remediation, testing,
and contingency planning to achieve a level of readiness that will effectively
deal with the Year 2000 concerns in a timely manner. These five steps are more
fully addressed in the three phases outlined below:
A. Assessment - This involves the identification and inventory of
TransMontaigne's Information Technology and Embedded Technology and
determination of their Year 2000 compliancy status and those third-party
customers, vendors and state and federal governmental agencies believed to be
material to TransMontaigne's business, results of operations, or financial
condition ("Key Parties").
B. Remediation Planning - This involves the development of remediation plans
which will enable business assets and business relationships critical to
TransMontaigne's business operations to be Year 2000 ready.
C. Plan Implementation - This involves the implementation of remediation
plans, including post-remediation testing and contingency planning.
Implementation of TransMontaigne's Year 2000 Plan is directly supervised by
a Senior Vice President, assisted by a Year 2000 Plan Director, who coordinates
the implementation of the Year 2000 Plan among TransMontaigne's individual
business units. The Plan Director has established an internal group to identify
and assess potential areas of risk and to make any required modifications to
computer systems and equipment used in TransMontaigne's business activities.
TransMontaigne has also undertaken to monitor the compliance efforts of Key
Parties, whose Information Technology and/or Embedded Technology interfaces with
that of TransMontaigne, or whose services are critical to the ongoing business
of TransMontaigne in order to ensure that operations will not be adversely
affected by the Year 2000 compliance problems of third-parties. TransMontaigne
has contacted 600 Key Parties by letter requesting detailed information to be
completed and returned to the Plan Director. Through June 30, 1999, responses
had been received from 74% of those contacted. Non-
39
<PAGE>
respondents have been contacted by phone or by letter in order of importance to
follow up and obtain responses to outstanding requests for information and
compliance status.
Failure of one or more Key Parties to address a Year 2000 issue could
result in business disruptions that could have a material adverse effect on the
operations or financial performance of TransMontaigne. While there can be no
assurance that Key Parties will successfully reprogram or replace, and test, all
of their Information Technology and Embedded Technology to ensure such systems
are Year 2000 compliant, TransMontaigne believes that the ongoing communication
with and assessment of the compliance efforts and status of the Key Parties will
minimize these risks.
TransMontaigne believes that it can provide the resources necessary to
ensure Year 2000 compliance and expects to complete the Year 2000 Plan within a
time frame which will enable its Information Technology and Embedded Systems to
function without significant disruption in the Year 2000. Inventory and
inventory assessment were substantially finalized at December 31, 1998. The
remediation, testing and contingency planning will be substantially completed at
September 30, 1999. Business acquisitions routinely involve an analysis of Year
2000 readiness and are incorporated into the overall program as necessary.
At June 30, 1999, TransMontaigne had incurred third party costs of
approximately $1,000,000 related to Year 2000 compliance matters and estimates
that the total cumulative future third party software and equipment costs
related to Year 2000 Assessment, Remediation Planning and Implementation phases,
based upon information developed to date, will be approximately $2,000,000,
which will be expensed as incurred. These costs have been and will continue to
be funded through operating cash flows. The cost of the remediation activities
and the completion dates are based on TransMontaigne's best estimates and may be
revised as additional information becomes available. The costs incurred to date
and those estimated to be incurred in the future also do not include internal
costs. TransMontaigne does not presently separately record internal costs
incurred with respect to implementation of the Year 2000 Plan. Such costs are
principally the related payroll costs for the information systems and field
operations personnel, including senior management, involved in carrying out the
Year 2000 Plan, as well as related travel and other out-of-pocket expenses.
40
<PAGE>
Although TransMontaigne anticipates that minimal business disruption will
occur as a result of Year 2000 issues, in the event TransMontaigne's Information
Technology and Embedded Technology, or those owned and operated by Key Parties,
should fail to function properly, possible consequences include but are not
limited to small, localized, loss of communications links with pipeline control
centers, terminal automation systems and field offices; loss of electric power;
and inability to automatically process commercial transactions, or engage in
similar normal automated or computerized business activities. Contingency plans
have been and are continuing to be developed to address the results of these
potentially isolated events to facilitate the resumption of normal operations
following disruption. However, it is also possible that the scope of Year 2000
issues involving Key Parties may result in multiple concurrent events or
disruptions, which may have a longer duration. In such event, depending upon
the number and duration of such disruptions and the number or importance of the
facilities impacted, such disruptions could have a material adverse impact on
the business, results of operations or financial condition of TransMontaigne.
Accordingly, contingency plans, as developed, will be reviewed and supplemented
as necessary by September 30, 1999 to address possible worst case scenarios in
order to minimize the impact of such events. Contingency plans under
development include performing certain processes manually, changing suppliers
and reducing or suspending certain non-critical aspects of TransMontaigne's
operations. The contingency planning effort focuses on potential internal
risks, as well as potential risks associated with Key Parties.
While TransMontaigne does not anticipate that Year 2000 issues, including
the cost of compliance and testing, will have a material adverse effect on the
business, results of operations or financial condition of TransMontaigne, if
TransMontaigne Information Technology or Embedded Technology, or those of Key
Parties, fail to achieve Year 2000 readiness in a timely manner, it could have a
material adverse impact on the business, results of operations or financial
condition of TransMontaigne.
41
<PAGE>
NEW ACCOUNTING STANDARDS
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"), was issued in June
1998 by the Financial Accounting Standards Board. SFAS 133 establishes new
accounting and reporting standards for derivative instruments and for hedging
activities. This statement requires an entity to establish at the inception of
a hedge, the method it will use for assessing the effectiveness of the hedging
derivative and the measurement approach for determining the ineffective aspect
of the hedge. Those methods must be consistent with the entity's approach to
managing risk. SFAS 133, as amended, is effective for all fiscal quarters of
fiscal years beginning after June 15, 2000. TransMontaigne is in the process of
assessing the impact, if any, that SFAS 133 will have on its consolidated
financial statements.
42
<PAGE>
ITEM 7A. QUALITATIVE AND QUANTITATIVE DISCLOSURES
ABOUT MARKET RISK
Risk Policies
TransMontaigne is exposed to market risks associated with commodity prices
and interest rates. Risk management policies have been established by a Product
and Risk Management Committee ("PRMC") to monitor and control these market
risks. The PRMC is comprised primarily of senior executives. The PRMC has
responsibility for oversight with respect to all product risk management and
establishes financial exposure limits.
Commodity Risk
TransMontaigne's earnings, cash flow and liquidity may be significantly
affected by a variety of factors beyond its control, including the supply of,
and demand for, commodities such as refined products and crude oil. The demand
for these refined products, as well as crude oil, depends on, among other
factors, changes in domestic and foreign economies, weather conditions, domestic
and foreign political affairs, production levels, the availability of imports,
the marketing of competitive fuels and the extent of government regulation. As a
result, refined products and crude oil experience price volatility, which
directly impacts the TransMontaigne's revenues, product costs and operating
income.
TransMontaigne has developed risk management strategies to mitigate the
risk associated with petroleum price volatility on its product inventories.
TransMontaigne believes these strategies are integral to its risk policies since
product inventories are required to effectively operate TransMontaigne's
logistical services business and such inventories are expected to be purchased,
sold and carried over extended periods of time in the ordinary course of
business.
TransMontaigne's strategies are intended to minimize the impact of refined
product prices volatility on profitability and generally involve the purchase
and sale of exchange-traded, energy-
43
<PAGE>
related futures and options. In addition, TransMontaigne to a lesser extent
enters into energy swap agreements similar to those traded on the exchanges,
such as crack spreads, which better match specific price movements in
TransMontaigne's markets. These strategies are designed to minimize, on a short-
term basis, TransMontaigne's exposure to the risk of fluctuations in refined
product margins. The number of barrels of crude oil and refined products covered
by such contracts varies and are closely managed and subject to internally
established risk standards.
A sensitivity analysis prepared by TransMontaigne estimates exposure
to market risk associated with derivative commodity positions. This analysis
may differ from actual results. The fair value of each derivative commodity
position was based on quoted futures prices. Market risk was estimated based on
a 10% change in prices. As of June 30, 1999, TransMontaigne's sensitivity to
market risk associated with commodity instruments was immaterial.
Interest Rate Risk
TransMontaigne is exposed to risk resulting from changes in interest rates
as a result of its variable-rate debt and fixed-rate debt. TransMontaigne
manages its interest rate exposure by monitoring the effects of market changes
in interest rates.
If market interest rates had averaged 1% higher (lower) in fiscal year
1999 than in fiscal year 1998, interest expense would increase (decrease), and
earnings before income taxes would decrease (increase) by approximately $2.9
million. Comparatively, if market interest rates had averaged 1% higher (lower)
in fiscal year 1998 than in fiscal year 1997, interest expense would have
increased (decreased), and earnings before income taxes would have decreased
(increased) by approximately $0.4 million. These amounts were determined by
considering the impact of the hypothetical interest rates on the variable-rate
borrowings outstanding as of June 30, 1999 and April 30, 1998. In the event of a
significant change in interest rates, management would likely take actions to
manage exposure to the change. However, due to the uncertainty of the specific
actions that would be taken and their possible effects, the interest sensitivity
analysis assumed no changes in TransMontaigne's financial structure.
Subsequent to June 30, 1999, TransMontaigne entered into swap agreements
with two money center banks to hedge against the exposure of an increase in
interest rates.
44
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
TransMontaigne's consolidated financial statements are included herein
beginning on the following pages.
45
<PAGE>
Independent Auditors' Report
----------------------------
The Board of Directors and Stockholders
TransMontaigne Inc.:
We have audited the accompanying consolidated balance sheets of TransMontaigne
Inc. and subsidiaries as of June 30, 1999 and April 30, 1998, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the year ended June 30, 1999, the two months ended June 30, 1998, and the years
ended April 30, 1998 and 1997. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of TransMontaigne Inc.
and subsidiaries as of June 30, 1999 and April 30, 1998, and the results of
their operations and their cash flows for the year ended June 30, 1999, the two
months ended June 30, 1998, and the years ended April 30, 1998 and 1997 in
conformity with generally accepted accounting principles.
KPMG LLP
Atlanta, Georgia
September 10, 1999
46
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
June 30, 1999 and April 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets June 30, 1999 April 30, 1998
- ------ ----------------- ------------------
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 13,926,666 29,807,354
Trade accounts receivable 174,121,534 74,118,482
Inventories 378,207,319 33,410,481
Prepaid expenses 4,355,134 2,673,807
--------------- --------------
570,610,653 140,010,124
--------------- --------------
Property, plant and equipment:
Land 42,772,857 2,801,964
Plant and equipment 431,140,700 183,669,911
Accumulated depreciation (37,571,926) (18,705,670)
--------------- --------------
436,341,631 167,766,205
--------------- --------------
Investments and other assets:
Investments 46,141,488 10,180,720
Deferred debt issuance costs, net 11,529,197 1,661,878
Unrealized gains on energy related contracts 8,996,485 -
Other assets, net 21,888,911 3,685,903
--------------- --------------
88,556,081 15,528,501
--------------- --------------
$ 1,095,508,365 323,304,830
=============== ==============
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Trade accounts payable $ 164,161,832 28,834,154
Inventory due under exchange agreements 25,790,821 4,568,886
Excise taxes payable 25,681,433 7,329,667
Other accrued liabilities 5,371,289 4,884,153
Current portion of long-term debt 2,000,000 -
--------------- --------------
223,005,375 45,616,860
--------------- --------------
Long-term debt 495,671,800 128,969,667
Deferred tax liabilities 780,000 914,000
Stockholders' equity:
Preferred stock, par value $.01 per share, authorized
2,000,000 shares, issued and outstanding 170,115
shares Series A Convertible at June 30, 1999,
liquidation preference of $170,115,000 1,701 -
Common stock, par value $.01 per share,
authorized 80,000,000 shares at June 30, 1999 and
authorized 40,000,000 shares at April 30, 1998,
issued and outstanding 30,479,024 shares at June 30, 1999
and 25,942,870 shares at April 30, 1998 304,791 259,429
Capital in excess of par value 367,235,421 136,717,865
Unearned compensation - (680,531)
Retained earnings 8,509,277 11,507,540
--------------- --------------
376,051,190 147,804,303
--------------- --------------
$ 1,095,508,365 323,304,830
=============== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
47
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
<TABLE>
<CAPTION>
Consolidated Statements of Operations
Year Ended June 30, 1999, Two Months Ended June 30, 1998 and Years Ended April 30, 1998 and 1997
- ----------------------------------------------------------------------------------------------------------------------------
June 30, 1999 June 30, 1998 April 30, 1998 April 30, 1997
------------------ ----------------- ------------------ ---------------
<S> <C> <C> <C> <C>
Revenues:
Product sales, pipeline tariffs, terminal
fees and natural gas gathering and
processing fees $ 3,047,060,694 315,533,026 1,967,506,496 1,166,664,621
Costs and expenses:
Product costs and operating expenses 2,982,116,425 314,407,737 1,931,617,127 1,148,054,685
General and administrative 17,990,979 1,938,042 8,437,928 5,253,369
Depreciation and amortization 16,774,552 1,773,315 8,216,992 3,455,999
------------------ ----------------- ------------------ ---------------
3,016,881,956 318,119,094 1,948,272,047 1,156,764,053
------------------ ----------------- ------------------ ---------------
Operating income (loss) 30,178,738 (2,586,068) 19,234,449 9,900,568
Other income (expenses):
Dividend income from investments 1,748,671 - - -
Interest income 1,920,538 289,525 2,059,494 1,777,441
Interest expense (25,495,361) (1,616,251) (7,591,223) (4,042,616)
Amortization of deferred debt issuance
costs (3,640,735) (80,274) (402,102) (183,591)
Other financing costs (1,318,299) (72,740) (170,488) (189,942)
Other, net - - - 220,674
------------------ ----------------- ------------------ ---------------
(26,785,186) (1,479,740) (6,104,319) (2,418,034)
------------------ ----------------- ------------------ ---------------
Earnings (loss) before
income tax 3,393,552 (4,065,808) 13,130,130 7,482,534
Income tax (expense) benefit (1,454,793) 1,402,907 (5,492,500) 1,688,778
------------------ ----------------- ------------------ ---------------
Net earnings (loss) 1,938,759 (2,662,901) 7,637,630 9,171,312
Preferred stock dividends (2,274,121) - - -
------------------ ----------------- ------------------ ---------------
Net earnings (loss) attributable
to common stockholders $ (335,362) (2,662,901) 7,637,630 9,171,312
================== ================= ================== ===============
Weighted average common shares outstanding:
Basic 28,971,516 25,948,709 25,886,737 21,742,625
================== ================= ================== ===============
Diluted 28,971,516 25,948,709 26,679,503 22,544,402
================== ================= ================== ===============
Earnings (loss) per common share
Basic $ (0.01) (0.10) 0.30 0.42
================== ================= ================== ===============
Diluted $ (0.01) (0.10) 0.29 0.41
================== ================= ================== ===============
</TABLE>
See accompanying notes to consolidated financial statements.
48
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
<TABLE>
<CAPTION>
Consolidated Statements of Stockholders' Equity
Year Ended June 30, 1999, Two Months Ended June 30, 1998, and Years Ended April 30, 1998 and 1997
- --------------------------------------------------------------------------------------------------------------------------
Capital in
Preferred Common excess of Unearned Retained
stock stock par value Compensation earnings Total
------------ ------------- --------------- ------------ -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Balance at April 30, 1996 $ - 1,933,117 61,187,476 - (5,301,402) 57,819,191
Change in the par value
of common stock from
$.10 to $.01 in
connection with merger - (1,739,805) 1,739,805 - - -
Common stock issued in
merger - 14,744 8,093,785 - - 8,108,529
Common stock issued for
minority interest in
subsidiary - 1,000 974,000 - - 975,000
Common stock repurchased
and retired - (148) (199,852) - - (200,000)
Common stock issued for
options exercised - 2,130 780,822 - - 782,952
Common stock issued for
cash in public offering - 46,909 62,952,321 - - 62,999,230
Costs related to issuance
of common stock - - (684,473) - - (684,473)
Net earnings - - - - 9,171,312 9,171,312
------------ ------------- --------------- ------------ -------------- ---------------
Balance at April 30, 1997 - 257,947 134,843,884 - 3,869,910 138,971,741
Common stock issued for
options exercised - 922 406,404 - - 407,326
Tax benefit arising from
options exercised - - 583,000 - - 583,000
Costs related to issuance
of common stock - - (53,863) - - (53,863)
Unearned compensation
related to restricted
stock awards - 560 938,440 (939,000) - -
Amortization of unearned
compensation - - - 258,469 - 258,469
Net earnings - - - - 7,637,630 7,637,630
------------ ------------- --------------- ------------ -------------- ---------------
Balance at April 30, 1998 - 259,429 136,717,865 (680,531) 11,507,540 147,804,303
Common stock issued for
options exercised - 88 36,652 - - 36,740
Common stock issued for
services - 17 25,483 - - 25,500
Amortization of unearned
compensation - - - 62,183 - 62,183
Net (loss) - - - - (2,662,901) (2,662,901)
------------ ------------- --------------- ------------ -------------- ---------------
Balance at June 30, 1998 - 259,534 136,780,000 (618,348) 8,844,639 145,265,825
Preferred stock issued in
connection with stock
purchase agreements 1,701 - 170,113,299 - - 170,115,000
Costs related to issuance
of preferred stock - - (327,448) - - (327,448)
Common stock issued for
options exercised - 154 84,145 - - 84,299
Common stock issued for
services - 65 93,373 - - 93,438
Tax benefit arising from
options exercised - - 63,500 - - 63,500
Unearned compensation
related to restricted
stock awards - 120 161,880 (162,000) - -
Amortization of unearned
compensation - - - 780,348 - 780,348
Common stock issued in
acquisition of Louis
Dreyfus Energy Corp. - 45,000 60,390,000 - - 60,435,000
Common stock repurchased
and retired - (82) (123,328) - - (123,410)
Preferred stock dividends - - - - (2,274,121) (2,274,121)
Net earnings - - - - 1,938,759 1,938,759
------------ ------------- --------------- ------------ -------------- ---------------
Balance at June 30, 1999 $ 1,701 304,791 367,235,421 - 8,509,277 376,051,190
============ ============= =============== ============ ============== ===============
</TABLE>
See accompanying notes to consolidated financial statements.
49
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
Year Ended June 30, 1999, Two Months Ended June 30, 1998 and Years Ended April 30, 1998 and 1997
- -------------------------------------------------------------------------------------------------------------------------------
June 30, 1999 June 30, 1998 April 30, 1998 April 30, 1997
------------------ ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 1,938,759 (2,662,901) 7,637,630 9,171,312
Adjustments to reconcile net earnings (loss)
to net cash provided (used) by operating
activities:
Depreciation and amortization 16,774,552 1,773,315 8,216,992 3,455,999
Equity in earnings of affiliates - - - (92,280)
Minority interests - - - 22,414
Deferred tax expense (benefit) 1,416,500 (1,487,000) 5,173,000 (2,274,600)
Loss (gain) on disposition of assets 92,406 (551) (35,097) (70,489)
Amortization of unearned compensation 780,348 62,183 258,469 -
Amortization of deferred debt issuance
costs 3,640,735 80,274 402,102 183,591
Changes in operating assets and
liabilities, net of noncash
activities:
Trade accounts receivable (12,711,389) 37,726,898 (27,247,275) (25,750,916)
Inventories (152,686,047) (30,149,156) 8,935,970 (18,737,315)
Prepaid expenses (1,636,387) (32,098) (1,025,817) 199,516
Trade accounts payable 56,393,368 (193,388) (8,059,245) 26,656,549
Inventory due under exchange
agreements 23,060,034 (1,838,099) (413,293) (3,892,466)
Excise taxes payable and other
accrued liabilities (5,924,284) 392,900 1,586,463 1,543,032
------------------ ---------------- --------------- ----------------
Net cash provided (used)
by operating activities (68,861,405) 3,672,377 (4,570,101) (9,585,653)
------------------ ---------------- --------------- ----------------
Cash flows from investing activities:
Purchases of property, plant and equipment (137,555,858) (6,455,349) (66,634,291) (92,294,394)
Proceeds from sale of assets 5,600 657 83,875 18,318
Acquisition of Louis Dreyfus Energy Corp. (293,056,539) - - -
Investment in West Shore Pipe Line Company (35,960,768) - - -
Costs related to acquisitions (699,263) - (130,755) (399,284)
Cash received in connection with acquisitions - - 1,222,360 2,315,527
Cash balance in subsidiary sold - - - (111,341)
Decrease (increase) in other assets, net 226,882 178,113 (671,851) 550,709
------------------ ---------------- --------------- ----------------
Net cash (used) by
investing activities (467,039,946) (6,276,579) (66,130,662) (89,920,465)
------------------ ---------------- --------------- ----------------
Cash flows from financing activities:
Borrowings (repayments) of long-term debt, net 368,700,400 1,733 64,195,400 35,825,400
Deferred debt issuance costs (13,562,077) (26,251) (425,071) (1,435,900)
Preferred stock issued for cash 170,115,000 - - -
Costs related to issuance of preferred stock (327,448) - - -
Common stock issued for cash 84,299 36,740 407,326 63,782,182
Costs related to issuance of common stock - - (53,863) (684,473)
Common stock repurchased and retired (123,410) - - -
Preferred stock dividends paid (2,274,121) - - -
------------------ ---------------- --------------- ----------------
Net cash provided by
financing activities 522,612,643 12,222 64,123,792 97,487,209
------------------ ---------------- --------------- ----------------
(Decrease) in cash
and cash equivalents (13,288,708) (2,591,980) (6,576,971) (2,018,909)
Cash and cash equivalents at beginning of year 27,215,374 29,807,354 36,384,325 38,403,234
------------------ ---------------- --------------- ----------------
Cash and cash equivalents at end of year $ 13,926,666 27,215,374 29,807,354 36,384,325
================== ================ =============== ================
(Continued)
</TABLE>
See accompanying notes to consolidated financial statements.
50
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows (Continued)
Year Ended June 30, 1999, Two Months Ended June 30, 1998, and Years Ended April 30, 1998 and 1997
- ---------------------------------------------------------------------------------------------------------------------------------
June 30, 1999 June 30, 1998 April 30, 1998 April 30, 1997
--------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Supplemental disclosures of cash flow information:
Acquisition of Louis Dreyfus Energy Corp.
Fair value of assets acquired $ 456,989,523 - - -
Fair value of liabilities assumed (103,497,984) - - -
--------------- --------------- ---------------- ----------------
353,491,539 - - -
Fair value of common stock issued (60,435,000) - - -
--------------- --------------- ---------------- ----------------
Cash paid in acquisition $ 293,056,539 - - -
=============== =============== ================ ================
Acquisition of Sheffield Exploration Company - - -
Fair value of assets acquired $ - - - 8,739,247
Fair value of liabilities assumed - - - (231,484)
--------------- --------------- ---------------- ----------------
- - - 8,507,763
Costs related to acquisition - - - (399,284)
--------------- --------------- ---------------- ----------------
Fair value of stock issued $ - - - 8,108,479
=============== =============== ================ ================
Cash received in connection with acquisition
included in assets acquired $ - - - 2,315,527
=============== =============== ================ ================
Sale of Sheffield Operating Company
Fair value of assets sold $ - - - 1,991,403
Fair value of liabilities assumed by purchaser - - - 245,451
--------------- --------------- ---------------- ----------------
Fair value of consideration received $ - - - 2,236,854
=============== =============== ================ ================
Cash distributed in connection with sale
included in assets sold $ - - - 111,341
=============== =============== ================ ================
</TABLE>
See accompanying notes to consolidated financial statements.
51
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1999 and April 30, 1998
- --------------------------------------------------------------------------------
(1) Summary of Significant Accounting Policies
Nature of Business and Basis of Presentation
TransMontaigne Inc. ("TransMontaigne") provides a broad range of integrated
transportation, terminaling, storage, supply, distribution, gathering,
processing and marketing services to producers, refiners, distributors,
marketers and industrial end-users of petroleum products, chemicals, other
bulk liquids, natural gas and crude oil in the downstream sector of the
petroleum and chemical industries. TransMontaigne is a holding company
which conducts its operations through wholly-owned subsidiaries primarily
in the Mid-Continent, Gulf Coast, Southeast, Mid-Atlantic, Northeast and
Rocky Mountain regions of the United States. TransMontaigne operations are
divided into logistical petroleum services business segments which include
pipelines; terminals, which includes terminaling and storage services;
supply, distribution and marketing of refined petroleum products; and a
natural gas services business segment which includes gathering, treating,
processing, fractionating and marketing natural gas liquids ("NGL") and
natural gas. Segment information is presented in the notes to the
consolidated financial statements. TransMontaigne does not explore for, or
produce, crude oil or natural gas; and does not own crude oil or natural
gas reserves.
In August 1998, the Board of Directors of TransMontaigne voted to change
TransMontaigne's fiscal year end from April 30 to June 30, to be effective
June 30, 1998. This new fiscal year end allows TransMontaigne to conform to
calendar quarterly reporting periods generally used in its industry.
TransMontaigne did not recast historical financial information.
Principles of Consolidation and Use of Estimates
The accounting and financial reporting policies of TransMontaigne and its
subsidiaries conform to generally accepted accounting principles and
prevailing industry practices. The consolidated financial statements
include all the majority owned subsidiaries of TransMontaigne. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
The preparation of financial statements in conformity with generally
accepted accounting principles requires TransMontaigne management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Changes in
these estimates and assumptions will occur as a result of the passage of
time and the occurrence of future events, and actual results will differ
from the estimates.
52
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1999 and April 30, 1998
- --------------------------------------------------------------------------------
(1) Summary of Significant Accounting Policies (continued)
"TransMontaigne" is used as a collective reference to TransMontaigne Inc.
and its subsidiaries and affiliates. The businesses of TransMontaigne are
conducted by the subsidiaries and affiliates whose operations are managed
by their respective officers.
Cash and Cash Equivalents
TransMontaigne considers all short-term investments with a maturity of
three months or less to be cash equivalents.
Inventories
Inventories consist primarily of refined products stated at market.
Refined products due from third parties under exchange agreements are
included in inventory and recorded at current replacement cost. Refined
products due to third parties under exchange agreements are recorded at
current replacement cost. Adjustments resulting from changes in current
replacement cost for refined products due to or from third parties under
exchange agreements are reflected in product costs. The exchange agreements
are typically for a term of 30 days and are generally settled by delivering
product to or receiving product from the party to the exchange.
Property, Plant and Equipment
Depreciation is computed using the straight-line and double-declining
balance methods. Estimated useful lives are 20 to 25 years for plant, which
includes buildings, storage tanks, and pipelines and 3 to 20 years for
equipment. All items of property, plant and equipment are carried at cost.
Expenditures that increase values, change capacities, or extend useful
lives are capitalized. Routine repairs and maintenance are expensed.
Computer software costs are capitalized and amortized over their useful
lives, generally not to exceed 5 years. Certain enterprise wide information
systems are amortized over periods not exceeding 10 years. TransMontaigne
capitalizes interest on major projects during construction.
53
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1999 and April 30, 1998
- --------------------------------------------------------------------------------
(1) Summary of Significant Accounting Policies (continued)
Investment in Lion Oil Company
Effective May 1, 1997, TransMontaigne Holding Inc., a 65% owned subsidiary
of TransMontaigne, issued to its 35% minority shareholders irrevocable
proxies to vote their 35% share of the 27.75% interest in Lion Oil Company
("Lion") owned by TransMontaigne Holding Inc. Since the issuance of the
irrevocable proxies reduced TransMontaigne's voting interest in Lion from
27.75% to 18.04%, TransMontaigne changed its method of accounting for the
investment in Lion from the equity method, under which the investment
originally recorded at cost is adjusted to recognize TransMontaigne's share
of Lion net earnings or losses as incurred, to the historical cost method,
under which the investment is recorded at cost and dividends or other
distributions are recognized as received. As of May 1, 1997, the investment
in Lion by TransMontaigne Holding Inc. representing its original cost plus
accumulated net earnings was $15,586,097 and the related minority interest
was $5,475,377.
Deferred Debt Issuance Costs
Deferred debt issuance costs related to the long-term credit agreements and
senior subordinated debentures are amortized on the interest method over
the term of the underlying debt instrument. Accumulated amortization was
$4,463,622 and $742,613 at June 30, 1999 and April 30, 1998, respectively.
Other Assets
Line space rights received in connection with the Louis Dreyfus Energy
Corp. ("LDEC") acquisition are included in other assets and their
amortization is included in depreciation and amortization expense. These
rights are amortized on a straight-line basis over 20 years. Accumulated
amortization was $645,509 at June 30, 1999.
54
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1999 and April 30, 1998
- --------------------------------------------------------------------------------
(1) Summary of Significant Accounting Policies (continued)
Income Taxes
TransMontaigne utilizes the asset and liability method of accounting for
income taxes, as prescribed by Statement of Financial Accounting Standards
No. 109 ("SFAS 109"). Under this method, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply in
the years in which these temporary differences are expected to be recovered
or settled. Changes in tax rates are recognized in income in the period
that includes the enactment date.
Environmental Expenditures
Expenditures that relate to an existing condition caused by past
operations, and which do not contribute to current or future revenue
generation are expensed. Expenditures relating to current or future
revenues are expensed or capitalized as appropriate. Liabilities are
recorded when environmental assessment and/or clean-ups are probable and
the costs can be reasonably estimated.
55
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1999 and April 30, 1998
- --------------------------------------------------------------------------------
(1) Summary of Significant Accounting Policies (continued)
Inventory Risk Management
TransMontaigne utilizes derivative financial instruments to manage market
risks associated with certain energy commodities.
In connection with its products supply, distribution and marketing
business, TransMontaigne engages in trading activities. Trading activities
are accounted for using the mark-to-market method of accounting. In 1998,
the Emerging Issues Task Force ("EITF") reached a consensus on Issue No.
98-10, Accounting for Contracts Involved in Energy Trading and Risk
Management Activities ("EITF 98-10"). EITF 98-10 is effective for fiscal
years beginning after December 15, 1998 and requires energy trading
contracts to be recorded at fair value on the balance sheet, with the
changes in fair value included in earnings. TransMontaigne has elected
early adoption of EITF 98-10 effective in the current fiscal year.
TransMontaigne, prior to the acquisition of LDEC, valued inventory at the
lower of cost or market, which was recorded at market at April 30, 1998.
LDEC historically valued its inventory at market. Management believes that
the adoption of EITF 98-10 in the current year does not have a material
impact on TransMontaigne's financial position or results of operations.
Trading activities are conducted through a variety of financial
instruments, including forward contracts involving cash settlement or
physical delivery of energy commodities; swap contracts which require
payments to (or receipts from) counterparties based on the differential
between a fixed and variable price for the commodities; exchange-trade
options; over-the-counter options; and other contractual arrangements.
Under mark-to-market accounting, commodity and energy related contracts are
reflected at fair value with resulting gains and losses recorded in
operating income. The net gains and losses recognized in the current period
result primarily from transactions originating within the period and the
impact of current period price movements on transactions originating in
prior periods. Unrealized gains and losses from energy trading activities
are recorded as assets and liabilities.
The market value of these energy contracts is based upon management's
estimate, considering various factors including closing exchange and over-
the-counter quotations, time value and volatility factors underlying the
commitments. The market values are adjusted to reflect the potential impact
of liquidating TransMontaigne's position in an orderly manner over a
reasonable period of time under present market conditions.
56
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1999 and April 30, 1998
- --------------------------------------------------------------------------------
(1) Summary of Significant Accounting Policies (continued)
TransMontaigne's Product and Risk Management Committee reviews the total
inventory and risk position on a regular basis in order to ensure
compliance with TransMontaigne's inventory management policies, including
hedging and trading activities. TransMontaigne has adopted policies under
which its net inventory position subject to price risk requires the prior
approval of the Product and Risk Management Committee.
Earnings Per Common Share
Basic earnings per common share has been calculated based on the weighted
average number of common shares outstanding during the period. Diluted
earnings per share assumes conversion of dilutive convertible preferred
stocks and exercise of all stock options and warrants having exercise
prices less than the average market price of the common stock using the
treasury stock method.
Recently Issued Accounting Pronouncement
In 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS 133 establishes accounting and
reporting standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be recorded on
the balance sheet as either an asset or liability measured at its fair
value. The statement requires that changes in the derivative's fair value
be recognized currently in earnings unless specific hedge accounting
criteria are met. SFAS 133 is effective for fiscal quarters of fiscal years
beginning after June 15, 2000 as amended by SFAS 137. TransMontaigne
believes that SFAS 133 will not have a material impact on its accounting
for price risk management activities.
57
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1999 and April 30, 1998
- --------------------------------------------------------------------------------
(1) Summary of Significant Accounting Policies (continued)
In June 1997, The Financial Accounting Standards Board issued SFAS 130,
Reporting Comprehensive Income. SFAS 130 establishes standards for
reporting and displaying comprehensive income and its components in a full
set of general purpose financial statements. SFAS 130 requires all items
that are required to be recognized under accounting standards as components
of comprehensive income be reported in a financial statement that is
displayed in equal prominence with the other financial statements. The term
"comprehensive income" is used in the statement to describe the total of
all components of comprehensive income including net income. TransMontaigne
does not have any items of other comprehensive income for any of the
periods presented, as there are no changes in equity during such periods
that result from transactions from non-owner sources.
Reclassifications
Certain amounts in the accompanying consolidated financial statements for
prior periods have been reclassified to conform to the classifications used
in 1999.
(2) Acquisitions
On June 30, 1999, TransMontaigne, through wholly-owned subsidiaries
TransMontaigne Terminaling Inc. ("TTI") and TransMontaigne Product Services
Inc. ("TPSI"), acquired from Amerada Hess Corporation the Hess Southeastern
Pipeline Network ("Hess Terminals") of refined petroleum product facilities
for approximately $66,200,000 cash, and related refined products inventory
for $32,500,000 cash. The Hess Terminals, which are interconnected to the
Colonial and Plantation pipeline systems, include approximately 5.3 million
barrels of tankage at 11 storage and terminal facilities and 36 miles of
proprietary pipelines.
On December 3, 1998, TransMontaigne, through a wholly-owned subsidiary,
TTI, acquired from SUNOCO, Inc. a petroleum products terminal located on
the Hudson River at Rensselaer, near Albany, New York for approximately
$5,200,000 cash. The Rensselaer terminal facility includes 510,000 barrels
of storage capacity, 3 truck loading racks and a dock capable of handling
barges and ocean going tankers.
58
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1999 and April 30, 1998
- --------------------------------------------------------------------------------
(2) Acquisitions (continued)
On October 30, 1998, TransMontaigne, through a wholly-owned subsidiary,
TPSI, acquired all of the common stock of LDEC for approximately
$161,000,000, including $100,565,000 cash and 4.5 million shares of
TransMontaigne common stock valued at $60,435,000. In addition,
TransMontaigne acquired LDEC's working capital for $192,492,000 cash. The
LDEC acquisition included 24 refined petroleum products terminal and
storage facilities, of which 7 are wholly owned and 17 are owned jointly
with BP Oil Company, together with its supply, distribution and marketing
business. These facilities are located in 9 states in the Southern and
Eastern regions of the United States; have approximately 4.2 million
barrels of TransMontaigne owned storage capacity; and are supplied
primarily by the Colonial and Plantation pipeline systems. Subsequent to
closing the acquisition, the name of LDEC was changed to TransMontaigne
Product Services East Inc. ("TPSI-East") and effective April 1, 1999, TPSI-
East was merged into its parent, TransMontaigne Product Services Inc.
On July 29, 1998, TransMontaigne, through a wholly-owned subsidiary, TTI,
acquired all of the common stock of Statia Terminals Southwest, Inc.
("Southwest Terminal") for $6,500,000 cash. The acquisition included
terminal, storage and loading facilities for petroleum products, chemicals
and other bulk liquids at the Port of Brownsville, Texas with over 1.6
million barrels of tank storage, 12 truck rack loading bays, connections to
barge and tanker loading facilities and the exclusive use of 5 railroad
spur lines with a total of 32 railroad car loading spots. Southwest
Terminal was merged into TTI effective September 30, 1998.
On November 25, 1997, TransMontaigne, through a wholly-owned subsidiary,
TTI, acquired for $32,000,000 the common stock of 17 corporations, known as
the "ITAPCO Terminal Corporations", and certain related property and
property interests. The acquisition included 17 storage and distribution
terminals located in 8 states having total tankage capacity in excess of
3.3 million barrels, handling primarily refined petroleum products,
chemicals and other bulk liquids together with the related operations of
the terminals. The ITAPCO Terminal Corporations were merged into TTI
effective December 1, 1997.
TransMontaigne has accounted for these acquisitions using the purchase
method accounting as of the effective date of each transaction.
Accordingly, the purchase price of each transaction has been allocated to
the assets and liabilities acquired based upon the estimated fair value of
those assets and liabilities as of the acquisition date. TransMontaigne
received a third party appraisal in connection with the LDEC allocation.
The cash used to purchase the above acquisitions was funded by advances
from TransMontaigne's credit facility.
59
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1999 and April 30, 1998
- --------------------------------------------------------------------------------
(2) Acquisitions (continued)
The following summary presents unaudited pro forma results of operations.
The pro forma information for the years ended June 30, 1999 and April 30,
1998 assumes that the acquisitions of LDEC and ITAPCO Terminal Corporations
occurred as of May 1, 1997, and combines the historical results of
operations of TransMontaigne for the years ended June 30, 1999 and April
30, 1998 with the historical results of operations of LDEC and the ITAPCO
Terminal Corporations for the years ended June 30, 1999 and April 30, 1998.
The pro forma information for the year ended April 30, 1997 assumes that
the acquisition of the ITAPCO Terminal Corporation occurred as of May 1,
1996. The unaudited pro forma results of operations are not necessarily
indicative of the results of operations which would actually have occurred
if LDEC and the ITAPCO Terminal Corporations had been acquired as of the
beginning of the respective pro forma period, or which will be attained in
the future.
<TABLE>
<CAPTION>
Years Ended
---------------------------------------------------------------------------------
June 30, 1999 April 30, 1998 April 30, 1997
----------------------- ----------------------- -----------------------
(Pro forma) (Pro forma) (Pro forma)
----------------------- ----------------------- -----------------------
<S> <C> <C> <C>
Revenues $ 3,897,193,000 4,174,835,000 1,208,636,000
======================= ======================= =======================
Net earnings $ 3,811,000 12,844,000 11,117,000
Dividend requirement for
preferred stock (2,274,000) - -
----------------------- ----------------------- -----------------------
Net earnings attributable
to common stockholders $ 1,537,000 12,844,000 11,117,000
======================= ======================= =======================
Earnings per common share:
Basic $ 0.05 0.42 0.51
======================= ======================= =======================
Diluted $ 0.05 0.41 0.49
======================= ======================= =======================
</TABLE>
60
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1999 and April 30, 1998
- --------------------------------------------------------------------------------
(3) Inventories
<TABLE>
<CAPTION>
June 30, 1999 April 30, 1998
--------------------- ---------------------
<S> <C> <C>
Refined petroleum products $ 368,768,302 28,874,634
Refined petroleum products due from
third parties under exchange agreements - 4,392,462
Unrealized gains on energy related contracts 9,449,017 -
Other - 143,385
--------------------- ---------------------
$ 378,207,319 33,410,481
===================== =====================
</TABLE>
TransMontaigne manages inventory to maximize value and minimize risk by
utilizing risk and portfolio management disciplines including certain
hedging strategies, forward purchases and sales, swaps and other financial
instruments to manage market exposure. In managing inventory balances and
related financial instruments, management evaluates the market exposure
from an overall portfolio basis which considers both continuous movement of
inventory balances and related open positions in commodity trading
instruments.
TransMontaigne's overall inventory position, including open positions in
commodity instruments at June 30, 1999 and April 30, 1998 is as follows:
June 30, 1999 April 30, 1998
------------- --------------
Fair value at end of year 387,203,804 33,410,481
Average fair value for the year 293,000,000 58,000,000
For the year ended June 30, 1999, net gains and losses arising from
transactions during the period and changes in fair value were $3,400,000
net gains, and were recorded within operating income. Net gains and losses
for the years ended April 30, 1998 and April 30, 1997 are immaterial.
61
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1999 and April 30, 1998
- --------------------------------------------------------------------------------
(3) Inventories (continued)
TransMontaigne's refined petroleum products inventory consists primarily of
gasoline and distillates, the majority of which is held for sale or
exchange in the ordinary course of business. A portion of this inventory
represents line fill and tank bottoms; is required to be held for operating
balances in the conduct of TransMontaigne's daily supply, distribution and
marketing activities; and is maintained both in tanks and pipelines owned
by TransMontaigne and pipelines owned by third parties. NGL and natural gas
inventories are not significant.
Contractual commitments are subject to risks including market value
fluctuations as well as counterparty credit and liquidity risk.
TransMontaigne has established procedures to continually monitor these
contracts in order to minimize credit risk, including the establishment and
review of credit limits, margin requirements, master netting arrangements,
letters of credit and other guarantees.
(4) Property, Plant and Equipment
Property, plant and equipment at June 30, 1999 and April 30, 1998 is as
follows:
<TABLE>
<CAPTION>
June 30, 1999 April 30, 1998
--------------------- ---------------------
<S> <C> <C>
Land $ 42,772,857 2,801,964
Pipelines, rights of way
and equipment 33,660,567 25,267,771
Terminals and equipment 268,936,333 53,722,440
Natural gas gathering
and processing 108,532,682 98,253,680
Other plant and equipment 20,011,118 6,426,020
--------------------- ---------------------
473,913,557 186,471,875
Less accumulated depreciation 37,571,926 18,705,670
--------------------- ---------------------
$ 436,341,631 167,766,205
===================== =====================
</TABLE>
62
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1999 and April 30, 1998
- --------------------------------------------------------------------------------
(5) Investments
TransMontaigne, through its 65% ownership of TransMontaigne Holding Inc.,
effectively owns 18.04% of the common stock of Lion. At June 30, 1999 and
April 30, 1998, TransMontaigne's investment in Lion, carried at cost, was
approximately $10,111,000. TransMontaigne recorded dividend income from
Lion of $374,400 at June 30, 1999.
On September 18, 1998, TransMontaigne, through a wholly-owned subsidiary,
TransMontaigne Pipeline Inc. ("TPI"), acquired for $29,219,000 cash the
15.38% common stock interest in West Shore Pipe Line Company ("West Shore")
owned by Atlantic Richfield Company. Effective December 31, 1998,
TransMontaigne acquired for $5,488,000 cash an additional 4.11% common
stock interest in West Shore owned by Equilon Pipeline Company, LLC and for
$1,186,000 cash an additional .89% common stock interest in West Shore
owned by Texaco Transportation and Trading Inc., both of which transactions
closed on January 7, 1999. TransMontaigne owns 20.38% of the common stock
of West Shore at June 30, 1999. West Shore ownership as of June 30, 1999
also includes Citgo, Marathon, Equilon, Texaco, BP Amoco, Midwest (Union
Oil), Mobil and Exxon. Although TransMontaigne owns 20.38%, it does not
maintain effective management control and therefore carries its $35,960,000
investment at cost. TransMontaigne recorded dividend income from West Shore
of $1,375,000 at June 30, 1999.
63
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1999 and April 30, 1998
- --------------------------------------------------------------------------------
(6) Long-term Debt
Long-term debt at June 30, 1999 and April 30, 1998 is as follows:
<TABLE>
<CAPTION>
June 30, 1999 April 30, 1998
--------------------- ---------------------
<S> <C> <C>
Line of credit $ 418,690,000 50,000,000
Senior promissory notes 75,000,000 75,000,000
12 3/4% senior subordinated debentures, net
of discount (face amount $4,000,000) 3,981,800 3,969,667
--------------------- ---------------------
497,671,800 128,969,667
Less current maturity 2,000,000 -
--------------------- ---------------------
$ 495,671,800 128,969,667
===================== =====================
</TABLE>
At June 30, 1999 TransMontaigne's bank credit facility consisted of a
$600,000,000 credit facility led by BankBoston, N.A. The credit facility
includes a $400,000,000 revolving component due December 31, 2003 and a
$200,000,000 term component due June 30, 2006. The term component has
quarterly principal payments required beginning in September 2000.
Borrowings under this credit facility bear interest at an annual rate equal
to the lender's Alternate Base Rate plus margins, subject to a Eurodollar
Rate pricing option at TransMontaigne's election. The average interest rate
at June 30, 1999 was 8.1% and at April 30, 1998 was 6.375%.
In April 1997, TransMontaigne entered into a Master Shelf Agreement with an
institutional lender which provides that the lender will agree to quote,
from time to time, an interest rate at which the lender would be willing to
purchase, on an uncommitted basis, up to $100 million of TransMontaigne's
senior promissory notes which will mature in no more than 12 years, with an
average life not in excess of 10 years. On April 17, 1997 and December 16,
1997, TransMontaigne sold $50,000,000 of 7.85% and $25,000,000 of 7.22%
Senior Notes due April 17, 2003 and October 17, 2004, respectively, all of
which was outstanding at June 30, 1999.
The bank credit facility agreement and the Master Shelf Agreement each
contain similar negative pledge covenants by TransMontaigne and its
subsidiaries and both are secured by the stock of the subsidiaries. These
agreements also include financial tests relating to fixed charges coverage,
leverage ratio, consolidated tangible net worth, distributions and open
inventory positions. As of June 30, 1999, TransMontaigne was in compliance
with all such tests.
64
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1999 and April 30, 1998
- --------------------------------------------------------------------------------
(6) Long-term Debt (continued)
In March 1991, TransMontaigne issued $4,000,000 of 12.75% senior
subordinated debentures which are guaranteed by certain subsidiaries and
are due December 15, 2000. The debentures are subject to a required
redemption of $2,000,000 on December 15, 1999 and December 15, 2000. The
debentures may be prepaid prior to maturity at a premium, under certain
circumstances. In conjunction with the issuance of these debentures,
TransMontaigne issued warrants to purchase 248,686 shares of its common
stock.
Maturities of long-term debt for fiscal years subsequent to 2000 are as
follows:
2001 $ 6,981,800
2002 5,000,000
2003 55,000,000
2004 223,690,000
2005 85,000,000
2006 120,000,000
-------------
$ 495,671,800
=============
Cash payments for interest were approximately $25,230,000, $1,578,000,
$6,995,000, and $4,404,000 for the year ended June 30, 1999, two months
ended June 30, 1998, and the years ended April 30, 1998 and 1997,
respectively.
65
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1999 and April 30, 1998
- --------------------------------------------------------------------------------
(7) Disclosures About Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the fair value
of on and off-balance sheet financial instruments at June 30, 1999 and
April 30, 1998.
Cash and Cash Equivalents, Trade Receivables and Trade Accounts Payable
The carrying amount approximates fair value because of the short term
maturity of these instruments.
Long-term Debt
The carrying value of the line of credit approximates fair value since it
bears interest at current market interest rates.
The carrying values of the senior promissory notes approximate fair value
since the interest rates approximate the current market rates for similar
debt instruments.
The estimated fair value of the 12.75% senior subordinated debentures is
$4,287,000. The fair value estimate has been calculated assuming a current
market rate for similar debt instruments of 9%.
Limitations
Fair value estimates are made at a specific point in time, based on
relevant market information and information about the financial instrument.
These estimates are subjective in nature and involve uncertainties and
matters of significant judgment and therefore cannot be determined with
precision. Changes in assumptions could significantly affect the estimates.
66
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1999 and April 30, 1998
- --------------------------------------------------------------------------------
(8) Stockholders' Equity
On March 25, 1999 and March 30, 1999, TransMontaigne closed a private
placement of $170,115,000 of $1,000 Series A Convertible Preferred Stock
Units. Each unit consists of one share of 5% convertible preferred stock,
convertible into common stock at $15 per share, and 66.67 warrants, each
warrant exercisable to purchase six-tenths of a share of common stock at
$14 per share. Dividends are cumulative and payable quarterly. The dividend
rate increases to an annual rate of 16% for any convertible preferred stock
outstanding after December 31, 2003. The convertible preferred stock is
convertible any time and may be called for redemption by TransMontaigne
after the second year if the market price of the common stock is greater
than 175% of the conversion price at the date of the call. The convertible
preferred stock has a liquidation preference of $1,000 per share plus
accrued but unpaid dividends. Proceeds were used to reduce bank debt
incurred in connection with the LDEC acquisition and for general corporate
purposes.
(9) Restricted Stock
TransMontaigne has a restricted stock plan that provides for awards of
common stock to certain key employees, subject to forfeiture if employment
terminates prior to the vesting dates. The market value of shares awarded
under the plan is recorded in stockholders' equity as unearned
compensation. During the fiscal year ended April 30, 1998, the
TransMontaigne Board of Directors awarded 56,000 shares to certain key
employees and during the year ended June 30, 1999, an additional 12,000
shares were awarded. At March 25, 1999, the vesting of the 62,400 shares
not then vested was accelerated due to an ownership change resulting from
the private placement of the Series A Convertible Preferred Stock and the
unamortized balance of the unearned compensation was fully amortized.
Amortization of unearned compensation of $780,348 and $258,469 is included
in general and administrative expense for the years ended June 30, 1999 and
April 30, 1998, respectively.
67
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1999 and April 30, 1998
- --------------------------------------------------------------------------------
(10) Stock Options
TransMontaigne has adopted three stock option plans, (the "1991 Plan",
the "1995 Plan" and the "1997 Plan") under which stock options may be
granted to employees. No additional options are available to be granted
under either the 1991 Plan or the 1995 Plan. Options granted under the
1991 Plan and 1997 Plan expire no later than ten years from the date of
grant and under the 1995 Plan expire no later than seven years from the
date of grant. At June 30, 1999, options granted under the 1991 Plan and
1995 Plan and those granted through July 1998 under the 1997 Plan have
vested. The options granted in March 1999 under the 1997 Plan, vest 10%
end of first year, 20% end of second year, 30% end of third year, and 40%
end of fourth year.
The following table summarizes information about stock options
outstanding for the year ended June 30, 1999, two months ended June 30,
1998, and the years ended April 30, 1998 and 1997:
<TABLE>
<CAPTION>
1991 Plan 1995 Plan 1997 Plan
------------------------------- -------------------------------- ------------------------------
Weighted Weighted Weighted
average average average
Shares exercise price Shares exercise price Shares exercise price
---------- ----------------- ------------ ---------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at April 30, 1996 95,754 $ 5.12 899,246 $ 3.88 - $ -
Granted - - - - - -
Exercised (17,500) 6.10 (118,246) 3.27 - -
---------- ----------------- ------------ ---------------- ------------ ---------------
Outstanding at April 30, 1997 78,254 4.90 781,000 3.98 - -
Granted - - - - 711,000 16.65
Cancelled - - - - (17,500) 17.25
Exercised (50,000) 4.46 (42,150) 4.37 - -
---------- ----------------- ------------ ---------------- ------------ ---------------
Outstanding at April 30, 1998 28,254 5.66 738,850 3.96 693,500 16.63
Granted - - - - - -
Cancelled - - - - (29,500) 15.34
Exercised (6,254) 4.12 (2,500) 4.38 - -
---------- ----------------- ------------ ---------------- ------------ ---------------
Outstanding at June 30, 1998 22,000 6.10 736,350 3.70 664,000 16.69
Granted - - - - 2,097,300 11.46
Cancelled - - - - (17,900) 14.11
Exercised (11,000) 6.10 (4,400) 3.91 - -
---------- ----------------- ------------ ---------------- ------------ ---------------
Outstanding at June 30, 1999 11,000 $ 6.10 731,950 $ 3.96 2,743,400 $ 12.71
========== ================= ============ ================ ============ ===============
Exercisable at June 30, 1999 11,000 $ 6.10 731,950 $ 3.96 1,034,500 $ 15.53
========== ================= ============ ================ ============ ===============
</TABLE>
68
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1999 and April 30, 1998
- --------------------------------------------------------------------------------
(10) Stock Options (continued)
The following table summarizes information about options outstanding at
June 30, 1999:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
-------------------------------------------------- -------------------------------
Weighted Weighted Weighted
Range of Number average remaining average Number average
exercise prices outstanding life in years exercise prices exercisable exercise prices
--------------- ------------- ------------------- ---------------- ------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
1991 Plan $ 6.10 11,000 2 $ 6.10 11,000 $ 6.10
1995 Plan 2.70 - 5.50 731,950 3 3.96 731,950 3.96
1997 Plan 11.00 - 17.25 2,743,400 9 12.71 1,034,500 15.53
</TABLE>
TransMontaigne applies Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees, and related Interpretations in
accounting for its plans. Accordingly, no compensation cost has been
recognized for its stock option plans. If compensation cost for
TransMontaigne's three stock-based compensation plans had been determined
on the fair value at the grant dates for awards under those plans
consistent with SFAS 123, Accounting for Stock-Based Compensation,
TransMontaigne's net earnings and earnings per common share would have
been reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
June 30, 1999 April 30, 1998 April 30, 1997
--------------- ---------------- ----------------
<S> <C> <C> <C>
Net earnings (loss)
attributable to common
stockholders:
As reported $ (335,000) $ 7,638,000 $ 9,171,000
Pro forma $ (2,256,000) $ 5,943,000 $ 8,725,000
Earnings (loss) per common share
As reported
Basic $ (.01) $ .30 $ .42
Diluted $ (.01) $ .29 $ .41
Pro forma
Basic $ (.08) $ .23 $ .40
Diluted $ (.08) $ .22 $ .39
</TABLE>
69
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1999 and April 30, 1998
- --------------------------------------------------------------------------------
(10) Stock Options (continued)
The weighted average fair value at grant dates for options granted during
the years ended June 30, 1999 and April 30, 1998 was $3.75 and $5.76,
respectively. The primary assumptions used to estimate the fair value of
options granted on the date of grant using the Black-Scholes option-
pricing model during the years ended June 30, 1999 and April 30, 1998 were
as follows: no dividend yield, expected volatility of 34% and 31%, risk-
free rate of 5.4% and 6.14%, and expected life of 7 years.
(11) Employee Benefit Plan
TransMontaigne has established a 401(k) retirement savings plan for all
employees. The plan allows participants to contribute up to 15% of their
compensation, with TransMontaigne making a discretionary percentage
matching contribution as determined by management based upon its financial
performance. Employees vest 25% per year in TransMontaigne's contribution.
The total amount of TransMontaigne's discretionary percentage matching
contributions for the year ended June 30, 1999 was $485,758 and for the
year ended April 30, 1998 was $172,434.
70
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1999 and April 30, 1998
- --------------------------------------------------------------------------------
(12) Income Taxes
Income tax expense (benefit) expense for the following dates consist of
the following:
<TABLE>
<CAPTION>
June 30, 1999 June 30, 1998 April 30, 1998 April 30, 1997
----------------- ----------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Current state income taxes $ 38,293 84,093 319,500 585,822
Deferred federal income taxes 1,267,000 (1,330,000) 4,630,000 (1,975,300)
Deferred state income taxes 149,500 (157,000) 543,000 (299,300)
----------------- ----------------- ------------------ ------------------
Income tax expense (benefit) $ 1,454,793 (1,402,907) 5,492,500 (1,688,778)
================= ================= ================== ==================
</TABLE>
Income tax expense (benefit) differs from the amount computed by applying
the federal corporate income tax rate of 34% to pretax earnings as a
result of the following:
<TABLE>
<CAPTION>
June 30, 1999 June 30, 1998 April 30, 1998 April 30, 1997
----------------- ----------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Computed "expected"
tax expense (benefit) $ 1,154,000 (1,382,000) 4,464,000 2,544,000
Increase (reduction) in income
taxes resulting from:
Increase (decrease) in the
valuation allowance for
deferred tax assets
allocated to income tax
expense - - - (4,474,000)
Recognition of tax benefit of net
operating loss carryforwards
of acquired entity - - - (1,021,600)
Adjustment of prior year's
cumulative temporary
differences offset by a change
in the valuation allowance - - - 497,000
State income taxes, net of
federal income tax benefit 124,000 (46,000) 723,300 387,000
Other, net 176,793 25,093 305,200 378,822
----------------- ----------------- ------------------ ------------------
Income tax expense (benefit) $ 1,454,793 (1,402,907) 5,492,500 (1,688,778)
================= ================= ================== ==================
</TABLE>
71
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1999 and April 30, 1998
- --------------------------------------------------------------------------------
(12) Income Taxes (continued)
The tax effects of temporary differences which give rise to significant
portions of the deferred tax assets and deferred tax liabilities at June
30, 1999 and April 30, 1998 are as follows:
<TABLE>
<CAPTION>
June 30, 1999 April 30, 1998
-------------------- --------------------
Deferred tax assets:
<S> <C> <C>
Net operating loss carryforwards $ 25,898,000 5,829,000
Inventories, principally due to difference in
costing method used for tax purposes - 3,384,000
Unearned compensation 384,000 -
Alternative minimum tax credit carryforwards 67,000 67,000
----------------- -----------------
Gross deferred tax assets 26,349,000 9,280,000
Deferred tax liabilities:
Plant and equipment, principally due to
differences in depreciation methods (26,633,000) (8,741,000)
Unrealized commodity futures contract
gains - (957,000)
Investments in affiliated company,
principally due to undistributed earnings (496,000) (496,000)
----------------- -----------------
Deferred tax (liabilities) assets, net $ (780,000) (914,000)
================= =================
</TABLE>
In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion or all of
the deferred tax assets will not be realized. The ultimate realization of
deferred tax assets is dependent upon the generation of future taxable
income during the periods in which those temporary differences become
deductible. Management considers the scheduled reversal of deferred tax
liabilities, projected future taxable income, and tax planning strategies
in making this assessment.
72
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1999 and April 30, 1998
- --------------------------------------------------------------------------------
(12) Income Taxes (continued)
As a result of the Grasslands Facilities acquisition in December 1996 and
the public offering of common stock in February 1997, and based upon
projections for future taxable income over the periods which the deferred
tax assets are deductible, management believed the "more likely than not"
criteria had been satisfied as of April 30, 1997, and that the benefits of
future deductible differences will be realized. Accordingly, the remaining
valuation allowance was reversed to income for the year ended April 30,
1997.
At June 30, 1999, TransMontaigne has aggregate net operating loss
carryforwards for federal income tax purposes of approximately $70,000,000
which were available to offset future federal taxable income, if any,
through 2019. In addition, TransMontaigne has alternative minimum tax
credit carryforwards of approximately $67,000 available to reduce future
federal regular income taxes, if any, which can be carried forward
indefinitely.
Under SFAS 109, TransMontaigne provides for deferred income taxes on the
undistributed net earnings of Lion. Under the transition rules in SFAS
109, TransMontaigne is not required to recognize a deferred tax liability
of approximately $6,100,000 for the undistributed net earnings of Lion
which arose prior to the adoption of SFAS 109 because TransMontaigne
currently does not expect those undistributed earnings to become taxable
to it in the foreseeable future. A deferred tax liability will be
recognized on these undistributed earnings when TransMontaigne expects
that it will recover those undistributed earnings in a taxable manner,
such as through the receipt of dividends or the sale of the investment.
TransMontaigne paid in cash federal income taxes of approximately $459,000
and $500,000 for the years ended June 30, 1999 and April 30, 1998,
respectively, and state income taxes of approximately $375,000, $110,000,
$575,000 and $214,000 for the year ended June 30, 1999, the two months
ended June 30, 1998, and the years ended April 30, 1998 and 1997,
respectively.
73
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1999 and April 30, 1998
- --------------------------------------------------------------------------------
(13) Commitments
On February 17, 1999, TransMontaigne and Colonial Pipeline Company
("Colonial") signed a definitive agreement whereby TransMontaigne, in an
alliance with Colonial, will construct, own and operate a marine loading
and unloading facility on the Mississippi River near Baton Rouge,
Louisiana which is designed to handle multiple barge deliveries of all
grades of petroleum products transported within Colonial's pipeline
system. Colonial will construct three pipelines to connect the
TransMontaigne marine facility for waterway deliveries along the
Mississippi and Ohio Rivers, as well as to receive barge deliveries for
long haul Colonial system shipments, and will also construct a related
pump station between its Baton Rouge tank farm and the TransMontaigne
marine facility. TransMontaigne's estimated cost for the marine facility
is $9,300,000. The facility is anticipated to be operational in the first
calendar quarter of 2000.
TransMontaigne leases office space, real property, and storage facilities
under various operating leases. The future annual minimum lease payments
range from $700,000 to $2,200,000 over the next five years.
(14) Litigation
TransMontaigne is a party to various claims and litigation in its normal
course of business. Although no assurances can be given, TransMontaigne
management believes that the ultimate resolution of such claims and
litigation, individually or in the aggregate, will not have a materially
adverse impact on TransMontaigne's financial position or its results of
operations.
74
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1999 and April 30, 1998
- --------------------------------------------------------------------------------
(15) Earnings Per Share
Earnings per share are calculated in accordance with SFAS 128. The
following tables reconcile the computation of basic EPS and diluted EPS
for the year ended June 30, 1999, two months ended June 30, 1998 and the
years ended April 30, 1998 and 1997.
<TABLE>
<CAPTION>
June 30, 1999 June 30, 1998 April 30, 1998 April 30, 1997
-------------- -------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Net earnings (loss) $ 1,938,759 (2,662,901) 7,637,630 9,171,312
Preferred stock dividends (2,274,121) - - -
-------------- -------------- ---------------- ----------------
Net earnings (loss) attributable to
common stockholders for basic EPS (335,362) (2,662,901) 7,637,630 9,171,312
Effect of dilutive securities - - - -
-------------- -------------- ---------------- ----------------
Net earnings (loss) attributable to common
stockholders for diluted EPS $ (335,362) (2,662,901) 7,637,630 9,171,312
============== ============== ================ ================
Basic weighted-average shares 28,971,516 25,948,709 25,886,737 21,742,625
Effect of dilutive securities:
Stock options - - 600,478 630,900
Stock warrants - - 192,288 170,877
-------------- -------------- ---------------- ----------------
Diluted weighted-average shares 28,971,516 25,948,709 26,679,503 22,544,402
============== ============== ================ ================
Earnings (loss) per shares:
Basic $ (.01) (.10) .30 .42
============== ============== ================ ================
Diluted $ (.01) (.10) .29 .41
============== ============== ================ ================
</TABLE>
75
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1999 and April 30, 1998
- --------------------------------------------------------------------------------
(16) Concentration of Credit Risk
Substantially all of TransMontaigne's trade accounts receivable at June
30, 1999 and April 30, 1998 result from sales of refined petroleum
products to numerous companies in the oil and gas industry. This
concentration could impact TransMontaigne's overall credit risk since
these companies could be affected by industry-wide changes in economics or
other conditions. Since TransMontaigne provides short-term credit to its
customers, which are generally either major and large independent oil
companies or wholesale distributors of these products, it may require
collateral, such as letters of credit, liens on products and guarantees as
determined on a customer by customer basis. TransMontaigne maintains
allowances for potential uncollectible accounts receivable, which
historically have been minimal.
(17) Business Segments
TransMontaigne provides a broad range of integrated transportation,
terminaling, supply, distribution, gathering, processing and marketing
services to producers, refiners, distributors, marketers and industrial
end-users of petroleum products, chemicals, other bulk liquids, natural
gas and crude oil in the downstream sector of the petroleum and chemical
industries. TransMontaigne conducts its business through five segments:
. Product supply, distribution and marketing - consists of the bulk
purchase and sale of refined petroleum products and the wholesale
marketing of products at terminal truck loading rack locations.
. Terminals - consists of owned and operated terminaling and storage
facilities handling petroleum products, chemicals and other bulk
liquids with transportation connections via pipelines, barges,
tankers, rail cars and trucks.
. Pipelines - consists of owned and operated refined petroleum
products pipelines and a crude oil gathering pipeline system
connected to major common carrier pipelines and terminaling and
storage facilities.
. Natural gas - consists of assets for and services provided in the
gathering, treating, processing, fractionating and marketing of
natural gas.
. Corporate - consists of assets and corporate income and expense not
specifically included in other business segments.
Eliminations represent intercompany transactions between TransMontaigne's
business segments, primarily relating to services performed by the
Terminals and Pipelines segments for and sales of NGL by the Natural gas
segment to the Product supply, distribution and marketing segment.
76
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1999 and April 30, 1998
- --------------------------------------------------------------------------------
(17) Business Segments (continued)
Information about TransMontaigne's business segments for the years ended
June 30, 1999, April 30, 1998 and April 30, 1997 is summarized below:
<TABLE>
<CAPTION>
June 30, 1999 April 30, 1998 April 30, 1997
--------------------- --------------------- ---------------------
Revenues:
<S> <C> <C> <C>
Products $ 2,985,618,188 1,911,943,811 1,131,400,279
Terminals 41,045,730 13,881,977 5,387,329
Pipelines 15,328,351 13,252,198 12,195,900
Natural gas 53,558,657 60,464,981 23,140,547
Corporate 1,577,906 557,388 -
Eliminations (50,068,138) (32,593,859) (5,459,434)
-------------------- -------------------- --------------------
Total consolidated $ 3,047,060,694 1,967,506,496 1,166,664,621
==================== ==================== ====================
Depreciation and amortization:
Products $ 659,465 - -
Terminals 7,903,174 1,516,167 441,035
Pipelines 1,121,664 998,863 897,733
Natural gas 5,961,928 5,114,745 1,735,034
Corporate 1,128,321 587,217 382,197
-------------------- -------------------- --------------------
Total consolidated $ 16,774,552 8,216,992 3,455,999
==================== ==================== ====================
Operating income:
Products $ 17,020,169 5,356,613 475,915
Terminals 11,417,281 5,487,091 2,045,114
Pipelines 4,058,127 4,359,374 4,411,115
Natural gas 1,434,618 5,231,371 4,189,122
Corporate (3,751,457) (1,200,000) (1,220,698)
-------------------- -------------------- --------------------
Total consolidated $ 30,178,738 19,234,449 9,900,568
==================== ==================== ====================
</TABLE>
77
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1999 and April 30, 1998
- --------------------------------------------------------------------------------
(17) Business Segments (continued)
<TABLE>
<CAPTION>
June 30, 1999 April 30, 1998 April 30, 1997
-------------------- -------------------- --------------------
Identifiable assets:
<S> <C> <C> <C>
Products $ 571,212,322 103,401,948 83,971,349
Terminals 304,566,785 54,250,442 13,708,920
Pipelines 65,604,940 22,081,845 16,485,215
Natural gas 96,246,975 94,431,372 86,828,380
Corporate 68,108,170 55,594,214 61,176,622
Eliminations (10,230,827) (6,454,991) (446,166)
-------------------- -------------------- --------------------
Total consolidated $ 1,095,508,365 323,304,830 261,724,320
==================== ==================== ====================
Capital expenditures:
Products $ - - -
Terminals 110,048,489 41,383,778 9,126,933
Pipelines 9,500,288 6,204,312 1,484,527
Natural gas 7,959,023 15,561,633 80,059,318
Corporate 10,048,058 3,484,568 1,623,616
-------------------- -------------------- --------------------
Total consolidated $ 137,555,858 66,634,291 92,294,394
==================== ==================== ====================
</TABLE>
78
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1999 and April 30, 1998
- --------------------------------------------------------------------------------
(18) Financial Results by Quarter (Unaudited)
<TABLE>
<CAPTION>
-------------------------------------------------------------------- ----------------
Three Months Ended Year Ended
-------------------------------------------------------------------- ----------------
September 30 December 31 March 31 June 30 June 30
1998 1998 1999 1999 1999
-------------- -------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C> <C>
Revenues $ 463,121,000 741,300,000 769,369,000 1,073,271,000 3,047,061,000
Total costs and expenses 457,551,000 734,034,000 754,832,000 1,070,465,000 3,016,882,000
-------------- -------------- -------------- -------------- ----------------
Operating income $ 5,570,000 7,266,000 14,537,000 2,806,000 30,179,000
============== ============== ============== ============== ================
Net earnings (loss)
attributable to common
stockholders $ 2,024,000 (291,000) 2,325,000 (4,393,000) (335,000)
============== ============== ============== ============== ================
Earnings (loss) per
common share
Basic $ .08 (.01) .08 (.14) (.01)
Diluted $ .08 (.01) .07 (.14) (.01)
<CAPTION>
-------------------------------------------------------------------- -----------------
Three Months Ended Year Ended
-------------------------------------------------------------------- -----------------
July 31 October 31 January 31 April 30 April 30
1997 1997 1998 1998 1998
-------------- -------------- -------------- -------------- -----------------
<S> <C> <C> <C> <C> <C>
Revenues $ 462,149,000 545,100,000 470,732,000 489,525,000 1,967,506,000
Total costs and expenses 456,462,000 540,105,000 466,108,000 485,597,000 1,948,272,000
-------------- -------------- -------------- -------------- ----------------
Operating income $ 5,687,000 4,995,000 4,624,000 3,928,000 19,234,000
============== ============== ============== ============== =================
Net earnings $ 3,010,000 2,397,000 1,718,000 513,000 7,638,000
============== ============== ============== ============== =================
Earnings per
common share
Basic $ .12 .09 .07 .02 .30
Diluted $ .12 .09 .06 .02 .29
<CAPTION>
-------------------------------------------------------------------- -----------------
Three Months Ended Year Ended
-------------------------------------------------------------------- -----------------
July 31 October 31 January 31 April 30 April 30
1996 1996 1997 1997 1997
-------------- -------------- -------------- -------------- -----------------
<S> <C> <C> <C> <C> <C>
Revenues $ 194,052,000 276,771,000 340,654,000 355,188,000 1,166,665,000
Total costs and expenses 191,816,000 274,298,000 338,210,000 352,440,000 1,156,764,000
-------------- -------------- -------------- -------------- ----------------
Operating income $ 2,236,000 2,473,000 2,444,000 2,748,000 9,901,000
============== ============== ============== ============== =================
Net earnings $ 1,807,000 2,673,000 1,426,000 3,265,000 9,171,000
============== ============== ============== ============== =================
Earnings per
common share
Basic $ .09 .13 .07 .13 .42
Diluted $ .09 .12 .07 .13 .41
</TABLE>
79
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES
Not Applicable
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
The information required by Item 10 concerning executive officers of
the registrant is included under the caption "Executive Officers of the
Registrant" on page 80 of this report.
ITEM 11. EXECUTIVE COMPENSATION
*
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
*
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
*
* Incorporated by reference from the Proxy Statement dated October 28,
1999 for the Annual Meeting of Stockholders to be held on November 18,
1999.
80
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
<CAPTION>
Current Positions and Principal
Name Age Occupations During Last Five Years
---- --- ----------------------------------
<S> <C> <C>
Cortlandt S. Dietler 78 Chairman, Chief Executive Officer and a Director since
April 1995; Chief Executive Officer of Associated Natural
Gas Corporation prior to its 1994 merger with Panhandle
Eastern Corporation (now Duke Energy Corporation) from 1985
to 1994
Richard E. Gathright 45 President and Chief Operating Officer since September 1996;
Director since April 1995; Executive Vice President from April
1995 to September 1996; President of TransMontaigne Transportation
Services Inc. and TransMontaigne Product Services Inc. since
September 13, 1999; Chief Executive Officer of Bear Paw Energy Inc.,
TransMontaigne Product Services Inc. and TransMontaigne Transportation
Services Inc. since December 11, 1996, October 22, 1998 and October 20,
1996, respectively; President of a subsidiary of TransMontaigne from
December 1993 to April 1995; President and Director of North American
Operations for Aberdeen Petroleum PLC from 1988 to 1993
Harold R. Logan, Jr. 54 Executive Vice President/Finance, Treasurer and a Director
since April 1995; Senior Vice President/Finance of
Associated Natural Gas Corporation from 1985 to 1994
W. A. Sikora 62 Executive Vice President since September 1996; Senior Vice
President and Chief Financial Officer of a subsidiary of
TransMontaigne from May 1995 to September 1996; business
consultant from 1982 to April 1995
Frederick W. Boutin 44 Senior Vice President since April 1995; Vice President of
Associated Natural Gas Corporation from 1985 to 1994
Robert W. Bradberry 45 Senior Vice President since September 13, 1999; Executive Vice
President of TransMontaigne Product Services Inc. since
September 13, 1999; President of TransMontaigne Product Services
Inc. from January 1, 1997 to September 13, 1999; other senior
management positions of a subsidiary of TransMontaigne from 1979
to January 1997
Erik B. Carlson 52 Senior Vice President, General Counsel, and Secretary since
January 1998; Senior Vice President, General Counsel and
Secretary for Duke Energy Field Services, Inc. (formerly
known as Pan Energy Field Services, Inc. and Associated
Natural Gas, Inc.) in Denver from 1983 until December 1997
</TABLE>
81
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT (continued)
<TABLE>
<CAPTION>
Current Positions and Principal
Name Age Occupations During Last Five Years
---- --- ----------------------------------
<S> <C> <C>
Rodney S. Pless 38 Vice President, Controller and Chief Accounting Officer
since December 1996; Vice President, Controller and other
accounting positions of a subsidiary of TransMontaigne from
1987 to December 1996
Robert J. Clark 54 President of Bear Paw Energy Inc. since June 1996;
President of a predecessor of Bear Paw Energy Inc. from
March 1995 to June 1996; Senior Vice President of Snyder
Oil Corporation from 1988 to March 1995
Larry F. Clynch 54 Executive Vice President of TransMontaigne Transportation
Services Inc. since September 13, 1999; President of TransMontaigne
Transportation Services Inc. from January 1, 1997 to September 13,
1999; Senior Vice President of a subsidiary of TransMontaigne from
January 1996 to January 1997; prior to January 1996 employed 28 years
by Conoco Pipe Line Company, the last 3 years as President
</TABLE>
82
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
(a) The following documents are filed as a part of this report.
(1) Consolidated Financial Statements:
TransMontaigne Inc.
Independent Auditors' Report
Consolidated Balance Sheets as of June 30, 1999 and April 30, 1998
Consolidated Statements of Operations for the year ended June 30,
1999, two months ended June 30, 1998 and years ended April
30, 1998 and 1997
Consolidated Statements of Stockholders' Equity for the
year ended June 30, 1999, two months ended June 30, 1998
and years ended April 30, 1998 and 1997
Consolidated Statements of Cash Flows for the years ended June 30,
1999, two months ended June 30, 1998 and years ended April
30, 1998 and 1997
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules: Not Applicable
83
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K (continued)
(3) Exhibits:
A list of the exhibits required by Item 601 of Regulation
S-K to be filed as part of this report:
Exhibit No. Description
----------- -----------
3.1A Restated Articles of Incorporation and Certificate of
Merger. Incorporated by reference to TransMontaigne
Oil Company Form 10-K (Securities and Exchange
Commission File No. 001-11763) for the year ended
April 30, 1996.
3.1B Certificate of Amendment of Restated Certificate of
Incorporation of TransMontaigne Oil Company dated
August 26, 1998. Incorporated by reference to
TransMontaigne Inc. Form 10-Q (Securities and Exchange
Commission File No. 001-11763) for the quarter ended
September 30, 1998.
3.1C Certificate of Amendment of Restated Certificate of
Incorporation of TransMontaigne Inc. dated December
18, 1998. Incorporated by reference to TransMontaigne
Inc. Form 10-Q (Securities and Exchange Commission
File No. 001-11763) for the quarter ended December 31,
1998.
3.1D Certificate of Designations of Series A Convertible
Preferred Stock. Incorporated by reference to
TransMontaigne Inc. Current Report on Form 8-K
(Securities and Exchange Commission File No.
001-11763) filed on April 1, 1999.
3.2 Amended and Restated By-Laws. Incorporated by
reference to TransMontaigne Oil Company Form S-2
(Securities and Exchange Commission File No.
333-18795)
4.1 Warrant Agreement between TransMontaigne and
BankBoston, N.A., as the Warrant Agent, dated March
25, 1999. Incorporated by reference to TransMontaigne
Inc. Current Report on Form 8-K (Securities and
Exchange Commission File No. 001-11763) filed on April
1, 1999.
10.1 The TransMontaigne Oil Company Amended and Restated
1995 Stock Option Plan. Incorporated by reference to
TransMontaigne Oil Company Form 10-K (Securities and
Exchange Commission File No. 001-11763) for the year
ended April 30, 1996.
10.2 TransMontaigne Oil Company Equity Incentive Plan.
Incorporated by reference to TransMontaigne Oil
Company's Definitive Proxy Statement (Securities and
Exchange Commission File No. 001-11763) filed in
connection with the August 28, 1997 Annual Meeting of
Shareholders.
84
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K (continued)
10.3 Stock Purchase Agreement effective April 17, 1996
between TransMontaigne Oil Company and the investors
named therein. Incorporated by reference to
TransMontaigne Oil Company Form 10-K (Securities and
Exchange Commission File No. 001-11763) for the year
ended April 30, 1996.
10.4 Anti-dilution Rights Agreement dated as of April 17,
1996 between TransMontaigne Oil Company and Waterwagon
& Co., nominee for Merrill Lynch Growth Fund.
Incorporated by reference to TransMontaigne Oil
Company Form 10-K (Securities and Exchange Commission
File No. 001-11763) for the year ended April 30, 1996.
10.5 Agreement to Elect Directors dated as of April 17,
1996 between TransMontaigne Oil Company and the First
Reserve Investors named therein. Incorporated by
reference to TransMontaigne Oil Company Form 10-K
(Securities and Exchange Commission File No.
001-11763) for the year ended April 30, 1996.
10.6 Registration Rights Agreement dated as of April 17,
1996 between TransMontaigne Oil Company and the
entities named therein. Incorporated by reference to
TransMontaigne Oil Company Form 10-K (Securities and
Exchange Commission File No. 001-11763) for the year
ended April 30, 1996.
10.7 Amendment and Waiver to the April 17, 1996
Registration Rights Agreement dated as of October 30,
1998 between TransMontaigne Inc. and the entities
listed on the signature pages hereof (the
"Institutional Investors"). FILED HEREWITH.
10.8 Second Amendment and Waiver by and among the Company
and certain institutional investors signatories
thereto dated March 25, 1999. Incorporated by
reference to TransMontaigne Inc. Current Report on
Form 8-K (Securities and Exchange Commission File No.
001-11763) filed on April 1, 1999.
10.9 Registration Rights Agreement dated as of October 30,
1998 between TransMontaigne Inc. and Louis Dreyfus
Corporation. FILED HEREWITH.
10.10 Amendment and Waiver between the Company and Louis
Dreyfus Corporation dated March 25, 1999. Incorporated
by reference to TransMontaigne Inc. Current Report on
Form 8-K (Securities and Exchange Commission File No.
001-11763) filed on April 1, 1999.
10.11 Registration Rights Agreement between the Company and
the Series A Convertible Preferred Stock purchasers
signatories thereto dated March 25, 1999 (without
exhibits). Incorporated by reference to TransMontaigne
Inc. Current Report on Form 8-K (Securities and
Exchange Commission File No. 001-11763) filed on April
1, 1999.
85
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K (continued)
10.12 Form of Preferred Stock and Warrant Purchase Agreement
(without exhibits). Incorporated by reference to
TransMontaigne Inc. Current Report on Form 8-K
(Securities and Exchange Commission File No.
001-11763) filed on April 1, 1999.
10.13 Stockholders' Agreement among the Company and certain
institutional purchasers signatories thereto dated
March 25, 1999. Incorporated by reference to
TransMontaigne Inc. Current Report on Form 8-K
(Securities and Exchange Commission File No.
001-11763) filed on April 1, 1999.
10.14 Third Amended and Restated Credit Agreement between
TransMontaigne Inc. and BankBoston, N.A., as Agent,
dated as of June 29, 1999. FILED HEREWITH.
10.15 Master Shelf Agreement among TransMontaigne Oil
Company, The Prudential Insurance Company and U.S.
Private Placement Fund, dated April 17, 1997.
Incorporated by reference to TransMontaigne Oil
Company Form 10-K (Securities and Exchange Commission
File No. 001-11763) for the year ended April 30, 1997.
10.16 Letter Amendment No. 1, dated March 31, 1998, to
Master Shelf Agreement dated as of April 17, 1997,
among TransMontaigne Oil Company, The Prudential
Insurance Company of America and U.S. Private
Placement Fund. Incorporated by reference to
TransMontaigne Oil Company Form 10-K (Securities and
Exchange Commission File No. 001-11763) for the year
ended April 30, 1998.
10.17 Letter Amendment No. 2, dated as of June 30, 1998, to
Master Shelf Agreement dated as of April 17, 1997,
among TransMontaigne Oil Company, The Prudential
Insurance Company of America and U.S. Private
Placement Fund. Incorporated by reference to
TransMontaigne Inc. Form 10-Q (Securities and Exchange
Commission File No. 001-11763) for the quarter ended
December 31, 1998.
10.18 Letter Amendment No. 3, dated as of October 30, 1998,
to Master Shelf Agreement dated as of April 17, 1997,
among TransMontaigne Oil Company, The Prudential
Insurance Company of America and U.S. Private
Placement Fund. Incorporated by reference to
TransMontaigne Inc. Form 10-Q (Securities and Exchange
Commission File No. 001-11763) for the quarter ended
December 31, 1998.
86
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K (continued)
10.19 Letter Amendment No. 4, dated as of March 25, 1999, to
Master Shelf Agreement dated as of April 17, 1997,
among TransMontaigne Oil Company, The Prudential
Insurance Company of America and U.S. Private
Placement Fund. Incorporated by reference to
TransMontaigne Inc. Form 10-Q (Securities and Exchange
Commission File No. 001-11763) for the quarter ended
March 31, 1999.
10.20 Letter Amendment No. 5, dated as of June 29, 1999, to
Master Shelf Agreement dated as of April 17, 1997,
among TransMontaigne Oil Company, The Prudential
Insurance Company of America and U.S. Private
Placement Fund. FILED HEREWITH.
10.21 Stock Purchase Agreement dated as of September 13,
1998, between Louis Dreyfus Corporation and
TransMontaigne Inc. Incorporated by reference to
TransMontaigne Inc. Current Report on Form 8-K
(Securities and Exchange Commission File No.
001-11763) filed on November 13, 1998.
10.22 Amendment No. 1 to Stock Purchase Agreement dated as
of October 30, 1998, between Louis Dreyfus Corporation
and TransMontaigne Inc. Incorporated by reference to
TransMontaigne Inc. Current Report on Form 8-K
(Securities and Exchange Commission File No.
001-11763) filed on November 13, 1998.
10.23 Sale of Assets Agreement dated as of May 3, 1999
between Amerada Hess Corporation and TransMontaigne
Terminaling Inc. Incorporated by reference to
TransMontaigne Inc. Current Report on Form 8-K
(Securities and Exchange Commission File No.
001-11763) filed on July 15, 1999.
10.24 Amendment No. 1 to Sale of Assets Agreement dated as
of June 30, 1999, between Amerada Hess Corporation and
TransMontaigne Terminaling Inc. Incorporated by
reference to TransMontaigne Inc. Current Report on
Form 8-K (Securities and Exchange Commission File No.
001-11763) filed on July 15, 1999.
10.25 Letter Agreement dated as of June 30, 1999 between
Amerada Hess Corporation and TransMontaigne
Terminaling Inc. Incorporated by reference to
TransMontaigne Inc. Current Report on Form 8-K
(Securities and Exchange Commission File No.
001-11763) filed on July 15, 1999.
21 Schedule of TransMontaigne Inc. Subsidiaries. FILED
HEREWITH.
23.1 Consent of KPMG LLP. FILED HEREWITH.
27 Financial Data Schedule for the Fiscal Year Ended June
30, 1999. FILED HEREWITH.
87
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K (continued)
(b) Reports on Form 8-K.
The following reports on Form 8-K were filed during the quarter ended June
30, 1999 and are included in this Form 10-K by reference:
April 1, 1999 reporting Item 5 of Form 8-K announcing the completion of a
private placement of $170 million of Series A Convertible Preferred Stock Units;
and Item 7 of Form 8-K, providing exhibits.
May 4, 1999 reporting Item 5 of Form 8-K announcing the signing of a
definitive agreement with Amerada Hess Corporation; and Item 7 of Form 8-K,
providing the May 4, 1999 press release as the exhibit.
88
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
TRANSMONTAIGNE INC.
By /s/ CORTLANDT S. DIETLER
------------------------
Cortlandt S. Dietler
Chairman and Chief Executive Officer
Date: September 28, 1999
Pursuant to the requirements of the Securities and Exchange Act of 1934, this
report is signed below by the following persons on behalf of the Registrant and
in the capacities indicated on September 24, 1999.
Name and Signature Title
------------------ -----
(i) Principal executive officer:
/s/ CORTLANDT S. DIETLER Chairman, Chief Executive Officer and
- ------------------------ Director
Cortlandt S. Dietler
(ii) Principal operating officer:
/s/ RICHARD E. GATHRIGHT President, Chief Operating Officer and
- ------------------------ Director
Richard E. Gathright
(iii) Principal financial officer:
/s/ HAROLD R. LOGAN, JR. Executive Vice President/Finance,
- ------------------------ Treasurer and Director
Harold R. Logan, Jr.
(iv) Principal accounting officer:
/s/ RODNEY S. PLESS Vice President, Controller and Chief
- ------------------- Accounting Officer
Rodney S. Pless
(v) Non Employee Directors:
/s/ THOMAS R. DENISON /s/ EDWIN H. MORGENS
- --------------------- --------------------
Thomas R. Denison Edwin H. Morgens
/s/ JOHN A. HILL /s/ SIMON B. RICH, JR.
- ------------------ ----------------------
John A. Hill Simon B. Rich, Jr.
/s/ BRYAN H. LAWRENCE
- ---------------------
Bryan H. Lawrence
89
<PAGE>
EXHIBIT 10.7
EXECUTION COPY
AMENDMENT AND WAIVER dated as of October 30 1998, by and
among TransMontaigne Inc., a Delaware corporation (the
"Company"), and the entities listed on the signature pages
-------
hereof (the "Institutional Investors").
-----------------------
WHEREAS, the Company and the Institutional Investors are parties to a
Registration Rights Agreement dated as of April 17, 1996 (the "Agreement");
---------
WHEREAS, the Company and Louis Dreyfus Corporation, a New York
corporation ("LDC") have entered into a Stock Purchase Agreement dated as of
---
September 13, 1998 (the "Stock Purchase Agreement"), pursuant to which the
------------------------
Company has agreed to purchase from LDC, and LDC has agreed to sell to the
Company, all of the issued and outstanding shares of common stock, par value
$1.00 per share, of Louis Dreyfus Energy Corp., a Delaware corporation and a
wholly owned subsidiary of LDC (the "Stock Purchase");
--------------
WHEREAS, a portion of the purchase price payable by the Company to LDC
in connection with the Stock Purchase consists of shares (the "LDC Shares") of
----------
common stock, par value $.01 per share, of the Company (the "Common Stock");
------------
WHEREAS, pursuant to the Stock Purchase Agreement, the Company has
agreed to enter into a Registration Rights Agreement (the "LDC Registration
----------------
Rights Agreement") to, among other things, grant LDC (and certain permitted
- ----------------
affiliates of LDC to whom LDC transfers any portion of the LDC Shares)
registration rights in respect of the LDC Shares substantially comparable to the
rights set forth in the Agreement;
WHEREAS, the Company and the Institutional Investors desire to amend
the Agreement in certain respects to coordinate the provisions of the Agreement
and the LDC Registration Rights Agreement and the Institutional Investors desire
to waive certain provisions of the Agreement to permit the Company to enter in
to the LDC Registration Rights Agreement.
<PAGE>
NOW, THEREFORE, in consideration of the aforesaid and the mutual
promises hereinafter made, the parties hereto agree as follows:
SECTION 1. Defined Terms. Unless otherwise defined herein, all
--------------
capitalized terms used herein shall have the meanings ascribed to such terms in
the Agreement.
SECTION 2. Waiver of Certain Provisions of the Agreement. In
----------------------------------------------
accordance with Section 3.3 of the Agreement, the Institutional Investors hereby
waive any and all provisions of the Agreement to the extent necessary in order
to permit the Company to enter into the LDC Registration Rights Agreement, a
copy of which is attached hereto as Annex A. Without limiting the generality of
the foregoing, the Institutional Investors hereby waive compliance with (i) the
covenant of the Company set forth in Section 2.10 of the Agreement and (ii) to
the extent that the entering into of the LDC Registration Rights Agreement could
be deemed to be a breach thereof by the Company, the covenant of the Company set
forth in the last sentence of Section 2.2.5 of the Agreement.
SECTION 3. Amendments to the Agreement. Effective as of the date
----------------------------
hereof, the Agreement is hereby amended and supplemented as follows:
(a) Pari Passu Treatment. The Institutional Investors hereby
---------------------
acknowledge and agree that, at any time on or after December 31, 1999, (i) LDC
and (ii) each Person to whom LDC is permitted under the terms of the Stock
Purchase Agreement and the LDC Registration Rights Agreement to transfer shares
of Common Stock then owning shares of Common Stock that carry registration
rights pursuant to the LDC Registration Rights Agreement (collectively, the "LDC
---
Holders") have the right (i) pursuant to Section 2.1.1 of the LDC Registration
- -------
Rights Agreement, to participate in Piggyback Registrations and (ii) pursuant to
Section 2.2.1 of the LDC Registration Rights Agreement, to participate in Demand
Registrations, in each case, pursuant to Sections 2.1.3 and 2.2.4, respectively,
of the LDC Registration Rights Agreement, pari passu in terms of priority with
---- -----
the Institutional Investors under the Agreement. The Company hereby
acknowledges and agrees that the Institutional Investors have the right,
pursuant to Sections 2.2.1 and 2.2.4 of the LDC Registration Rights Agreement
and subject to the terms and conditions set forth in Section 3(b) of this
Amendment and Waiver, to receive notice of, and participate in, demand
registrations initiated by the LDC Holders pursuant to the LDC Registration
Rights Agreement ("LDC Demand Registrations")
------------------------
<PAGE>
3
pari passu in terms of priority with the LDC Holders thereunder. Participation
- ---- -----
by an Institutional Investor in an LDC Demand Registration shall count as one of
the four Demand Registrations that the Institutional Investors have the right to
request or participate in a request for pursuant to Section 2.2.1 of the
Agreement.
(b) Notification of LDC Demand Registration Requests; Priority on LDC
-----------------------------------------------------------------
Demand Registrations. The Company agrees that it shall, within 10 days after
- ---------------------
receipt of a LDC Demand Registration request notice from any one or more of the
LDC Holders pursuant to Section 2.2.1 of the LDC Registration Rights Agreement,
serve written notice (the "LDC Notice") of such registration request to all
----------
Institutional Investors holding Registrable Securities and, subject to the pro
---
rata allocations set forth in the next succeeding sentence, the Company shall
- ----
include in such LDC Demand Registration all Registrable Securities held by
Institutional Investors with respect to which the Company has received a written
request for inclusion therein within 20 days after the giving of the LDC Notice.
The shares of Common Stock to be included in any such LDC Demand Registration
shall be apportioned (i) first, pro rata among (x) the Registrable Securities of
--- ----
the Institutional Investors who have made a request to be included in such LDC
Demand Registration and (y) shares of Common Stock held by LDC Holders who have
made a request to be included in such LDC Demand Registration and (ii) second,
pro rata among any other shares of Common Stock proposed to be included in such
- --- ----
LDC Demand Registration, including any shares proposed to be sold by the Company
pursuant to such LDC Demand Registration. The Company represents that the LDC
Holders have agreed to the Institutional Investors' right to participate in LDC
Demand Registrations on the terms and conditions set forth in this Section 3(b).
(c) Blackout Period. Clause (i) of the first sentence of the second
----------------
paragraph of Section 2.2.1 of the Agreement is hereby amended by deleting the
phrase "as a Piggyback Registration" and inserting in lieu thereof the phrase ",
either as a Piggyback Registration or pursuant to the Institutional Investors'
participation rights in respect of an LDC Demand Registration (as such term is
defined in the Amendment and Waiver dated as of October 30, 1998 to this
Agreement),".
<PAGE>
4
(d) Registration Expenses. Section 2.4 of the Agreement is hereby
----------------------
amended by deleting the phrase "; legal fees or expenses of one counsel selected
by the Institutional Investors (such counsel being subject to the reasonable
approval of the Company) for the Institutional Investors" beginning in the fifth
line thereof and inserting in lieu thereof the phrase " and legal fees or
expenses of one counsel for the Institutional Investors and the LDC Holders (as
such term is defined in the Amendment and Waiver dated as of October 30, 1998 to
this Agreement) mutually selected by the Institutional Investors and the LDC
Holders (such counsel being subject to the reasonable approval of the Company)".
SECTION 4. Notices. All notices hereunder shall be made in
--------
accordance with Section 3.1 of the Agreement.
SECTION 5. Governing Law. This Amendment and Waiver shall be
--------------
governed by and construed in accordance with the internal laws of the State of
New York applicable to agreements made and to be performed entirely within such
State, without regard to the conflicts of law principles of such State.
SECTION 6. Counterparts. This Amendment and Waiver may be executed
-------------
in one or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more such counterparts have
been signed by each of the parties and delivered to the other parties.
<PAGE>
5
IN WITNESS WHEREOF, the parties have caused this Amendment and Waiver
to be duly executed as of the date first written above.
TRANSMONTAIGNE INC.,
by
/s/ Richard E. Gathright
------------------------
Name:Richard E. Gathright
Title:President
YORKTOWN INVESTORS: YORKTOWN ENERGY PARTNERS, L.P.,
- -------------------
by DR ASSOCIATES III, L.P.,
its General Partner
by DILLON, READ & CO. INC.,
its General Partner
by
/s/ Bryan H. Lawrence
---------------------
Name:Bryan H. Lawrence
Title:Member
YORKTOWN ENERGY PARTNERS II, L.P.,
by DR ASSOCIATES III, L.P.,
its General Partner
by DILLON, READ & CO. INC.,
its General Partner
by
/s/ Bryan H. Lawrence
---------------------
Name: Bryan H. Lawrence
Title: Member
<PAGE>
6
LEXINGTON PARTNERS III, L.P.
by DILLON, READ & CO. INC.,
its General Partner
by
/s/ Steve Chrappa
-----------------------
Name: Steve Chrappa
Title: Associate Director
by /s/ William Bidell
--------------------------
Name: William Bidell
Title: Executive Director, Corporate Finance
LEXINGTON PARTNERS IV, L.P.
by DRMC, INC.,
its General Partner
by
/s/ Steve Chrappa
-----------------------
Name: Steve Chrappa
Title: Associate Director
by /s/ William Bidell
-------------------------
Name: William Bidell
Title: Executive Director, Corporate Finace
DILLON, READ & CO. INC.,
as Nominee
by
/s/ Steve Chrappa
-----------------------
Name: Steve Chrappa
Title: Associate Director
<PAGE>
7
by /s/ William Bidell
------------------------
Name: William Bidell
Title: Executive Director, Corporate Finance
DILLON, READ & CO. INC.,
as Agent
by
/s/ Steve Chrappa
-----------------------
Name: Steve Chrappa
Title: Associate Director
by /s/ William Bidell
--------------------------
Name: William Bidell
Title: Executive Director, Corporate Finance
Merrill Lynch Growth Fund
by
/s/ Jerry Weiss
------------------------------
Name: Jerry Weiss
Title: Vice President,
Merrill Lynch Asset Management
MASSMUTUAL INVESTORS: MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
- ---------------------
by
/s/ John B. Joyce
---------------------------
Name: John B. Joyce
Title: Managing Director
<PAGE>
8
THE FOLLOWING IS THE SIGNATURE LINE AND LEGEND FOR
MASSMUTUAL CORPORATE INVESTORS:
MASSMUTUAL CORPORATE INVESTORS
by
/s/ John B. Joyce
------------------------------
Name: John B. Joyce
Title: Vice President
The foregoing is executed on behalf of MassMutual
Corporate Investors, organized under a Declaration of
Trust, dated September 13, 1985, as amended from time
to time. The obligations of such Trust are not
personally binding upon, nor shall resort be had to the
property of, any of the Trustees, shareholders,
officers, employees or agents of such Trust, but the
trust's property only shall be bound.
<PAGE>
9
THE FOLLOWING IS THE SIGNATURE LINE AND LEGEND FOR
MASSMUTUAL PARTICIPATION INVESTORS:
MASSMUTUAL PARTICIPATION INVESTORS
by
/s/ John B. Joyce
--------------------------
Name: John B. Joyce
Title: Vice President
The foregoing is executed on behalf of MassMutual
Participation Investors, organized under a Declaration
of Trust, dated April 7, 1998, as amended from time to
time. The obligations of such Trust are not personally
binding upon, nor shall resort be had to the property
of, any of the Trustees, shareholders, officers,
employees or agents of such Trust, but the trust's
property only shall be bound.
MASSMUTUAL CORPORATE VALUE PARTNERS LIMITED, A Grand
Cayman Island Corporation
by MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY,
its Investment Manager
by
/s/ John B. Joyce
---------------------------
Name: John B. Joyce
Title: Managing Director
<PAGE>
10
FIRST RESERVE INVESTORS: FIRST RESERVE SECURED ENERGY ASSETS FUND, LIMITED
- ------------------------
PARTNERSHIP
by FIRST RESERVE CORPORATION,
as Managing General Partner
by
/s/ Thomas R. Denison
--------------------------
Name: Thomas R. Denison
Title: Managing Director
FIRST RESERVE FUND VI, LIMITED PARTNERSHIP
by FIRST RESERVE CORPORATION,
as Managing General Partner
by
/s/ Thomas R. Denison
---------------------------
Name: Thomas R. Denison
Title: Managing Director
FIRST RESERVE FUND V-II, LIMITED PARTNERSHIP
by FIRST RESERVE CORPORATION,
as Managing General Partner
by
/s/ Thomas R. Denison
-----------------------------
Name: Thomas R. Denison
Title: Managing Director
<PAGE>
11
FIRST RESERVE FUND V, LIMITED PARTNERSHIP
by FIRST RESERVE CORPORATION,
as Managing General Partner
by
/s/ Thomas R. Denison
--------------------------
Name: Thomas R. Denison
Title: Managing Director
<PAGE>
ANNEX A TO AMENDMENT AND WAIVER
[Registration Rights Agreement dated as of October 30, 1998,
between TransMontaigne Inc. and Louis Dreyfus Corporation]
[Included as Exhibit 10.9]
<PAGE>
EXHIBIT 10.9
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT dated as of
October 30, 1998, between TransMontaigne Inc., a
Delaware corporation (the "Company"), and Louis
-------
Dreyfus Corporation, a New York corporation
("LDC").
---
WHEREAS, the Company and LDC have entered into a Stock Purchase
Agreement dated as of September 13, 1998 (the "Stock Purchase Agreement"),
------------------------
pursuant to which the Company has agreed to purchase from LDC, and LDC has
agreed to sell to the Company, all of the issued and outstanding shares of
common stock, par value $1.00 per share, of Louis Dreyfus Energy Corp. ("LDEC"),
----
a Delaware corporation and a wholly owned subsidiary of LDC (the "Stock
-----
Purchase");
- --------
WHEREAS, a portion of the purchase price payable by the Company to LDC
in connection with the Stock Purchase consists of shares (the "LDC Shares") of
----------
common stock, par value $.01 per share, of the Company (the "Common Stock");
------------
WHEREAS, pursuant to the Stock Purchase Agreement, the Company has
agreed to enter into this Agreement to, among other things, grant LDC (and any
Permitted Affiliate of LDC (as defined below) to whom LDC transfers any portion
of the LDC Shares) registration rights in respect of the LDC Shares
substantially comparable to the rights set forth in the Registration Rights
Agreement dated as of April 17, 1996 (the "Institutional Investor Registration
-----------------------------------
Rights Agreement") by and among the Company and the Institutional Investors
- ----------------
identified therein (the "Institutional Investors").
-----------------------
<PAGE>
NOW, THEREFORE, in consideration of the aforesaid and the mutual
promises hereinafter made, the parties hereto agree as follows:
ARTICLE I
Definitions
-----------
SECTION 1.1. Definitions. The following terms, as used herein, shall
------------
have the following meanings:
"Advice" has the meaning set forth in Section 2.3.
------
"Affiliate" means, with respect to any specified person, any other
---------
person directly or indirectly controlling, controlled by or under direct or
indirect common control with such specified person. For the purposes of this
definition, "control" when used with respect to any specified person means the
-------
power to direct the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
----------- ----------
correlative to the foregoing.
"Board" means the Board of Directors of the Company.
-----
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
------------
Friday which is not a day on which banking institutions in New York, New York,
Boston, Massachusetts or Fayetteville, Arkansas are authorized or obligated by
law or executive order to close.
"Commission" means the Securities and Exchange Commission or any other
----------
Federal agency from time to time administering the 1933 Act or the Exchange Act.
"Common Stock" has the meaning set forth in the recitals to this
------------
Agreement.
"Common Stock Equivalent" means any securities of any person
-----------------------
convertible into or exchangeable or exercisable for Common Stock (whether at the
option of such person or of the holder of such securities).
"Company" has the meaning set forth in the preamble to this Agreement.
-------
<PAGE>
3
"Covered Employees" means those employees of LDEC who are to receive
-----------------
an award of Employee Shares (as defined below).
"Demand Registration" has the meaning set forth in Section 2.2.1.
-------------------
"Employee Shares" means that portion of the LDC Shares (consisting of
---------------
148,920 shares) to be distributed to the Covered Employees immediately
following, and in connection with, the closing of the Stock Purchase.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Institutional Investor Demand Registration" has the meaning set forth
------------------------------------------
in Section 2.2.1.
"Institutional Investor Notice" has the meaning set forth in Section
-----------------------------
2.2.1.
"Institutional Investor Registration Rights Agreement" has the meaning
----------------------------------------------------
set forth in the recitals to this Agreement.
"Institutional Investors" has the meaning set forth in the recitals to
-----------------------
this Agreement.
"LDC" has the meaning set forth in the preamble to this Agreement.
---
"LDC Demand Registration" has the meaning set forth in Section 2.2.1.
-----------------------
"LDC Holders" has the meaning set forth in Section 2.1.1.
-----------
"LDC Notice" has the meaning set forth in Section 2.2.1.
----------
"LDC Shares" has the meaning set forth in the recitals to this
----------
Agreement.
"LDEC" has the meaning set forth in the recitals to this Agreement.
----
<PAGE>
4
"1933 Act" means the Securities Act of 1933, as amended.
--------
"Permitted Affiliate of LDC" means any entity that is and continues to
--------------------------
be at least 80% owned, directly or indirectly, by S.A. Louis Dreyfus et Cie.
"Permitted Affiliate Section 3.1 Agreement" has the meaning set forth
-----------------------------------------
in Section 3.1.
"person" means any individual, corporation, partnership, joint
------
venture, association, joint-stock company, trust, unincorporated organization or
any other entity or organization, including a government, a political
subdivision or an agency or instrumentality thereof.
"Piggyback Registration" has the meaning set forth in Section 2.1.1.
----------------------
"Registration" has the meaning set forth in Section 2.3.
------------
"Registrable Securities" means any shares of Common Stock acquired in
----------------------
connection with the Stock Purchase and owned by LDC or a Permitted Affiliate of
LDC and any shares of Common Stock which may be issued or distributed in respect
of such shares of Common Stock by way of concession, stock dividend or stock
split or other distribution, recapitalization or reclassification, but with
respect to such shares of Common Stock, only so long as such shares are
"Restricted Securities". A share of Common Stock shall be deemed to be a
---------------------
"Restricted Security" until such time as such share (i) has been effectively
-------------------
registered under the 1933 Act pursuant to a registration statement with respect
to the sale of such share and disposed of pursuant to such registration
statement, (ii) has been distributed to the public pursuant to Rule 144 (or any
similar provision then in force) under the 1933 Act, (iii) shall have been
otherwise transferred, new certificates for it not bearing a legend restricting
further transfer shall have been delivered by the Company and subsequent
disposition of it shall not require registration or qualification of it under
the 1933 Act or any state securities or blue sky law then in force or (iv) shall
have ceased to be outstanding.
<PAGE>
5
"Request Notice" has the meaning set forth in Section 2.2.1.
--------------
"Share Transfer" has the meaning set forth in Section 3.1.
--------------
"Shelf Registration" has the meaning set forth in Section 2.2.1.
------------------
"Stock Purchase" has the meaning set forth in the recitals to this
--------------
Agreement.
"Stock Purchase Agreement" has the meaning set forth in the recitals
------------------------
to this Agreement.
"Stop Order" has the meaning set forth in Section 2.2.3.
----------
ARTICLE II
Registration and Related Rights
-------------------------------
SECTION 2.1. Company Registration.
--------------------
<PAGE>
6
2.1.1. Right to Piggyback on Company Registration of Common Stock.
-----------------------------------------------------------
Subject to Section 2.1.3, if the Company proposes, on its own initiative, to
register any Common Stock under the 1933 Act in connection with the offering of
such Common Stock on any form other than Form S-4 or Form S-8 or any form
substituting therefor (except for a registration in connection with an exchange
offer of securities solely to existing securityholders of the Company) and such
proposal would result in the filing of a registration statement with the
Commission in connection therewith at any time on or after December 31, 1999,
the Company shall each such time promptly give LDC and each Permitted Affiliate
of LDC then owning Registrable Securities (collectively, the "LDC Holders")
-----------
prior written notice of such determination no later than 45 days prior to the
proposed filing date of the registration statement to be prepared in connection
with such proposed registration. Any LDC Holder wishing to register all or any
portion of such LDC Holder's Registrable Securities pursuant to such proposed
registration (a "Piggyback Registration") must give written notice to the
----------------------
Company of its intent to participate in such proposed registration no less than
15 days after the receipt of such notice. Subject to the pro rata allocations
--- ----
set forth in Section 2.1.3, upon receipt of such written request of any such LDC
Holder, the Company will use its best efforts to effect the registration under
the 1933 Act of all Registrable Securities which the Company has been so
requested to register by the LDC Holders. Notwithstanding the fact that a
Piggyback Registration requested pursuant to this Section 2.1 involves an
underwritten public offering, any LDC Holder holding Registrable Securities that
has requested to be included in such registration may elect, in writing at least
three Business Days prior to the effective date of the registration statement
filed in connection with such registration, not to register such Registrable
Securities in connection with such registration.
2.1.2. Selection of Underwriters. If the Company in its sole
--------------------------
discretion decides a Piggyback Registration shall be underwritten, the Company
shall have sole discretion in the selection of any underwriter or underwriters
to manage such Piggyback Registration.
2.1.3. Priority on Piggyback Registrations. If the managing
------------------------------------
underwriter or underwriters of a Piggyback
<PAGE>
7
Registration (or in the case of a Piggyback Registration not being underwritten,
holders of a majority of the shares of Common Stock proposed to be registered by
(x) the LDC Holders and (y) the Institutional Investors pursuant to the
Institutional Investor Registration Rights Agreement) advise the Company in
writing that in its or their opinion the number of shares of Common Stock
proposed to be sold in such Piggyback Registration (including any shares
proposed to be sold by Institutional Investors pursuant to the Institutional
Investor Registration Rights Agreement) exceeds the number which can be sold, or
would adversely affect the price at which the Common Stock could be sold in such
offering, the Company will include in such registration only that number of
shares of Common Stock which, in the opinion of such underwriter or underwriters
(or holders of a majority of the shares of Common Stock proposed to be
registered by the LDC Holders and the Institutional Investors, as the case may
be), can be sold in such offering without so affecting such price. The shares of
Common Stock to be included in such Piggyback Registration shall be apportioned
(i) first, to any shares of Common Stock that the Company proposes to sell, (ii)
second, pro rata among any shares of Common Stock proposed to be sold by (x) any
--- ----
LDC Holder or (y) any Institutional Investor pursuant to the Institutional
Investor Registration Rights Agreement and (iii) third, pro rata among any other
--- ----
shares of Common Stock proposed to be included in such Piggyback Registration,
in each case according to the total number of shares of Common Stock requested
for inclusion by the LDC Holders and the Institutional Investors, or in such
other proportions as shall mutually be agreed to among the LDC Holders and the
Institutional Investors.
SECTION 2.2. Demand Registration Rights.
---------------------------
<PAGE>
8
2.2.1. Right to Demand. Subject to the following sentence, if, at
----------------
any time on or after December 31, 1999, any one or more of the LDC Holders
holding Registrable Securities representing ten percent (10%) or more in the
aggregate of the then outstanding Common Stock (assuming conversion or exercise
of all Common Stock Equivalents held by the LDC Holders into Registrable
Securities at the then conversion price or exercise price) submits a written
request (a "Request Notice") to the Company for registration with the Commission
--------------
under and in accordance with the provisions of the 1933 Act of all or part of
the Registrable Securities then owned by such LDC Holder or LDC Holders (an "LDC
---
Demand Registration"), the Company shall thereupon, as expeditiously as
- -------------------
possible, use its best efforts to file a registration statement with the
Commission and have the registration statement declared effective by the
Commission; provided, however, that the number of Registrable Securities as to
-------- -------
which such request is made shall represent not less than five percent (5%) of
the then outstanding Common Stock and Common Stock Equivalents. Notwithstanding
the foregoing, the LDC Holders shall have the right, even though they hold
Registrable Securities representing less than ten percent (10%) in the aggregate
of the then outstanding Common Stock, to initiate an LDC Demand Registration by
submitting a Request Notice to the Company at any time on or after December 31,
1999 if all of the following conditions are met: (i) the LDC Holders have not
previously submitted a Request Notice to the Company that resulted in an
effective LDC Demand Registration under the terms of this Agreement, (ii) the
Registrable Securities held by the LDC Holders represent less than ten percent
(10%) in the aggregate of the then outstanding Common Stock as a result of
additional issuances of Common Stock by the Company after the date of this
Agreement, (iii) the LDC Holders are not then eligible to sell the Registrable
Securities held by them pursuant to the provisions of paragraph (k) of Rule 144
under the 1933 Act (or any successor provision) and (iv) such Request Notice
relates to the proposed sale by the LDC Holders of either (x) Registrable
Securities representing not less than five percent (5%) of the then outstanding
Common Stock and Common Stock Equivalents or (y) all of the Registrable
Securities then held by the LDC Holders. The LDC Holders acknowledge that,
within 10 days after receipt of such Request Notice, the Company will serve
written notice (the "Institutional Investor Notice") of such
-----------------------------
<PAGE>
9
registration request to all Institutional Investors who hold shares of Common
Stock which carry registration rights pursuant to the Institutional Investor
Registration Rights Agreement, and, subject to the pro rata allocations set
--- ----
forth in Section 2.2.4, the Company will include in such LDC Demand Registration
all such shares of Common Stock held by Institutional Investors with respect to
which the Company has received a written request for inclusion therein within 20
days after the giving of the Institutional Investor Notice.
The Institutional Investors have rights to demand registrations under
the Institutional Investor Registration Rights Agreement substantially
comparable to those of the LDC Holders under this Agreement. The Company agrees
that, at any time on or after December 31, 1999, it shall, within 10 days after
receipt of a demand registration request notice from any one or more of the
Institutional Investors pursuant to the Institutional Investor Registration
Rights Agreement (an "Institutional Investor Demand Registration", with the
------------------------------------------
terms "Institutional Investor Demand Registration" and "LDC Demand Registration"
being collectively referred to herein as a "Demand Registration"), serve written
-------------------
notice (the "LDC Notice") of such registration request to all LDC Holders
----------
holding Registrable Securities and, subject to the pro rata allocations set
--- ----
forth in Section 2.2.4, the Company shall include in such Institutional Investor
Demand Registration all Registrable Securities held by LDC Holders with respect
to which the Company has received a written request for inclusion therein within
20 days after the giving of the LDC Notice. The Company represents that the
Institutional Investors have agreed to the LDC Holders' right to participate in
Institutional Investor Demand Registrations on the terms and conditions set
forth in this Section 2.2.
All LDC Holders requesting registration of their Registrable
Securities pursuant to this Section 2.2.1 shall specify the aggregate number of
Registrable Securities proposed to be registered and the intended methods of
disposition thereof. The LDC Holders shall collectively be entitled to request
or participate in an Institutional Investor request for four Demand
Registrations (the last of which shall be a shelf registration pursuant to Rule
415 under the 1933 Act to be effective for not less than 180 days (the "Shelf
-----
Registration")) pursuant to which a
- ------------
<PAGE>
10
registration statement covering Registrable Securities shall be filed with and
declared effective by the Commission, the expenses of which shall be borne by
the Company in accordance with Section 2.4, and no more than one LDC Demand
Registration may be requested by any LDC Holder in any 12-month period;
provided, however, that if, following the effective date of any registration
- -------- -------
statement filed pursuant to a Demand Registration, any LDC Holder whose
Registrable Securities are to be included in such Demand Registration pursuant
to this Section 2.2.1 elects, by giving written notice to the Company not later
than 90 days after such effective date, not to dispose of its Registrable
Securities because of a material adverse change in the business, condition
(financial or otherwise), assets or prospects of the Company and its
subsidiaries, taken as a whole, or because of a material adverse event with
respect to the Company and its subsidiaries, taken as a whole, not disclosed in
the final prospectus prepared in connection with such Demand Registration, then
such Demand Registration shall not count as one of the four Demand Registrations
permitted hereunder unless shares of Common Stock representing five percent (5%)
or more of the then outstanding Common Stock, including Common Stock
Equivalents, are sold pursuant to the registration statement prepared in
connection with such Demand Registration within 90 days of the effective date of
such registration statement and prior to the occurrence of such material adverse
change or event.
If at the time of any Request Notice (i) the Company is engaged in a
registered public offering as to which the LDC Holders had the right to include
their Registrable Securities, either as a Piggyback Registration or pursuant to
the LDC Holders' participation rights in respect of an Institutional Investor
Demand Registration, or which was made on Form S-4 or any successor form, (ii)
the Company is engaged in any other activity outside of the ordinary course of
business, such as a merger, consolidation, recapitalization or acquisition
which, in the good faith judgment of the Board, would be materially and
adversely affected by the requested registration or (iii) the Board makes a good
faith determination that the public disclosures required to be made in the
requested registration statement would have a material and adverse impact on the
business, financial condition or prospects of
<PAGE>
11
the Company, the Company may at its option direct that such request be delayed
for a period of not more than 90 days, which right to delay may be exercised by
the Company only one time in respect of each LDC Demand Registration.
The Company shall have the same rights to piggyback on an LDC Demand
Registration as an LDC Holder would have in a Piggyback Registration permitted
under Section 2.1.
2.2.2. Selection of Underwriters. If a proposed LDC Demand
--------------------------
Registration involves either a firm or best efforts underwritten offering, the
LDC Holder(s) giving the Request Notice with respect to such LDC Demand
Registration shall have the right, subject to approval by the Company (which
approval shall not be unreasonably withheld), to select the underwriter or
underwriters to manage such LDC Demand Registration.
2.2.3. Effective Registration Statement. A registration requested
---------------------------------
pursuant to this Section 2.2 shall not be deemed to have been effected unless
the registration statement prepared in connection therewith has become
effective; provided, however, that if, within 75 days after such registration
-------- -------
statement has become effective (135 days in the case of the Shelf Registration),
the offering of Registrable Securities pursuant to such registration statement
is interfered with by any stop order, injunction or other order or requirement
of the SEC or other governmental agency or court (collectively, a "Stop Order"),
----------
such registration shall be deemed not to have been effected. Notwithstanding
the preceding sentence, if any such Stop Order is rescinded, the effective
period shall continue upon such rescission and be extended by the number of days
by which such Stop Order reduced the effective period.
2.2.4. Priority on Demand Registrations. If the managing underwriter
---------------------------------
or underwriters of a Demand Registration initiated under this Agreement or the
Institutional Investor Registration Rights Agreement advise the Company in
writing that in its or their opinion the number of shares of Common Stock
proposed to be sold in such Demand Registration exceeds the number which can be
sold, or would adversely affect the price at which the Common Stock could be
sold in such offering, the Company will include in
<PAGE>
12
such registration only that number of shares of Common Stock which, in the
opinion of such underwriter or underwriters, can be sold in such offering
without so affecting such price. The shares of Common Stock to be included in
such Demand Registration shall be apportioned (i) first, pro rata among (x) the
--- ----
Registrable Securities of the LDC Holders who have made a request to be included
in such Demand Registration and (y) shares of Common Stock held by Institutional
Investors who have made a request to be included in such Demand Registration and
(ii) second, pro rata among any other shares of Common Stock proposed to be
--- ----
included in such Demand Registration, including any shares proposed to be sold
by the Company pursuant to such Demand Registration.
2.2.5. Approval of Institutional Investors. As evidenced by the
------------------------------------
Amendment and Waiver dated as of October 30, 1998, entered into by and between
the Company and the Institutional Investors (a copy of which is attached hereto
as Annex A), the Company represents that the Institutional Investors have
approved of the Company's entering into of this Agreement and the granting to
the LDC Holders of registration rights in respect of Piggyback Registrations and
Demand Registrations on the terms and conditions set forth herein.
2.2.6. Additional Rights. If the Company at any time grants to any
------------------
other holders of Common Stock or Common Stock Equivalents any rights to request
the Company to effect the registration under the 1933 Act of any such shares of
Common Stock on terms more favorable to such holders than the terms set forth in
this Agreement, the terms of this Agreement shall be deemed amended or
supplemented to the extent necessary to provide the LDC Holders with the same
more favorable terms. The Company shall not grant any other person rights to
register securities of the Company on terms which could restrict in any way the
ability of the Company fully to perform its obligations to the LDC Holders
pursuant to this Agreement.
SECTION 2.3. Registration Procedures. It shall be a condition
------------------------
precedent to the obligations of the Company and any underwriter or underwriters
to take any action pursuant to this Article II that the LDC Holders requesting
inclusion in any Piggyback Registration or Demand
<PAGE>
13
Registration (collectively referred to as a "Registration") furnish to the
------------
Company such information regarding them, the Registrable Securities held by
them, the intended method of disposition of such Registrable Securities, and
such agreements regarding indemnification, disposition of such securities and
the other matters referred to in this Article II as the Company may reasonably
request and as may be required in connection with any action to be taken by the
Company or any such underwriter. With respect to any Registration which includes
Registrable Securities held by a LDC Holder, the Company shall, subject to
Sections 2.1 and 2.2:
2.3.1. Prepare and file with the Commission a registration statement
on the appropriate form prescribed by the Commission within 60 days after the
end of the period within which requests for registration may be given to the
Company, file with the Commission any necessary amendments to the registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become effective; provided, however,
-------- -------
that at least five business days prior to filing a registration statement or
prospectus or any amendments or supplements thereto, including documents
incorporated by reference after the initial filing of the registration
statement, the Company shall furnish to the holders of the Registrable
Securities covered by such registration statement and the underwriter or
underwriters, if any, copies of or drafts of all such documents proposed to be
filed, which documents shall be subject to the reasonable review of such holders
and underwriters, if any, and the Company shall not file any registration
statement or amendment thereto or any prospectus or any supplement thereto or
any documents required to be incorporated by reference therein to which the LDC
Holders or the underwriters, if any, shall reasonably object;
2.3.2. Prepare and file with the Commission such amendments and post-
effective amendments to such registration statement and any documents required
to be incorporated by reference therein as may be necessary to keep the
registration statement effective for a period of time as necessary to complete
the offering, which period shall be not less than 90 days (or 180 days in the
case of the Shelf Registration) (or such shorter period that shall
<PAGE>
14
terminate when all Registrable Securities covered by such registration statement
have been sold or withdrawn, but not prior to the expiration of the time period
referred to in Section 4(3) of the 1933 Act and Rule 174 thereunder, if
applicable); cause the prospectus to be supplemented by any required prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 under the
1933 Act (or any successor rule); and comply with the provisions of the 1933 Act
applicable to it with respect to the disposition of all Registrable Securities
covered by such registration statement during the applicable period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such registration statement or supplement to the prospectus;
2.3.3. Furnish to each such LDC Holder, without charge, at least one
conformed copy of the registration statement and any post-effective amendment
thereto, upon request, and such number of copies of the prospectus (including
each preliminary prospectus) and any amendments or supplements thereto, and any
exhibits or documents incorporated by reference therein as any such LDC Holder
or underwriter or underwriters, if any, may request in order to facilitate the
disposition of the securities being sold by any such LDC Holder (it being
understood that the Company consents to the use of the prospectus and any
amendment or supplement thereto by any such LDC Holder covered by the
registration statement and the underwriter or underwriters, if any, in
connection with the offering and sale of the securities covered by the
prospectus or any amendments or supplements thereto);
2.3.4. Immediately notify each such LDC Holder, at any time when a
prospectus relating thereto is required to be delivered under the 1933 Act, when
the Company becomes aware of the happening of any event as a result of which the
prospectus included in such registration statement (as then in effect) contains
any untrue statement of material fact or omits to state a material fact
necessary to make the statements therein (in the case of the prospectus or any
preliminary prospectus, in light of the circumstances under which they were
made) not misleading and, as promptly as practicable thereafter, prepare and
file with the Commission and furnish a supplement or amendment to such
prospectus so that, as thereafter delivered to the LDC Holders (a reasonable
number of such amended and supplemented
<PAGE>
15
prospectuses having been delivered to the LDC Holders), such prospectus will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading;
2.3.5. Use its best efforts to cause all securities included in such
registration statement to be listed, by the date of the first sale of securities
pursuant to such registration statement, on each national securities exchange or
market on which the Common Stock is then listed;
2.3.6. Make every reasonable effort to obtain the withdrawal of any
Stop Order suspending the effectiveness of the registration statement at the
earliest possible moment;
2.3.7. Subject to the time limitations specified in Section 2.3.2, if
requested by the managing underwriter or underwriters or any such LDC Holder,
promptly incorporate in a prospectus supplement or post-effective amendment such
information as the managing underwriter or underwriters or such LDC Holder
reasonably requests to be included therein, including, without limitation, with
respect to the number of shares being sold by such LDC Holder to such
underwriter or underwriters, the purchase price being paid therefor by such
underwriter or underwriters and with respect to any term of the underwritten
offering of the securities to be sold in such offering; and make all required
filings of such prospectus supplement or post-effective amendment as soon as
practicable after being notified of the matters to be incorporated in such
prospectus supplement or post-effective amendment;
2.3.8. As promptly as practicable after the filing with the
Commission of any document which is incorporated by reference into a
registration statement, deliver a reasonable number of copies of such document
to each such LDC Holder;
2.3.9. Prior to the date on which the registration statement is
declared effective, use its best efforts to register or qualify, and cooperate
with such LDC Holders, the underwriter or underwriters, if any, and their
counsel in connection with the registration or qualification of, the securities
covered by the registration statement for
<PAGE>
16
offer and sale under the securities or blue sky laws of each state and other
jurisdiction of the United States as such LDC Holders or managing underwriter or
underwriters, if any, requests in writing, use its best efforts to keep each
such registration or qualification effective, including through new filings, or
amendments or renewals, during the period such registration statement is
required to be kept effective and do any and all other acts or things necessary
or advisable to enable the disposition in all such jurisdictions of the
Registrable Securities covered by the applicable registration statement;
provided, however, that the Company shall not be required to qualify generally
to do business in any jurisdiction where it is not then so qualified or to take
any action which would subject it to general service of process in any such
jurisdiction where it is not then so subject;
2.3.10. Enter into such customary agreements (including an
underwriting agreement in customary form) and take such other actions
customarily taken by registrants, if any, as the LDC Holders or the underwriters
may reasonably request in order to expedite or facilitate the disposition of
such Registrable Securities;
2.3.11. Obtain a "cold comfort" letter or letters from the Company's
independent public accountants in customary form and covering matters of the
type customarily covered by "cold comfort" letters as the underwriters, if any,
may reasonably request;
2.3.12. Make available for inspection by any LDC Holder holding
Registrable Securities covered by such registration statement, by any
underwriter participating in any disposition to be effected pursuant to such
registration statement and by any attorney, accountant or other agent retained
by any such seller or any such underwriter, all pertinent financial and other
records, pertinent corporate documents and properties of the Company, and cause
the Company's officers, directors and employees to supply all information
reasonably requested by any such LDC Holder, underwriter, attorney, accountant
or agent in connection with such registration statement;
2.3.13. Cooperate with such LDC Holders and the managing underwriter
or underwriters, if any, to facilitate
<PAGE>
17
the timely preparation and delivery of certificates (not bearing any restrictive
legends) representing securities to be sold under the registration statement,
and enable such securities to be in such denominations and registered in such
names as the LDC Holders or the managing underwriter or underwriters, if any,
may request; and
2.3.14. Use its best efforts to cause the securities covered by the
registration statement to be registered with or approved by such other
governmental agencies or authorities within the United States, including,
without limitation, the National Association of Securities Dealers, Inc., as may
be necessary to enable the seller or sellers thereof or the underwriter or
underwriters, if any, to consummate the disposition of such Registrable
Securities.
The LDC Holders, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 2.3.4, shall forthwith
discontinue disposition of the securities until the LDC Holders' receipt of the
copies of the supplemented or amended prospectus contemplated by Section 2.3.4
or until they are advised in writing (the "Advice") by the Company that the use
------
of the prospectus may be resumed, and have received copies of any additional or
supplemental filings which are incorporated by reference in the prospectus, and,
if so directed by the Company, each LDC Holder shall, or shall request the
managing underwriter or underwriters, if any, to, deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such LDC
Holder's possession, of the prospectus covering such securities which is current
at the time of receipt of such notice. In the event that the Company gives any
such notice, the time periods set forth in Section 2.3.4 shall be extended by
the number of days during the period from and including the date of the giving
of such notice to and including the date when each seller of securities covered
by such registration statement shall have received the copies of the
supplemented or amended prospectus contemplated by Section 2.3.4 or the Advice.
SECTION 2.4. Registration Expenses. In the case of any Registration,
---------------------
the Company shall bear all of the costs and expenses of such Registration
(including, without
<PAGE>
18
limitation, the expenses of preparing any registration statement, Commission and
state "blue sky" filings, registration and qualification fees, the cost of
providing any legal opinion or "cold comfort" letters requested by the LDC
Holders and printing costs) and legal fees or expenses of one counsel for the
LDC Holders and the Institutional Investors mutually selected by the LDC Holders
and the Institutional Investors (such counsel being subject to the reasonable
approval of the Company); provided, however, that the Company shall not be
-------- -------
responsible for registration or qualification fees or underwriter's discounts or
commissions that are attributable to the Registrable Securities of an LDC
Holder.
SECTION 2.5. Indemnification and Contribution.
---------------------------------
<PAGE>
19
2.5.1. Indemnification by the Company. The Company agrees to
-------------------------------
indemnify and hold harmless each LDC Holder, its officers, directors and agents
and each person who controls (within the meaning of the 1933 Act and the
Exchange Act) such LDC Holder against all losses, claims, damages, liabilities
and expenses arising out of or based upon any untrue or alleged untrue statement
of a material fact contained in any registration statement, prospectus or
preliminary prospectus in which such LDC Holder is participating or in any
document incorporated by reference therein or any omission or alleged omission
to state therein a material fact necessary to make the statements therein (in
the case of the prospectus or any preliminary prospectus, in light of the
circumstances under which they were made) not misleading, except insofar as the
same are caused by, based upon or contained in any information with respect to
such LDC Holder furnished in writing to the Company by such LDC Holder expressly
for use therein; provided, however, that the foregoing indemnity agreement with
-------- -------
respect to any preliminary prospectus shall not inure to the benefit of any LDC
Holder from whom the person asserting such loss, claim, damage or liability
purchased shares of Common Stock if it is determined that it was the
responsibility of such LDC Holder to provide such person with a current copy of
the prospectus and such current copy of the prospectus would have cured such
loss, claim, damage or liability. The Company shall also indemnify underwriters
(as such term is defined in the 1933 Act), their officers and directors and each
person who controls such persons (within the meaning of the 1933 Act and the
Exchange Act) to the same extent as provided above with respect to the
indemnification of the LDC Holders.
2.5.2. Indemnification by LDC. In connection with any Registration
-----------------------
in which an LDC Holder is participating, such LDC Holder shall furnish to the
Company in writing such information and affidavits with respect to such LDC
Holder as the Company may reasonably request for use in connection with any
registration statement or prospectus and LDC agrees to indemnify and hold
harmless the Company, its directors, officers and agents and each person who
controls (within the meaning of the 1933 Act and the Exchange Act) the Company
against any losses, claims, damages, liabilities and expenses arising out of or
based upon any untrue statement of a material fact or any omission
<PAGE>
20
to state a material fact necessary to make the statements in the registration
statement or prospectus or preliminary prospectus (in the case of the prospectus
or preliminary prospectus, in light of the circumstances under which they were
made) not misleading, to the extent, but only to the extent, that such untrue
statement or omission is contained in any information or affidavit with respect
to such LDC Holder furnished in writing to the Company by such LDC Holder
expressly for use therein; provided, however, that the amount recoverable by the
-------- -------
Company from LDC under this indemnification provision shall not exceed the
amount of net proceeds received by all LDC Holders from the sale of Registrable
Securities in connection with any such Registration; and provided further that
-------- -------
the indemnity agreement contained in this Section 2.5.2 shall not apply to
amounts paid in settlement of any loss, claim, damage, liability or action
arising pursuant to a Registration if such settlement is effected without the
consent of LDC (which consent shall not be unreasonably withheld). Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Company or any of the prospective sellers, or any of
their respective Affiliates, directors, officers or controlling persons and
shall survive the transfer of such securities by such seller.
2.5.3 Conduct of Indemnification Proceedings. Any person entitled to
---------------------------------------
indemnification hereunder shall (i) give prompt written notice to the
indemnifying party of any claim with respect to which it seeks indemnification
and (ii) unless in such indemnified party's reasonable judgment a conflict of
interest may exist between such indemnified and indemnifying party, permit the
indemnifying party to assume the defense of such claim, with counsel reasonably
satisfactory to the indemnified party. The failure to so notify the indemnifying
party shall relieve the indemnifying party from any liability hereunder with
respect to the action to the extent that such failure materially prejudices the
indemnifying party. Whether or not such defense is assumed by the indemnifying
party, the indemnifying party shall not be subject to any liability for any
settlement made without its consent (which consent shall not be unreasonably
withheld). No indemnifying party shall consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving
<PAGE>
21
by the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation. An indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim shall not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim.
2.5.4. Contribution. If for any reason the indemnification provided
-------------
for in the preceding Sections 2.5.1 and 2.5.2 is unavailable to an indemnified
party as contemplated by the preceding Sections 2.5.1 and 2.5.2 for any reason,
then the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect not only the relative benefits
received by the indemnified party and the indemnifying party, but also the
relative fault of the indemnified party and the indemnifying party, as well as
any other relevant equitable considerations. Notwithstanding the foregoing, if
the indemnifying party is LDC, any contribution pursuant to this Section 2.5.4
shall be limited to the amount of net proceeds received by all LDC Holders from
the sale of Registrable Securities in connection with the applicable
Registration.
2.5.5. Other Indemnification. Indemnification similar to that set
----------------------
forth in the preceding subdivisions of this Section 2.5 (with appropriate
modifications) shall be given by the Company and LDC with respect to any
required registration or other qualification of securities under any Federal or
state law or regulation or governmental authority other than the 1933 Act.
SECTION 2.6. Exchange Act Reports. The Company agrees that it will
---------------------
use its best efforts to file in a timely manner all reports required to be filed
by it pursuant to the Exchange Act to the extent the Company is required to file
such reports. Upon request of an LDC Holder, the Company will furnish the
requesting LDC Holder with such information as may be necessary to enable such
LDC Holder to effect sales pursuant to Rule 144A. Notwithstanding the
foregoing, the Company may deregister any class of its equity securities under
Section 12 of the Exchange Act or suspend its duty to file reports with respect
to any class
<PAGE>
22
of its securities pursuant to Section 15(d) of the Exchange Act if it is then
permitted to do so pursuant to the Exchange Act and rules and regulations
thereunder.
SECTION 2.7. Restrictions on Public Sale by Holder of Securities.
----------------------------------------------------
2.7.1. To the extent not inconsistent with applicable law, any LDC
Holder whose Registrable Securities are included in a Registration relating in
whole or in part to an underwritten public offering agrees not to effect any
public sale or distribution of the issue being registered or any similar
security of the Company, or any securities convertible into or exchangeable or
exercisable for such securities, including a public sale pursuant to Rule 144
under the 1933 Act, during the 14 days prior to, and during the 180-day period
beginning on, the effective date of such registration statement (except as part
of such Registration); provided, however, that the foregoing shall only apply if
-------- -------
and to the extent requested by the managing underwriter or underwriters.
2.7.2. Each LDC Holder agrees that, in the event the Company files a
registration statement under the 1933 Act with respect to an underwritten public
offering of any shares of Common Stock or Common Stock Equivalent, such LDC
Holder shall not effect any public sale or distribution of any Common Stock
owned by it (other than as part of such underwritten public offering) within 7
days prior to, and during the 180-day period beginning on, the effective date of
such registration statement and the Company hereby also so agrees and agrees to
use its best efforts to cause, as the managing underwriters may require, each
other holder of any equity security, or of any security convertible into or
exchangeable or exercisable for any equity security, of the Company purchased
from the Company (at any time other than in a public offering) to so agree.
SECTION 2.8. Participation in Registrations. No LDC Holder may
-------------------------------
participate in any Registration hereunder unless such LDC Holder (i) agrees to
sell such LDC Holder's securities on the basis provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, underwriting
<PAGE>
23
agreements and other documents customarily required under the terms of such
underwriting arrangements.
SECTION 2.9. Remedies. LDC shall have the right and remedy to have
---------
the provisions of Sections 2.1 and 2.2 specifically enforced by any court having
jurisdiction in the event that the Company breaches such provisions, and the
Company shall reimburse LDC for the reasonable costs of the expenses for counsel
for LDC incurred in connection with such proceeding.
ARTICLE III
Restrictions on Transfer of
---------------------------
Common Stock by LDC; Standstill
-------------------------------
<PAGE>
24
SECTION 3.1. Restrictions on Transfer. Prior to December 31, 1999,
-------------------------
LDC shall not sell, assign, transfer, pledge, hypothecate, deposit in a voting
trust or otherwise dispose of any portion of the LDC Shares (any such
disposition, a "Share Transfer"), other than (x) to a Covered Employee in
--------------
connection with the distribution of Bonus Shares or (y) to a Permitted Affiliate
of LDC that has agreed in writing (the "Permitted Affiliate Section 3.1
-------------------------------
Agreement") to be bound by the terms and provisions of this Section 3.1 to the
- ---------
same extent that LDC would be bound if it beneficially owned the shares of
Common Stock transferred to such Permitted Affiliate of LDC and acknowledging
the last sentence of Section 4.4. LDC shall promptly notify the Company of any
Share Transfer to a Permitted Affiliate of LDC, which notification shall include
a Permitted Affiliate Section 3.1 Agreement executed by each Permitted Affiliate
of LDC to whom any shares of Common Stock have been transferred. If any
Permitted Affiliate of LDC which owns any shares of Common Stock ceases for any
reason to be a Permitted Affiliate of LDC, LDC shall promptly thereupon cause
such former Permitted Affiliate of LDC to transfer all shares of Common Stock
held by it to LDC or a Permitted Affiliate of LDC, and in no event shall any
such former Permitted Affiliate of LDC effect any Share Transfer in a manner
that would be prohibited by this Section 3.1 if such Share Transfer were
effected by LDC. On or after December 31, 1999, LDC shall not, and shall not
permit any of its Affiliates to, directly or indirectly, effect any Share
Transfer (other than to a Permitted Affiliate of LDC) in a manner that would
result in the acquisition by any other person to the extent that, to LDC's
knowledge after due inquiry (it being understood that no such inquiry is
required in respect of a non-prearranged sale over a securities exchange or
other transactions where it is not possible to determine who the acquiror is, or
in connection with a registered public offering where the Company controls the
placement of shares), after giving effect to such Share Transfer, such acquiring
person would hold in excess of five percent (5%) of the total voting power of
all voting securities of the Company.
SECTION 3.2. Standstill. For a period of five years from the Closing
-----------
Date (as such term is defined in Section 2(a)(i) of the Stock Purchase
Agreement), LDC shall not, and shall not permit any of its Affiliates to,
directly
<PAGE>
25
or indirectly, (i) without the prior written consent of the Company, by purchase
or otherwise, acquire, agree to acquire or offer to acquire beneficial ownership
of any voting securities of the Company or direct or indirect rights or options
to acquire such beneficial ownership (including, without limitation, any voting
trust certificates representing such securities) if such acquisition would
result in the aggregate beneficial ownership by LDC and all Affiliates of LDC of
voting securities having voting power equal to or in excess of 15% of the then
aggregate voting power of the Company, (ii) enter, propose to enter into,
solicit or support any merger or business combination or change of control or
other similar transaction involving the Company or any of its subsidiaries, or
purchase, acquire, propose to purchase or acquire or solicit or support the
purchase or acquisition of any portion of the business or assets of the Company
or any of its subsidiaries other than in the ordinary course of business, (iii)
initiate or propose any matter for submission to a vote of the shareholders of
the Company or make, or in any way participate in, any "solicitation" of
"proxies" (as such terms are used in the proxy rules promulgated by the SEC
under the Exchange Act) to vote, or seek to advise or influence any person with
respect to the voting of, the Common Stock or any other voting securities of the
Company or request or take any action to obtain any list of shareholders of the
Company for such purposes, (iv) form, join or in any way participate in any
group (other than a group composed solely of LDC and its Affiliates) formed for
the purpose of acquiring, holding, voting or disposing of or taking any other
action with respect to the Common Stock or any other voting securities of the
Company that would be required under Section 13(d) of the Exchange Act to file a
Schedule 13D with respect to such voting securities, (v) deposit any shares of
Common Stock or any other voting securities of the Company in a voting trust or
enter into any voting agreement or arrangement with respect thereto, (vi) seek
representation on the Board (other than as contemplated by Section 7(b) of the
Stock Purchase Agreement), the removal of any directors from the Board or a
change in the size or composition of the Board, (vii) make any request to amend
or waive any provision of this Section 3.2, which request would require public
disclosure under applicable law, rule or regulation, (viii) disclose any intent,
purpose, plan, arrangement or proposal
<PAGE>
26
inconsistent with the foregoing (including any such intent, purpose, plan,
arrangement or proposal that is conditioned on or would require the waiver,
amendment, nullification or invalidation of any of the foregoing) or take any
action that would require public disclosure of any such intent, purpose, plan,
arrangement or proposal, (ix) take any action challenging the validity or
enforceability of the foregoing, (x) assist, advise, encourage or negotiate with
any person with respect to, or seek to do, any of the foregoing or (xi) take, or
solicit, propose to or agree with any other person to take, any similar actions
designed to influence the management or control of the Company.
Nothing in this Section 3.2 shall (i) prohibit or restrict LDC or its
Affiliates from responding to any inquiries from any shareholders of the Company
as to LDC's or any such Affiliate's intention with respect to the voting of
shares of Common Stock or any other voting securities of the Company
beneficially owned by LDC or such Affiliate so long as such response is
consistent with the terms of this Agreement, (ii) prohibit the purchase or other
acquisition of beneficial ownership of Common Stock or other voting securities
of the Company in compliance with Section 3.2(i) or (iii) restrict the right of
any director on the Board designated by LDC as contemplated by Section 7(b) of
the Stock Purchase Agreement to vote on any matter as such designee believes
appropriate in light of his duties as a director of the Company or the manner in
which such designee may participate in his capacity as a director of the Company
in deliberations or discussions at meetings of the Board or as a member of any
committee thereof.
ARTICLE IV
Miscellaneous
-------------
<PAGE>
27
SECTION 4.1. Notices. All notices or other communications required
--------
or permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent by prepaid telex, cable or telecopy or sent, postage prepaid, by
registered, certified or express mail or reputable overnight courier service and
shall be deemed given when so delivered by hand, telexed, cabled or telecopied,
or if mailed, three days after mailing (one business day in the case of express
mail or overnight courier service), as follows:
(i) if to the Company,
TransMontaigne Inc.
370 Seventeenth Street
Suite 2750
Denver, Colorado 80202
Phone: (303) 626-8200
Fax: (303) 626-8228
Attention: Richard E. Gathright
President and Chief Operating
Officer
with copies to:
TransMontaigne Inc.
370 Seventeenth Street
Suite 2750
Denver, Colorado 80202
Phone: (303) 626-8200
Fax: (303) 626-8228
Attention: Erik B. Carlson, Esq.
Senior Vice President, General
Counsel and Corporate Secretary
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Attention: Philip A. Gelston, Esq.; and
<PAGE>
28
(ii) if to LDC,
Louis Dreyfus Corporation
Ten Westport Road
P.O. Box 810
Wilton, Connecticut 06897
Phone: (203) 761-8369
Fax: (203) 761-8085
Attention: Peter Griffin
President
with copies to:
Louis Dreyfus Corporation
Ten Westport Road
P.O. Box 810
Wilton, Connecticut 06897
Phone: (203) 761-8317
Fax: (302) 761-8321
Attention: Andrew J. Connelly, Esq.
General Counsel; and
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
Attention: Stanton J. Lovenworth, Esq.
SECTION 4.2. Binding Effect; Benefits. This Agreement shall be
-------------------------
binding upon and inure to the benefit of the parties to this Agreement and their
respective successors and permitted assigns. Nothing in this Agreement, express
or implied, is intended or shall be construed to give any person other than the
parties to this Agreement, the other LDC Holders, if any, and their respective
successors or assigns any legal or equitable right, remedy or claim under or in
respect of any agreement or any provision contained herein. This Agreement
constitutes the entire agreement and understanding, and supersedes and
terminates all prior agreements and
<PAGE>
29
understandings, both oral and written (including those contained in the Stock
Purchase Agreement), between the parties hereto relating to the subject matter
hereof.
SECTION 4.3. Waiver. Each party hereto may, by written notice to the
-------
other party (i) extend the time for the performance of any of the obligations or
other actions of such other party under this Agreement; (ii) waive compliance
with any of the conditions or covenants of such other party contained in this
Agreement; and (iii) waive or modify performance of any of the obligations of
such other party under this Agreement. Except as provided in the preceding
sentence, no action taken pursuant to this Agreement, including, without
limitation, any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representation, warranty, covenant or agreement contained herein. Neither the
waiver by either party hereto of a breach of any provision hereof or any
preceding or succeeding breach nor the failure by either party to exercise any
right or privilege hereunder shall be deemed a waiver of such party's rights or
privileges hereunder nor shall it be deemed a waiver of such party's rights to
exercise the same at any subsequent time or times hereunder.
SECTION 4.4. Amendments. No amendment, modification or waiver in
-----------
respect of this Agreement shall be effective unless it shall be in writing and
signed by both parties hereto. Any such amendment, modification or waiver in
respect of this Agreement executed by or on behalf of LDC shall bind each other
LDC Holder, if any, to the terms and conditions thereof.
SECTION 4.5. Assignability. Neither this Agreement nor any right,
--------------
remedy, obligation or liability arising hereunder or by reason hereof shall be
assignable by either the Company or LDC (other than, in the case of LDC, to a
Permitted Affiliate of LDC in connection with a transfer of a portion of the LDC
Shares).
SECTION 4.6. Governing Law. This Agreement shall be governed by and
--------------
construed in accordance with the internal laws of the State of New York
applicable to agreements made and to be performed entirely within such
<PAGE>
30
State, without regard to the conflicts of law principles of such State.
SECTION 4.7. Attorney Fees. A party in breach of this Agreement
--------------
shall, on demand, indemnify and hold harmless the other party for and against
all reasonable out-of-pocket expenses, including legal fees, incurred by such
other party by reason of the enforcement and protection of its rights under this
Agreement. The payment of such expenses is in addition to any other relief to
which such other party may be entitled.
SECTION 4.8. Section and Other Headings. The section and other
---------------------------
headings contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement.
SECTION 4.9. Counterparts. This Agreement may be executed in one or
-------------
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more such counterparts have been signed
by each of the parties and delivered to the other party.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
TRANSMONTAIGNE INC.,
by /s/ Richard E. Gathright
-----------------------------
Name:
Title:
LOUIS DREYFUS CORPORATION,
by /s/ Peter Griffin
-----------------------------
Name:
Title:
<PAGE>
ANNEX A
[Amendment and Waiver to Institutional Investor Registration Rights Agreement]
[Included as Exhibit 10.7]
<PAGE>
Exhibit 10.14
Execution Copy
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TRANSMONTAIGNE INC.
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF JUNE 29, 1999
BANKBOSTON, N.A., AGENT
BANCBOSTON ROBERTSON STEPHENS INC.
LEAD ARRANGER AND BOOK MANAGER
NATIONSBANK, N.A.
DOCUMENTATION AGENT
FIRST UNION NATIONAL BANK
SYNDICATION AGENT
CERTAIN FINANCIAL INSTITUTIONS
LENDERS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$400,000,000
REVOLVING CREDIT FACILITY
$200,000,000
TERM LOAN
JUNE 30, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. Definitions; Certain Rules of Construction.............................................. 1
2. The Credits............................................................................. 24
2.1. Revolving Credit................................................................. 24
2.1.1. Revolving Loan........................................................... 24
2.1.2. Maximum Amount of Revolving Credit....................................... 24
2.1.3. Borrowing Requests....................................................... 24
2.1.4. Revolving Loan Account; Revolving Notes.................................. 24
2.2. Swingline Credit................................................................. 25
2.2.1. Swingline Loan........................................................... 25
2.2.2. Borrowing Requests....................................................... 25
2.2.3. Swingline Loan Account; Swingline Notes.................................. 25
2.2.4. Conversion of Swingline Loan into Revolving Loan......................... 26
2.3. Term Credit...................................................................... 26
2.3.1. Term Loan................................................................ 26
2.3.2. Term Loan Account; Term Notes............................................ 27
2.4. Letters of Credit................................................................ 27
2.4.1. Issuance of Letters of Credit............................................ 27
2.4.2. Requests for Letters of Credit........................................... 27
2.4.3. Form and Expiration of Letters of Credit................................. 28
2.4.4. Lenders' Participation in Letters of Credit.............................. 28
2.4.5. Presentation............................................................. 28
2.4.6. Payment of Drafts........................................................ 29
2.4.7. Uniform Customs and Practice............................................. 29
2.4.8. Subrogation.............................................................. 30
2.4.9. Modification, Consent, etc............................................... 30
2.5. Application of Proceeds.......................................................... 31
2.5.1. Revolving Loan........................................................... 31
2.5.2. Swingline Loan........................................................... 31
2.5.3. Term Loan................................................................ 31
2.5.4. [Intentionally Omitted].................................................. 31
2.5.5. Letters of Credit........................................................ 31
2.5.6. Specifically Prohibited Applications..................................... 31
2.6. Nature of Obligations of Lenders to Make Extensions of Credit.................... 31
3. Interest; Eurodollar Pricing Options; Fees.............................................. 32
3.1. Interest......................................................................... 32
3.2. Eurodollar Pricing Options....................................................... 32
3.2.1. Election of Eurodollar Pricing Options................................... 32
3.2.2. Notice to Lenders and Company............................................ 33
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
3.2.3. Selection of Eurodollar Interest Periods................ 33
3.2.4. Additional Interest..................................... 34
3.2.5. Violation of Legal Requirements......................... 34
3.2.6. Funding Procedure....................................... 35
3.3. Facility Fees................................................... 35
3.4. Letter of Credit Fees........................................... 35
3.5. Reserve Requirements, etc....................................... 36
3.6. Taxes........................................................... 36
3.7. Capital Adequacy................................................ 37
3.8. Regulatory Changes.............................................. 37
3.9. Computations of Interest and Fees............................... 38
4. Payment............................................................... 38
4.1. Payment at Maturity............................................. 38
4.2. Contingent Required Prepayments................................. 38
4.2.1. Excess Credit Exposure.................................. 38
4.2.2. Letter of Credit Exposure............................... 38
4.3. Scheduled Required Prepayments.................................. 38
4.4. [Intentionally Omitted]......................................... 39
4.5. Voluntary Prepayments........................................... 39
4.6. Letters of Credit............................................... 39
4.7. Reborrowing; Application of Payments, etc....................... 40
4.7.1. Reborrowing............................................. 40
4.7.2. Order of Application.................................... 40
4.7.3. Payment with Accrued Interest, etc...................... 40
4.7.4. Payments for Lenders.................................... 40
5. Conditions to Extending Credit........................................ 40
5.1. Conditions on Restatement Date.................................. 40
5.1.1. Notes................................................... 40
5.1.2. Perfection of Security.................................. 41
5.1.3. Payment of Fees......................................... 41
5.1.4. Legal Opinions.......................................... 41
5.1.5. [Intentionally omitted.]................................ 41
5.1.6. Prudential Consent...................................... 41
5.1.7. No Material Adverse Change.............................. 41
5.1.8. No Order, Injunction or Litigation...................... 41
5.1.9. Adverse Market Change................................... 42
5.1.10. Acquisition............................................. 42
5.1.11. Year 2000 Plan.......................................... 42
5.1.12. Pro forma Compliance.................................... 43
5.1.13. Subordinated Debentures................................. 43
5.2. Conditions to Each Extension of Credit.......................... 43
5.2.1. Officer's Certificate................................... 43
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
5.2.2. Proper Proceedings...................................... 44
5.2.3. Legality, etc........................................... 44
5.2.4. General................................................. 44
6. General Covenants..................................................... 44
6.1. Taxes and Other Charges; Accounts Payable....................... 44
6.1.1. Taxes and Other Charges................................. 44
6.1.2. Accounts Payable........................................ 45
6.2. Conduct of Business, etc........................................ 45
6.2.1. Types of Business....................................... 45
6.2.2. Maintenance of Properties............................... 45
6.2.3. Statutory Compliance.................................... 45
6.2.4. Compliance with Material Agreements..................... 46
6.2.5. Trading Policy.......................................... 46
6.2.6. Subordinated Debentures................................. 46
6.2.7. Inventory Accounting.................................... 46
6.2.8. Inactive Subsidiaries................................... 46
6.3. Insurance....................................................... 46
6.3.1. Property Insurance...................................... 46
6.3.2. Liability Insurance..................................... 47
6.4. Financial Statements and Reports................................ 47
6.4.1. Annual Reports.......................................... 47
6.4.2. Quarterly Reports....................................... 48
6.4.3. Year 2000 Compliant..................................... 49
6.4.4. Other Reports........................................... 49
6.4.5. Notice of Litigation.................................... 50
6.4.6. Notice of Defaults...................................... 50
6.4.7. ERISA Reports........................................... 50
6.4.8. Notice of Year 2000 Problem............................. 50
6.4.9. Other Information; Audit................................ 51
6.5. Certain Financial Tests......................................... 51
6.5.1. Interest Coverage....................................... 51
6.5.2. Leverage................................................ 52
6.5.3. Fixed Asset Reliance.................................... 52
6.5.4. Cash Flow Leverage Ratio................................ 52
6.5.5. Consolidated Tangible Net Worth......................... 52
6.6. Indebtedness.................................................... 52
6.7. Guarantees; Letters of Credit................................... 55
6.8. Liens........................................................... 55
6.9. Investments and Acquisitions.................................... 57
6.10. Distributions................................................... 58
6.11. Merger, Consolidation and Dispositions of Assets................ 58
6.12. Lease Obligations............................................... 59
6.13. Issuance of Stock by Subsidiaries; Subsidiary Distributions..... 59
</TABLE>
-iii-
<PAGE>
<TABLE>
<S> <C>
6.13.1. Issuance of Stock by Subsidiaries............................... 59
6.13.2. No Restrictions on Subsidiary Distributions..................... 59
6.14. Interest Rate Protection................................................. 60
6.15. Derivative Contracts..................................................... 60
6.16. Negative Pledge Clauses.................................................. 60
6.17. ERISA, etc............................................................... 60
6.18. Transactions with Affiliates............................................. 60
6.19. Open Positions........................................................... 61
6.20. Environmental Laws....................................................... 61
6.20.1. Compliance with Law and Permits................................. 61
6.20.2. Notice of Claims, etc........................................... 61
7. Representations and Warranties.................................................. 61
7.1. Organization and Business................................................ 61
7.1.1. The Company..................................................... 61
7.1.2. Subsidiaries.................................................... 62
7.1.3. Qualification................................................... 62
7.1.4. Capitalization.................................................. 62
7.2
7.3. Financial Statements and Other Information; Material Agreements.......... 63
7.3.1. Financial Statements and Other Information...................... 63
7.3.2. Material Agreements............................................. 64
7.4. Agreements Relating to Financing Debt, Investments, etc.................. 64
7.5. Changes in Condition..................................................... 64
7.6. Title to Assets.......................................................... 64
7.7. Operations in Conformity with Law, etc................................... 64
7.8. Litigation............................................................... 65
7.9. Authorization and Enforceability......................................... 65
7.10. No Legal Obstacle to Agreements.......................................... 65
7.11. Defaults................................................................. 66
7.12. Licenses, etc............................................................ 66
7.13. Tax Returns.............................................................. 66
7.14. Certain Business Representations......................................... 67
7.14.1. Labor Relations................................................. 67
7.14.2. Antitrust....................................................... 67
7.14.3. Consumer Protection............................................. 67
7.14.4. Burdensome Obligations.......................................... 67
7.14.5. Future Expenditures............................................. 67
7.15. Environmental Regulations................................................ 67
7.15.1. Environmental Compliance........................................ 67
7.15.2. Environmental Litigation........................................ 68
7.15.3. Hazardous Material.............................................. 68
7.15.4. Environmental Condition of Properties........................... 69
7.16. Pension Plans............................................................ 69
</TABLE>
-iv-
<PAGE>
<TABLE>
<S> <C>
7.17. [Intentionally Omitted]....................................................... 69
7.18. Foreign Trade Regulations; Government Regulation; Margin Stock................ 69
7.18.1. Foreign Trade Regulations............................................ 69
7.18.2. Government Regulation................................................ 69
7.18.3. Margin Stock......................................................... 69
7.19. Disclosure.................................................................... 70
7.20. Year 2000 Compliance.......................................................... 70
8. Defaults............................................................................. 70
8.1. Events of Default............................................................. 70
8.1.1. Payment.............................................................. 70
8.1.2. Specified Covenants.................................................. 70
8.1.3. Other Covenants...................................................... 70
8.1.4. Representations and Warranties....................................... 71
8.1.5. Cross Default, etc................................................... 71
8.1.6. Ownership; Liquidation; etc.......................................... 71
8.1.7. Enforceability, etc.................................................. 72
8.1.8. Judgments............................................................ 72
8.1.9. ERISA................................................................ 72
8.1.10. Bankruptcy, etc...................................................... 73
8.1.11. Subordinated Debentures.............................................. 73
8.2. Certain Actions Following an Event of Default................................. 73
8.2.1. Terminate Obligation to Extend Credit................................. 73
8.2.2. Specific Performance; Exercise of Rights.............................. 74
8.2.3. Acceleration.......................................................... 74
8.2.4. Enforcement of Payment; Credit Security; Setoff....................... 74
8.2.5. Cumulative Remedies................................................... 74
8.3. Annulment of Defaults......................................................... 74
8.4. Waivers....................................................................... 75
9. Guarantees........................................................................... 75
9.1. Guarantees of Credit Obligations.............................................. 75
9.2. Continuing Obligation......................................................... 75
9.3. Waivers with Respect to Credit Obligations.................................... 76
9.4. Lenders' Power to Waive, etc.................................................. 78
9.5. Information Regarding the Company, etc........................................ 78
9.6. Certain Guarantor Representations............................................. 79
9.7. Subrogation................................................................... 79
9.8. Subordination................................................................. 80
9.9. Future Subsidiaries; Further Assurances....................................... 80
10. Security............................................................................. 80
10.1. Credit Security................................................................ 80
10.1.1. Pledged Stock......................................................... 80
</TABLE>
-v-
<PAGE>
<TABLE>
<S> <C>
10.1.2. Pledged Rights........................................................... 81
10.1.3. Pledged Indebtedness..................................................... 81
10.1.4. Proceeds and Products.................................................... 81
10.1.5. Excluded Property........................................................ 81
10.2. [Intentionally Omitted]........................................................... 81
10.3. Representations, Warranties and Covenants with Respect to Credit Security......... 81
10.3.1. Pledged Stock............................................................ 81
10.3.2. Pledged Indebtedness..................................................... 82
10.3.3. [Intentionally Omitted].................................................. 82
10.3.4. No Liens or Restrictions on Transfer or Change of Control................ 82
10.3.5. [Intentionally Omitted].................................................. 82
10.3.6. Trade Names.............................................................. 82
10.3.7. [Intentionally Omitted].................................................. 82
10.3.8. Modifications to Credit Security......................................... 83
10.3.9. Delivery of Documents.................................................... 83
10.3.10. Perfection of Credit Security............................................ 83
10.4. Administration of Credit Security................................................. 83
10.4.1. Use of Credit Security................................................... 83
10.4.2. [Intentionally Omitted].................................................. 83
10.4.3. Pledged Securities....................................................... 83
10.5. Right to Realize upon Credit Security............................................. 84
10.5.1. Assembly of Credit Security; Receiver.................................... 84
10.5.2. General Authority........................................................ 84
10.5.3. Marshaling, etc.......................................................... 85
10.5.4. Sales of Credit Security................................................. 86
10.5.5. Sale Without Registration................................................ 86
10.5.6. Application of Proceeds.................................................. 87
10.6. Custody of Credit Security........................................................ 87
11. Expenses; Indemnity....................................................................... 88
11.1. Expenses.......................................................................... 88
11.2. General Indemnity................................................................. 88
11.3. Indemnity With Respect to Letters of Credit....................................... 89
12. Operations; Agent......................................................................... 89
12.1. Interests in Credits.............................................................. 89
12.2. Agent's Authority to Act, etc..................................................... 89
12.3. Company to Pay Agent, etc......................................................... 89
12.4. Lender Operations for Advances, Letters of Credit, etc............................ 90
12.4.1. Advances.................................................................. 90
12.4.2. Letters of Credit........................................................ 90
12.4.3. Agent to Allocate Payments, etc.......................................... 90
12.4.4. Delinquent Lenders; Nonperforming Lenders................................ 91
12.5. Sharing of Payments, etc.......................................................... 92
</TABLE>
-vi-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
12.6. Amendments, Consents, Waivers, etc.............................................. 92
12.7. Agent's Resignation............................................................. 93
12.8. Concerning the Agent............................................................ 94
12.8.1. Action in Good Faith, etc.............................................. 94
12.8.2. No Implied Duties, etc................................................. 94
12.8.3. Validity, etc.......................................................... 94
12.8.4. Compliance............................................................. 95
12.8.5. Employment of Agents and Counsel....................................... 95
12.8.6. Reliance on Documents and Counsel...................................... 95
12.8.7. Agent's Reimbursement.................................................. 95
12.8.8. Agent's Fees........................................................... 95
12.9. Rights as a Lender.............................................................. 95
12.10. Independent Credit Decision............................................ 96
12.11. Indemnification........................................................ 96
13. Successors and Assigns; Lender Assignments and Participations.......................... 96
13.1. Assignments by Lenders.......................................................... 97
13.1.1. Assignees and Assignment Procedures.................................... 97
13.1.1A. Assignment Among Lenders............................................... 98
13.1.2. Terms of Assignment and Acceptance..................................... 98
13.1.3. Register............................................................... 99
13.1.4. Acceptance of Assignment and Assumption................................ 99
13.1.5. Federal Reserve Bank................................................... 99
13.1.6. Further Assurances..................................................... 100
13.2. Credit Participants............................................................. 100
13.3. Replacement of Lender........................................................... 100
14. Confidentiality........................................................................ 101
15. Foreign Lenders........................................................................ 102
16. Notices................................................................................ 103
17. Course of Dealing; Amendments and Waivers.............................................. 103
18. Defeasance............................................................................. 104
19. Venue; Service of Process.............................................................. 104
20. WAIVER OF JURY TRIAL................................................................... 104
21. General................................................................................ 105
</TABLE>
-vii-
<PAGE>
EXHIBITS
2.1.4 - Form of Revolving Note
2.2.3 - Form of Swingline Note
2.3.2 - Form of Term Note
5.2.1 - Form of Officer's Certificate
6.2.5 - Risk and Product Management Policy Statement dated October 31,
1998 of TransMontaigne Product Services Inc., as amended by
letter dated May 28, 1999
6.4.1 - Form of Covenant Compliance Certificate
7 - Disclosure Schedule
7.1 - Company and Subsidiaries
7.2.2 - Material Agreements
7.3 - Financing Debt, Certain Investments, etc.
7.14 - Hazardous Material Sites
7.15 - Multi-employer and Defined Benefit Plans
12.1 - Percentage Interests
13.1.1 - Form of Assignment and Acceptance
-viii-
<PAGE>
TRANSMONTAIGNE INC.
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
This Agreement, dated as of June 29, 1999, is among TransMontaigne Inc., a
Delaware corporation, the Subsidiaries of TransMontaigne Inc. from time to time
party hereto, the Lenders from time to time party hereto, BankBoston, N.A., both
in its capacity as a Lender and in its capacity as agent for itself and the
other Lenders, NationsBank, N.A., both in its capacity as a Lender and in its
capacity as Documentation Agent, and First Union National Bank, both in its
capacity as a lender and in its capacity as Syndication Agent.
RECITALS
The parties hereto are party to a Credit Agreement dated as of December 18,
1996, as amended and restated effective as of March 31, 1998 and as further
amended and restated effective as of October 30, 1998 as amended by Amendment
No. 1 thereto dated as of December 14, 1998 and Amendment No. 2 thereto dated as
of March 25, 1999 (as so amended and restated and further amended, the "Existing
--------
Credit Agreement").
- ----------------
The Company has requested certain amendments of the terms of the Existing
Credit Agreement, including the modification of financial covenants and other
covenants, an increase in pricing and the establishment of a new Term Loan with
a stated maturity of June 30, 2006. Insofar as such modifications affect the
Lenders party to the Existing Credit Agreement, such modifications may be
approved by the holders of 51% of the Percentage Interests under the Existing
Credit Agreement.
The Agent has been authorized on behalf of Required Lenders under the
Existing Credit Agreement to execute and deliver this restatement, and the
holders of 100% of the Percentage Interests in the new Term Loan have agreed to
this Agreement.
Accordingly, the parties hereby agree that the Existing Credit Agreement is
amended and restated, effective as of June 29, 1999, subject to satisfaction of
each of the conditions set forth in Section 5.1 hereof, as follows:
1. Definitions; Certain Rules of Construction. Certain capitalized terms are
------------------------------------------
used in this Agreement and in the other Credit Documents with the specific
meanings defined below in this Section 1. Except as otherwise explicitly
specified to the contrary or unless the context clearly requires otherwise, (a)
the capitalized term "Section" refers to sections of this Agreement, (b) the
capitalized term "Exhibit" refers to exhibits to this Agreement, (c) references
to a particular Section include all subsections thereof, (d) the word
"including" shall be construed as "including without limitation", (e) accounting
terms not otherwise defined herein have the meaning provided under GAAP, (f)
terms defined in the UCC and not otherwise defined herein have the meaning
provided under the UCC, (g) references to a particular statute or regulation
include all rules and regulations thereunder and any successor statute,
regulation or rules, in each case as from time to time in effect and (h)
references to a particular Person include such Person's successors and
<PAGE>
assigns to the extent not prohibited by this Agreement and the other Credit
Documents. References to "the date hereof" mean the date first set forth above.
1.1. "Accumulated Benefit Obligations" means the actuarial present value of
-------------------------------
the accumulated benefit obligations under any Plan, calculated in accordance
with Statement No. 87 of the Financial Accounting Standards Board.
1.2. "Acquired Assets" means the property being purchased by TransMontaigne
---------------
Terminaling Inc. under the Acquisition Agreement.
1.3. "Acquisition Agreement" means the Sale of Assets Agreement dated May
---------------------
3, 1999 between TransMontaigne Terminaling Inc., an Arkansas corporation, and
the Seller providing for the acquisition by TransMontaigne Terminaling Inc. of
certain terminals and pipeline assets of the Seller, as amended by Amendment No.
1 to Sale of Assets Agreement dated as of June 30, 1999.
1.4. "Affected Lender" is defined in Section 13.3.
---------------
1.5. "Affiliate" means, with respect to the Company (or any other specified
---------
Person), any other Person directly or indirectly controlling, controlled by or
under direct or indirect common control with the Company (or with such other
specified Person), and shall include (a) any executive officer or director or
general partner of the Company (or of such other specified Person) and (b) any
Person of which the Company (or such other specified Person) or any Affiliate
(as defined in clause (a) above) of the Company (or of such other specified
Person) shall, directly or indirectly, beneficially own either (i) at least 25%
of the outstanding equity securities having the general power to vote or (ii) at
least 25% of all equity interests; provided, however, that Lion Oil Company, an
-------- -------
Arkansas corporation, shall not be deemed to be an Affiliate of the Company or
of any Subsidiary of the Company under clause (b) of this definition, unless the
Company or such Subsidiary shall, directly or indirectly, beneficially own
either (x) at least 30% of the outstanding equity securities having the general
power to vote of Lion Oil Company or (y) at least 30% of all equity interests in
Lion Oil Company; and provided, further, that with respect to any Lender, the
term "Affiliate" shall include any fund or other investment vehicle advised by
such Lender or by an Affiliate of such Lender, any fund or other investment
vehicle advised by the same investment vehicle as such Lender or the investment
advisor of such Lender.
1.6. "Agent" means BankBoston in its capacity as agent for the Lenders
-----
hereunder, as well as its successors and assigns in such capacity pursuant to
Section 12.7.
1.7 "Applicable Margin" means, with respect to any portion of the
-----------------
Revolving Loan subject to a Eurodollar Pricing Option and with respect to the
Swingline Loan, (a) on any date on which the Reference Ratio is equal to or
greater than 300%, two and three quarters percent (2.75%), and (b) on any date
on which the Reference Ratio is less than 300%, two and one-half percent
(2.50%).
-2-
<PAGE>
With respect to any portion of the Revolving Loan not subject to a
Eurodollar Pricing Option, "Applicable Margin" means (i) on any date on which
the Reference Ratio is equal to or greater than 300%, one and one-quarter
percent (1.25%), and (ii) on any date on which the Reference Ratio is less than
300%, one percent (1.00%).
With respect to any portion of the Term Loan subject to a Eurodollar
Pricing Option, "Applicable Margin" means (A) on any date on which the Reference
Ratio is equal to or greater than 300%, three and one-half percent (3.50%), and
(B) on any date on which the Reference Ratio is less than 300%, three and one-
quarter percent (3.25%).
With respect to any portion of the Term Loan not subject to a Eurodollar
Pricing Option, "Applicable Margin" means (x) on any date on which the Reference
Ratio is equal to or greater than 300%, two percent (2.00%), and (y) on any date
on which the Reference Ratio is less than 300%, one and three-quarters percent
(1.75%).
For purposes of calculating the Applicable Margin, (i) the Reference Ratio
shall be determined (A) as at the end of the most recent March, June, September
or December for which financial statements have been furnished (or are required
to have been furnished) by the Company to the Lenders pursuant to Section 6.4.1
or 6.4.2 and (B) upon the consummation of any acquisition (giving effect to such
acquisition and the financing thereof) in connection with which the Company is
required to provide to the Lenders a certificate of a Financial Officer pursuant
to Section 6.9 and (ii) any adjustment in the Applicable Margin shall be
prospective and shall take effect on the fifth Business Day following either the
date upon which the financial statements referred to in the foregoing clause (i)
are furnished (or are required to be furnished) by the Company to the Lenders
pursuant to Section 6.4.1 or 6.4.2 or the date of consummation of an acquisition
referred to in the foregoing clause (i), as the case may be.
1.8. "Applicable Rate" means, at any date, the sum of:
---------------
(a) (i) with respect to each portion of the Revolving Loan or
the Term Loan subject to a Eurodollar Pricing Option, the sum of the
Applicable Margin with respect thereto plus the Eurodollar Rate with
----
respect to such Eurodollar Pricing Option; or
(ii) with respect to (A) each other portion of the Revolving
Loan or the Term Loan, the sum of the Applicable Margin with respect
thereto plus the Base Rate;
----
plus (b) an additional 2% effective on the day the Agent
----
notifies the Company that the interest rates hereunder are increasing
as a result of the occurrence and continuance of an Event of Default
until the earlier of such time as (i) such Event of Default is no
longer continuing or (ii) such Event of Default is deemed no longer to
exist, in each case pursuant to Section 8.3.
-3-
<PAGE>
1.9. "Assignee" is defined in Section 13.1.1.
--------
1.10. "Assignment and Acceptance" is defined in Section 13.1.1.
-------------------------
1.11. "BankBoston" means BankBoston, N.A.
----------
1.12. "BankBoston Fee Letter" is defined in Section 5.1.3.
---------------------
1.13. "Banking Day" means any day other than Saturday, Sunday or a day on
-----------
which banks in Boston, Massachusetts are authorized or required by law or other
governmental action to close and, if such term is used with reference to a
Eurodollar Pricing Option, any day on which dealings are effected in the
Eurodollars in question by first-class banks in the inter-bank Eurodollar
markets in New York, New York.
1.14. "Bankruptcy Code" means Title 11 of the United States Code.
---------------
1.15. "Bankruptcy Default" means an Event of Default referred to in Section
------------------
8.1.10.
1.16. "Base Rate" means, on any day, the greater of (a) the rate of
---------
interest announced by BankBoston at the Boston Office as its Base Rate or (b)
the sum of 1/2% plus the Federal Funds Rate.
----
1.17. "Boston Office" means the principal banking office of BankBoston in
-------------
Boston, Massachusetts.
1.18. "By-laws" means all written by-laws, rules, regulations and all other
-------
documents relating to the governance of any Person other than an individual, or
interpretive of the Charter of such Person, all as from time to time in effect.
1.19. "Capitalized Lease" means any lease which is required to be
-----------------
capitalized on the balance sheet of the lessee in accordance with GAAP,
including Statement Nos. 13 and 98 of the Financial Accounting Standards Board.
1.20. "Capitalized Lease Obligations" means the amount of the liability
-----------------------------
reflecting the aggregate discounted amount of future payments under all
Capitalized Leases calculated in accordance with GAAP, including Statement Nos.
13 and 98 of the Financial Accounting Standards Board.
1.21. "Cash Equivalents" means:
----------------
(a) negotiable certificates of deposit, time deposits (including
sweep accounts), demand deposits and bankers' acceptances having a maturity
of nine months or less and issued by any United States financial
institution having capital and surplus and undivided
-4-
<PAGE>
profits aggregating at least $100,000,000 and rated at least Prime-1 by
Moody's or A-1 by S&P or issued by any Lender;
(b) corporate obligations having a maturity of nine months or less
and rated at least Prime-1 by Moody's or A-1 by S&P or issued by any
Lender;
(c) any direct obligation of the United States of America or any
agency or instrumentality thereof, or of any state or municipality thereof,
(i) which has a remaining maturity at the time of purchase of not more than
one year or which is subject to a repurchase agreement with any Lender (or
any other financial institution referred to in clause (a) above)
exercisable within one year from the time of purchase and (ii) which, in
the case of obligations of any state or municipality, is rated at least Aa
by Moody's or AA by S&P; and
(d) any mutual fund or other pooled investment vehicle rated at least
Aa by Moody's or AA by S&P which invests principally in obligations
described above.
1.22. "CERCLA" means the federal Comprehensive Environmental Response,
------
Compensation and Liability Act of 1980.
1.23. "CERCLIS" means the federal Comprehensive Environmental Response
-------
Compensation Liability Information System List (or any successor document)
promulgated under CERCLA.
1.24. "Charter" means the articles of organization, certificate of
-------
incorporation, statute, constitution, joint venture agreement, partnership
agreement, trust indenture, limited liability company agreement or other charter
document of any Person other than an individual, each as from time to time in
effect.
1.25. "Closing Date" means the Restatement Date and each other date on
------------
which any extension of credit is made pursuant to Section 2.1, 2.2 or 2.4.
1.26. "Code" means the federal Internal Revenue Code of 1986, as amended.
----
1.27. "Commitment" means, with respect to any Lender, such Lender's
----------
obligations to extend the credits contemplated by the Credit Documents. The
original Commitments are set forth in Exhibit 12.1 and the current Commitments
are recorded from time to time in the Register.
1.28. "Company" means TransMontaigne Inc., a Delaware corporation.
-------
1.29. "Computation Covenants" means Sections 6.5, 6.6.7, 6.6.16, 6.9.5,
---------------------
6.9.7, 6.9.8, 6.10.2, 6.11.1, 6.12.2 and 6.19.
-5-
<PAGE>
1.30. "Consolidated" and "Consolidating", when used with reference to any
------------ -------------
term, mean that term as applied to the accounts of the Company (or other
specified Person) and all of its Subsidiaries (or other specified group of
Persons), or such of its Subsidiaries as may be specified, consolidated (or
combined) or consolidating (or combining), as the case may be, in accordance
with GAAP and with appropriate deductions for minority interests in
Subsidiaries.
1.31. "Consolidated Current Assets" means, at any date, all amounts that
---------------------------
are or should be carried as current assets on the balance sheet of the Company
and its Subsidiaries (other than cash and Cash Equivalents) determined in
accordance with GAAP on a Consolidated basis.
1.32. "Consolidated Current Liabilities" means, at any date, all amounts
--------------------------------
that are or should be carried as current liabilities on the balance sheet of the
Company and its Subsidiaries determined in accordance with GAAP on a
Consolidated basis, including the current portion of all Funded Debt.
1.33. "Consolidated EBITDA" means, for any period, the total of:
-------------------
(a) Consolidated Net Income; plus
----
(b) all amounts deducted in computing such Consolidated Net Income in
respect of (i) depreciation, amortization and other non-cash charges
(including increases of reserves), (ii) Consolidated Interest Expense and
(iii) taxes based upon or measured by net income; plus
----
(c) all amounts included in computing such Consolidated Net Income in
respect of any non-cash inventory writedowns in the fiscal year ending June
30, 1999; minus
-----
(d) all amounts included in computing such Consolidated Net Income in
respect of dividends received in any form other than cash; minus
-----
(e) taxes based upon or measured by net income that are actually paid
in cash during such period; minus
-----
(f) all amounts included in Consolidated Net Income in respect of
deferred income tax benefits; minus.
-----
(g) all amounts representing payments from reserves to pay
liabilities during such period that were not deducted in computing such
Consolidated Net Income.
1.34. "Consolidated Interest Expense" means, for any period, the total of:
-----------------------------
(a) the aggregate amount of interest, including without limitation
commitment fees, payments in the nature of interest under Capitalized
Leases and net payments under Interest Rate Protection Agreements, accrued
by the Company and its Subsidiaries
-6-
<PAGE>
(whether such interest is reflected as an item of expense or capitalized)
in accordance with GAAP on a Consolidated basis; minus
-----
(b) to the extent included in clause (a) above, the amortization of
deferred financing fees and costs, original issue discount relating to
Indebtedness and accrued interest on Indebtedness not paid in cash to the
extent permitted by the terms, including subordination terms, of such
Indebtedness (including PIK Interest), plus
----
(c) actual cash payments with respect to accrued and unpaid interest
(including PIK Interest) that has previously reduced Consolidated Interest
Expense pursuant to clause (b) above.
1.35. "Consolidated Net Income" means, for any period, the net earnings (or
-----------------------
loss) before dividend requirements for preferred stock of the Company and its
Subsidiaries, determined in accordance with GAAP on a Consolidated basis;
provided, however, that Consolidated Net Income shall not include:
- -------- -------
(a) the earnings (or loss) of any Person accrued prior to the date
such Person becomes a Subsidiary or is merged into or consolidated with the
Company or any of its Subsidiaries;
(b) the earnings (or loss) of any Person (other than a Subsidiary) in
which the Company or any of its Subsidiaries has an ownership interest;
provided, however, that (i) Consolidated Net Income shall include amounts
-------- -------
in respect of the earnings of such Person when actually received in cash by
the Company or such Subsidiary in the form of dividends or similar
Distributions and (ii) Consolidated Net Income shall be reduced by the
aggregate amount of all Investments, regardless of the form thereof, made
by the Company or any of its Subsidiaries in such Person for the purpose of
funding any deficit or loss of such Person;
(c) all amounts included in computing such net earnings (or loss) in
respect of the write-up of any asset or the retirement of any Indebtedness
or equity at less than face value after April 30, 1998;
(d) extraordinary and nonrecurring gains;
(e) the earnings of any Subsidiary to the extent the payment of such
earnings in the form of a Distribution or repayment of Indebtedness to the
Company or a Wholly Owned Subsidiary is not permitted, whether on account
of any Charter or By-law restriction, any agreement, instrument, deed or
lease or any law, statute, judgment, decree or governmental order, rule or
regulation applicable to such Subsidiary; and
(f) any after-tax gains or losses attributable to returned surplus
assets of any Plan.
-7-
<PAGE>
1.36. "Consolidated Net Liabilities" means, on any date, the difference of
----------------------------
(a) Consolidated Total Liabilities of the Company and its Subsidiaries on such
date minus (b) an amount equal to 75% of the Consolidated Current Assets of the
Company and its Subsidiaries on such date.
1.37. "Consolidated Net Tangible Assets" means at any date the total of:
--------------------------------
(a) the total assets of the Company and its Subsidiaries determined
in accordance with GAAP on a Consolidated basis;
minus (b) Consolidated Current Liabilities;
-----
minus (c) all other liabilities of the Company and its Subsidiaries
-----
determined in accordance with GAAP on a Consolidated basis other than
liabilities for Funded Debt;
minus (d) the amount of intangible assets carried on the balance sheet of
-----
the Company and its Subsidiaries determined in accordance with GAAP on a
Consolidated basis, including goodwill, patents, patent applications,
copyrights, trademarks, tradenames, research and development expense,
organizational expense, annualized debt discount and expense, deferred
financing charges and debt acquisition costs;
minus (e) the amount at which any minority interest in a Subsidiary appears
-----
as a liability on the Consolidated balance sheet of the Company and its
Subsidiaries.
1.38. "Consolidated Pro Forma EBITDA" means, for any period, the
-----------------------------
Consolidated EBITDA of the Company and its Subsidiaries for such period adjusted
to include the results of operations of any Person, business or assets acquired,
and exclude the results of operations of any Person, business or assets disposed
of, by the Company or a Subsidiary during such period for the portion of such
period which preceded such acquisition, or disposition, the method of making any
such adjustment to be reasonably satisfactory to the Agent.
1.39. "Consolidated Tangible Net Worth" means, at any date, the total of:
-------------------------------
(a) stockholders' equity of the Company and its Subsidiaries
determined in accordance with GAAP on a Consolidated basis, excluding the
effect of any foreign currency translation adjustments (but in any event
including in such equity, on a Consolidated basis, the Series A Convertible
Preferred Stock and any other convertible preferred stock of the Company at
the time outstanding);
minus (b) the amount by which such stockholders' equity has been increased
-----
after April 30, 1998 by the items described in clause (a), (b), (c), (e) or
(f) of the definition of Consolidated Net Income;
-8-
<PAGE>
minus (c) to the extent not already deducted from the amount in clause (a)
-----
above, (i) treasury stock, (ii) receivables due from an employee stock
ownership plan and (iii) Guarantees of Indebtedness incurred by an employee
stock ownership plan;
minus (d) the amount of intangible assets carried on the balance sheet of
-----
the Company and its Subsidiaries determined in accordance with GAAP on a
Consolidated basis, including goodwill, patents, patent applications,
copyrights, trademarks, tradenames, research and development expense,
organizational expense, unamortized debt discount and expense, deferred
financing charges and debt acquisition costs.
1.40. "Consolidated Total Liabilities" means, at any date, all
------------------------------
Indebtedness of the Company and its Subsidiaries on a Consolidated basis.
1.41. "Credit Documents" means:
----------------
(a) this Agreement, the Notes, each Letter of Credit, each draft
presented or accepted under a Letter of Credit, the BankBoston Fee Letter,
the Intercreditor Agreement, the Pledge Agreement and each Interest Rate
Protection Agreement provided by a Lender (or an Affiliate of a Lender) to
the Company or any of its Subsidiaries, each as from time to time in
effect;
(b) all financial statements, reports, notices, mortgages,
assignments, UCC financing statements or certificates delivered to the
Agent or any of the Lenders by the Company, any of its Subsidiaries or any
other Obligor in connection herewith or therewith; and
(c) any other present or future agreement or instrument from time to
time entered into among the Company, any of its Subsidiaries or any other
Obligor, on one hand, and the Agent, any Letter of Credit Issuer or all the
Lenders, on the other hand, relating to, amending or modifying this
Agreement or any other Credit Document referred to above or which is stated
to be a Credit Document, each as from time to time in effect.
1.42. "Credit Obligations" means all present and future liabilities,
------------------
obligations and Indebtedness of the Company, any of its Subsidiaries or any
other Obligor owing to the Agent or any Lender under or in connection with this
Agreement or any other Credit Document, including without limitation obligations
in respect of principal, interest, reimbursement obligations under Letters of
Credit and Interest Rate Protection Agreements provided by a Lender (or an
Affiliate of a Lender), commitment fees, facility fees, Letter of Credit fees,
amounts provided for in Sections 3.2.4, 3.5, 3.6, 3.7, 3.8 and 11, amounts
payable under the BankBoston Fee Letter and other fees, charges, indemnities and
expenses from time to time owing hereunder or under any other Credit Document
(whether accruing before or after a Bankruptcy Default). Credit Obligations
shall include all obligations of the Company and its Subsidiaries owing under
the Existing Credit Agreement which are not paid in full and finally on or prior
to the Restatement Date.
-9-
<PAGE>
1.43. "Credit Participant" is defined in Section 13.2.
------------------
1.44. "Credit Security" means all assets now or from time to time hereafter
---------------
subjected to a security interest, mortgage or charge (or intended or required so
to be subjected pursuant to this Agreement or any other Credit Document) to
secure the payment or performance of any of the Credit Obligations, including
the assets described in Section 10.1.
1.45. "Default" means any Event of Default and any event or condition which
-------
with the passage of time or giving of notice, or both, would become an Event of
Default and the filing against the Company, any of its Subsidiaries or any other
Obligor of a petition commencing an involuntary case under the Bankruptcy Code.
1.46. "Delinquency Period" is defined in Section 12.4.4.
------------------
1.47. "Delinquent Lender" is defined in Section 12.4.4.
-----------------
1.48. "Delinquent Payment" is defined in Section 12.4.4.
------------------
1.49. "Distribution" means, with respect to the Company (or other specified
------------
Person):
(a) the declaration or payment of any dividend or distribution,
including dividends payable in shares of capital stock of or other equity
interests in the Company (or such specified Person), on or in respect of any
shares of any class of capital stock of or other equity interests in the Company
(or such specified Person);
(b) the purchase, redemption or other retirement of any shares of any
class of capital stock of or other equity interest in the Company (or such
specified Person) or of options, warrants or other rights for the purchase of
such shares, directly, indirectly through a Subsidiary or otherwise;
(c) any other distribution on or in respect of any shares of any
class of capital stock of or equity or other beneficial interest in the Company
(or such specified Person);
(d) any payment of principal or interest with respect to, or any
purchase, redemption or defeasance of, any Indebtedness of the Company (or such
specified Person) which by its terms or the terms of any agreement is
subordinated to the payment of the Credit Obligations; and
(e) any loan or advance by the Company (or such specified Person) to,
or any other Investment by the Company (or such specified Person) in, the holder
of any shares of any class of capital stock of or equity interest in the Company
(or such specified Person), or any Affiliate of such holder;
-10-
<PAGE>
provided, however, that the term "Distribution" shall not include (i) the
-------- -------
accrual of unpaid dividends on the Series A Convertible Preferred Stock or
dividends on the Series A Convertible Preferred Stock paid solely in the
form of additional shares of the Series A Convertible Preferred Stock, (ii)
dividends payable in perpetual common stock of or other similar equity
interests in the Company (or such specified Person), (iii) payments in the
ordinary course of business in respect of (A) reasonable compensation paid
to employees, officers and directors or (B) advances to employees for
travel expenses, drawing accounts and similar expenditures, (iv) any loan
or advance by the Company to any Guarantor or (v) any other loan or advance
by the Company which constitutes an Investment permitted under Section
6.9.5, 6.9.6 or 6.9.7.
1.50. "Eligible Assignee" means any of (a) a commercial bank organized
-----------------
under the laws of the United States, or any State thereof or the District of
Columbia; (b) a savings and loan association or savings bank organized under the
laws of the United States, or any State thereof or the District of Columbia; (c)
a commercial bank organized under the laws of any other country which is a
member of the Organization for Economic Cooperation and Development (the
"OECD"), or a political subdivision of any such country, provided that such bank
--------
is acting through a branch or agency located in the country in which it is
organized or another country which is also a member of the OECD; (d) the central
bank of any country which is a member of the OECD; (e) an insurance company that
is engaged in making, purchasing or otherwise investing in commercial loans in
the ordinary course of its business; (f) an Affiliate of any entity described in
clause (a), (b), (c), (d) or (e); and (g) any Person which the Agent and the
Company agree is an Eligible Assignee; provided, however, that no entity
-------- -------
described in clause (a), (b), (c), (d), (e) or (f) above shall be an Eligible
Assignee unless it has total assets in excess of $1 billion and unless debt
obligations issued by such entity (or by a parent entity owning beneficially all
of the capital stock of such financial institution) are rated "A3" or higher by
Moody's or "A-" or higher by S&P.
1.51. "Environmental Laws" means all applicable federal, state or local
------------------
statutes, laws, ordinances, codes, rules, regulations and guidelines (including
consent decrees and administrative orders) relating to public health and safety
and protection of the environment, including OSHA.
1.52. "ERISA" means the federal Employee Retirement Income Security Act of
-----
1974.
1.53. "ERISA Group Person" means the Company, any Subsidiary of the Company
------------------
and any Person which is a member of the controlled group or under common control
with the Company or any Subsidiary within the meaning of section 414 of the Code
or section 4001(a)(14) of ERISA.
1.54. "Eurodollars" means, with respect to any Lender, deposits of United
-----------
States Funds in a non-United States office or an international banking facility
of such Lender.
-11-
<PAGE>
1.55. "Eurodollar Basic Rate" means, for any Eurodollar Interest Period,
---------------------
the sum of the Eurodollar Basic Reference Rates furnished by the Reference
Lenders to the Agent divided by the number of such Reference Lenders.
1.56. "Eurodollar Basic Reference Rate" means, for any Eurodollar Interest
-------------------------------
Period and any Reference Lender, the rate of interest at which Eurodollar
deposits in an amount comparable to the Percentage Interest of such Reference
Lender in the portion of the Loan as to which a Eurodollar Pricing Option has
been elected and which have a term corresponding to such Eurodollar Interest
Period are offered to such Reference Lender by first class banks in the inter-
bank Eurodollar market for delivery in immediately available funds at a
Eurodollar Office on the first day of such Eurodollar Interest Period as
determined by such Reference Lender at approximately 10:00 a.m. (Boston time)
two Banking Days prior to the date upon which such Eurodollar Interest Period is
to commence (which determination by such Reference Lender shall, in the absence
of demonstrable error, be conclusive) and as furnished promptly thereafter by
such Reference Lender to the Agent.
1.57. "Eurodollar Interest Period" means any period, selected as provided
--------------------------
in Section 3.2.1, of one, two, three or six months, commencing on any Banking
Day and ending on the corresponding date in the subsequent calendar month so
indicated (or, if such subsequent calendar month has no corresponding date, on
the last day of such subsequent calendar month); provided, however, that subject
-------- -------
to Section 3.2.3, if any Eurodollar Interest Period so selected would otherwise
begin or end on a date which is not a Banking Day, such Eurodollar Interest
Period shall instead begin or end, as the case may be, on the immediately
preceding or succeeding Banking Day as determined by the Agent in accordance
with the then current banking practice in the inter-bank Eurodollar market with
respect to Eurodollar deposits at the applicable Eurodollar Office, which
determination by the Agent shall, in the absence of demonstrable error, be
conclusive.
1.58. "Eurodollar Office" means such non-United States office or
-----------------
international banking facility of any Lender as the Lender may from time to time
select.
1.59. "Eurodollar Pricing Options" means the options granted pursuant to
--------------------------
Section 3.2.1 to have the interest on any portion of the Loan computed on the
basis of a Eurodollar Rate.
1.60. "Eurodollar Rate" for any Eurodollar Interest Period means the rate,
---------------
rounded upward to the nearest one-thousandth of one percent, obtained by
dividing (a) the Eurodollar Basic Rate for such Eurodollar Interest Period by
(b) an amount equal to 1 minus the Eurodollar Reserve Rate; provided, however,
----- -------- -------
that if at any time during such Eurodollar Interest Period the Eurodollar
Reserve Rate applicable to any outstanding Eurodollar Pricing Option changes,
the Eurodollar Rate for such Eurodollar Interest Period shall automatically be
adjusted to reflect such change, effective as of the date of such change.
-12-
<PAGE>
1.61. "Eurodollar Reserve Rate" means the stated maximum rate (expressed as
-----------------------
a decimal) of all reserves (including any basic, supplemental, marginal or
emergency reserve or any reserve asset), if any, as from time to time in effect,
required by any Legal Requirement to be maintained by any Lender against (a)
"Eurocurrency liabilities" as specified in Regulation D of the Board of
Governors of the Federal Reserve System applicable to Eurodollar Pricing
Options, (b) any other category of liabilities that includes Eurodollar deposits
by reference to which the interest rate on portions of the Loan subject to
Eurodollar Pricing Options is determined, (c) the principal amount of or
interest on any portion of the Loan subject to a Eurodollar Pricing Option or
(d) any other category of extensions of credit, or other assets, that includes
loans subject to a Eurodollar Pricing Option by a non-United States office of
any of the Lenders to United States residents.
1.62. "Event of Default" is defined in Section 8.1.
----------------
1.63. "Exchange Act" means the federal Securities Exchange Act of 1934.
------------
1.64. "Existing Credit Agreement" is defined in the Recitals to this
-------------------------
Agreement.
1.65. "FACA" means the Federal Assignment of Claims Act as set forth in 31
----
U.S.C. (S) 3727 and 41 U.S.C. (S) 15.
1.66. "Facility Fee Rate" means three-eighths of one percent (.375%);
-----------------
provided, however, that on any date on which the Leverage Ratio is equal to or
greater than 60%, Facility Fee Rate means one-half of one percent (.500%).
For purposes of calculating the Facility Fee Rate, (i) the Leverage Ratio
shall be determined (A) as at the end of the most recent March, June, September
or December for which financial statements have been furnished (or are required
to have been furnished) by the Company to the Lenders pursuant to Section 6.4.1
and 6.4.2 and (B) upon the consummation of any acquisition (giving effect to
such acquisition and the financing thereof) in connection with which the Company
is required to provide to the Lenders a certificate of a Financial Officer
pursuant to Section 6.9 and (ii) any adjustment in the Facility Fee Rate shall
be prospective and shall take effect on the fifth Business Day following either
the date upon which the financial statements referred to in the foregoing clause
(i) are furnished (or are required to be furnished) by the Company to the
Lenders pursuant to Section 6.4.1 or 6.4.2 or the date of consummation of an
acquisition referred to in the foregoing clause (i), as the case may be.
1.67. "Federal Funds Rate" means, for any day, the rate equal to the
------------------
weighted average (rounded upward to the nearest 1/8%) of the rates on overnight
federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers, (a) as such weighted average is published for such day
(or, if such day is not a Banking Day, for the immediately preceding Banking
Day) by the Federal Reserve Bank of New York or (b) if such rate is not so
published for such Banking Day, as determined by the Agent using any reasonable
means of determination. Each determination by the Agent of the Federal Funds
Rate shall, in the absence of demonstrable error, be conclusive.
-13-
<PAGE>
1.68. "Final Maturity Date" means December 31, 2003.
-------------------
1.69. "Final Term Loan Maturity Date" means June 30, 2006.
-----------------------------
1.70. "Financial Officer" of the Company (or other specified Person) means
-----------------
its chief executive officer, chief financial officer, chief operating officer,
chairman, president, treasurer or any of its vice presidents whose primary
responsibility is for its financial affairs, all of whose incumbency and
signatures have been certified to the Agent by the secretary or other
appropriate attesting officer of the Company (or such specified Person).
1.71. "Financing Debt" means each of the items described in clauses (a)
--------------
through (f) of the definition of the term "Indebtedness".
1.72. "Foreign Trade Regulations" means (a) any act that prohibits or
-------------------------
restricts, or empowers the President or any executive agency of the United
States of America to prohibit or restrict, exports to or financial transactions
with any foreign country or foreign national, (b) the regulations with respect
to certain prohibited foreign trade transactions set forth at 22 C.F.R. Parts
120-130 and 31 C.F.R. Part 500 and (c) any order, regulation, ruling,
interpretation, direction, instruction or notice relating to any of the
foregoing.
1.73. "Funded Debt" means all Indebtedness of the Company or other
-----------
specified Person which is payable more than one year from the date of creation
thereof and shall include (a) current maturities of such Indebtedness and (b)
all Indebtedness consisting of reimbursement obligations with respect to letters
of credit other than letters of credit issued to finance inventory purchases or
to secure other debt appearing on the balance sheet of the obligor.
1.74. "Funding Liability" means (a) any Eurodollar deposit which was
-----------------
usedb (or deemed by Section 3.2.6 to have been used) to fund any portion of the
Loan subject to a Eurodollar Pricing Option, and (b) any portion of the Loan
subject to a Eurodollar Pricing Option funded (or deemed by Section 3.2.6 to
have been funded) with the proceeds of any such Eurodollar deposit.
1.75. "GAAP" means generally accepted accounting principles as from time to
----
time in effect, including the statements and interpretations of the United
States Financial Accounting Standards Board and any predecessor or successor
entity.
1.76. "Guarantee" means, with respect to the Company (or other specified
---------
Person):
(a) any guarantee by the Company (or such specified Person), of the
payment or performance of, or any contingent obligation by the Company (or
such specified Person), in respect of, any Indebtedness or other obligation
of any primary obligor;
(b) any other arrangement whereby credit is extended to a primary
obligor on the basis of any promise or undertaking of the Company (or such
specified Person),
-14-
<PAGE>
including any binding "comfort letter" or "keep well agreement" written by
the Company (or such specified Person), to a creditor or prospective
creditor of such primary obligor, to (i) pay the Indebtedness of such
primary obligor, (ii) purchase an obligation owed by such primary obligor,
(iii) pay for the purchase or lease of assets or services regardless of the
actual delivery thereof or (iv) maintain the capital, working capital,
solvency or general financial condition of such primary obligor;
(c) any liability of the Company (or such specified Person), as a
general partner of a partnership in respect of Indebtedness or other
obligations of such partnership;
(d) any liability of the Company (or such specified Person) as a
joint venturer of a joint venture in respect of Indebtedness or other
obligations of such joint venture; and
(e) reimbursement obligations of the Company (or such specified
Person) with respect to letters of credit, bankers acceptances, surety
bonds, other financial guarantees and Interest Rate Protection Agreements,
whether or not any of the foregoing are reflected on the balance sheet of the
Company (or such specified Person) or in a footnote thereto; provided, however,
-------- -------
that the term "Guarantee" shall not include endorsements for collection or
deposit in the ordinary course of business. The amount of any Guarantee and the
amount of Indebtedness resulting from such Guarantee shall be the maximum amount
that the guarantor may become obligated to pay in respect of the obligations
(whether or not such obligations are outstanding at the time of computation).
1.77. "Guarantor" means each Subsidiary listed on the signature page hereto
---------
or which subsequently becomes party to this Agreement as a Guarantor.
1.78. "Hazardous Material" means any pollutant, toxic or hazardous material
------------------
or waste, including any "hazardous substance" or "pollutant" or "contaminant" as
defined in section 101(14) of CERCLA or any other Environmental Law or regulated
as toxic or hazardous under RCRA or any other Environmental Law.
1.79. "Indebtedness" means all obligations, contingent or otherwise, which
------------
in accordance with GAAP are required to be classified upon the balance sheet of
the Company (or other specified Person) as liabilities, but in any event
including (without duplication):
(a) borrowed money;
(b) indebtedness evidenced by notes, debentures or similar
instruments;
(c) Capitalized Lease Obligations;
(d) the deferred purchase price of assets or securities, including
related noncompetition, consulting and stock repurchase obligations (other
than ordinary
-15-
<PAGE>
trade accounts payable within six months after the incurrence thereof in
the ordinary course of business);
(e) mandatory redemption or dividend obligations on capital stock (or
other equity) (excluding, however, any such obligation in respect of the
Series A Convertible Preferred Stock);
(f) reimbursement obligations with respect to letters of credit,
bankers acceptances, surety bonds, other financial guarantees and Interest
Rate Protection Agreements;
(g) unfunded pension liabilities;
(h) obligations that are immediately and directly due and payable out
of the proceeds of or production from property;
(i) liabilities secured by any Lien existing on property owned or
acquired by the Company (or such specified Person), whether or not the
liability secured thereby shall have been assumed; and
(j) all Guarantees in respect of Indebtedness of others.
1.80. "Indemnified Party" is defined in Section 11.2.
-----------------
1.81. "Intercreditor Agreement" means the Intercreditor Agreement dated as
-----------------------
of April 17, 1997, as from time to time in effect, among the Company, the
Guarantors, the Lenders, the Agent and Prudential.
1.82. "Interest Rate Protection Agreement" means any interest rate swap,
----------------------------------
interest rate cap, interest rate hedge or other contractual arrangement that
converts variable interest rates into fixed interest rates, fixed interest rates
into variable interest rates or other similar arrangements.
1.83. "Investment" means, with respect to the Company (or other specified
----------
Person):
(a) any share of capital stock, partnership or other equity interest,
evidence of Indebtedness or other security issued by any other Person to
the Company (or such other specified Person);
(b) any loan, advance or extension of credit to, or contribution to
the capital of, any other Person;
(c) any Guarantee of the Indebtedness of any other Person;
-16-
<PAGE>
(d) any acquisition of all or any part of the business of any other
Person or the assets comprising such business or part thereof; and
(e) any other similar investment.
The investments described in the foregoing clauses (a) through (e) shall be
included in the term "Investment" whether they are made or acquired by purchase,
exchange, issuance of stock or other securities, merger, reorganization or any
other method; provided, however, that the term "Investment" shall not include
-------- -------
(i) current trade and customer accounts receivable for property leased, goods
furnished or services rendered in the ordinary course of business and payable in
accordance with customary trade terms, (ii) advances and prepayments to
suppliers for property leased, goods furnished and services rendered in the
ordinary course of business, (iii) advances to employees for travel expenses,
drawing accounts and similar expenditures, (iv) stock or other securities
acquired in connection with the satisfaction or enforcement of Indebtedness or
claims due to the Company (or such specified Person) or as security for any such
Indebtedness or claim, (v) demand deposits in banks or similar financial
institutions or (vi) joint operating agreements conducted by Wholly Owned
Subsidiaries of the Company with each other or with third parties.
In determining the amount of outstanding Investments:
(A) the amount of any Investment shall be the cost thereof (excluding
any amounts paid in respect of inventory or other working capital items)
minus any returns of capital in cash on such Investment (determined in
-----
accordance with GAAP without regard to amounts realized as income on such
Investment);
(B) the amount of any Investment in respect of a purchase described
in clause (d) above shall be increased by the amount of any Indebtedness
assumed in connection with such purchase or secured by any asset acquired
in such purchase (whether or not any Indebtedness is assumed) or for which
any Person that becomes a Subsidiary is liable on the date on which the
securities of such Person are acquired; and
(C) no Investment shall be increased as the result of an increase in
the undistributed retained earnings of the Person in which the Investment
was made or decreased as a result of an equity interest in the losses of
such Person.
1.84. "Legal Requirement" means any present or future requirement imposed
-----------------
upon any of the Lenders or the Company and its Subsidiaries by any law, statute,
rule, regulation, directive, order, decree, guideline (or any interpretation
thereof by courts or of administrative bodies) of the United States of America,
or any jurisdiction in which any Eurodollar Office is located or any state or
political subdivision of any of the foregoing, or by any board, governmental or
administrative agency, central bank or monetary authority of the United States
of America, any jurisdiction in which any Eurodollar Office is located, or any
political subdivision of any of the foregoing. Any such requirement imposed on
any of the Lenders not having the force of law shall
-17-
<PAGE>
be deemed to be a Legal Requirement if such Lender reasonably believes that
compliance therewith is in the best interest of such Lender.
1.85. "Lender" means each of the Persons listed as lenders on the signature
------
page hereto, including BankBoston in its capacity as a Lender and such other
Persons who may from time to time own a Percentage Interest in the Credit
Obligations, but the term "Lender" shall not include any Credit Participant.
1.86. "Lending Officer" means such individuals whom the Agent may designate
---------------
by notice to the Company from time to time as an officer who may receive
telephone requests for borrowings under Sections 2.1.3 and 2.2.2.
1.87. "Letter of Credit" is defined in Section 2.4.1.
----------------
1.88. "Letter of Credit Exposure" means, at any date, the sum of (a) the
-------------------------
aggregate face amount of all drafts that may then or thereafter be presented by
beneficiaries under all Letters of Credit then outstanding, plus (b) the
----
aggregate face amount of all drafts that the Letter of Credit Issuer has
previously accepted under Letters of Credit but has not paid.
1.89. "Letter of Credit Fee Rate" means on any date an amount equal to the
-------------------------
Applicable Margin applicable to any portion of the Revolving Loan subject to a
Eurodollar Pricing Option.
1.90. "Letter of Credit Issuer" means, for any Letter of Credit, BankBoston
-----------------------
or, in the event BankBoston does not for any reason issue a requested Letter of
Credit, another Lender designated by the Agent to issue such Letter of Credit in
accordance with Section 2.4.
1.91. "Leverage Ratio" means on any date the quotient, expressed as a
--------------
percentage, equal to the Consolidated Funded Debt of the Company and its
Subsidiaries divided by the Consolidated Net Tangible Assets of the Company and
its Subsidiaries.
1.92. "Lien" means, with respect to the Company (or any other specified
----
Person):
(a) Any lien, encumbrance, mortgage, pledge, charge or security
interest of any kind upon any property or assets of the Company (or such
specified Person), whether now owned or hereafter acquired, or upon the
income or profits therefrom;
(b) The acquisition of, or the agreement to acquire, any property or
asset upon conditional sale or subject to any other title retention
agreement, device or arrangement (including a Capitalized Lease);
(c) The sale, assignment, pledge or transfer for security of any
accounts, general intangibles or chattel paper of the Company (or such
specified Person), with or without recourse;
-18-
<PAGE>
(d) The transfer of any tangible property or assets for the purpose
of subjecting such items to the payment of previously outstanding
Indebtedness in priority to payment of the general creditors of the Company
(or such specified Person); and
(e) The existence for a period of more than 120 consecutive days of
any Indebtedness against the Company (or such specified Person) which if
unpaid would by law or upon a Bankruptcy Default be given any priority over
general creditors.
1.93. "Loan" means the aggregate outstanding amount of the Revolving Loan,
----
Swingline Loan and Term Loan, as applicable.
1.94. "Loan Account" means each Revolving Loan Account, Swingline Loan
------------
Account and Term Loan Account, as applicable.
1.95. "Mandatory Borrowing" is defined in Section 2.2.4.
-------------------
1.96. "Margin Stock" means "margin stock" within the meaning of
------------
Regulations G, T, U or X of the Board of Governors of the Federal Reserve
System.
1.97. "Master Shelf Agreement" is defined in Section 6.6.12.
----------------------
1.98. "Material Adverse Change" means, since any specified date or from
-----------------------
the circumstances existing immediately prior to the happening of any specified
event, a material adverse change in the business, assets, financial condition or
income of the Company and its Subsidiaries on a Consolidated basis, whether as a
result of (a) general economic conditions affecting the petroleum industry, (b)
difficulties in obtaining supplies and raw materials, (c) fire, flood or other
natural calamities, (d) environmental pollution, (e) regulatory changes,
judicial decisions, war or other governmental action or (f) any other event or
development, whether or not related to those enumerated above.
1.99. "Material Adverse Effect" means (i) a materially adverse effect on
-----------------------
the business, assets, operations, prospects, income or condition, financial or
otherwise, of the Company and its Subsidiaries on a Consolidated basis, (ii)
material impairment of the ability of the Company or any of its Subsidiaries to
perform any of their obligations under this Agreement or any of the other Credit
Documents, or (iii) material impairment of the rights of or benefits available
to the Lenders under this Agreement or any of the other Credit Documents.
1.100. "Material Agreements" is defined in Section 7.2.2.
-------------------
1.101. "Maximum Amount of Revolving Credit" is defined in Section 2.1.2.
----------------------------------
1.102. "Moody's" means Moody's Investors Service, Inc.
-------
-19-
<PAGE>
1.103. "Multiemployer Plan" means any Plan that is a "multiemployer plan"
------------------
as defined in section 4001(a)(3) of ERISA.
1.104. "Nonperforming Lender" is defined in Section 12.4.4.
--------------------
1.105. "Notes" means the Revolving Notes, Swingline Notes and the Term
-----
Notes, as applicable.
1.106. "Obligor" means the Company, each Guarantor and each Person
-------
guaranteeing, providing collateral for or subordinating obligations to, the
Credit Obligations.
1.107. "Open Position" means any difference (whether positive or negative)
-------------
between (a) the number of barrels of petroleum product the Company and its
Subsidiaries hold in inventory or have contracted to buy and (b) the number of
barrels of petroleum product the Company and its Subsidiaries have contracted to
sell.
1.108. "OSHA" means the federal Occupational Health and Safety Act.
----
1.109. "Overdue Rate" is defined in Section 3.1.
------------
1.110. "Payment Date" means (a) the last Banking Day of each calendar month
------------
occurring after the Restatement Date and (b) the Final Maturity Date.
1.111. "PBGC" means the Pension Benefit Guaranty Corporation or any
----
successor entity.
1.112. "Percentage Interest" means (a) at all times when no Event of
-------------------
Default under Section 8.1.1 and no Bankruptcy Defaults exists, the ratio that
the respective Commitments of the Lenders bear to the total Commitments of all
Lenders as from time to time in effect and reflected in the Register, and (b) at
all other times, the ratio that the respective amounts of the outstanding Credit
Obligations owing to the Lenders in respect of extensions of credit under
Section 2 to the total outstanding Credit Obligations owing to all Lenders.
1.113. "Performing Lender" is defined in Section 12.4.4.
-----------------
1.114. "Person" means any present or future natural person or any
------
corporation, association, partnership, joint venture, limited liability, joint
stock or other company, business trust, trust, organization, business or
government or any governmental agency or political subdivision thereof.
1.115. "PIK Interest" means any accrued interest payments on Financing Debt
------------
that are postponed or made through the issuance of "payment-in-kind" notes on
other similar securities (including book-entry accrual with respect to such
postponed interest payments), all in accordance with the terms of such Financing
Debt; provided, however, that in no event shall PIK Interest include payments
made with cash or Cash Equivalents.
-20-
<PAGE>
1.116. "Plan" means, at any date, any pension benefit plan subject to
----
Title IV of ERISA maintained, or to which contributions have been made or are
required to be made, by any ERISA Group Person within six years prior to such
date.
1.117. "Pledge Agreement" means the Pledge Agreement dated as of April 17,
----------------
1997, as from time to time in effect, among the Company, the Guarantors and the
Agent, as collateral agent.
1.118. "Pledged Indebtedness" is defined in Section 10.1.3.
--------------------
1.119. "Pledged Rights" is defined in Section 10.1.2.
--------------
1.120. "Pledged Securities" means the Pledged Stock, the Pledged Rights
------------------
and the Pledged Indebtedness, collectively.
1.121. "Pledged Stock" is defined in Section 10.1.1.
-------------
1.122. "Prudential" is defined in Section 6.6.12.
----------
1.123 "RCRA" means the federal Resource Conservation and Recovery Act, 42
----
U.S.C. (S) 690, et seq.
-- ---
1.124. "Reference Lender" means BankBoston.
----------------
1.125. "Reference Ratio" means, as of the last day of any fiscal quarter
---------------
of the Company, the ratio of (a) the Consolidated Net Liabilities of the Company
and its Subsidiaries as of such day to (b) the Consolidated EBITDA of the
Company and its Subsidiaries for the period of four consecutive fiscal quarters
ending on such day. For the purposes of this definition the Consolidated EBITDA
of the Company and its Subsidiaries for any period prior to October 30, 1998
shall be deemed to be the Consolidated EBITDA of the Company and its
Subsidiaries for such period plus the Consolidated EBITDA of Louis Dreyfus
Energy Corp., a Delaware corporation, for such period, combined in accordance
with GAAP.
1.126. "Register" is defined in Section 13.1.3.
--------
1.127. "Replacement Lender" is defined in Section 13.3.
------------------
1.128. "Required Lenders" means, with respect to any approval, consent,
----------------
modification, waiver or other action to be taken by the Agent or the Lenders
under the Credit Documents which require action by the Required Lenders, such
Lenders as own at least 51% of the Percentage Interests (other than Delinquent
Lenders during the existence of a Delinquency Period so long as such Delinquent
Lender is treated the same as the other Lenders with respect to any actions
being taken by the Required Lenders); provided, however, that with respect to
-------- -------
any matters referred to
-21-
<PAGE>
in paragraph (b) of the proviso to Section 12.6, Required Lenders means such
Lenders as own at least the portion of the Percentage Interests required by such
paragraph (b).
1.129. "Restatement Date" means June 30, 1999 or such later date as may be
----------------
agreed to by the Company and the Agent and on which all conditions to closing in
Section 5 have been satisfied.
1.130. "Revolving Loan" is defined in Section 2.1.4.
--------------
1.131. "Revolving Loan Account" is defined in Section 2.1.4.
----------------------
1.132. "Revolving Loan Percentage Interest" means the percentage interest
----------------------------------
of each Lender in the Commitments relating to the Revolving Loan.
1.133. "Revolving Notes" is defined in Section 2.1.4.
---------------
1.134. "Securities Act" means the federal Securities Act of 1933.
--------------
1.135. "Seller" means Amerada Hess Corporation, a Delaware corporation.
------
1.136. "Series A Convertible Preferred Stock" means the Series A
------------------------------------
Convertible Preferred Stock, par value $.01, issued by the Company on or after
March 25, 1999 in the aggregate initial amount of up to 200,000 shares having an
initial liquidation value of $1,000 per share and any additional shares of such
series of convertible preferred stock issued as or in lieu of dividends thereon.
1.137. "S&P" means Standard & Poor's, a Division of The McGraw-Hill
---
Companies, Inc.
1.138. "Subordinated Debentures" is defined in Section 6.6.10.
-----------------------
1.139. "Subordinated Debentures Agreement" is defined in Section 7.2.2.
---------------------------------
1.140. "Subordinated Debentures Guarantee" is defined in Section 6.7.5.
---------------------------------
1.141. "Subsidiary" means any Person of which the Company (or other
----------
specified Person) shall at the time, directly or indirectly through one or more
of its Subsidiaries, (a) own more than 50% of the outstanding capital stock (or
other shares of beneficial interest) entitled to vote generally or (b) hold more
than 50% of the partnership, joint venture or similar interests.
1.142. "Swingline Lender" means BankBoston, in its capacity as swingline
----------------
lender hereunder.
1.143. "Swingline Loan" is defined in Section 2.2.3.
--------------
-22-
<PAGE>
1.144. "Swingline Loan Account" is defined in Section 2.2.3.
----------------------
1.145. "Swingline Note" is defined in Section 2.2.3.
--------------
1.146. "Swingline Rate" means the rate equal to the sum of (a) the Federal
--------------
Funds Rate plus the Applicable Margin, plus (b) an additional 2% per annum
---- ----
effective on the day the Agent notifies the Company that the interest rates
hereunder are increasing as a result of the occurrence and continuance of an
Event of Default until the earlier of such time as (i) such Event of Default is
no longer continuing or (ii) such Event of Default is deemed no longer to exist,
in each case pursuant to Section 8.3.
1.147. "Syndication Agent" means BancBoston Robertson Stephens Inc.
-----------------
1.148. "Tax" means any present or future tax, levy, duty, impost,
---
deduction, withholding or other charges of whatever nature at any time required
by any Legal Requirement (a) to be paid by any Lender or (b) to be withheld or
deducted from any payment otherwise required hereby to be made to any Lender, in
each case on or with respect to its obligations hereunder, the Loan, any payment
in respect of the Credit Obligations or any Funding Liability not included in
the foregoing; provided, however, that the term "Tax" shall not include any
-------- -------
franchise tax or taxes imposed upon or measured by the gross or net income of
such Lender (or withholding taxes with respect to such taxes).
1.149. "Term Loan" is defined in Section 2.3.1.
---------
1.150. "Term Loan Account" is defined in Section 2.3.2.
-----------------
1.151. "Term Loan Percentage Interest" means the percentage interest of
-----------------------------
each Lender in the Commitments relating to the Term Loan.
1.152. "Term Note" is defined in Section 2.3.2.
---------
1.153. "UCC" means the Uniform Commercial Code as in effect in
---
Massachusetts on the date hereof; provided, however, that with respect to the
-------- -------
perfection of the Agent's Lien in the Credit Security and the effect of
nonperfection thereof, the term "UCC" means the Uniform Commercial Code as in
effect in any jurisdiction the laws of which are made applicable by Section 9-
103 of the Uniform Commercial Code as in effect in Massachusetts.
1.154. "Uniform Customs and Practice" is defined in Section 2.4.7.
----------------------------
1.155. "United States Funds" means such coin or currency of the United
-------------------
States of America as at the time shall be legal tender therein for the payment
of public and private debts.
1.156. "Wholly Owned Subsidiary" means any Subsidiary of which all of the
-----------------------
outstanding capital stock (or other shares of beneficial interest) entitled to
vote generally (other than directors'
-23-
<PAGE>
qualifying shares) is owned by the Company (or other specified Person) directly,
or indirectly through one or more Wholly Owned Subsidiaries.
1.157. "Year 2000 Compliant" is defined in Section 7.19.
-------------------
1.158. "Year 2000 Plan" is defined in Section 5.1.11.
--------------
2. The Credits.
-----------
2.1. Revolving Credit.
----------------
2.1.1. Revolving Loan. Subject to all the terms and conditions of
--------------
this Agreement and so long as no Default exists, from time to time on and
after the Restatement Date and prior to the Final Maturity Date the Lenders
will, severally in accordance with their respective Revolving Loan
Percentage Interests, make loans to the Company in such amounts as may be
requested by the Company in accordance with Section 2.1.3. The sum of the
aggregate principal amount of loans made under this Section 2.1.1 at any
one time outstanding plus the Swingline Loan plus the Letter of Credit
---- ----
Exposure shall in no event exceed the Maximum Amount of Revolving Credit.
In no event will the principal amount of loans at any one time outstanding
made by any Lender pursuant to this Section 2.1 exceed such Lender's
Commitment.
2.1.2. Maximum Amount of Revolving Credit. The term "Maximum
---------------------------------- -------
Amount of Revolving Credit" means the lesser of (a) $400,000,000 or (b) the
--------------------------
amount (in an integral multiple of $1,000,000 equal to or greater than
$10,000,000) to which the then applicable amount set forth in clause (a)
shall have been irrevocably reduced from time to time by notice from the
Company to the Agent.
2.1.3. Borrowing Requests. The Company may from time to time
------------------
request a loan under Section 2.1.1 by providing to the Agent a notice
(which may be given by a telephone call received by a Lending Officer if
promptly confirmed in writing). Such notice must be not later than 2:00
p.m. (Boston time) on the same Banking Day as the requested Closing Date
for such loan (third Banking Day prior to the requested Closing Date of
such loan if any portion of such loan will be subject to a Eurodollar
Pricing Option on the requested Closing Date). The notice must specify (a)
the amount of the requested loan (which shall be not less than $500,000 and
an integral multiple of $100,000) and (b) the requested Closing Date
therefor (which shall be a Banking Day). Upon receipt of such notice, the
Agent will promptly inform each other Lender (by telephone or otherwise).
Each such loan will be made at the Boston Office by depositing the amount
thereof to the general account of the Company with the Agent. In connection
with each such loan, the Company shall furnish to the Agent a certificate
in substantially the form of Exhibit 5.2.1.
2.1.4. Revolving Loan Account; Revolving Notes. The Agent will
---------------------------------------
establish on its books a loan account for the Company (the "Revolving Loan
--------------
Account") which the
-------
-24-
<PAGE>
Agent shall administer as follows: (a) the Agent shall add to the Revolving
Loan Account, and the Revolving Loan Account shall evidence, the principal
amount of all loans from time to time made by the Lenders to the Company
pursuant to Section 2.1.1 and (b) the Agent shall reduce the Revolving Loan
Account by the amount of all payments made on account of the Indebtedness
evidenced by the Revolving Loan Account. The aggregate principal amount of
the Indebtedness evidenced by the Revolving Loan Account is referred to as
the "Revolving Loan". The Revolving Loan shall be deemed owed to each
--------------
Lender severally in accordance with such Lender's Revolving Loan Percentage
Interest, and all payments credited to the Revolving Loan Account shall be
for the account of each Lender in accordance with its Revolving Loan
Percentage Interest. The Company's obligations to pay each Lender's
Revolving Loan Percentage Interest in the Revolving Loan shall be evidenced
by a separate note of the Company in substantially the form of Exhibit
2.1.4 (the "Revolving Notes"), payable to each Lender in maximum principal
---------------
amount equal to such Lender's Revolving Loan Percentage Interest in the
Revolving Loan.
2.2. Swingline Credit.
----------------
2.2.1. Swingline Loan. Subject to all the terms and conditions of
--------------
this Agreement and so long as no Default exists, from time to time on and
after the Restatement Date and prior to the Final Maturity Date, the
Swingline Lender will make loans to the Company in such amounts as may be
requested by the Company in accordance with Section 2.2.2. The sum of the
aggregate principal amount of loans made under this Section 2.2 at any one
time outstanding plus the Revolving Loan plus the Letter of Credit Exposure
---- ----
shall in no event exceed the Maximum Amount of Revolving Credit. In no
event will the principal amount of loans made pursuant to this Section 2.2
at any one time outstanding exceed $20,000,000.
2.2.2. Borrowing Requests. The Company may from time to time
------------------
request a loan under Section 2.2.1 by providing to the Swingline Lender a
notice (which may be given by a telephone call received by a Lending
Officer). Such notice must be not later than 2:00 p.m. (Boston time) on the
requested Closing Date (which must be a Banking Day) for such loan. Each
such loan will be made at the Boston Office by depositing the amount
thereof to the general account of the Company with the Swingline Lender. In
connection with each such loan, if the Swingline Lender shall so request,
the Company shall furnish to the Swingline Lender a certificate in
substantially the form of Exhibit 5.2.1.
2.2.3. Swingline Loan Account; Swingline Notes. The Swingline
---------------------------------------
Lender will establish on its books a loan account for the Company (the
"Swingline Loan Account") which the Swingline Lender shall administer as
----------------------
follows: (a) the Swingline Lender shall add to the Swingline Loan Account,
and the Swingline Loan Account shall evidence, the principal amount of all
loans from time to time made by the Swingline Lender to the Company
pursuant to Section 2.2.1 and (b) the Swingline Lender shall reduce the
Swingline Loan Account by the amount of all payments made on account of the
Indebtedness evidenced by the Swingline Loan Account. The aggregate
principal amount
-25-
<PAGE>
of the Indebtedness evidenced by the Swingline Loan Account is referred to
as the "Swingline Loan". The Company's obligation to pay the Swingline Loan
--------------
shall be evidenced by a note of the Company in substantially the form of
Exhibit 2.2.3 (the "Swingline Note"), payable to the Swingline Lender in
--------------
maximum principal amount equal to the Swingline Loan.
2.2.4. Conversion of Swingline Loan into Revolving Loan. On any
------------------------------------------------
Banking Day after the occurrence and during the continuance of an Event of
Default, the Swingline Lender may, in its sole discretion, give notice to
the other Lenders and the Company that the Swingline Loan shall be paid in
full with a mandatory borrowing under the Revolving Loan (the "Mandatory
---------
Borrowing"). Such a notice of a Mandatory Borrowing shall be deemed to have
---------
been automatically given upon a Bankruptcy Default or upon the exercise of
any of the remedies provided in Section 8.2. Upon the giving of any such
notice or deemed notice, a Mandatory Borrowing under the Revolving Loan in
the amount of the Swingline Loan shall be made on the next Banking Day from
all Lenders in accordance with their respective Revolving Loan Percentage
Interests in the Revolving Loan, and the proceeds thereof shall be applied
to the Swingline Lender as a repayment of the Swingline Loan. Each Lender
irrevocably agrees to make such loan pursuant to each such Mandatory
Borrowing notice in the amount and in the manner specified above in this
Section 2.2.4, notwithstanding (a) whether any conditions specified in
Section 5 have been satisfied, (b) that a Default or an Event of Default
has occurred and is continuing or (c) the date of such Mandatory Borrowing.
In the event that any Mandatory Borrowing cannot for any reason be made on
the date required above (including as a result of the commencement of a
proceeding under the Bankruptcy Code), each Lender shall promptly purchase
from the Swingline Lender as of the date the Mandatory Borrowing otherwise
would have occurred such participation in the Swingline Loan as shall be
necessary to cause the Lenders to share in the Swingline Loan ratably based
upon their respective Revolving Loan Percentage Interests in the Revolving
Loan. In the event of such participations, all interest payable on the
Swingline Loan shall be for the account of the Swingline Lender until the
date on which the participations are required to be purchased and, to the
extent attributable to the purchased participations, shall be payable to
the participants from and after such date. At the time any such purchase of
participations is actually made, the purchasing Lender shall pay the
Swingline Lender interest on the principal amount of the participation
purchased at the overnight Federal Funds Rate for each day, commencing with
the date the Mandatory Borrowing otherwise would have occurred, to the date
of payment for such participation.
2.3. Term Credit.
-----------
2.3.1. Term Loan. Subject to all the terms and conditions of this
---------
Agreement and so long as no Default exists, on the Restatement Date the
Lenders will, in accordance with their respective Commitments to make the
Term Loan, severally lend to the Company as a term loan, an aggregate
amount of $200,000,000. The aggregate principal amount of the loan made
pursuant to this Section 2.2.1 at any one time outstanding is referred to
as
-26-
<PAGE>
the "Term Loan". In connection with the Term Loan, the Company shall
---------
furnish to the Agent a certificate in substantially the form of Exhibit
5.2.1.
2.3.2. Term Loan Account; Term Notes. The Term Loan shall be made
-----------------------------
at the Boston Office by crediting the amount of such loan to the general
account of the Company with the Agent. The Agent will establish on its
books a loan account for the Company (the "Term Loan Account") which the
-----------------
Agent shall administer as follows: (a) the Agent shall record and the Term
Loan Account shall evidence, the principal amount of the loan made by the
Lenders to the Company pursuant to Section 2.3.1 and (b) the Agent shall
reduce the Term Loan Account by the amount of all payments made on account
of the Indebtedness evidenced by the Term Loan Account. The Agent shall
keep a record of the respective interests of the Lenders in the Term Loan
Account as part of the Register, which shall evidence the Term Loan. The
Term Loan shall be deemed owed to each Lender severally in accordance with
such Lender's Term Loan Percentage Interest therein, and all payments
thereon shall be for the account of each Lender in accordance with its Term
Loan Percentage Interest therein. Upon written request of any Lender, the
Company's obligations to pay such Lender's Term Loan Percentage Interest in
the Term Loan shall be further evidenced by a separate note of the Company
in substantially the form of Exhibit 2.3.2 (the "Term Notes"), payable to
----------
such Lender in accordance with such Lender's Term Loan Percentage Interest
in the Term Loan.
2.4. Letters of Credit.
-----------------
2.4.1. Issuance of Letters of Credit. Subject to all the terms
-----------------------------
and conditions of this Agreement and so long as no Default exists, from
time to time on and after the Restatement Date and prior to the Final
Maturity Date, the Letter of Credit Issuer will issue for the account of
the Company or, if the Company shall so direct, for the account of any
Guarantor one or more irrevocable documentary or standby letters of credit
(the "Letters of Credit"); provided, that the Letter of Credit Exposure
-----------------
shall in no event exceed $45,000,000 and the sum of the Letter of Credit
Exposure plus the Revolving Loan plus the Swingline Loan shall in no event
---- ----
exceed the Maximum Amount of Revolving Credit; and, provided, further, that
all letters of credit issued pursuant to Section 2.4.1 of the Existing
Credit Agreement that are outstanding on the Restatement Date shall be
continued and treated in all respects from and after the Restatement Date
as Letters of Credit issued under this Section 2.4.1.
2.4.2. Requests for Letters of Credit. The Company may from time
------------------------------
to time request a Letter of Credit to be issued by providing to the Letter
of Credit Issuer (and the Agent if the Letter of Credit Issuer is not the
Agent) a notice which is actually received not less than two Banking Days
prior to the requested Closing Date for such Letter of Credit specifying
(a) the amount of the requested Letter of Credit, (b) the beneficiary
thereof, (c) the requested Closing Date and (d) the principal terms of the
text for such Letter of Credit. Each Letter of Credit will be issued by
forwarding it to the Company or to such other Person as directed in writing
by the Company, with a copy to the
-27-
<PAGE>
Company. In connection with the issuance of any Letter of Credit, the
Company shall furnish to the Letter of Credit Issuer (and the Agent if the
Letter of Credit Issuer is not the Agent) a certificate in substantially
the form of Exhibit 5.2.1 and any customary application forms required by
the Letter of Credit Issuer.
2.4.3. Form and Expiration of Letters of Credit. Each Letter of
----------------------------------------
Credit issued under this Section 2.4 and each draft accepted or paid under
such a Letter of Credit shall be issued, accepted or paid, as the case may
be, by the Letter of Credit Issuer at its principal office. No Letter of
Credit shall provide for the payment of drafts drawn thereunder, and no
draft shall be payable, at a date which is later than the earlier of (a)
the date twelve months after the date of issuance or (b) the Final Maturity
Date. Each Letter of Credit and each draft accepted under a Letter of
Credit shall be in such form as is generally acceptable in the petroleum
industry, shall be in such amount as the Letter of Credit Issuer and the
Company may agree upon at the time such Letter of Credit is issued and
shall include a requirement of not less than three Banking Days after
presentation of a draft before payment must be made thereunder.
2.4.4. Lenders' Participation in Letters of Credit. Upon the
-------------------------------------------
issuance of any Letter of Credit, a participation therein, in an amount
equal to each Lender's Revolving Loan Percentage Interest, shall
automatically be deemed granted by the Letter of Credit Issuer to each
Lender on the date of such issuance and the Lenders shall automatically be
obligated, as set forth in Section 12.4, to reimburse the Letter of Credit
Issuer to the extent of their respective Revolving Loan Percentage
Interests for all obligations incurred by the Letter of Credit Issuer to
third parties in respect of such Letter of Credit not reimbursed by the
Company. The Letter of Credit Issuer will send to each Lender (and the
Agent if the Letter of Credit Issuer is not the Agent) a confirmation
regarding the participations in Letters of Credit outstanding during such
month.
2.4.5. Presentation. The Letter of Credit Issuer may accept or
------------
pay any draft presented to it, regardless of when drawn and whether or not
negotiated, if such draft, the other required documents and any transmittal
advice are presented to the Letter of Credit Issuer and dated on or before
the expiration date of the Letter of Credit under which such draft is
drawn. Except insofar as instructions actually received may be given by the
Company in writing expressly to the contrary with regard to, and prior to,
the Letter of Credit Issuer's issuance of any Letter of Credit for the
account of the Company and such contrary instructions are reflected in such
Letter of Credit, the Letter of Credit Issuer may honor as complying with
the terms of the Letter of Credit and with this Agreement any drafts or
other documents otherwise in order signed or issued by an administrator,
executor, conservator, trustee in bankruptcy, debtor in possession,
assignee for benefit of creditors, liquidator, receiver or other legal
representative of the party authorized under such Letter of Credit to draw
or issue such drafts or other documents. Within two Banking Days following
the presentation of a draft under any Letter of Credit, the Letter of
Credit Issuer shall give notice thereof to the Company, which notice shall
be accompanied by copies of the draft and all documents presented
therewith.
-28-
<PAGE>
2.4.6. Payment of Drafts. At such time as a Letter of Credit
-----------------
Issuer makes any payment on a draft presented or accepted under a Letter of
Credit, the Company will on demand pay to such Letter of Credit Issuer in
immediately available funds the amount of such payment. Unless the Company
shall otherwise pay to the Letter of Credit Issuer the amount required by
the foregoing sentence, any such amount paid prior to the Final Maturity
Date shall be considered a loan under Section 2.1.1 and part of the
Revolving Loan. So long as no Default shall exist or be created thereby,
the addition of such amount to the Revolving Loan pursuant to the preceding
sentence shall constitute payment for the purposes of this Section 2.4.6.
2.4.7. Uniform Customs and Practice. The Uniform Customs and
----------------------------
Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500, and any subsequent revisions thereof approved
by a Congress of the International Chamber of Commerce and adhered to by
the Letter of Credit Issuer (the "Uniform Customs and Practice"), shall be
----------------------------
binding on the Company and the Letter of Credit Issuer except to the extent
otherwise provided herein, in any Letter of Credit or in any other Credit
Document. Anything in the Uniform Customs and Practice to the contrary
notwithstanding:
(a) Neither the Company nor any beneficiary of any Letter of
Credit shall be deemed an agent of any Letter of Credit Issuer.
(b) With respect to each Letter of Credit, neither the Letter
of Credit Issuer nor its correspondents shall be responsible for or shall
have any duty to ascertain:
(i) the genuineness of any signature;
(ii) the validity, form, sufficiency, accuracy,
genuineness or legal effect of any endorsements;
(iii) delay in giving, or failure to give, notice of
arrival, notice of refusal of documents or of discrepancies in
respect of which any Letter of Credit Issuer refuses the documents
or any other notice, demand or protest;
(iv) the performance by any beneficiary under any Letter
of Credit of such beneficiary's obligations to the Company;
(v) inaccuracy in any notice received by the Letter of
Credit Issuer;
(vi) the validity, form, sufficiency, accuracy,
genuineness or legal effect of any instrument, draft, certificate
or other document required by such Letter of Credit to be presented
before payment of a draft, or the office held by or the authority
of any Person signing any of the same; or
-29-
<PAGE>
(vii) failure of any instrument to bear any reference or
adequate reference to such Letter of Credit, or failure of any
Person to note the amount of any instrument on the reverse of such
Letter of Credit or to surrender such Letter of Credit or to
forward documents in the manner required by such Letter of Credit.
(c) The occurrence of any of the events referred to in the
Uniform Customs and Practice or in the preceding clauses of this Section
2.4.7 shall not affect or prevent the vesting of any of the Letter of
Credit Issuer's rights or powers hereunder or the Company's obligation to
make reimbursement of amounts paid under any Letter of Credit or any draft
accepted thereunder.
(d) Upon receipt, the Company will promptly examine (i) each
Letter of Credit (and any amendments thereof) sent to it by the Letter of
Credit Issuer and (ii) all instruments and documents delivered to it from
time to time by the Letter of Credit Issuer. The Company will notify the
Letter of Credit Issuer of any claim of noncompliance by notice actually
received within 36 hours (excluding hours included in non-Banking Days)
after receipt of any of the foregoing documents, the Company being
conclusively deemed to have waived any such claim against such Letter of
Credit Issuer and its correspondents unless such notice is given.
(e) In the event of any conflict between the provisions of this
Agreement and the Uniform Customs and Practice, the provisions of this
Agreement shall govern.
2.4.8. Subrogation. Upon any payment by a Letter of Credit Issuer
-----------
under any Letter of Credit and until the reimbursement of such Letter of
Credit Issuer by the Company with respect to such payment as provided in
Section 2.4.6, the Letter of Credit Issuer shall be entitled to be
subrogated to, and to acquire and retain, the rights which the Person to
whom such payment is made may have against the Company, all for the benefit
of the Lenders. The Company will take such action as the Letter of Credit
Issuer may reasonably request, including requesting the beneficiary of any
Letter of Credit to execute such documents as the Letter of Credit Issuer
may reasonably request, to assure and confirm to the Letter of Credit
Issuer such subrogation and such rights, including the rights, if any, of
the beneficiary to whom such payment is made in accounts receivable,
inventory and other properties and assets of any Obligor.
2.4.9. Modification, Consent, etc. If the Company requests or
--------------------------
consents in writing to any modification or extension of any Letter of
Credit, or waives in writing any failure of any draft, certificate or other
document to comply with the terms of such Letter of Credit, and if the
Letter of Credit Issuer consents thereto, the Letter of Credit Issuer shall
be entitled to rely on such request, consent or waiver. This Agreement
shall be binding upon the Company with respect to such Letter of Credit as
so modified or extended, and with respect to any action taken or omitted by
such Letter of Credit Issuer pursuant to any such request, consent or
waiver.
-30-
<PAGE>
2.5. Application of Proceeds.
-----------------------
2.5.1. Revolving Loan. Subject to Section 2.5.6 and the other
--------------
provisions of this Agreement, the Company will apply the proceeds of the
Revolving Loan to refinance the Company's obligations under the Existing
Credit Agreement, to fund acquisitions and capital expenditures, and for
working capital and other lawful corporate purposes of the Company and its
Subsidiaries.
2.5.2. Swingline Loan. Subject to Section 2.5.6 and the other
--------------
provisions of this Agreement, the Company will apply the proceeds of the
Swingline Loan for working capital and other lawful corporate purposes of
the Company and its Subsidiaries.
2.5.3. Term Loan. Subject to Section 2.5.6 and the other
---------
provisions of this Agreement, the Company will apply the proceeds of the
Term Loan to refinance the Company's obligations under the Existing Credit
Agreement, to fund the acquisition under the Acquisition Agreement and
capital expenditures, and for working capital and other lawful corporate
purposes of the Company and its Subsidiaries.
2.5.4. [Intentionally Omitted].
2.5.5. Letters of Credit. Subject to Section 2.5.6 and the other
-----------------
provisions of this Agreement, Letters of Credit shall be issued only for
such lawful corporate purposes as the Company has requested in writing.
2.5.6. Specifically Prohibited Applications. The Company will not,
------------------------------------
directly or indirectly, apply any part of the proceeds of any extension of
credit made pursuant to the Credit Documents to purchase or to carry Margin
Stock or to any transaction prohibited by the Foreign Trade Regulations, by
other Legal Requirements applicable to the Lenders or by the Credit
Documents.
2.6. Nature of Obligations of Lenders to Make Extensions of Credit. The
-------------------------------------------------------------
Lenders' obligations to extend credit under this Agreement are several and are
not joint or joint and several. Notwithstanding the foregoing, the obligation
to make a Swingline Loan shall be an obligation solely of the Swingline Lender.
If on any Closing Date any Lender shall fail to perform its obligations under
this Agreement, the aggregate amount of Commitments to make the extensions of
credit under this Agreement shall be reduced by the amount of unborrowed
Commitment of the Lender so failing to perform and the Percentage Interests,
Revolving Loan Percentage Interests and Term Loan Percentage Interests shall be
appropriately adjusted. Lenders that have not failed to perform their
obligations to make the extensions of credit contemplated by Section 2 may, if
any such Lender so desires, assume, in such proportions as such Lenders may
agree, the obligations of any Lender who has so failed and the Percentage
Interests, Revolving Loan Percentage Interests and Term Loan Percentage
Interests shall be appropriately adjusted. The
-31-
<PAGE>
provisions of this Section 2.6 shall not affect the rights of the Company
against any Lender failing to perform its obligations hereunder.
3. Interest; Eurodollar Pricing Options; Fees.
------------------------------------------
3.1. Interest. The Revolving Loan and the Term Loan shall accrue and
--------
bear interest at a rate per annum which shall at all times equal the Applicable
Rate. Prior to any stated or accelerated maturity of the Revolving Loan and the
Term Loan, the Company will, on each Payment Date, pay the accrued and unpaid
interest on the portion of the Loan which was not subject to a Eurodollar
Pricing Option. On the last day of each Eurodollar Interest Period or on any
earlier termination of any Eurodollar Pricing Option, the Company will pay the
accrued and unpaid interest on the portion of the Loan which was subject to the
Eurodollar Pricing Option which expired or terminated on such date. In the case
of any Eurodollar Interest Period longer than three months, the Company will
also pay the accrued and unpaid interest on the portion of the Revolving Loan
and the Term Loan, respectively, subject to the Eurodollar Pricing Option having
such Eurodollar Interest Period at three-month intervals, the first such payment
to be made on the last Banking Day of the three-month period which begins on the
first day of such Eurodollar Interest Period. On the stated or any accelerated
maturity of the Revolving Loan or the Term Loan, the Company will pay all
accrued and unpaid interest on the Revolving Loan or the Term Loan, as the case
may be, including any accrued and unpaid interest on any portion of the
Revolving Loan or the Term Loan, as the case may be, which is subject to a
Eurodollar Pricing Option. The Swingline Loan shall accrue and bear interest at
a rate per annum which shall at all times equal the Swingline Rate. Interest on
the Swingline Loan shall be calculated on a daily basis and on the basis of a
year of 360 days. Prior to any stated or accelerated maturity of the Swingline
Loan, the Company will on each Wednesday, beginning on the first Wednesday after
the Restatement Date, pay the accrued and unpaid interest, if any, on such
Indebtedness. On any stated or accelerated maturity of the Swingline Loan all
accrued and unpaid interest thereon shall be forthwith due and payable. All
payments of interest hereunder in respect of the Swingline Loan shall be made by
the Company to the Agent for the account of the Swingline Lender. In addition,
the Company will on demand pay interest on any overdue installments of principal
and, to the extent not prohibited by applicable law, on any overdue installments
of interest, fees and any other overdue amounts owed under any Credit Document
at a rate per annum equal to the sum of 2% plus the highest Applicable Rate then
----
in effect or at a rate per annum equal to the sum of 2% plus the Swingline Rate
----
then in effect in the case of overdue installments of principal and interest
with respect to a Swingline Loan (the "Overdue Rate"). All payments of interest
------------
hereunder shall be made to the Agent for the account of each Lender in
accordance with such Lender's Revolving Loan Percentage Interest or Term Loan
Percentage Interest, as the case may be.
3.2. Eurodollar Pricing Options.
--------------------------
3.2.1. Election of Eurodollar Pricing Options. Subject to all of
--------------------------------------
the terms and conditions hereof and so long as no Default exists, the
Company may from time to time,
-32-
<PAGE>
by irrevocable notice to the Agent actually received not less than three
Banking Days prior to the commencement of the Eurodollar Interest Period
selected in such notice, elect to have such portion of the Loan (excluding
the Swingline Loan) as the Company may specify in such notice accrue and
bear interest during the Eurodollar Interest Period so selected at the
Applicable Rate computed on the basis of the Eurodollar Rate. No such
election shall become effective:
(a) if, prior to the commencement of any such Eurodollar
Interest Period, the Agent determines that (i) the electing or granting of
the Eurodollar Pricing Option in question would violate a Legal
Requirement, (ii) Eurodollar deposits in an amount comparable to the
principal amount of the Loan as to which such Eurodollar Pricing Option has
been elected and which have a term corresponding to the proposed Eurodollar
Interest Period are not readily available in the inter-bank Eurodollar
market, or (iii) by reason of circumstances affecting the inter-bank
Eurodollar market, adequate and reasonable methods do not exist for
ascertaining the interest rate applicable to such deposits for the proposed
Eurodollar Interest Period; or
(b) if any Lender shall have advised the Agent by telephone or
otherwise at or prior to noon (Boston time) on the second Banking Day prior
to the commencement of such proposed Eurodollar Interest Period (and shall
have subsequently confirmed in writing) that, after reasonable efforts to
determine the availability of such Eurodollar deposits, such Lender
reasonably anticipates that Eurodollar deposits in an amount equal to the
Revolving Loan Percentage Interest or Term Loan Percentage Interest, as the
case may be, of such Lender in the portion of the Loan as to which such
Eurodollar Pricing Option has been elected and which have a term
corresponding to the Eurodollar Interest Period in question will not be
offered in the Eurodollar market to such Lender.
3.2.2. Notice to Lenders and Company. The Agent will promptly
-----------------------------
inform each Lender (by telephone or otherwise) of each notice received by
it from the Company pursuant to Section 3.2.1 and of the Eurodollar
Interest Period specified in such notice. Upon determination by the Agent
of the Eurodollar Rate for such Eurodollar Interest Period or in the event
such election shall not become effective, the Agent will promptly notify
the Company and each Lender (by telephone or otherwise) of the Eurodollar
Rate so determined or why such election did not become effective, as the
case may be.
3.2.3. Selection of Eurodollar Interest Periods. Eurodollar
----------------------------------------
Interest Periods shall be selected so that:
(a) the minimum portion of the Loan subject to any Eurodollar
Pricing Option shall be $1,000,000 and an integral multiple of $500,000;
(b) no more than ten Eurodollar Pricing Options shall be
outstanding at any one time;
-33-
<PAGE>
(c) no Eurodollar Interest Period with respect to any part of
the Revolving Loan subject to a Eurodollar Pricing Option shall expire
later than the Final Maturity Date; and
(d) no Eurodollar Interest Period with respect to any part of
the Term Loan subject to a Eurodollar Pricing Option shall expire later
than the Final Term Loan Maturity Date.
3.2.4. Additional Interest. If any portion of the Loan subject to
-------------------
a Eurodollar Pricing Option is repaid, or any Eurodollar Pricing Option is
terminated for any reason (including without limitation any requirement
hereunder that all or a portion of the Loan be prepaid or any acceleration
of the maturity of the Loan), on a date which is prior to the last Banking
Day of the Eurodollar Interest Period applicable to such Eurodollar Pricing
Option, the Company will pay to the Agent for the account of each Lender in
accordance with such Lender's Revolving Loan Percentage Interest or Term
Loan Percentage Interest, as the case may be, in addition to any amounts of
interest otherwise payable hereunder, an amount equal to the present value
(calculated in accordance with this Section 3.2.4) of interest for the
unexpired portion of such Eurodollar Interest Period on the portion of the
Loan so repaid, or as to which a Eurodollar Pricing Option was so
terminated, at a per annum rate equal to the excess, if any, of (a) the
rate applicable to such Eurodollar Pricing Option minus (b) the lowest rate
-----
of interest obtainable by the Agent upon the purchase of debt securities
customarily issued by the Treasury of the United States of America which
have a maturity date approximating the last Banking Day of such Eurodollar
Interest Period. The present value of such additional interest shall be
calculated by discounting the amount of such interest for each day in the
unexpired portion of such Eurodollar Interest Period from such day to the
date of such repayment or termination at a per annum interest rate equal to
the interest rate determined pursuant to clause (b) of the preceding
sentence, and by adding all such amounts for all such days during such
period. The determination by the Agent of such amount of interest shall,
in the absence of demonstrable error, be conclusive. For purposes of this
Section 3.2.4, if any portion of the Loan which was to have been subject to
a Eurodollar Pricing Option is not outstanding on the first day of the
Eurodollar Interest Period applicable to such Eurodollar Pricing Option
other than for reasons described in Section 3.2.1, the Company shall be
deemed to have terminated such Eurodollar Pricing Option.
3.2.5. Violation of Legal Requirements. If any Legal Requirement
-------------------------------
shall prevent any Lender from funding or maintaining through the purchase
of deposits in the interbank Eurodollar market any portion of the Loan
subject to a Eurodollar Pricing Option or otherwise from giving effect to
such Lender's obligations as contemplated by Section 3.2, (a) the Agent may
by notice to the Company describing such Legal Requirement terminate all of
the affected Eurodollar Pricing Options, (b) the portion of the Loan
subject to such terminated Eurodollar Pricing Options shall immediately
bear interest thereafter at the Applicable Rate computed on the basis of
the Base Rate and (c) the Company shall make any payment required by
Section 3.2.4.
-34-
<PAGE>
3.2.6. Funding Procedure. The Lenders may fund any portion of the
-----------------
Loan subject to a Eurodollar Pricing Option out of any funds available to
the Lenders. Regardless of the source of the funds actually used by any of
the Lenders to fund any portion of the Loan subject to a Eurodollar Pricing
Option, however, all amounts payable hereunder, including the interest rate
applicable to any such portion of the Loan and the amounts payable under
Sections 3.2.4, 3.5, 3.6, 3.7 and 3.8, shall be computed as if each Lender
had actually funded such Lender's Revolving Loan Percentage Interest or
Term Loan Percentage Interest, as the case may be, in such portion of the
Loan through the purchase of deposits in such amount of the type by which
the Eurodollar Basic Rate was determined with a maturity the same as the
applicable Eurodollar Interest Period relating thereto and through the
transfer of such deposits from an office of the Lender having the same
location as the applicable Eurodollar Office to one of such Lender's
offices in the United States of America.
3.3. Facility Fees. In consideration of the Lenders' commitments to make
-------------
the extensions of credit provided for in Section 2, while such commitments are
outstanding, the Company will pay to the Agent for the account of the Lenders in
accordance with the Lenders' respective Revolving Loan Percentage Interests, on
each Payment Date and on the Final Maturity Date, an amount equal to interest
computed at a rate per annum equal to the Facility Fee Rate on the average daily
Maximum Amount of Revolving Credit during the quarter or portion thereof ending
on such Payment Date or, as the case may be, the Final Maturity Date; provided,
--------
however, that the first such payment shall be for the period beginning on the
- -------
Restatement Date and ending on the first Payment Date.
3.4. Letter of Credit Fees. The Company will pay to the Agent for the
---------------------
account of each of the Lenders, in accordance with the Lenders' respective
Revolving Loan Percentage Interests, on each Payment Date and on the Final
Maturity Date, a Letter of Credit fee equal to interest at a rate per annum
equal to the Letter of Credit Fee Rate on the average daily Letter of Credit
Exposure during the quarter or portion thereof ending on such Payment Date or,
as the case may be, the Final Maturity Date; provided, that if any Letter of
Credit or any extension of a Letter of Credit would produce a fee hereunder that
is less than $250 during the term of such Letter of Credit or extension, the fee
owing to the Lenders hereunder with respect to such Letter of Credit or
extension shall be $250. The Company also will pay to the Letter of Credit
Issuer (i) on the date of issuance of each Letter of Credit an issuance fee of
$150 with respect to such Letter of Credit, (ii) on each Payment Date and on the
Final Maturity Date, an additional Letter of Credit fee equal to interest at the
rate of one-eighth of one percent (1/8%) per annum on the average daily Letter
of Credit Exposure during the quarter or portion thereof ending on such Payment
Date or, as the case may be, the Final Maturity Date and (iii) as invoiced,
other customary service charges and expenses for the services of the Letter of
Credit Issuer in connection with the Letters of Credit at the times and in the
amounts from time to time in effect in accordance with its general rate
structure, including fees and expenses relating to issuance, amendment,
negotiation, cancellation and similar operations.
-35-
<PAGE>
3.5. Reserve Requirements, etc. If any Legal Requirement shall (a)
-------------------------
impose, modify, increase or deem applicable any insurance assessment, reserve,
special deposit or similar requirement against any Funding Liability or the
Letters of Credit, (b) impose, modify, increase or deem applicable any other
requirement or condition with respect to any Funding Liability or the Letters of
Credit, or (c) change the basis of taxation of Funding Liabilities or payments
in respect of any Letter of Credit (other than changes in the rate of taxes
measured by the overall net income of such Lender) and the effect of any of the
foregoing shall be to increase the cost to any Lender of issuing, making,
funding or maintaining its respective Revolving Loan Percentage Interest or Term
Loan Percentage Interest, as the case may be, in any portion of the Loan subject
to a Eurodollar Pricing Option or any Letter of Credit, to reduce the amounts
received or receivable by such Lender under this Agreement or to require such
Lender to make any payment or forego any amounts otherwise payable to such
Lender under this Agreement, then, within 15 days after the receipt by the
Company of a certificate from such Lender setting forth why it is claiming
compensation under this Section 3.5 and computations (in reasonable detail) of
the amount thereof, the Company shall pay to the Agent for the account of such
Lender such additional amounts as are specified by such Lender in such
certificate as sufficient to compensate such Lender for such increased cost or
such reduction, together with interest at the Overdue Rate on such amount from
the 15th day after receipt of such certificate until payment in full thereof;
provided, however, that the foregoing provisions shall not apply to any Tax or
- -------- -------
to any reserves which are included in computing the Eurodollar Reserve Rate. The
determination by such Lender of the amount of such costs shall, in the absence
of demonstrable error, be conclusive. The Company shall be entitled to replace
any such Lender in accordance with Section 13.3.
3.6. Taxes. All payments of the Credit Obligations shall be made without
-----
set-off or counterclaim and free and clear of any deductions, including
deductions for Taxes, unless the Company is required by law to make such
deductions. If (a) any Lender shall be subject to any Tax with respect to any
payment of the Credit Obligations or its obligations hereunder or (b) the
Company shall be required to withhold or deduct any Tax on any payment on the
Credit Obligations, within 15 days after the receipt by the Company of a
certificate from such Lender setting forth why it is claiming compensation under
this Section 3.6 and computations (in reasonable detail) of the amount thereof,
the Company shall pay to the Agent for such Lender's account such additional
amount as is necessary to enable such Lender to receive the amount of Tax so
imposed on the Lender's obligations hereunder or the full amount of all payments
which it would have received on the Credit Obligations (including amounts
required to be paid under Sections 3.5, 3.7, 3.8 and this Section 3.6) in the
absence of such Tax, as the case may be, together with interest at the Overdue
Rate on such amount from the 15th day after receipt of such certificate until
payment in full thereof. Whenever Taxes must be withheld by the Company with
respect to any payments of the Credit Obligations, the Company shall promptly
furnish to the Agent for the account of the applicable Lender official receipts
(to the extent that the relevant governmental authority delivers such receipts)
evidencing payment of any such Taxes so withheld. If the Company fails to pay
any such Taxes when due or fails to remit to the Agent for the account of the
applicable Lender the required receipts evidencing payment of any such Taxes so
withheld or deducted, the Company shall indemnify the affected Lender for any
incremental Taxes and interest or penalties that may become payable by such
Lender as a result of any such failure. The
-36-
<PAGE>
determination by such Lender of the amount of such Tax and the basis therefor
shall, in the absence of demonstrable error, be conclusive. The Company shall be
entitled to replace any such Lender in accordance with Section 13.3.
3.7. Capital Adequacy. If any Lender shall determine that compliance by
----------------
such Lender with any Legal Requirement regarding capital adequacy of banks or
bank holding companies has or would have the effect of reducing the rate of
return on such Lender's capital as a consequence of such Lender's commitment to
make the extensions of credit contemplated hereby, or such Lender's maintenance
of the extensions of credit contemplated hereby, to a level below that which
such Lender could have achieved but for such compliance (taking into
consideration such Lender's policies with respect to capital adequacy
immediately before such compliance and assuming that such Lender's capital was
fully utilized prior to such compliance) by an amount deemed by such Lender to
be material, then, within 15 days after the receipt by the Company of a
certificate from such Lender setting forth why it is claiming compensation under
this Section 3.7 and computations (in reasonable detail) of the amount thereof,
the Company shall pay to the Agent for the account of such Lender such
additional amounts as shall be sufficient to compensate such Lender for such
reduced return, together with interest at the Overdue Rate on each such amount
from the 15th day after receipt of such certificate until payment in full
thereof. The determination by such Lender of the amount to be paid to it and the
basis for computation thereof shall, in the absence of demonstrable error, be
conclusive. In determining such amount, such Lender may use any reasonable
averaging, allocation and attribution methods. The Company shall be entitled to
replace any such Lender in accordance with Section 13.3.
3.8. Regulatory Changes. If any Lender shall determine that (a) any
------------------
change in any Legal Requirement (including any new Legal Requirement) after the
date hereof shall directly or indirectly (i) reduce the amount of any sum
received or receivable by such Lender with respect to the Loan or the Letters of
Credit or the return to be earned by such Lender on the Loan or the Letters of
Credit, (ii) impose a cost on such Lender or any Affiliate of such Lender that
is attributable to the making or maintaining of, or such Lender's commitment to
make, its portion of the Loan or the Letters of Credit, or (iii) require such
Lender or any Affiliate of such Lender to make any payment on, or calculated by
reference to, the gross amount of any amount received by such Lender under any
Credit Document, and (b) such reduction, increased cost or payment shall not be
fully compensated for by an adjustment in the Applicable Rate or the Letter of
Credit fees, then, within 15 days after the receipt by the Company of a
certificate from such Lender setting forth why it is claiming compensation under
this Section 3.8 and computations (in reasonable detail) of the amount thereof,
the Company shall pay to such Lender such additional amounts as such Lender
determines will, together with any adjustment in the Applicable Rate, fully
compensate for such reduction, increased cost or payment, together with interest
on such amount from the 15th day after receipt of such certificate until payment
in full thereof at the Overdue Rate. The determination by such Lender of the
amount to be paid to it and the basis for computation thereof hereunder shall,
in the absence of demonstrable error, be conclusive. In determining such amount,
such Lender may use any reasonable averaging and attribution methods. The
Company shall be entitled to replace any such Lender in accordance with Section
13.3.
-37-
<PAGE>
3.9. Computations of Interest and Fees. For purposes of this Agreement,
---------------------------------
interest, facility fees and Letter of Credit fees (and any other amount
expressed as interest or such fees) shall be computed on the basis of a 360-day
year for actual days elapsed. If any payment required by this Agreement becomes
due on any day that is not a Banking Day, such payment shall, except as
otherwise provided in the Eurodollar Interest Period, be made on the next
succeeding Banking Day. If the due date for any payment of principal is extended
as a result of the immediately preceding sentence, interest shall be payable for
the time during which payment is extended at the Applicable Rate or, in the case
of principal of the Swingline Loan, at the Swingline Rate.
4. Payment.
-------
4.1. Payment at Maturity. In the case of the Revolving Loan and the
-------------------
Swingline Loan, on the Final Maturity Date, and in the case of the Term Loan, on
the Final Term Loan Maturity Date, and on any accelerated maturity of the Loan,
the Company will pay to the Agent for the account of the Lenders an amount equal
to the Loan then due, together with all accrued and unpaid interest thereon and
all other Credit Obligations then outstanding.
4.2. Contingent Required Prepayments.
-------------------------------
4.2.1. Excess Credit Exposure. If at any time the Revolving Loan
----------------------
exceeds the Maximum Amount of Revolving Credit, the Company will within
three Banking Days pay the amount of such excess to the Agent for the
account of the Lenders. If at any time the Swingline Loan exceeds
$20,000,000, the Company will within three Banking Days pay the amount of
such excess to the Swingline Lender.
4.2.2. Letter of Credit Exposure. If at any time the Letter of
-------------------------
Credit Exposure exceeds the limits set forth in Section 2.4, the Company
will promptly pay the amount of such excess to the Agent for the account of
the Lenders to be applied as provided in Section 4.6.
4.3. Scheduled Required Prepayments. On the Payment Date in March, June,
------------------------------
September and December set forth below (both dates inclusive), the Borrower will
pay to the Agent as a prepayment of the Term Loan the lesser of (a) the amount
set forth below for such month or (b) the amount of the Term Loan then
outstanding.
Payment Dates in March,
June, September and December Amount
---------------------------- ------
September 2000 through June 2004 $ 1,250,000
September 2004 through June 2005 15,000,000
September 2005 through June 2006 30,000,000
-38-
<PAGE>
4.4. [Intentionally Omitted].
4.5. Voluntary Prepayments. In addition to the prepayments required by
---------------------
Sections 4.2 and 4.3, the Company may from time to time prepay all or any
portion of the Revolving Loan or Term Loan (in a minimum amount of $1,000,000
and an integral multiple of $100,000). Any such prepayments of the Revolving
Loan shall be without premium or penalty of any type (except as provided in
Section 3.2.4 with respect to the early termination of Eurodollar Pricing
Options). Any such prepayments of the Term Loan shall be accompanied by the
payment of any additional interest required by Section 3.2.4 with respect to any
early termination of Eurodollar Pricing Options and, with respect to any such
prepayment of the Term Loan made prior to April 1, 2001, by the payment of a
prepayment premium in an amount determined as follows: (i) if such prepayment
occurs on or before March 31, 2000, a premium equal to one-half of one percent
(0.50%) of the principal amount prepaid and (ii) if such prepayment occurs after
March 31, 2000 and on or before March 31, 2001, a premium equal to one-quarter
of one percent (0.25%) of the principal amount prepaid. The Company shall give
the Agent at least three Banking Days prior notice of its intention to prepay,
specifying the date of payment, the total amount of the Revolving Loan or Term
Loan to be paid on such date and the amount of interest to be paid with such
prepayment. At any time or from time to time upon telephone notice to the
Swingline Lender, given not later than 3:00 p.m. (Boston time) on any Banking
Day, the Company shall have the right to prepay, without premium or penalty of
any type, all or any part of the outstanding principal amount of its Swingline
Loan in such amounts as are not less than $100,000 and in integral multiples of
$50,000, unless such payment is equal to the entire outstanding principal amount
of the Swingline Loan.
4.6. Letters of Credit. If on the stated or any accelerated maturity of
-----------------
the Credit Obligations the Lenders shall be obligated in respect of a Letter of
Credit or a draft accepted under a Letter of Credit, the Company will either:
(a) prepay such obligation by depositing with the Agent an amount
of cash, or
(b) deliver to the Agent a standby letter of credit (designating
the Agent as beneficiary and issued by a bank and on terms reasonably
acceptable to the Agent),
in each case in an amount equal to the portion of the then Letter of Credit
Exposure issued for the account of the Company. Any such cash so deposited and
the cash proceeds of any draw under any standby letter of credit so furnished,
including any interest thereon, shall be returned by the Agent to the Company
only when, and to the extent that, the amount of such cash held by the Agent
exceeds the Letter of Credit Exposure at a time when no Default exists;
provided, however, that if an Event of Default occurs and the Credit Obligations
- -------- -------
become or are declared immediately due and payable, the Agent may apply such
cash, including any interest thereon, to the payment of any of the Credit
Obligations as provided in Section 10.5.6.
-39-
<PAGE>
4.7. Reborrowing; Application of Payments, etc.
------------------------------------------
4.7.1. Reborrowing. The amounts of the Revolving Loan prepaid
-----------
pursuant to Section 4.2.1 or 4.5 may be reborrowed from time to time prior
to the Final Maturity Date in accordance with Section 2.1, subject to the
limits set forth therein. The amounts of the Swingline Loan prepaid
pursuant to Section 4.2.1 or 4.5 may be reborrowed from time to time prior
to the Final Maturity Date in accordance with Section 2.2, subject to the
limits set forth therein. No amount of the Term Loan that is repaid may be
reborrowed hereunder.
4.7.2. Order of Application. Any prepayment of the Revolving Loan
--------------------
or the Term Loan shall be applied first to the portion thereof not then
subject to Eurodollar Pricing Options, then the balance of any such
prepayment shall be applied to the portion thereof then subject to
Eurodollar Pricing Options, in the chronological order of the respective
maturities thereof, together with any payments required by Section 3.2.4.
4.7.3. Payment with Accrued Interest, etc. Upon all prepayments of
----------------------------------
the Term Loan, the Company shall pay to the Agent the principal amount to
be prepaid, together with unpaid interest in respect thereof accrued to the
date of prepayment, any additional interest with respect thereto under
Section 3.2.4 and any prepayment premium owing with respect thereto under
Section 4.5. Notice of prepayment having been given in accordance with
Section 4.5, and whether or not notice is given of prepayments pursuant to
Section 4.2 the amount specified to be prepaid shall become due and payable
on the date specified for prepayment.
4.7.4. Payments for Lenders. All payments of principal hereunder
--------------------
shall be made to the Agent for the account of the Lenders in accordance
with the Lenders' respective Revolving Loan Percentage Interests or Term
Loan Percentage Interests, as the case may be.
5. Conditions to Extending Credit.
------------------------------
5.1. Conditions on Restatement Date. The obligations of the Lenders to
------------------------------
make any extension of credit pursuant to Section 2 shall be subject to the
satisfaction, on or before the Restatement Date, of the conditions set forth in
this Section 5.1 as well as the further conditions in Section 5.2. If the
conditions set forth in this Section 5.1 are not met on or prior to the
Restatement Date, the Lenders shall have no obligation to make any extensions of
credit hereunder.
5.1.1. Notes. The Company shall have duly executed and delivered
-----
to the Agent a Revolving Note and a Term Note for each Lender committing to
the Revolving Loan and the Term Loan, respectively, and a Swingline Note
for the Swingline Lender.
-40-
<PAGE>
5.1.2. Perfection of Security. Each Obligor shall have duly
----------------------
authorized, executed, acknowledged, delivered, filed, registered and
recorded such security agreements, notices, financing statements and other
instruments as the Agent may have requested in order to perfect the Liens
purported or required pursuant to the Credit Documents to be created in the
Credit Security. All Liens securing amounts owing under the Existing Credit
Agreement shall remain in effect as part of the Credit Security.
5.1.3. Payment of Fees. The Company shall have paid to the Agent for
---------------
the account of BankBoston all fees required to be paid on or prior to the
Restatement Date pursuant to the separate agreement dated June 4, 1999
among the Company, BankBoston and the Syndication Agent (the "BankBoston
----------
Fee Letter") and the fees and disbursements of the Agent's special counsel
----------
and other costs and expenses of the Agent for which statements have been
rendered on or prior to the Restatement Date.
5.1.4. Legal Opinions. On the Restatement Date, the Lenders shall
--------------
have received from the following counsel their respective opinions with
respect to the transactions contemplated by the Credit Documents, which
opinions shall be in form and substance satisfactory to the Required
Lenders:
(a) Erik B. Carlson, general counsel of the Company and its
Subsidiaries.
(b) Jennifer J. May, associate counsel of certain Subsidiaries of
the Company.
(c) Ropes & Gray, special counsel for the Agent.
Each of the Company and its Subsidiaries authorizes and directs its
counsel to furnish the foregoing opinions.
5.1.5. [Intentionally omitted.]
---------------------
5.1.6. Prudential Consent. Prudential and each other holder of
------------------
Indebtedness issued under the Master Shelf Agreement shall have consented,
to the extent required under the Master Shelf Agreement and the
Intercreditor Agreement, to the modifications of the Existing Credit
Agreement effected hereby, the terms and conditions of such consent to be
satisfactory to the Required Lenders, and shall have acknowledged that the
Intercreditor Agreement remains in full force and effect; and the covenants
of the Company set forth in the Master Shelf Agreement shall have been
amended to reflect the covenant modifications of the Existing Credit
Agreement made herein.
5.1.7. No Material Adverse Change. There shall have been no Material
--------------------------
Adverse Change in the Company since April 30, 1998.
5.1.8. No Order, Injunction or Litigation. There has been no order,
----------------------------------
injunction or other pending litigation, which in the sole judgment of the
Agent, causes a reasonable
-41-
<PAGE>
possibility of a decision which could materially adversely affect the
ability of the Company or its Subsidiaries to perform under the Credit
Documents or affect the Agent's rights under the Credit Documents or its
ability to exercise such rights.
5.1.9. Adverse Market Change. Since June 4, 1999 no material adverse
---------------------
change shall have occurred in the syndication markets for credit facilities
similar in nature to this Agreement and no material disruption of or
material adverse change in the financial, banking or capital markets that
would have an adverse effect on such syndication market shall have
occurred, in each case as determined by the Agent and the Syndication Agent
in their sole discretion.
5.1.10. Acquisition. Other than as consented to by the Agent in
-----------
writing:
(a) The provisions of the Acquisition Agreement shall not have been
amended, modified, waived or terminated.
(b) All of the representations and warranties of the Seller set forth
in the Acquisition Agreement shall be complete and correct in all material
respects on and as of the Restatement Date with the same force and effect
as though made on and as of such date.
(c) All of the other conditions to the obligations of the Company set
forth in the Acquisition Agreement shall have been satisfied.
(d) Any material consent, authorization, order or approval of any
Person required in connection with the transactions contemplated by the
Acquisition Agreement shall have been obtained and shall be in full force
and effect.
(e) All of the items required to be delivered under the Acquisition
Agreement shall have been so delivered.
(f) Contemporaneously with the making by the Lenders of the extension
of credit hereunder on the Restatement Date, the Company shall have
furnished to the Lenders a certificate, signed by a Financial Officer, to
the effect that the closing has occurred under the Acquisition Agreement.
5.1.11. Year 2000 Plan. The Company and its Subsidiaries will have
--------------
informed the Lenders, in reasonable detail, of the actions the Company and
its Subsidiaries have taken and will be taking to become Year 2000
Compliant (the "Year 2000 Plan").
--------------
-42-
<PAGE>
5.1.12. Pro forma Compliance.
--------------------
(a) After giving effect to the closing under the Acquisition
Agreement and the incurrence of the Credit Obligations contemplated to be
incurred on the Restatement Date, the Company and its Subsidiaries, taken
as a whole:
(i) will be solvent;
(ii) will have assets having a fair saleable value in excess of
the amount required to pay their probable liability on their existing
debts as such debts become absolute and mature;
(iii) will have access to adequate capital for the conduct of
their business; and
(iv) will have the ability to pay their debts from time to time
incurred as such debts mature.
(b) The Company shall have furnished to the Lenders a certificate,
signed by a Financial Officer, to such effect, together with calculations
pursuant to Sections 6.9 and 7.2.1(d) with respect to the Computation
Covenants, in each case using the financial statements of the Company and
its Subsidiaries as of March 31, 1999 and of the Acquired Assets as of
March 31, 1999 and giving pro forma effect to the closing under the
Acquisition Agreement and the incurrence of the Credit Obligations
contemplated to be incurred on the Restatement Date.
5.1.13. Subordinated Debentures. The holders of the Subordinated
-----------------------
Debentures shall have consented to the execution and delivery of this
Agreement and shall have agreed that the Credit Obligations constitute
"Superior Indebtedness" with respect to the Subordinated Debentures.
5.2. Conditions to Each Extension of Credit. The obligations of the
--------------------------------------
Lenders to make any extension of credit pursuant to Section 2 (which, for the
avoidance of any doubt, shall not include any pricing election under Section
3.2.2 with respect to any portion of the Loan that is already outstanding) shall
be subject to the satisfaction, on or before the Closing Date for such extension
of credit, of the following conditions:
5.2.1. Officer's Certificate. The representations and warranties
---------------------
contained in Sections 7 and 10.3 shall be true and correct on and as of
such Closing Date with the same force and effect as though made on and as
of such date (except as to any representation or warranty which refers to a
specific earlier date); provided, that the information contained in
Exhibits 7.1, 7.3 and 7.15 shall be correct as most recently supplemented,
including any supplements thereto noted in the certificate provided under
this Section 5.2.1; no Default shall exist on such Closing Date prior to or
immediately after giving effect to the requested
-43-
<PAGE>
extension of credit; no Material Adverse Change shall have occurred since
April 30, 1998 and be continuing on such Closing Date; and the Company
shall have furnished to the Agent in connection with the requested
extension of credit a certificate to these effects, in substantially the
form of Exhibit 5.2.1, signed by a Financial Officer.
5.2.2. Proper Proceedings. This Agreement, each other Credit
------------------
Document and the transactions contemplated hereby and thereby shall have
been authorized by all necessary corporate or other proceedings. All
necessary consents, approvals and authorizations of any governmental or
administrative agency or any other Person of any of the transactions
contemplated hereby or by any other Credit Document shall have been
obtained and shall be in full force and effect.
5.2.3. Legality, etc. The making of the requested extension of credit
-------------
shall not (a) subject any Lender to any penalty or special tax (other than
a Tax for which the Company is required to reimburse the Lenders under
Section 3.6), (b) be prohibited by any Legal Requirement or (c) violate any
credit restraint program of the executive branch of the government of the
United States of America, the Board of Governors of the Federal Reserve
System or any other governmental or administrative agency so long as any
Lender reasonably believes that compliance therewith is in the best
interests of such Lender.
5.2.4. General. All legal and corporate proceedings in connection
-------
with the transactions contemplated by this Agreement shall be satisfactory
in form and substance to the Agent; and the Agent shall have received
copies of all documents, including certified copies of the Charter and By-
Laws of the Company and the other Obligors, records of corporate
proceedings, certificates as to signatures and incumbency of officers and
opinions of counsel, which the Agent may have reasonably requested in
connection therewith, such documents where appropriate to be certified by
proper corporate or governmental authorities.
6. General Covenants. Each of the Company and the Guarantors covenants that,
-----------------
until all of the Credit Obligations shall have been paid in full and until the
Lenders' commitments to extend credit under this Agreement and any other Credit
Document shall have been irrevocably terminated, the Company and its
Subsidiaries will comply with the following provisions:
6.1. Taxes and Other Charges; Accounts Payable.
-----------------------------------------
6.1.1. Taxes and Other Charges. Each of the Company and its
-----------------------
Subsidiaries shall duly pay and discharge, or cause to be paid and
discharged, before the same becomes in arrears, all material taxes,
assessments and other governmental charges imposed upon such Person and its
properties, sales or activities, or upon the income or profits therefrom,
as well as all claims for labor, materials or supplies which if unpaid
might by law become a Lien upon any of its property; provided, however,
-------- -------
that any such tax, assessment, charge or claim need not be paid if the
validity or amount thereof shall at the time be contested in good faith by
appropriate proceedings and if such Person shall have set aside on its
-44-
<PAGE>
books adequate reserves with respect thereto to the extent required by
GAAP; and provided, further, that each of the Company and its Subsidiaries
-------- -------
shall pay or bond, or cause to be paid or bonded, all such taxes,
assessments, charges or other governmental claims immediately upon the
commencement of proceedings to foreclose any Lien which may have attached
as security therefor (except to the extent such proceedings have been
dismissed or stayed).
6.1.2. Accounts Payable. Each of the Company and its Subsidiaries
----------------
shall promptly pay when due, or in conformity with customary trade terms,
all other material Indebtedness incident to the operations of such Person
not referred to in Section 6.1.1; provided, however, that any such
-------- -------
Indebtedness need not be paid if the validity or amount thereof shall at
the time be contested in good faith and if such Person shall have set aside
on its books adequate reserves with respect thereto to the extent required
by GAAP.
6.2. Conduct of Business, etc.
------------------------
6.2.1. Types of Business. The Company and its Subsidiaries shall
-----------------
engage principally in the business of (a) providing transportation,
terminaling and storage services for petroleum products and the
distribution, purchase and/or sale of petroleum products, chemicals and
other bulk liquids, (b) natural gas gathering, processing, transmission and
marketing and (c) other activities related thereto. The Company and its
Subsidiaries may engage in businesses other than those described in the
preceding sentence, provided that the gross revenues of such other
businesses in any fiscal year of the Company shall not exceed 10% of the
Consolidated gross revenues of the Company and its Subsidiaries.
6.2.2. Maintenance of Properties. Each of the Company and its
-------------------------
Subsidiaries:
(a) shall keep its properties in such repair, working order and
condition, and shall from time to time make such repairs, replacements,
additions and improvements thereto as are necessary for the efficient
operation of its businesses and shall comply at all times in all material
respects with all material franchises, licenses and leases to which it is
party so as to prevent any loss or forfeiture thereof or thereunder, except
where failure to comply with such provisions has not resulted, and does not
create a material risk of resulting, in the aggregate in any Material
Adverse Change; and
(b) shall do all things necessary to preserve, renew and keep in full
force and effect and in good standing its legal existence and authority
necessary to continue its business; provided, however, that this Section
-------- -------
6.2.2(b) shall not prevent the merger, consolidation or liquidation of
Subsidiaries permitted by Section 6.11.
6.2.3. Statutory Compliance. Each of the Company and its Subsidiaries
--------------------
shall comply in all material respects with all valid and applicable
statutes, laws, ordinances, zoning and building codes and other rules and
regulations of the United States of America, of the states and territories
thereof and their counties, municipalities and other subdivisions
-45-
<PAGE>
and of any foreign country or other jurisdictions applicable to such
Person, except where failure so to comply with such provisions has not
resulted, and does not create a material risk of resulting, in the
aggregate in any Material Adverse Change.
6.2.4. Compliance with Material Agreements. Each of the Company and
-----------------------------------
its Subsidiaries shall comply in all material respects with the Material
Agreements (to the extent not in violation of the other provisions of this
Agreement or any other Credit Document). Without the prior written consent
of the Required Lenders, no Material Agreement shall be amended, modified,
waived or terminated in any manner that would have in any material respect
an adverse effect on the interests of the Lenders; provided, without
limitation of the foregoing, that any modification of the Master Shelf
Agreement that would cause the covenants of the Company or the defaults
thereunder to be more restrictive than the covenants or defaults,
respectively, contained in this Agreement or that would constitute or cause
a Default shall require the prior written consent of the Required Lenders.
6.2.5. Trading Policy. The Company and its Subsidiaries will
--------------
maintain and follow a policy of managing petroleum inventory risk with the
objective of minimizing potentially adverse impacts on earnings arising
from volatility in refined petroleum product prices. The Lenders
acknowledge that the policy described in the Risk and Product Management
Policy Statement dated October 31, 1998 of TransMontaigne Product Services
Inc., an Arkansas corporation, as modified by the letter dated May 28, 1999
from the Company to the Agent, a full copy of which is attached to this
Agreement as Exhibit 6.2.5, represents such a policy.
6.2.6. Subordinated Debentures. The Company shall do all things
-----------------------
necessary to assure that the Loan and all of the Credit Obligations be and
remain "Superior Indebtedness" within the meaning of Section 9(a) of the
Subordinated Debentures Agreement.
6.2.7. Inventory Accounting. The Company and its Subsidiaries shall
--------------------
account for substantially all of their inventory on the basis of the "mark
to market" method.
6.2.8. Inactive Subsidiaries. The Company and its Subsidiaries shall
---------------------
not make any Investment in or transfer any assets to each of K123
Corporation, a Colorado corporation, and Republic Natural Gas Company, a
Kansas corporation, each of which is a Wholly Owned Subsidiary of the
Company.
6.3 Insurance.
---------
6.3.1. Property Insurance. Each of the Company and its Subsidiaries
------------------
shall keep its assets which are of an insurable character insured by
financially sound and reputable insurers against theft and fraud and
against loss or damage by fire, explosion and hazards insured against by
extended coverage to the extent, in amounts and with deductibles at
-46-
<PAGE>
least as favorable as those generally maintained by businesses of similar
size engaged in similar activities.
6.3.2. Liability Insurance. Each of the Company and its Subsidiaries
-------------------
shall maintain with financially sound and reputable insurers insurance
against liability for hazards, risks and liability to persons and property
to the extent, in amounts and with deductibles at least as favorable as
those generally maintained by businesses of similar size engaged in similar
activities; provided, however, that it may effect workers' compensation
-------- -------
insurance or similar coverage with respect to operations in any particular
state or other jurisdiction through an insurance fund operated by such
state or jurisdiction or by meeting the self-insurance requirements of such
state or jurisdiction.
6.4. Financial Statements and Reports. Each of the Company and its
--------------------------------
Subsidiaries shall maintain a system of accounting in accordance with generally
accepted accounting practices. The fiscal year of the Company and its
Subsidiaries shall end on June 30 in each year and the fiscal quarters of the
Company and its Subsidiaries shall end on September 30, December 31, March 31
and June 30 in each year.
6.4.1. Annual Reports. The Company shall furnish to the Lenders as
--------------
soon as available, and in any event within 95 days after the end of each
fiscal year, the Consolidated balance sheet of the Company and its
Subsidiaries as at the end of such fiscal year, the Consolidated statements
of income, changes in shareholders' equity and cash flows of the Company
and its Subsidiaries for such fiscal year (all in reasonable detail) and
together with Consolidating schedules as of such date and for such period
and, in the case of Consolidated financial statements, comparative figures
for the immediately preceding fiscal year, all accompanied by:
(a) Unqualified reports of KPMG LLP (or, if they cease to be auditors
of the Company and its Subsidiaries, other independent certified public
accountants of recognized national standing reasonably satisfactory to the
Required Lenders), containing no material uncertainty, to the effect that
they have audited the foregoing Consolidated financial statements in
accordance with generally accepted auditing standards and that such
Consolidated financial statements present fairly, in all material respects,
the financial position of the Company and its Subsidiaries covered thereby
at the dates thereof and the results of their operations for the periods
covered thereby in conformity with GAAP.
(b) The statement of such accountants that they have caused this
Agreement to be reviewed and that in the course of their audit of the
Company and its Subsidiaries no facts have come to their attention that
cause them to believe that any Default exists and in particular that they
have no knowledge of any Default under Sections 6.5 through 6.20 or, if
such is not the case, specifying such Default and the nature thereof. This
statement is furnished by such accountants with the understanding that the
examination of such accountants cannot be relied upon to give such
accountants knowledge of any such Default except as it relates to
accounting or auditing matters within the scope of their audit.
-47-
<PAGE>
(c) A certificate of the Company signed by a Financial Officer to
the effect that such officer has caused this Agreement to be reviewed and
has no knowledge of any Default, or if such officer has such knowledge,
specifying such Default and the nature thereof, and what action the Company
has taken, is taking or proposes to take with respect thereto.
(d) Computations by the Company in the form set forth in Exhibit
6.4.1 hereto demonstrating, as of the end of such fiscal year, compliance
with the Computation Covenants, certified by a Financial Officer.
(e) Calculations, as at the end of such fiscal year, of (i) the
Accumulated Benefit Obligations for each Plan covered by Title IV of ERISA
(other than Multiemployer Plans) and (ii) the fair market value of the
assets of such Plan allocable to such benefits.
(f) Supplements to Exhibits 7.1, 7.3 and 7.15 showing any changes
in the information set forth in such Exhibits not previously furnished to
the Lenders in writing, as well as any changes in the Charter, Bylaws or
incumbency of officers of the Company or its Subsidiaries from those
previously certified to the Agent.
6.4.2. Quarterly Reports. The Company shall furnish to the Lenders as
-----------------
soon as available and, in any event, within 50 days after the end of each
of the first three fiscal quarters of the Company, the internally prepared
Consolidated balance sheet of the Company and its Subsidiaries as of the
end of such fiscal quarter, the Consolidated statements of income, changes
in shareholders' equity and cash flows of the Company and its Subsidiaries
for such fiscal quarter and for the portion of the fiscal year then ended
(all in reasonable detail) and together with Consolidating schedules as of
such date and for such period (if such Consolidating schedules are
requested by the Agent or the Required Lenders) and, in the case of
Consolidated statements, comparative figures for the same period in the
preceding fiscal year, all accompanied by:
(a) A certificate of the Company signed by a Financial Officer to
the effect that such financial statements have been prepared in accordance
with GAAP and present fairly, in all material respects, the financial
position of the Company and its Subsidiaries covered thereby at the dates
thereof and the results of their operations for the periods covered
thereby, subject only to normal year-end audit adjustments and the addition
of footnotes.
(b) A certificate of the Company signed by a Financial Officer to
the effect that such officer has caused this Agreement to be reviewed and
has no knowledge of any Default, or if such officer has such knowledge,
specifying such Default and the nature thereof and what action the Company
has taken, is taking or proposes to take with respect thereto.
-48-
<PAGE>
(c) Computations by the Company in the form set forth in Exhibit
6.4.1 hereto demonstrating, as of the end of such quarter, compliance with
the Computation Covenants, certified by a Financial Officer.
(d) Supplements to Exhibits 7.1, 7.3 and 7.15 showing any changes
in the information set forth in such Exhibits not previously furnished to
the Lenders in writing, as well as any changes in the Charter, Bylaws or
incumbency of officers of the Company and its Subsidiaries from those
previously certified to the Agent.
6.4.3. Year 2000 Compliant. The Company shall furnish to the Lenders
-------------------
as soon as available and in any event within 50 days after the end of each
fiscal quarter of the Company, a certificate signed by a responsible
officer stating that the Company and its Subsidiaries have made no
determination that any computer application or system which is material to
the operations of the Company or its Subsidiaries will not be Year 2000
Compliant on a timely basis, except to the extent that such failure could
not be expected to have a Material Adverse Effect.
6.4.4. Other Reports. The Company shall promptly furnish to the
-------------
Lenders:
(a) As soon as prepared and in any event within 90 days after the
beginning of each fiscal year, an annual budget and operating projections
for such fiscal year of the Company and its Subsidiaries, prepared in a
manner consistent with the manner in which the financial projections
described in Section 7.2.1 were prepared and shall include a capital
expenditure plan for such fiscal year.
(b) Any material updates of such budget and projections.
(c) Any management letters furnished to the Company or any of its
Subsidiaries by the Company's auditors.
(d) All budgets, projections, statements of operations and other
reports furnished generally to the shareholders of the Company.
(e) Such registration statements, proxy statements and reports,
including Forms S-1, S-2, S-3, 10-K, 10-Q and 8-K, as may be filed by the
Company or any of its Subsidiaries with the Securities and Exchange
Commission.
(f) Any 90-day or 30-day letter from the federal Internal Revenue
Service asserting material tax deficiencies against the Company or any of
its Subsidiaries; and any similar notice from a state or other taxing
authority asserting material tax deficiencies against the Company or any of
its Subsidiaries that are not fully resolved without the assessment of a
material tax deficiency (and any tax paid) within 90 days following the
date of such notice.
-49-
<PAGE>
(g) Notice of the issuance of any Funded Debt permitted by Section
6.6.11 or 6.6.12, together with a calculation of the proceeds thereof (net
of costs of issuance) and copies of all evidence of Indebtedness and other
documentation governing such Funded Debt.
(h) Any revised versions of the Risk and Product Management Policy
Statement referred to in Section 6.2.5.
6.4.5. Notice of Litigation. The Company shall promptly furnish to
--------------------
the Lenders notice of any litigation or any administrative or arbitration
proceeding (a) to which the Company or any of its Subsidiaries may
hereafter become a party if the damages claimed in such proceeding exceed
$2,000,000 or (b) which creates a material risk of resulting, after giving
effect to any applicable insurance, in the payment by the Company and its
Subsidiaries of more than $1,000,000 or (c) which results, or creates a
material risk of resulting, in a Material Adverse Change.
6.4.6. Notice of Defaults. Promptly upon acquiring knowledge
------------------
thereof, the Company shall notify the Lenders of the existence of any
Default, specifying the nature thereof and what action the Company or any
Subsidiary has taken, is taking or proposes to take with respect thereto.
6.4.7. ERISA Reports. The Company shall furnish to the Lenders as
-------------
soon as available the following items with respect to any Plan:
(a) any request for a waiver of the funding standards or an extension
of the amortization period,
(b) any reportable event (as defined in section 4043 of ERISA),
unless the notice requirement with respect thereto has been waived by
regulation,
(c) any notice received by any ERISA Group Person that the PBGC
has instituted or intends to institute proceedings to terminate any Plan,
or that any Multiemployer Plan is insolvent or in reorganization,
(d) notice of the possibility of the termination of any Plan by
its administrator pursuant to section 4041 of ERISA, and
(e) notice of the intention of any ERISA Group Person to withdraw,
in whole or in part, from any Multiemployer Plan.
6.4.8. Notice of Year 2000 Problem. The Company will promptly notify
---------------------------
the Agent in writing within 15 days of determining that any computer
application or system which is material to the operations of the Company or
any of its Subsidiaries or any of its
-50-
<PAGE>
material vendors or suppliers will not be Year 2000 Compliant on a timely
basis, except to the extent that such failure could not be expected to have
a Material Adverse Effect.
6.4.9. Other Information; Audit. From time to time at reasonable
------------------------
intervals upon request of the Agent or the Required Lenders, each of the
Company and its Subsidiaries shall furnish to the Lenders such other
information regarding the business, assets, financial condition, income or
prospects of the Company and its Subsidiaries as such officer may
reasonably request, including copies of all tax returns, licenses,
agreements, leases and instruments to which any of the Company or its
Subsidiaries is party. The authorized officers and representatives of the
Agent shall have the right during normal business hours upon reasonable
notice and at reasonable intervals to examine the books and records of the
Company and its Subsidiaries, to make copies and notes therefrom for the
purpose of ascertaining compliance with or obtaining enforcement of this
Agreement or any other Credit Document. The Company and its Subsidiaries
shall permit the Agent to examine its Year 2000 Plan and/or to discuss the
Company's Year 2000 Plan with appropriate officers of the Company all at
such reasonable times and intervals as the Agent may request. The Agent,
upon reasonable advance notice, may at the expense of the Company undertake
to have the Company and its Subsidiaries reviewed by the Agent's commercial
financial examiners and fixed asset appraisers; provided, that so long as
--------
no Event of Default shall have occurred and be continuing, the Agent shall
not request such reviews more than twice in any fiscal year of the Company.
6.5. Certain Financial Tests.
-----------------------
6.5.1. Interest Coverage.
-----------------
(a) For each fiscal quarter of the Company, commencing with the
fiscal quarter ended June 30, 1999, the ratio (expressed as a percentage)
of (i) the Consolidated EBITDA of the Company and its Subsidiaries for the
period of four consecutive fiscal quarters then ended to (ii) the
Consolidated Interest Expense of the Company and its Subsidiaries for such
period shall equal or exceed 200%; provided, however, that for any single
period of four consecutive fiscal quarters such ratio may be as low as 150%
so long as for the next succeeding period of four consecutive fiscal
quarters (which shall include the last three quarters of the prior period)
such ratio equals or exceeds 200%.
(b) For the purposes of this Section 6.5.1 the Consolidated EBITDA
of the Company and its Subsidiaries for any period prior to October 30,
1998 shall be deemed to be the Consolidated EBITDA of the Company and its
Subsidiaries for such period plus the Consolidated EBITDA of Louis Dreyfus
Energy Corp., a Delaware corporation, for such period, combined in
accordance with GAAP.
(c) For the purposes of this Section 6.5.1 the Consolidated
Interest Expense of the Company and its Subsidiaries for each period listed
below shall be the amount set forth next to such period:
-51-
<PAGE>
Period Amount
------ ------
Twelve months ended $10,310,000 plus Consolidated
June 30, 1999 Interest Expense for the portion of
the period commencing November 1, 1998
Twelve months ended $2,980,000 plus Consolidated Interest
September 30, 1999 Expense for the portion of the period
commencing November 1, 1998
6.5.2. Leverage Ratio. On and after June 30, 1999 the Leverage Ratio
--------------
of the Company and its Subsidiaries at no time shall exceed 65%.
6.5.3. Fixed Asset Reliance. On and after June 30, 1999 the ratio of
--------------------
(a) the difference of (i) the Consolidated Total Liabilities of the Company
and its Subsidiaries minus (ii) the Consolidated Current Assets of the
Company and its Subsidiaries to (b) the Consolidated Tangible Net Worth of
the Company and its Subsidiaries (expressed as a percentage) shall not at
any time be greater than 80%.
6.5.4. Cash Flow Leverage Ratio. On the last day of each fiscal
------------------------
quarter of the Company, commencing with the fiscal quarter ended June 30,
1999, the ratio (expressed as a percentage) of (a) the Consolidated Net
Liabilities of the Company and its Subsidiaries to (b) the Consolidated Pro
Forma EBITDA of the Company and its Subsidiaries for the period of four
consecutive fiscal quarters then ended shall not exceed 350%.
6.5.5. Consolidated Tangible Net Worth. On and after June 30, 1999 the
-------------------------------
Consolidated Tangible Net Worth shall not at any time be less than
$300,000,000; provided, however, that on the last day of each fiscal
-------- -------
quarter of the Company commencing with the fiscal quarter ended September
30, 1999, the then effective dollar amount in this Section 6.5.5 (including
any prior increases of such amount as provided in clauses (a) and (b)
below) shall be increased by the sum of (a) 50% of the net proceeds of
common stock, preferred stock or other equity securities issued during the
fiscal quarter then ended by the Company and its Subsidiaries, calculated
on a Consolidated basis in accordance with GAAP, plus (b) 50% of
----
Consolidated Net Income (if positive) for the fiscal quarter then ended.
6.6. Indebtedness. Neither the Company nor any of its Subsidiaries shall
------------
create, incur, assume or otherwise become or remain liable with respect to any
Indebtedness except the following:
6.6.1. Indebtedness in respect of the Credit Obligations.
-52-
<PAGE>
6.6.2. Guarantees permitted by Section 6.7.
6.6.3. Current liabilities, other than Financing Debt, incurred in
the ordinary course of business.
6.6.4. To the extent that payment thereof shall not at the time be
required by Section 6.1, Indebtedness in respect of taxes, assessments,
governmental charges and claims for labor, materials and supplies.
6.6.5. Indebtedness secured by Liens of carriers, warehouses,
mechanics and landlords permitted by Sections 6.8.5 and 6.8.6.
6.6.6. Indebtedness in respect of judgments or awards (a) which have
been in force for less than the applicable appeal period or (b) in respect
of which the Company or any Subsidiary shall at the time in good faith be
prosecuting an appeal or proceedings for review and, in the case of each of
clauses (a) and (b), the Company or such Subsidiary shall have taken
appropriate reserves therefor in accordance with GAAP and execution of such
judgment or award shall not be levied.
6.6.7. To the extent permitted by Section 6.8.9, Indebtedness in
respect of Capitalized Lease Obligations or secured by purchase money
security interests; provided, however, that (a) the aggregate principal
-------- -------
amount of all Indebtedness permitted by this Section 6.6.7 which consists
of Indebtedness in respect of Capital Lease Obligations and other
Indebtedness incurred for the acquisition of equipment shall not exceed 2%
of Consolidated Net Tangible Assets at any one time outstanding and (b)
that the aggregate principal amount of all Indebtedness permitted by this
Section 6.6.7 which consists of Indebtedness issued to sellers of any
business or part thereof or operating assets in consideration for the
acquisition thereof by the Company or a Subsidiary shall not exceed 4% of
Consolidated Net Tangible Assets at any one time outstanding.
6.6.8. Indebtedness in respect of deferred taxes arising in the
ordinary course of business.
6.6.9. Indebtedness in respect of inter-company loans and advances
among the Company and its Subsidiaries which are not prohibited by Section
6.9.
6.6.10. Indebtedness of the Company in respect of its 12.75%
Guaranteed Senior Subordinated Debentures due December 15, 2000 (the
"Subordinated Debentures").
-----------------------
6.6.11. Unsecured Funded Debt of the Company which is incurred or
issued for the purpose of financing acquisitions permitted by Section 6.9.5
or 6.9.7 and/or by the last paragraph of Section 6.9 and which is
subordinated to the Credit Obligations on terms satisfactory to the
Required Lenders.
-53-
<PAGE>
6.6.12. The 7.85% Senior Secured Notes, Series A, Due April 10, 2003
of the Company issued pursuant to the Master Shelf Agreement dated as of
April 17, 1997 (as in effect on the Restatement Date and as from time to
time amended subject to the provisions of Section 6.2.4 hereof, the "Master
------
Shelf Agreement") between the Company and The Prudential Insurance Company
---------------
of America and affiliates thereof from time to time party thereto
(collectively, "Prudential") in aggregate principal amount not exceeding
----------
$50,000,000, the 7.22% Senior Secured Notes, Series B, Due October 17, 2004
of the Company issued pursuant to the Master Shelf Agreement in aggregate
principal amount not exceeding $25,000,000, other "Obligations", as defined
in the Master Shelf Agreement, of the Company and the Guarantors under the
Master Shelf Agreement (excluding any "Series" of "Notes" other than the
"Series A Notes", each as defined in the Master Shelf Agreement) and any
Indebtedness issued by the Company solely for the purpose of refunding the
aforesaid notes due April 10, 2003 the terms of which Indebtedness are
acceptable to the Required Lenders.
6.6.13. Unfunded pension liabilities and obligations with respect to
Plans so long as the Company is in compliance with Section 6.17.
6.6.14. Indebtedness outstanding on the date hereof and described in
Exhibit 7.3.
6.6.15. Funded Debt of the Company issued under and subject to the
terms of the Master Shelf Agreement, provided, that the aggregate principal
amount of such additional Funded Debt so issued shall not exceed
$25,000,000 and that the average life of such additional Funded Debt shall
be equal to or greater than six years from the date of issuance; and
provided, further, that after giving effect to the issuance of such Funded
Debt and the application of the proceeds thereof on the issuance date no
Default shall exist and the Company shall have delivered to the Agent a
certificate of a Financial Officer of the Company in reasonable detail
demonstrating compliance with Section 6.5 after giving effect to such
issuance and application.
6.6.16. Unsecured Funded Debt of the Company; provided, that after
giving effect to the issuance of such Unsecured Funded Debt and the
application of any of the proceeds thereof on the issuance date no Default
shall exist, and the Company shall have delivered to the Agent a
certificate of a Financial Officer of the Company in reasonable detail
demonstrating compliance with these conditions after giving effect to such
issuance and application; and provided, further, either (a) that the terms
and conditions of such unsecured Funded Debt, including without limitation,
financial covenants, defaults, amortization and rate of interest shall have
been consented to by the Required Lenders or (b) that the sum of (i) the
aggregate outstanding principal amount of Indebtedness permitted by Section
6.6.15 plus (ii) the aggregate outstanding principal amount of Indebtedness
permitted under this clause (b) and not consented to as provided in the
preceding clause (a) at no time shall exceed $35,000,000.
-54-
<PAGE>
6.6.17. Unsecured Funded Debt of the Company which is subordinated to
the Credit Obligations on terms satisfactory to the Required Lenders.
6.7. Guarantees; Letters of Credit. Neither the Company nor any of its
-----------------------------
Subsidiaries shall become or remain liable with respect to any Guarantee,
including reimbursement obligations under letters of credit or other financial
guarantees by third parties, except the following:
6.7.1. Letters of Credit and Guarantees of the Credit Obligations.
6.7.2. Guarantees by the Company or its Subsidiaries of Indebtedness
incurred by any of its Subsidiaries and permitted by Section 6.6.
6.7.3. Unsecured Guarantees by Wholly Owned Subsidiaries of the
Credit Obligations or Indebtedness of the Company permitted by Sections
6.6.10 and 6.6.11, so long as such Wholly Owned Subsidiaries are Guarantors
and such Guarantees are subordinated to such Guarantors' Guarantees of the
Credit Obligations to the same extent and in the same manner as the
Indebtedness of the Company permitted by Sections 6.6.10 and 6.6.11.
6.7.4. Guarantees and reimbursement obligations with respect to
letters of credit issued in support of Lion Oil Company, an Arkansas
corporation, but only so long as the Investment represented thereby is
permitted under Section 6.9.6 or 6.9.7 and, if permitted by Section 6.9.7,
is counted toward the limit provided therein.
6.7.5. The unsecured Guarantee by TransMontaigne Product Services
Midwest Inc. (formerly known as Continental Ozark, Inc.), an Arkansas
corporation, of the Subordinated Debentures pursuant to the Senior
Subordinated Debenture Guarantee dated March 28, 1991 (the "Subordinated
------------
Debentures Guarantee") executed by such corporation.
--------------------
6.7.6. Guarantees of the Funded Debt permitted by Sections 6.6.12 and
6.6.15.
6.8. Liens. Neither the Company nor any of its Subsidiaries shall create,
-----
incur or enter into, or suffer to be created or incurred or to exist, any Lien,
except the following:
6.8.1. Liens on the Credit Security that secure the Credit
Obligations.
6.8.2. Liens to secure taxes, assessments and other governmental
charges, to the extent that payment thereof shall not at the time be
required by Section 6.1.
6.8.3. Deposits or pledges made (a) in connection with, or to secure
payment of, workers' compensation, unemployment insurance, old age pensions
or other social security, (b) in connection with casualty insurance
maintained in accordance with Section 6.3, (c) to secure the performance of
bids, tenders, contracts (other than contracts relating to Financing Debt)
or leases, (d) to secure statutory obligations or surety or appeal bonds,
-55-
<PAGE>
(e) to secure indemnity, performance or other similar bonds in the ordinary
course of business or (f) in connection with contested amounts to the
extent that payment thereof shall not at that time be required by Section
6.1.
6.8.4. Liens in respect of judgments or awards, to the extent that
such judgments or awards are permitted by Section 6.6.6.
6.8.5. Liens of carriers, warehouses, mechanics and similar Liens,
in each case (a) in existence less than 90 days from the date of creation
thereof or (b) being contested in good faith by the Company or any
Subsidiary in appropriate proceedings (so long as the Company or such
Subsidiary shall have set aside on its books adequate reserves with respect
thereto to the extent required by GAAP).
6.8.6. Encumbrances in the nature of (a) zoning restrictions, (b)
easements, (c) restrictions of record on the use of real property, (d)
landlords' and lessors' Liens on rented premises and (e) restrictions on
transfers or assignment of leases, which in each case do not materially
detract from the value of the encumbered property or materially impair the
use thereof in the business of the Company or any Subsidiary.
6.8.7. Restrictions under federal and state securities laws on the
transfer of securities.
6.8.8. Restrictions under Foreign Trade Regulations on the transfer
or licensing of certain assets of the Company and its Subsidiaries.
6.8.9. Liens constituting (a) purchase money security interests
(including mortgages, conditional sales, Capitalized Leases and any other
title retention or deferred purchase devices) in real property, interests
in leases or tangible personal property (other than inventory) existing or
created on the date on which such property is acquired, and (b) the
renewal, extension or refunding of any security interest referred to in the
foregoing clause (a) in an amount not to exceed the amount thereof
remaining unpaid immediately prior to such renewal, extension or refunding;
provided, however, that (i) each such security interest shall attach solely
-------- -------
to the particular item of property so acquired, and the principal amount of
Indebtedness (including Indebtedness in respect of Capitalized Lease
Obligations) secured thereby shall not exceed the cost (including all such
Indebtedness secured thereby, whether or not assumed) of such item of
property; and (ii) the aggregate principal amount of all Indebtedness
secured by Liens permitted by this Section 6.8.9 shall not exceed the
amount permitted by Section 6.6.7.
6.8.10. Liens on the Credit Security securing the Funded Debt
permitted by Sections 6.6.12 and 6.6.15, but only so long as such Liens are
on parity with or subordinate to the Lien of Section 10 hereof.
-56-
<PAGE>
6.9. Investments and Acquisitions. Neither the Company nor any of its
----------------------------
Subsidiaries shall have outstanding, acquire, commit itself to acquire or hold
any Investment (including any Investment consisting of the acquisition of any
business) except for the following:
6.9.1. Investments of the Company and its Subsidiaries in Wholly
Owned Subsidiaries as long as such Wholly Owned Subsidiaries are or become
Guarantors; provided, that Investments consisting of all or part of a
business or operating assets shall be permitted under this Section 6.9.1 to
the extent that such business or assets shall be acquired as assets of the
Company or of a Wholly Owned Subsidiary which is or becomes a Guarantor.
6.9.2. Intercompany loans and advances from any Wholly Owned
Subsidiary to the Company or other Wholly Owned Subsidiaries but in each
case only to the extent reasonably necessary for Consolidated tax planning
and working capital management.
6.9.3. Investments in Cash Equivalents.
6.9.4. Guarantees permitted by Section 6.7.
6.9.5. Investments made after the Restatement Date in Subsidiaries
listed in Exhibit 7.1 hereto as supplemented from time to time other than
Wholly Owned Subsidiaries, provided that the aggregate outstanding amount
of loans, advances and other Investments in such Subsidiaries, measured in
each case as of the date of the making of such Investment, shall not at any
time exceed 15% of Consolidated Net Tangible Assets.
6.9.6. Investments outstanding on the Restatement Date and
identified in Exhibit 7.3.
6.9.7. Other Investments made after the date hereof that are not
permitted by any of the foregoing subsections of this Section 6.9, provided
that the aggregate outstanding amount of loans, advances and other
Investments of the Company and its Subsidiaries permitted under this
Section 6.9.7, measured in each case as of the date of the making of such
Investment, shall not at any time exceed 10% of Consolidated Tangible Net
Worth; provided, however, that no Investment may be made in a Subsidiary
-------- -------
unless such Subsidiary is listed in Exhibit 7.1 hereto as supplemented from
time to time.
6.9.8. Investments in West Shore Pipe Line Company, a Delaware
corporation, made after the Restatement Date; provided, that the aggregate
cumulative amount of the Investments made under this Section 6.9.8 shall
not exceed the remainder of (a) the sum of (i) $30,000,000 plus (ii) 50% of
the cumulative Consolidated Net Income of the Company and its Subsidiaries
commencing July 1, 1998 minus (b) the aggregate cumulative amount of
Distributions theretofore paid by the Company permitted by Section 6.10.2;
and provided, further, however, that the limitation set forth in the
preceding proviso to this Section 6.9.8 shall not apply to any Investment
in West Shore Pipeline
-57-
<PAGE>
Company which will give the Company control of West Shore Pipeline Company
and which is made in compliance with the final paragraph of this Section
6.9 (including delivery of the pro forma compliance certificate described
therein).
In addition, the Company covenants that the Company and its Subsidiaries
shall not acquire any operating business (whether through an asset acquisition
or an acquisition of stock or other equity) unless, after giving effect to such
acquisition and the financing thereof, the Company and its Subsidiaries will not
suffer any Default under any Computation Covenant or any other provision of this
Agreement; and provided, that, if the consideration (including without
limitation any assumption of Indebtedness, any deferred consideration and any
consideration paid for any related non-competition agreement) given shall exceed
$40,000,000 for any single acquisition, then prior to consummating any such
acquisition the Company shall provide to the Lenders a certificate of a
Financial Officer demonstrating that, after giving effect to such acquisition
and the financing thereof, the Company and its Subsidiaries will not suffer any
Default under any Computation Covenant or any other provision of this Agreement.
6.10. Distributions. Neither the Company nor any of its Subsidiaries shall
-------------
make any Distribution except for the following:
6.10.1. Subsidiaries of the Company may make Distributions to the
Company or any Wholly Owned Subsidiary of the Company.
6.10.2. So long as immediately before and after giving effect
thereto no Default exists, the Company may make Distributions to its
stockholders; provided, that the cumulative amount distributed shall not
exceed the remainder of (a) the sum of (i) $30,000,000 plus (ii) 50% of the
cumulative Consolidated Net Income of the Company and its Subsidiaries
commencing July 1, 1998 minus (b) the aggregate cumulative amount of the
Investments made by the Company and its Subsidiaries under Section 6.9.8;
provided, however, that if the Company shall have gained control of West
Shore Pipeline Company, the amount in the preceding clause (b) shall be
zero.
6.10.3. So long as immediately before and after giving effect
thereto no Default exists, the Company may make scheduled payments of
interest and principal on the Subordinated Debentures and other Funded Debt
of the Company permitted under Section 6.6.11.
6.11. Merger, Consolidation and Dispositions of Assets. Neither the
------------------------------------------------
Company nor any of its Subsidiaries shall merge or enter into a consolidation or
sell, lease, sell and lease back, sublease or otherwise dispose of any of its
assets, except the following:
6.11.1 The Company and any of its Subsidiaries may sell or
otherwise dispose of (a) inventory sold to customers in the ordinary course
of business, (b) tangible assets to be replaced in the ordinary course of
business within six months by other tangible assets of equal or greater
value and (c) tangible assets that are no longer used or useful in the
-58-
<PAGE>
business of the Company or such Subsidiary, the fair market value (or book
value if greater) of which shall not exceed 4% of Consolidated Net Tangible
Assets of the Company and its Subsidiaries as of the last day of the next
preceding fiscal year.
6.11.2. Any Wholly Owned Subsidiary of the Company may merge or be
liquidated into the Company or any other Wholly Owned Subsidiary of the
Company so long as after giving effect to any such merger to which the
Company is a party the Company shall be the surviving or resulting Person.
6.11.3. The Company and its Subsidiaries may enter into leases
(other than Capitalized Leases) as lessor of real and tangible personal
property and rights associated therewith in the ordinary course of
business.
6.11.4. Any inactive Subsidiary other than a Guarantor may be
liquidated.
6.12. Lease Obligations. Neither the Company nor any of its Subsidiaries
-----------------
will enter into any arrangement, directly or indirectly, whereby the Company or
such Subsidiary shall sell or transfer any property owned by it in order then or
thereafter to lease such property or to lease other property which the Company
or such Subsidiary intends to use for substantially the same purpose as the
property being sold or transferred. Neither the Company nor any of its
Subsidiaries shall be or become obligated as lessee under any lease except:
6.12.1. Capitalized Leases permitted by Sections 6.6.7 and 6.8.9.
6.12.2. Leases other than Capitalized Leases; provided, however,
-------- -------
that the aggregate fixed rental obligations for any fiscal year (excluding
payments required to be made by the lessee in respect of taxes and
insurance whether or not denominated as rent) shall not exceed in any
fiscal year 3% of Consolidated Net Tangible Assets as of the last day of
the next preceding fiscal year.
6.13. Issuance of Stock by Subsidiaries; Subsidiary Distributions.
-----------------------------------------------------------
6.13.1. Issuance of Stock by Subsidiaries. No Subsidiary shall
---------------------------------
issue or sell any shares of its capital stock or other evidence of
beneficial ownership to any Person other than the Company or any Wholly
Owned Subsidiary of the Company, which shares shall have been pledged to
the Agent as part of the Credit Security.
6.13.2. No Restrictions on Subsidiary Distributions. Except for
-------------------------------------------
this Agreement and the Credit Documents, neither the Company nor any
Subsidiary shall enter into or be bound by any agreement (including
covenants requiring the maintenance of specified amounts of net worth or
working capital) restricting the right of any Subsidiary to make
Distributions or extensions of credit to the Company (directly or
indirectly through another Subsidiary).
-59-
<PAGE>
6.14. Interest Rate Protection. On or before June 30, 2000, unless the
------------------------
Term Loan shall have been prepaid in full, the Company shall obtain, and
thereafter shall maintain, one or more Interest Rate Protection Agreements, each
in form and substance reasonably satisfactory to the Agent, covering 50% of the
Consolidated Funded Debt of the Company and its Subsidiaries, excluding the
outstanding principal amount of the Revolving Loan.
6.15. Derivative Contracts. Neither the Company nor any of its
--------------------
Subsidiaries shall enter into any Interest Rate Protection Agreement, foreign
currency exchange contract or other financial or commodity derivative contracts
except to provide hedge protection for an underlying economic transaction in the
ordinary course of business.
6.16. Negative Pledge Clauses. Neither the Company nor any of its
-----------------------
Subsidiaries shall enter into any agreement, instrument, deed or lease which
prohibits or limits the ability of the Company or any of its Subsidiaries to
create, incur, assume or suffer to exist any Lien upon any of their respective
properties, assets or revenues, whether now owned or hereafter acquired, except
the following:
6.16.1. This Agreement and the other Credit Documents.
6.16.2. Covenants in documents creating Liens permitted by Section
6.8 prohibiting further Liens on the assets encumbered thereby.
6.16.3. The Master Shelf Agreement.
6.17. ERISA, etc. Each of the Company and its Subsidiaries shall comply,
----------
and shall cause all ERISA Group Persons to comply, in all material respects,
with the provisions of ERISA and the Code applicable to each Plan. Each of the
Company and its Subsidiaries shall meet, and shall cause all ERISA Group Persons
to meet, all minimum funding requirements applicable to them with respect to any
Plan pursuant to section 302 of ERISA or section 412 of the Code, without giving
effect to any waivers of such requirements or extensions of the related
amortization periods which may be granted. At no time shall the Accumulated
Benefit Obligations under any Plan that is not a Multiemployer Plan exceed the
fair market value of the assets of such Plan allocable to such benefits by more
than $1,000,000. The Company and its Subsidiaries shall not withdraw, and shall
cause all other ERISA Group Persons not to withdraw, in whole or in part, from
any Multiemployer Plan so as to give rise to withdrawal liability exceeding
$1,000,000 in the aggregate. At no time shall the actuarial present value of
unfunded liabilities for post-employment health care benefits, whether or not
provided under a Plan, calculated in a manner consistent with Statement No. 106
of the Financial Accounting Standards Board, exceed $1,000,000.
6.18. Transactions with Affiliates. Neither the Company nor any of its
----------------------------
Subsidiaries shall effect any transaction with any of their respective
Affiliates (except for the Company and its Subsidiaries) on a basis less
favorable to the Company and its Subsidiaries than would be the case if such
transaction had been effected with a non-Affiliate.
-60-
<PAGE>
6.19. Open Positions. The Company and its Subsidiaries may maintain Open
--------------
Positions relating to product inventory requirements that do not exceed the
amount permitted by the Risk and Product Management Policy Statement then in
effect, so long as that policy is materially consistent with the requirements of
the first sentence of Section 6.2.5.
6.20. Environmental Laws.
------------------
6.20.1. Compliance with Law and Permits. Each of the Company and its
-------------------------------
Subsidiaries shall use and operate all of its facilities and properties in
material compliance with all Environmental Laws, keep all necessary
permits, approvals, certificates, licenses and other authorizations
relating to environmental matters in effect and remain in material
compliance therewith, and handle all Hazardous Materials in material
compliance with all applicable Environmental Laws, except where any failure
to so act could not, individually or in the aggregate, have a Material
Adverse Effect.
6.20.2. Notice of Claims, etc. Each of the Company and its
---------------------
Subsidiaries shall immediately notify the Agent, and provide copies upon
receipt, of all written claims, complaints, notices or inquiries from
governmental authorities relating to the condition of its facilities and
properties or compliance with Environmental Laws which could have a
Material Adverse Effect, and shall use best efforts to promptly cure and
have dismissed with prejudice to the satisfaction of the Agent any actions
and proceedings relating to compliance with Environmental Laws.
7. Representations and Warranties. In order to induce the Lenders to extend
------------------------------
credit to the Company hereunder, each of the Company and such of its
Subsidiaries as are party hereto from time to time jointly and severally
represents and warrants that, except as disclosed in the Disclosure Schedule
attached hereto as Exhibit 7:
7.1. Organization and Business.
-------------------------
7.1.1. The Company. The Company is a duly organized and validly
-----------
existing corporation, in good standing under the laws of Delaware, with all
power and authority, corporate or otherwise, necessary to (a) enter into
and perform this Agreement and each other Credit Document to which it is
party, (b) grant the Agent for the benefit of the Lenders the security
interests in the Credit Security owned by it to secure the Credit
Obligations and (c) own its properties and carry on the business now
conducted or proposed to be conducted by it. Certified copies of the
Charter and By-laws of the Company have been previously delivered to the
Agent and are correct and complete. Exhibit 7.1, as from time to time
hereafter supplemented in accordance with Sections 6.4.1 and 6.4.2, sets
forth, as of the later of the date hereof or as of the end of the most
recent fiscal quarter for which financial statements are required to be
furnished in accordance with such Sections, (i) the jurisdiction of
incorporation of the Company, (ii) the address of the Company's principal
executive office and chief place of business, (iii) each name,
-61-
<PAGE>
including any trade name, under which the Company conducts its business and
(iv) the jurisdictions in which the Company keeps tangible personal
property.
7.1.2. Subsidiaries. Each Subsidiary of the Company is duly
------------
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized, with all power and authority,
corporate or otherwise, necessary to (a) enter into and perform this
Agreement and each other Credit Document to which it is party, (b)
guarantee the Credit Obligations, (c) grant the Lenders the security
interest in the Credit Security owned by such Subsidiary to secure the
Credit Obligations and (d) own its properties and carry on the business now
conducted or proposed to be conducted by it. Certified copies of the
Charter and By-laws of each Subsidiary of the Company have been previously
delivered to the Agent and are correct and complete. Exhibit 7.1, as from
time to time hereafter supplemented in accordance with Sections 6.4.1 and
6.4.2, sets forth, as of the later of the date hereof or as of the end of
the most recent fiscal quarter for which financial statements are required
to be furnished in accordance with such Sections, (i) the name and
jurisdiction of organization of each Subsidiary of the Company, (ii) the
address of the chief executive office and principal place of business of
each such Subsidiary, (iii) each name under which each such Subsidiary
conducts its business, (iv) each jurisdiction in which each such Subsidiary
keeps tangible personal property, and (v) the number of authorized and
issued shares and ownership of each such Subsidiary; provided, however,
-------- -------
that there may be omitted from Exhibit 7.1 one or more Subsidiaries which
have no business operations and no assets or liabilities.
7.1.3. Qualification. Each of the Company and its Subsidiaries is
-------------
duly and legally qualified to do business as a foreign corporation or other
entity and is in good standing in each state or jurisdiction in which such
qualification is required and is duly authorized, qualified and licensed
under all laws, regulations, ordinances or orders of public authorities, or
otherwise, to carry on its business in the places and in the manner in
which it is conducted, except for failures to be so qualified, authorized
or licensed which would not in the aggregate result, or create a material
risk of resulting, in any Material Adverse Change.
7.1.4. Capitalization. No options, warrants, conversion rights,
--------------
preemptive rights or other statutory or contractual rights to purchase
shares of capital stock or other securities of any Subsidiary now exist,
nor has any Subsidiary authorized any such right, nor is any Subsidiary
obligated in any other manner to issue shares of its capital stock or other
securities.
-62-
<PAGE>
7.2. Financial Statements and Other Information; Material Agreements.
---------------------------------------------------------------
7.2.1. Financial Statements and Other Information. The Company has
------------------------------------------
previously furnished to the Lenders copies of the following:
(a) The audited Consolidated and unaudited Consolidating balance
sheets of the Company and its Subsidiaries as at April 30, 1995, 1996, 1997
and 1998 and the audited Consolidated statements of operations,
stockholders' equity and cash flows of the Company and its Subsidiaries for
the fiscal years of the Company then ended.
(b) The unaudited Consolidated balance sheet of the Company and its
Subsidiaries as at March 31, 1999 and the unaudited Consolidated statements
of operations, stockholders' equity and cash flows of the Company and its
Subsidiaries for the portion of the fiscal year then ended.
(c) The financial and operational projections and current capital
expenditures plan of the Company and its Subsidiaries dated May 28, 1999.
(d) Calculations demonstrating pro forma compliance with the
Computation Covenants as of the end of the most recent month or quarter, as
applicable, preceding the date hereof.
The audited Consolidated financial statements (including the notes
thereto) referred to in clause (a) above were prepared in accordance with
GAAP and fairly present the financial position of the Company and its
Subsidiaries on a Consolidated basis at the respective dates thereof and
the results of their operations for the periods covered thereby. The
unaudited Consolidating financial statements referred to in clause (a)
above and the unaudited Consolidated financial statements referred to in
clause (b) above were prepared in accordance with GAAP and fairly present
the financial position of the Company and its Subsidiaries at the
respective dates thereof and the results of their operations for the
periods covered thereby, subject to normal year-end audit adjustment and
the addition of footnotes in the case of interim financial statements.
Neither the Company nor any of its Subsidiaries has any known contingent
liability material to the Company and its Subsidiaries on a Consolidated
basis which is not reflected in the balance sheets referred to in clause
(a) or (b) above (or delivered pursuant to Section 6.4.1 or 6.4.2) or in
the notes thereto.
In the Company's judgment, the financial and operational projections
referred to in clause (c) above constitute a reasonable basis as of the
Restatement Date for the assessment of the future performance of the
Company and its Subsidiaries during the periods indicated therein, it being
understood that any projected financial information represents an estimate,
based on various assumptions, of future results of operations, which
assumptions may prove to have been incorrect and which results may not in
fact occur.
-63-
<PAGE>
7.2.2. Material Agreements. The Company has previously furnished to
-------------------
the Lenders a correct and complete copy of the Amended and Restated
Debenture Agreement dated December 23, 1997 (the "Subordinated Debentures
-----------------------
Agreement") between the Company, Massachusetts Mutual Life Insurance
---------
Company, MassMutual Corporate Investors and MassMutual Participation
Investors, and correct and complete copies, including all exhibits,
schedules and amendments thereto, of the agreements, each as in effect on
the date hereof, listed in Exhibit 7.2.2 (together with the Subordinated
Debentures, the Subordinated Debentures Agreement, the Subordinated
Debentures Guarantee, the Acquisition Agreement and the Master Shelf
Agreement, the "Material Agreements").
-------------------
7.3. Agreements Relating to Financing Debt, Investments, etc. Exhibit 7.3,
-------------------------------------------------------
as from time to time hereafter supplemented in accordance with Sections 6.4.1
and 6.4.2, sets forth (a) the amounts (as of the dates indicated in Exhibit 7.3,
as so supplemented) of all Financing Debt of the Company and its Subsidiaries
and all agreements which relate to such Financing Debt, (b) all Liens and
Guarantees with respect to such Financing Debt, (c) all agreements which
directly or indirectly require the Company or any Subsidiary to make any
Investment and (d) all Investments permitted under Section 6.9.6. The Company
has furnished the Lenders with correct and complete copies of any agreements
described in clauses (a), (b), (c) and (d) above requested by the Required
Lenders.
7.4. Changes in Condition. Since April 30, 1998 no Material Adverse Change
--------------------
has occurred and between April 30, 1998 and the date hereof, neither the Company
nor any Subsidiary of the Company has entered into any material transaction
outside the ordinary course of business except for the transactions contemplated
by this Agreement and the Material Agreements.
7.5. Title to Assets. The Company and its Subsidiaries have defensible
---------------
title to or the right to use all material assets necessary for or used in the
operations of their business as now conducted by them and reflected in the most
recent balance sheet referred to in Section 7.2.1 (or the balance sheet most
recently furnished to the Lenders pursuant to Sections 6.4.1 or 6.4.2), and to
all assets acquired subsequent to the date of such balance sheet, subject to no
Liens except for Liens permitted by Section 6.8 and except for assets disposed
of as permitted by Section 6.11.
7.6. Operations in Conformity with Law, etc. To the best knowledge of the
--------------------------------------
Company and the Guarantors, the operations of the Company and its Subsidiaries
as now conducted or proposed to be conducted are not in violation of, nor is the
Company or its Subsidiaries in default under, any Legal Requirement presently in
effect, except for such violations and defaults as do not and will not, in the
aggregate, result, or create a material risk of resulting, in any Material
Adverse Change. The Company has received no notice of any such violation or
default and has no knowledge of any basis on which the operations of the Company
or its Subsidiaries, as now conducted and as currently proposed to be conducted
after the date hereof, would be held so as to violate or to give rise to any
such violation or default.
-64-
<PAGE>
7.7. Litigation. No litigation, at law or in equity, or any proceeding
----------
before any court, board or other governmental or administrative agency or any
arbitrator is pending or, to the knowledge of the Company or any Guarantor,
threatened which may involve any material risk of any final judgment, order or
liability which, after giving effect to any applicable insurance, has resulted,
or creates a material risk of resulting, in any Material Adverse Change or which
seeks to enjoin the consummation, or which questions the validity, of any of the
transactions contemplated by this Agreement or any other Credit Document. No
judgment, decree or order of any court, board or other governmental or
administrative agency or any arbitrator has been issued against or binds the
Company or any of its Subsidiaries which has resulted, or creates a material
risk of resulting, in any Material Adverse Change.
7.8. Authorization and Enforceability. Each of the Company and each other
--------------------------------
Obligor has taken all corporate action required to execute, deliver and perform
this Agreement and each other Credit Document to which it is party. No consent
of stockholders of the Company is necessary in order to authorize the execution,
delivery or performance of this Agreement or any other Credit Document to which
the Company is party. Each of this Agreement and each other Credit Document
constitutes the legal, valid and binding obligation of each Obligor party
thereto and is enforceable against such Obligor in accordance with its terms.
7.9. No Legal Obstacle to Agreements. Neither the execution and delivery of
-------------------------------
this Agreement or any other Credit Document, nor the making of any borrowings
hereunder, nor the guaranteeing of the Credit Obligations, nor the securing of
the Credit Obligations with the Credit Security, nor the consummation of any
transaction referred to in or contemplated by this Agreement or any other Credit
Document, nor the fulfillment of the terms hereof or thereof or of any other
agreement, instrument, deed or lease contemplated by this Agreement or any other
Credit Document, has constituted or resulted in or will constitute or result in:
(a) any breach or termination of the provisions of any material
agreement, instrument, deed or lease to which the Company, any of its
Subsidiaries or any other Obligor is a party or by which it is bound
(including the Master Shelf Agreement, the Pledge Agreement and the
Intercreditor Agreement), or of the Charter or By-laws of the Company, any
of its Subsidiaries or any other Obligor;
(b) the violation of any law, statute, judgment, decree or
governmental order, rule or regulation applicable to the Company, any of
its Subsidiaries or any other Obligor;
(c) the creation under any agreement, instrument, deed or lease
(including the Master Shelf Agreement, the Pledge Agreement and the
Intercreditor Agreement) of any Lien (other than Liens on the Credit
Security which secure the Credit Obligations) upon any of the assets of the
Company, any of its Subsidiaries or any other Obligor; or
(d) any redemption, retirement or other repurchase obligation of the
Company, any of its Subsidiaries or any other Obligor under any Charter,
By-law, agreement, instrument, deed or lease.
-65-
<PAGE>
No approval, authorization or other action by, or declaration to or filing with,
any governmental or administrative authority or any other Person is required to
be obtained or made (which has not been so obtained or made), including any
approval, authorization, consent or other action of Prudential under the Master
Shelf Agreement, the Intercreditor Agreement and the Pledge Agreement, by the
Company, any of its Subsidiaries or any other Obligor in connection with the
execution, delivery and performance of this Agreement, the Notes or any other
Credit Document, the transactions contemplated hereby or thereby, the making of
any borrowing hereunder, the guaranteeing of the Credit Obligations or the
securing of the Credit Obligations with the Credit Security.
7.10. Defaults. Neither the Company nor any of its Subsidiaries is in
--------
default under any provision of its Charter or By-laws or of this Agreement or
any other Credit Document. Neither the Company nor any of its Subsidiaries is in
default under any provision of (a) the Subordinated Debentures, the Subordinated
Debentures Agreement or the Subordinated Debentures Guarantee, (b) the Master
Shelf Agreement or (c) any other agreement, instrument, deed or lease to which
it is party or by which it or its property is bound or has violated any law,
judgment, decree or governmental order, rule or regulation, in each case
referred to in this clause (c) so as to result, or create a material risk of
resulting, in any Material Adverse Effect.
7.11. Licenses, etc. To the best knowledge of the Company and the
-------------
Guarantors, the Company and its Subsidiaries have all material patents, patent
applications, patent licenses, patent rights, trademarks, trademark rights,
trade names, trade name rights, copyrights, licenses, franchises, permits,
authorizations and other rights as are necessary for the conduct of the business
of the Company and its Subsidiaries as now conducted by them. All of the
foregoing are in full force and effect in all material respects, and each of the
Company and its Subsidiaries is in substantial compliance with the foregoing
without any known conflict with the valid rights of others which has resulted,
or creates a material risk of resulting, in any Material Adverse Effect. No
event has occurred which permits, or after notice or lapse of time or both would
permit, the revocation or termination of any such license, franchise or other
right or which affects the rights of any of the Company and its Subsidiaries
thereunder so as to result, or to create a material risk of resulting, in any
Material Adverse Effect. No litigation or other proceeding or dispute exists
with respect to the validity or, where applicable, the extension or renewal, of
any of the foregoing which has resulted, or creates a material risk of
resulting, in any Material Adverse Effect.
7.12. Tax Returns. Each of the Company and its Subsidiaries has filed
-----------
all material tax and information returns or permitted extensions which are
required to be filed by it and has paid, or made adequate provision for the
payment of, all taxes which have or may become due pursuant to such returns or
to any assessment received by it. Neither the Company nor any of its
Subsidiaries knows of any material additional assessments or any basis therefor.
The Company reasonably believes that the charges, accruals and reserves on the
books of the Company and its Subsidiaries in respect of taxes or other
governmental charges are adequate.
-66-
<PAGE>
7.13. Certain Business Representations.
--------------------------------
7.13.1. Labor Relations. No dispute or controversy between the
---------------
Company or any of its Subsidiaries and any of their respective employees
has resulted, or is reasonably likely to result, in any Material Adverse
Effect, and neither the Company nor any of its Subsidiaries anticipate that
its relationships with its unions or employees will result, or are
reasonably likely to result, in any Material Adverse Effect. The Company
and each of its Subsidiaries is in compliance in all material respects with
all federal and state laws with respect to (a) non-discrimination in
employment with which the failure to comply, in the aggregate, has
resulted, or creates a material risk of resulting, in a Material Adverse
Effect and (b) the payment of wages.
7.13.2. Antitrust. Each of the Company and its Subsidiaries is in
---------
compliance in all material respects with all federal and state antitrust
laws relating to its business and the geographic concentration of its
business.
7.13.3. Consumer Protection. Neither the Company nor any of its
-------------------
Subsidiaries is in violation of any rule, regulation, order, or
interpretation of any rule, regulation or order of the Federal Trade
Commission (including truth-in-lending), with which the failure to comply,
in the aggregate, has resulted, or creates a material risk of resulting, in
a Material Adverse Effect.
7.13.4. Burdensome Obligations. Neither the Company nor any of
----------------------
its Subsidiaries is party to or bound by any agreement, instrument, deed or
lease or is subject to any Charter, By-law or other restriction, commitment
or requirement which, in the opinion of the management of such Person, is
so unusual or burdensome as in the foreseeable future to result, or create
a material risk of resulting, in a Material Adverse Effect.
7.13.5. Future Expenditures. Neither the Company nor any of its
-------------------
Subsidiaries anticipate that the future expenditures, if any, by the
Company and its Subsidiaries needed to meet the provisions of any federal,
state or foreign governmental statutes, orders, rules or regulations will
be so burdensome as to result, or create a material risk of resulting, in
any Material Adverse Effect.
7.14. Environmental Regulations.
-------------------------
7.14.1. Environmental Compliance. To the best knowledge of the
------------------------
Company and the Guarantors, each of the Company and its Subsidiaries is in
compliance in all material respects with the Clean Air Act, the Federal
Water Pollution Control Act, the Marine Protection Research and Sanctuaries
Act, RCRA, CERCLA and any other Environmental Law in effect in any
jurisdiction in which any properties of the Company or any of its
Subsidiaries are located or where any of them conducts its business, and
with all applicable published rules and regulations (and applicable
standards and requirements) of the federal
-67-
<PAGE>
Environmental Protection Agency and of any similar agencies in states or
foreign countries in which the Company or its Subsidiaries conducts its
business, in each case other than those which in the aggregate have not
resulted, and do not create a material risk of resulting, in a Material
Adverse Effect.
7.14.2. Environmental Litigation. Except in instances in which
------------------------
such event has not resulted, and does not create a material risk of
resulting, in a Material Adverse Effect, no suit, claim, action or
proceeding of which the Company or any of its Subsidiaries has been given
notice or otherwise has knowledge is now pending before any court,
governmental agency or board or other forum, or to the Company's or any of
its Subsidiaries' knowledge, threatened by any Person (nor to the Company's
or any of its Subsidiaries' knowledge, does any factual basis exist
therefor) for, and neither the Company nor any of its Subsidiaries have
received written correspondence from any federal, state or local
governmental authority with respect to:
(a) noncompliance by the Company or any of its Subsidiaries with
any Environmental Law;
(b) personal injury, wrongful death or other tortious conduct
relating to materials, commodities or products used, generated, sold,
transferred or manufactured by the Company or any of its Subsidiaries
(including products made of, containing or incorporating asbestos, lead or
other hazardous materials, commodities or toxic substances); or
(c) the release into the environment by the Company or any of its
Subsidiaries of any Hazardous Material generated by the Company or any of
its Subsidiaries whether or not occurring at or on a site owned, leased or
operated by the Company or any of its Subsidiaries.
7.14.3. Hazardous Material. Exhibit 7.14 contains a list as of
------------------
the date hereof of all waste disposal or dump sites at which Hazardous
Material generated by either the Company or any of its Subsidiaries has
been disposed of directly by the Company or any of its Subsidiaries and all
independent contractors to whom the Company and its Subsidiaries have
delivered Hazardous Material, or to the Company's or any of its
Subsidiaries' knowledge, where Hazardous Material finally came to be
located, and indicates all such sites which are or have been included
(including as a potential or suspect site) in any published federal, state
or local "superfund" or other list of hazardous or toxic waste sites,
except sites as to which the involvement of the Company or any Subsidiary
has not resulted, and does not present a material risk of resulting, in a
Material Adverse Effect. Any waste disposal or dump sites at which
Hazardous Material generated by either the Company or any of its
Subsidiaries has been disposed of directly by the Company or any of its
Subsidiaries and all independent contractors to whom the Company or any of
its Subsidiaries have delivered Hazardous Material, or to the Company's or
any of its
-68-
<PAGE>
Subsidiaries' knowledge, where Hazardous Material finally came to be
located, has not resulted, and does not present a material risk of
resulting, in a Material Adverse Effect.
7.14.4. Environmental Condition of Properties. None of the
-------------------------------------
properties owned or leased by the Company or any of its Subsidiaries has
been used as a treatment, storage or disposal site, other than as disclosed
in Exhibit 7.14, except sites as to which the involvement of the Company or
any Subsidiary has not resulted, and does not present a material risk of
resulting, in a Material Adverse Effect. No Hazardous Material is present
in any real property currently or formerly owned or operated by the Company
or any of its Subsidiaries except that which has not resulted, and does not
present a material risk of resulting, in a Material Adverse Effect.
7.15. Pension Plans. Each Plan (other than a Multiemployer Plan) and, to
-------------
the knowledge of the Company and its Subsidiaries, each Multiemployer Plan is in
material compliance with the applicable provisions of ERISA and the Code. Each
Multiemployer Plan and each Plan that constitutes a "defined benefit plan" (as
defined in ERISA) are set forth in Exhibit 7.15. Each ERISA Group Person has met
all of the funding standards applicable to all Plans that are not Multiemployer
Plans, and no condition exists which would permit the institution of proceedings
to terminate any Plan that is not a Multiemployer Plan under section 4042 of
ERISA. To the best knowledge of the Company and each Subsidiary, no Plan that is
a Multiemployer Plan is currently insolvent or in reorganization or has been
terminated within the meaning of ERISA.
7.16. [Intentionally Omitted]
7.17. Foreign Trade Regulations; Government Regulation; Margin Stock.
--------------------------------------------------------------
7.17.1. Foreign Trade Regulations. Neither the execution and
-------------------------
delivery of this Agreement or any other Credit Document, nor the making by
the Company of any borrowings hereunder, nor the guaranteeing of the Credit
Obligations by any Guarantor, nor the securing of the Credit Obligations
with the Credit Security, has constituted or resulted in or will constitute
or result in the violation of any Foreign Trade Regulation.
7.17.2. Government Regulation. Neither the Company nor any of its
---------------------
Subsidiaries, nor any Person controlling the Company or any of its
Subsidiaries or under common control with the Company or any of its
Subsidiaries, is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Investment Company Act, the
Interstate Commerce Act or any statute or regulation which regulates the
incurring by the Company or any of its Subsidiaries of Financing Debt as
contemplated by this Agreement and the other Credit Documents.
7.17.3. Margin Stock. Neither the Company nor any of its
------------
Subsidiaries owns any Margin Stock.
-69-
<PAGE>
7.18. Disclosure. To the best knowledge of the Company and the
----------
Guarantors, neither this Agreement nor any other Credit Document to be furnished
to the Lenders by or on behalf of the Company or any of its Subsidiaries in
connection with the transactions contemplated hereby or by such Credit Document
contains any untrue statement of material fact or omits to state a material fact
necessary in order to make the statements contained herein or therein,
considered as a whole, not misleading in light of the circumstances under which
they were made. No fact is actually known to the Company or any Guarantor which,
so far as the Company or any Guarantor is aware, has resulted, or in the future
(so far as the Company or any Guarantor can reasonably foresee) will result, or
presents a material risk of resulting, in any Material Adverse Change, except to
the extent that present or future general economic conditions may result in a
Material Adverse Change.
7.19. Year 2000 Compliance. The Company and its Subsidiaries have (i)
--------------------
reviewed the areas within their business and operations which could be adversely
affected by failure to become "Year 2000 Compliant" (that is, that computer
applications, imbedded microchips and other systems used by the Company, its
Subsidiaries or its material vendors, will be able properly to recognize and
perform date-sensitive functions involving certain dates prior to and any date
after December 31, 1999); (ii) developed a detailed plan and timetable to become
Year 2000 Compliant in a timely manner; and (iii) committed adequate resources
to support its Year 2000 Plan. Based on such review and plan the Company and its
Subsidiaries reasonably believe that they will become Year 2000 Compliant on a
timely basis except to the extent that a failure to do so will not have a
Material Adverse Effect.
8. Defaults.
--------
8.1. Events of Default. The following events are referred to as "Events
----------------- ------
of Default":
- ----------
8.1.1. Payment. The Company shall fail to make any payment in
-------
respect of: (a) interest or any fee on or in respect of any of the Credit
Obligations owed by it as the same shall become due and payable, and such
failure shall continue for a period of three Banking Days, or (b) any
Credit Obligation with respect to payments made by any Letter of Credit
Issuer under any Letter of Credit or any draft drawn thereunder within
three Banking Days after demand therefor by such Letter of Credit Issuer or
(c) principal of any of the Credit Obligations owed by it as the same shall
become due, whether at maturity or by acceleration or otherwise.
8.1.2. Specified Covenants. The Company or any of its
-------------------
Subsidiaries shall fail to perform or observe any of the provisions of
Section 6.2.5, 6.4.6, 6.5, 6.6, 6.7, 6.8, 6.11, 6.12 or 6.19.
8.1.3 Other Covenants. The Company, any of its Subsidiaries or
---------------
any other Obligor shall fail to perform or observe any other covenant,
agreement or provision to be performed or observed by it under this
Agreement or any other Credit Document, and such failure shall not be
rectified or cured to the written satisfaction of the Required
-70-
<PAGE>
Lenders within 30 days after the earlier of (a) notice thereof by the Agent
to the Company or (b) a Financial Officer shall have actual knowledge
thereof.
8.1.4. Representations and Warranties. Any representation or
------------------------------
warranty of or with respect to the Company, any of its Subsidiaries or any
other Obligor made to the Lenders or the Agent in, pursuant to or in
connection with this Agreement or any other Credit Document shall be
materially false on the date as of which it was made.
8.1.5. Cross Default, etc.
------------------
(a) The Company or any of its Subsidiaries shall fail to make
any payment when due (after giving effect to any applicable grace periods)
in respect of any Financing Debt (other than the Credit Obligations)
outstanding in an aggregate amount of principal (whether or not due) and
accrued interest exceeding $3,000,000, and such failure shall continue,
without having been duly cured, waived or consented to, beyond the period
of grace, if any, specified in the agreement or instrument governing such
Financing Debt;
(b) the Company or any of its Subsidiaries shall fail to
perform or observe the terms of any agreement or instrument relating to
such Financing Debt, and such failure shall continue, without having been
duly cured, waived or consented to, beyond the period of grace, if any,
specified in such agreement or instrument, and such failure shall permit
the acceleration of such Financing Debt;
(c) all or any part of such Financing Debt of the Company or
any of its Subsidiaries shall be accelerated or shall become due or payable
prior to its stated maturity (except with respect to voluntary prepayments
thereof) for any reason whatsoever;
(d) any Lien on any property of the Company or any of its
Subsidiaries securing any such Financing Debt shall be enforced by
foreclosure or similar action; or
(e) any holder of any such Financing Debt shall exercise any
right of rescission or put right with respect thereto.
8.1.6. Ownership; Liquidation; etc. Except as permitted by
---------------------------
Section 6.11:
(a) The Company shall cease to own, directly or indirectly,
all the capital stock of any Subsidiary which is a Wholly Owned Subsidiary
on the date hereof or subsequently becomes a Wholly Owned Subsidiary;
(b) any Person, together with "affiliates" and "associates" of
such Person within the meaning of Rule 12b-2 of the Exchange Act, which is
not now a beneficial owner of equity securities of the Company shall
acquire after the date hereof beneficial ownership within the meaning of
Rule 13d-3 of the Exchange Act of 50% or more of either the voting stock or
total equity capital of the Company;
-71-
<PAGE>
(c) a majority of the board of directors shall consist of
individuals who were not on the date hereof members of such board, except
to the extent that the new members were nominated by a majority of the
directors serving on the date hereof; and
(d) the Company or any of its Subsidiaries or any other
Obligor shall initiate any action to dissolve, liquidate or otherwise
terminate its existence.
8.1.7. Enforceability, etc. Any Credit Document shall cease for
-------------------
any reason (other than the scheduled termination thereof in accordance with
its terms) to be enforceable in accordance with its terms or in full force
and effect and such enforceability shall not be restored, or other
provision therefor made, to the satisfaction of the Required Lenders within
30 days following such cessation; or any party to any Credit Document shall
so assert in a judicial or similar proceeding; or the security interests
created by this Agreement or any other Credit Documents shall cease to be
enforceable and of the same effect and priority purported to be created
hereby.
8.1.8. Judgments. A final judgment (a) which, with other
---------
outstanding final judgments against the Company and its Subsidiaries,
exceeds an aggregate of $1,000,000 in excess of applicable insurance
coverage shall be rendered against the Company or any of its Subsidiaries,
or (b) which grants injunctive relief that results, or creates a material
risk of resulting, in a Material Adverse Change and in either case if, (i)
within 60 days after entry thereof, such judgment shall not have been
discharged or execution thereof stayed pending appeal or (ii) within 60
days after the expiration of any such stay, such judgment shall not have
been discharged.
8.1.9. ERISA. Any "reportable event" (as defined in section 4043
-----
of ERISA) shall have occurred that reasonably could be expected to result
in termination of a Plan or the appointment by the appropriate United
States District Court of a trustee to administer any Plan or the imposition
of a Lien in favor of a Plan; or any ERISA Group Person shall fail to pay
when due amounts aggregating in excess of $1,000,000 which it shall have
become liable to pay to the PBGC or to a Plan under Title IV of ERISA; or
notice of intent to terminate a Plan shall be filed under Title IV of ERISA
by any ERISA Group Person or administrator; or the PBGC shall institute
proceedings under Title IV of ERISA to terminate or to cause a trustee to
be appointed to administer any Plan or a proceeding shall be instituted by
a fiduciary of any Plan against any ERISA Group Person to enforce section
515 or 4219(c)(5) of ERISA and such proceeding shall not have been
dismissed within 60 days thereafter; or a condition shall exist by reason
of which the PBGC would be entitled to obtain a decree adjudicating that
any Plan must be terminated.
-72-
<PAGE>
8.1.10. Bankruptcy, etc. The Company, any of its Subsidiaries or
---------------
any other Obligor shall:
(a) commence a voluntary case under the Bankruptcy Code or
authorize, by appropriate proceedings of its board of directors or other
governing body, the commencement of such a voluntary case;
(b) (i) have filed against it a petition commencing an
involuntary case under the Bankruptcy Code that shall not have been
dismissed within 90 days after the date on which such petition is filed, or
(ii) file an answer or other pleading within such 90-day period admitting
or failing to deny the material allegations of such a petition or seeking,
consenting to or acquiescing in the relief therein provided, or (iii) have
entered against it an order for relief in any involuntary case commenced
under the Bankruptcy Code;
(c) seek relief as a debtor under any applicable law, other
than the Bankruptcy Code, of any jurisdiction relating to the liquidation
or reorganization of debtors or to the modification or alteration of the
rights of creditors, or consent to or acquiesce in such relief;
(d) have entered against it an order by a court of competent
jurisdiction (i) finding it to be bankrupt or insolvent, (ii) ordering or
approving its liquidation or reorganization as a debtor or any modification
or alteration of the rights of its creditors or (iii) assuming custody of,
or appointing a receiver or other custodian for, all or a substantial
portion of its property; or
(e) make an assignment for the benefit of, or enter into a
composition with, its creditors, or appoint, or consent to the appointment
of, or suffer to exist a receiver or other custodian for, all or a
substantial portion of its property.
8.1.11. Subordinated Debentures. There shall occur any "Event of
-----------------------
Default" as defined in Section 11.1 of the Subordinated Debentures
Agreement, or any of the Credit Obligations shall fail to be "Superior
Indebtedness" within the meaning of Section 9(a) of the Subordinated
Debentures Agreement.
8.1.12. Series A Convertible Preferred Stock. There shall occur
------------------------------------
any "Fundamental Change" as defined in the provisions of the Charter of the
Company which relate to the Series A Convertible Preferred Stock.
8.2. Certain Actions Following an Event of Default. If any one or more
---------------------------------------------
Events of Default shall occur, then in each and every such case:
8.2.1 Terminate Obligation to Extend Credit. The Agent on
-------------------------------------
behalf of the Lenders may (and upon written request of the Required Lenders
the Agent shall) terminate
-73-
<PAGE>
the obligations of the Lenders to make any further extensions of credit
under the Credit Documents by furnishing notice of such termination to the
Company.
8.2.2. Specific Performance; Exercise of Rights. The Agent on
----------------------------------------
behalf of the Lenders may (and upon written request of the Required Lenders
the Agent shall) proceed to protect and enforce the Lenders' rights by suit
in equity, action at law and/or other appropriate proceeding, either for
specific performance of any covenant or condition contained in this
Agreement or any other Credit Document or in any instrument or assignment
delivered to the Lenders pursuant to this Agreement or any other Credit
Document, or in aid of the exercise of any power granted in this Agreement
or any other Credit Document or any such instrument or assignment.
8.2.3. Acceleration. The Agent on behalf of the Lenders may (and
------------
upon written request of the Required Lenders the Agent shall) by notice in
writing to the Company (a) declare all or any part of the unpaid balance of
the Credit Obligations then outstanding to be immediately due and payable,
and (b) require the Company immediately to deposit with the Agent in cash
an amount equal to the then Letter of Credit Exposure (which cash shall be
held and applied as provided in Section 4.5), and thereupon such unpaid
balance or part thereof and such amount equal to the Letter of Credit
Exposure shall become so due and payable without presentation, protest or
further demand or notice of any kind, all of which are hereby expressly
waived; provided, however, that if a Bankruptcy Default shall have
-------- -------
occurred, the unpaid balance of the Credit Obligations shall automatically
become immediately due and payable.
8.2.4. Enforcement of Payment; Credit Security; Setoff. The
-----------------------------------------------
Agent on behalf of the Lenders may (and upon written request of the
Required Lenders the Agent shall) proceed to enforce payment of the Credit
Obligations in such manner as it may elect, to cancel, or instruct other
Letter of Credit Issuers to cancel, any outstanding Letters of Credit which
permit the cancellation thereof and to realize upon any and all rights in
the Credit Security. The Lenders may offset and apply toward the payment of
the Credit Obligations (and/or toward the curing of any Event of Default)
any Indebtedness from the Lenders to the respective Obligors, including any
Indebtedness represented by deposits in any account maintained with the
Lenders, regardless of the adequacy of any security for the Credit
Obligations. The Lenders shall have no duty to determine the adequacy of
any such security in connection with any such offset.
8.2.5. Cumulative Remedies. To the extent not prohibited by
-------------------
applicable law which cannot be waived, all of the Lenders' rights hereunder
and under each other Credit Document shall be cumulative.
8.3. Annulment of Defaults. Once an Event of Default has occurred, such
---------------------
Event of Default shall be deemed to exist and be continuing for all purposes of
the Credit Documents until the Required Lenders or the Agent (with the consent
of the Required Lenders) shall have waived such Event of Default in writing,
stated in writing that the same has been cured to such Lenders'
-74-
<PAGE>
reasonable satisfaction or entered into an amendment to this Agreement which by
its express terms cures such Event of Default, at which time such Event of
Default shall no longer be deemed to exist or to have continued. No such action
by the Lenders or the Agent shall extend to or affect any subsequent Event of
Default or impair any rights of the Lenders upon the occurrence thereof. The
making of any extension of credit during the existence of any Default or Event
of Default shall not constitute a waiver thereof.
8.4. Waivers. To the extent that such waiver is not prohibited by the
-------
provisions of applicable law that cannot be waived, each of the Company and the
other Obligors waives:
(a) all presentments, demands for performance, notices of
nonperformance (except to the extent required by this Agreement or any
other Credit Document), protests, notices of protest and notices of
dishonor;
(b) any requirement of diligence or promptness on the part of
any Lender in the enforcement of its rights under this Agreement, the Notes
or any other Credit Document;
(c) any and all notices of every kind and description which
may be required to be given by any statute or rule of law; and
(d) any defense (other than indefeasible payment in full)
which it may now or hereafter have with respect to its liability under this
Agreement, the Notes or any other Credit Document or with respect to the
Credit Obligations.
9. Guarantees.
----------
9.1. Guarantees of Credit Obligations. Each Guarantor unconditionally
--------------------------------
jointly and severally guarantees that the Credit Obligations will be performed
and will be paid in full in cash when due and payable, whether at the stated or
accelerated maturity thereof or otherwise, this guarantee being a guarantee of
payment and not of collectability and being absolute and in no way conditional
or contingent. In the event any part of the Credit Obligations shall not have
been so paid in full when due and payable, each Guarantor will, immediately upon
notice by the Agent or, without notice, immediately upon the occurrence of a
Bankruptcy Default, pay or cause to be paid to the Agent for the account of each
Lender in accordance with the Lenders' respective Percentage Interests the
amount of such Credit Obligations which are then due and payable and unpaid. The
obligations of each Guarantor hereunder shall not be affected by the invalidity,
unenforceability or irrecoverability of any of the Credit Obligations as against
any other Obligor, any other guarantor thereof or any other Person. For purposes
hereof, the Credit Obligations shall be due and payable when and as the same
shall be due and payable under the terms of this Agreement or any other Credit
Document notwithstanding the fact that the collection or enforcement thereof may
be stayed or enjoined under the Bankruptcy Code or other applicable law.
-75-
<PAGE>
9.2. Continuing Obligation. Each Guarantor acknowledges that the
---------------------
Lenders and the Agent have entered into this Agreement (and, to the extent that
the Lenders or the Agent may enter into any future Credit Document, will have
entered into such agreement) in reliance on this Section 9 being a continuing
irrevocable agreement, and such Guarantor agrees that its guarantee may not be
revoked in whole or in part. The obligations of the Guarantors hereunder shall
terminate when the commitment of the Lenders to extend credit under this
Agreement shall have terminated and all of the Credit Obligations have been
indefeasibly paid in full in cash and discharged; provided, however, that:
-------- -------
(a) if a claim is made upon the Lenders at any time for repayment
or recovery of any amounts or any property received by the Lenders from any
source on account of any of the Credit Obligations and the Lenders repay or
return any amounts or property so received (including interest thereon to
the extent required to be paid by the Lenders) or
(b) if the Lenders become liable for any part of such claim by
reason of (i) any judgment or order of any court or administrative
authority having competent jurisdiction, or (ii) any settlement or
compromise of any such claim of which the Company has notice and an
opportunity to comment,
then the Guarantors shall remain liable under this Agreement for the amounts so
repaid or property so returned or the amounts for which the Lenders become
liable (such amounts being deemed part of the Credit Obligations) to the same
extent as if such amounts or property had never been received by the Lenders,
notwithstanding any termination hereof or the cancellation of any instrument or
agreement evidencing any of the Credit Obligations. Not later than five days
after receipt of notice from the Agent, the Guarantors shall jointly and
severally pay to the Agent an amount equal to the amount of such repayment or
return for which the Lenders have so become liable. Payments hereunder by a
Guarantor may be required by the Agent on any number of occasions.
9.3. Waivers with Respect to Credit Obligations. Except to the extent
------------------------------------------
expressly required by this Agreement or any other Credit Document, each
Guarantor waives, to the fullest extent permitted by the provisions of
applicable law, all of the following (including all defenses, counterclaims and
other rights of any nature based upon any of the following):
(a) presentment, demand for payment and protest of nonpayment of
any of the Credit Obligations, and notice of protest, dishonor or
nonperformance;
(b) notice of acceptance of this guarantee and notice that credit
has been extended in reliance on the Guarantor's guarantee of the Credit
Obligations;
(c) notice of any Default or of any inability to enforce
performance of the obligations of the Company or any other Person with
respect to any Credit Document, or notice of any acceleration of maturity
of any Credit Obligations;
-76-
<PAGE>
(d) demand for performance or observance of, and any enforcement of
any provision of, the Credit Obligations, this Agreement or any other
Credit Document or any pursuit or exhaustion of rights or remedies with
respect to any Credit Security or against the Company or any other Person
in respect of the Credit Obligations or any requirement of diligence or
promptness on the part of the Agent or the Lenders in connection with any
of the foregoing;
(e) any act or omission on the part of the Agent or the Lenders
which may impair or prejudice the rights of the Guarantor, including rights
to obtain subrogation, exoneration, contribution, indemnification or any
other reimbursement from the Company or any other Person, or otherwise
operate as a deemed release or discharge;
(f) failure or delay to perfect or continue the perfection of any
security interest in any Credit Security or any other action which harms or
impairs the value of, or any failure to preserve or protect the value of,
any Credit Security;
(g) any statute of limitations or any statute or rule of law which
provides that the obligation of a surety must be neither larger in amount
nor in other respects more burdensome than the obligation of the principal;
(h) any "single action" or "anti-deficiency" law which would
otherwise prevent the Lenders from bringing any action, including any claim
for a deficiency, against the Guarantor before or after the Agent's or the
Lenders' commencement or completion of any foreclosure action, whether
judicially, by exercise of power of sale or otherwise, or any other law
which would otherwise require any election of remedies by the Agent or the
Lenders;
(i) all demands and notices of every kind with respect to the
foregoing; and
(j) to the extent not referred to above, all defenses (other than
payment) which the Company may now or hereafter have to the payment of the
Credit Obligations, together with all suretyship defenses, which could
otherwise be asserted by such Guarantor.
Each Guarantor represents that it has obtained the advice of counsel as to the
extent to which suretyship and other defenses may be available to it with
respect to its obligations hereunder in the absence of the waivers contained in
this Section 9.3.
No delay or omission on the part of the Agent or the Lenders in exercising
any right under this Agreement or any other Credit Document or under any
guarantee of the Credit Obligations or with respect to the Credit Security shall
operate as a waiver or relinquishment of such right. No action which the Agent
or the Lenders or the Company may take or refrain from taking with respect to
the Credit Obligations, including any amendments thereto or modifications
thereof or waivers with respect thereto, shall affect the provisions of this
Agreement or the obligations of
-77-
<PAGE>
the Guarantor hereunder. None of the Lenders' or the Agent's rights shall at any
time in any way be prejudiced or impaired by any act or failure to act on the
part of any Obligor, or by any noncompliance by the Company with the terms,
provisions and covenants of this Agreement, regardless of any knowledge thereof
which the Agent or the Lenders may have or otherwise be charged with.
9.4. Lenders' Power to Waive, etc. Each Guarantor grants to the
----------------------------
Lenders full power in their discretion, without notice to or consent of such
Guarantor, such notice and consent being expressly waived to the fullest extent
permitted by applicable law, and without in any way affecting the liability of
the Guarantor under its guarantee hereunder:
(a) To waive compliance with, and any Default under, and to consent
to any amendment to or modification or termination of any terms or
provisions of, or to give any waiver in respect of, this Agreement, any
other Credit Document, the Credit Security, the Credit Obligations or any
guarantee thereof (each as from time to time in effect);
(b) To grant any extensions of the Credit Obligations (for any
duration), and any other indulgence with respect thereto, and to effect any
total or partial release (by operation of law or otherwise), discharge,
compromise or settlement with respect to the obligations of the Obligors or
any other Person in respect of the Credit Obligations, whether or not
rights against the Guarantor under this Agreement are reserved in
connection therewith;
(c) To take security in any form for the Credit Obligations, and to
consent to the addition to or the substitution, exchange, release or other
disposition of, or to deal in any other manner with, any part of any
property contained in the Credit Security whether or not the property, if
any, received upon the exercise of such power shall be of a character or
value the same as or different from the character or value of any property
disposed of, and to obtain, modify or release any present or future
guarantees of the Credit Obligations and to proceed against any of the
Credit Security or such guarantees in any order;
(d) To collect or liquidate or realize upon any of the Credit
Obligations or the Credit Security in any manner or to refrain from
collecting or liquidating or realizing upon any of the Credit Obligations
or the Credit Security; and
(e) To extend credit under this Agreement, any other Credit
Document or otherwise in such amount as the Lenders may determine,
including increasing the amount of credit and the interest rate and fees
with respect thereto, even though the condition of the Obligors (financial
or otherwise on an individual or Consolidated basis) may have deteriorated
since the date hereof.
9.5. Information Regarding the Company, etc. Each Guarantor has made
--------------------------------------
such investigation as it deems desirable of the risks undertaken by it in
entering into this Agreement
-78-
<PAGE>
and is fully satisfied that it understands all such risks. Each Guarantor waives
any obligation which may now or hereafter exist on the part of the Agent or the
Lenders to inform it of the risks being undertaken by entering into this
Agreement or of any changes in such risks and, from and after the date hereof,
each Guarantor undertakes to keep itself informed of such risks and any changes
therein. Each Guarantor expressly waives any duty which may now or hereafter
exist on the part of the Agent or the Lenders to disclose to the Guarantor any
matter related to the business, operations, character, collateral, credit,
condition (financial or otherwise), income or prospects of the Company or its
Affiliates or their properties or management, whether now or hereafter known by
the Agent or the Lenders. Each Guarantor represents, warrants and agrees that it
assumes sole responsibility for obtaining from the Company all information
concerning this Agreement and all other Credit Documents and all other
information as to the Company and its Affiliates or their properties or
management as such Guarantor deems necessary or desirable.
9.6. Certain Guarantor Representations. Each Guarantor represents that:
---------------------------------
(a) it is in its best interest and in pursuit of the purposes for
which it was organized as an integral part of the business conducted and
proposed to be conducted by the Company and its Subsidiaries, and
reasonably necessary and convenient in connection with the conduct of the
business conducted and proposed to be conducted by them, to induce the
Lenders to enter into this Agreement and to extend credit to the Company by
making the Guarantees contemplated by this Section 9,
(b) the credit available hereunder will directly or indirectly
inure to its benefit,
(c) by virtue of the foregoing it is receiving at least reasonably
equivalent value from the Lenders for its Guarantee,
(d) it will not be rendered insolvent as a result of entering into
this Agreement,
(e) after giving effect to the transactions contemplated by this
Agreement, it will have assets having a fair saleable value in excess of
the amount required to pay its probable liability on its existing debts as
they become absolute and matured,
(f) it has, and will have, access to adequate capital for the
conduct of its business,
(g) it has the ability to pay its debts from time to time incurred
in connection therewith as such debts mature, and
(h) it has been advised by the Agent that the Lenders are unwilling
to enter into this Agreement unless the Guarantees contemplated by this
Section 9 are given by it.
9.7. Subrogation. Each Guarantor agrees that, until the Credit
-----------
Obligations are paid in full, it will not exercise any right of reimbursement,
subrogation, contribution, offset or other
-79-
<PAGE>
claims against the other Obligors arising by contract or operation of law in
connection with any payment made or required to be made by such Guarantor under
this Agreement. After the payment in full of the Credit Obligations, each
Guarantor shall be entitled to exercise against the Company and the other
Obligors all such rights of reimbursement, subrogation, contribution and offset,
and all such other claims, to the fullest extent permitted by law.
9.8. Subordination. Each Guarantor covenants and agrees that, after the
-------------
occurrence of an Event of Default, all Indebtedness, claims and liabilities then
or thereafter owing by the Company or any other Obligor to such Guarantor
whether arising hereunder or otherwise are subordinated to the prior payment in
full of the Credit Obligations and are so subordinated as a claim against such
Obligor or any of its assets, whether such claim be in the ordinary course of
business or in the event of voluntary or involuntary liquidation, dissolution,
insolvency or bankruptcy, so that no payment with respect to any such
Indebtedness, claim or liability will be made or received while any Event of
Default exists.
9.9. Future Subsidiaries; Further Assurances. The Company will from
---------------------------------------
time to time cause (a) any present Wholly Owned Subsidiary that is not a
Guarantor within 30 days after notice from the Agent or (b) any future Wholly
Owned Subsidiary within 30 days after any such Person becomes a Wholly Owned
Subsidiary, to join this Agreement as a Guarantor pursuant to a joinder
agreement in form and substance satisfactory to the Agent. Each Guarantor will,
promptly upon the request of the Agent from time to time, execute, acknowledge
and deliver, and file and record, all such instruments, and take all such
action, as the Agent deems necessary or advisable to carry out the intent and
purposes of this Section 9.
10. Security.
--------
10.1. Credit Security. As security for the payment and performance of
---------------
the Credit Obligations, each Obligor mortgages, pledges and collaterally grants
and assigns to the Agent for the benefit of the Lenders and the holders from
time to time of any Credit Obligation, and creates a security interest in favor
of the Agent for the benefit of the Lenders and such holders in, all of such
Obligor's right, title and interest in and to (but none of its obligations or
liabilities with respect to) the items and types of present and future property
described in Sections 10.1.1 through 10.1.4 (subject, however, to Section
10.1.5), whether now owned or hereafter acquired, all of which shall be included
in the term "Credit Security":
---------------
10.1.1. Pledged Stock. (a) All shares of capital stock or other
-------------
evidence of beneficial interest in any corporation, business trust or
limited liability company, including without limitation of all shares of
stock of each of TransMontaigne Transportation Services, Inc.,
TransMontaigne Product Services Inc., Bear Paw Energy Inc. and
TransMontaigne Holding Inc. owned by the Company, all shares of stock of
TransMontaigne Pipeline Inc. and TransMontaigne Terminaling Inc. owned by
TransMontaigne Transportation Services Inc., all shares of stock of
TransMontaigne Product Services Midwest Inc. owned by TransMontaigne
Product Services Inc. and all shares of West Shore Pipe Line Company owned
by TransMontaigne Pipeline Inc., (b) all
-80-
<PAGE>
limited partnership interests in any limited partnership, (c) all general
partnership interests in any general partnership, (d) all joint venture
interests in any joint venture and (e) all options, warrants and similar
rights to acquire such capital stock or such interests. All such capital
stock, interests, options, warrants and other rights are collectively
referred to as the "Pledged Stock".
-------------
10.1.2. Pledged Rights. All rights to receive profits or surplus
--------------
of, or other Distributions (including income, return of capital and
liquidating distributions) from, any corporation, business trust, limited
liability company, partnership or joint venture, including any
distributions by any such Person to partners or joint venturers. All such
rights are collectively referred to as the "Pledged Rights".
--------------
10.1.3. Pledged Indebtedness. All Indebtedness from time to time
--------------------
owing to such Obligor from any Obligor or any Subsidiary of any Obligor
(all such Indebtedness being referred to as the "Pledged Indebtedness").
--------------------
10.1.4. Proceeds and Products. All proceeds, including insurance
---------------------
proceeds, and products of the items of Credit Security described or
referred to in Sections 10.1.1 through 10.1.3 and, to the extent not
included in the foregoing, all Distributions with respect to the Pledged
Securities.
10.1.5. Excluded Property. Notwithstanding Sections 10.1.1
-----------------
through 10.1.4, the payment and performance of the Credit Obligations shall
not be secured by:
(a) any rights arising under, and any property, tangible or
intangible, acquired under, any agreement which validly prohibits the
creation by such Obligor of a security interest in such rights or property;
(b) any rights or property to the extent that any valid and
enforceable law or regulation applicable to such rights or property
prohibits the creation of a security interest therein; or
(c) more than 66% of the outstanding stock or other equity in any
foreign Subsidiary.
10.2. [Intentionally Omitted].
10.3. Representations, Warranties and Covenants with Respect to Credit
----------------------------------------------------------------
Security. Each Obligor represents, warrants and covenants that:
- --------
10.3.1. Pledged Stock. All shares of capital stock, limited
-------------
partnership interests, membership interests, beneficial interests and
similar securities included in the Pledged Stock are and shall be at all
times duly authorized, validly issued, fully paid and (in the case of
capital stock and limited partnership interests) nonassessable. Each
Obligor will
-81-
<PAGE>
deliver to the Agent certificates representing any Pledged Stock
represented by a certificate, accompanied by a stock transfer power
executed in blank and, if the Agent so requests, with the signature
guaranteed, all in form and manner satisfactory to the Agent. Pledged Stock
that is not evidenced by a certificate will be registered in the Agent's
name as pledgee on the issuer's records, all in form and substance
satisfactory to the Agent. At any time after the occurrence of an Event of
Default, the Agent may transfer into its name or the name of its nominee,
as pledgee, any Pledged Securities. In the event the Pledged Stock includes
any Margin Stock, the Obligors will furnish to the Lenders Federal Reserve
Form U-1 and take such other action as the Agent may request to ensure
compliance with applicable laws.
10.3.2. Pledged Indebtedness. All Pledged Indebtedness owed by
--------------------
any Affiliate of the Obligors shall be on open account and shall not be
evidenced by any note or other instrument; provided, however, that all
-------- -------
Pledged Indebtedness owed by any Obligor shall, if the Agent requests, be
evidenced by a promissory note, which note shall be delivered to the Agent
after having been endorsed in blank. Each Obligor will, immediately upon
the receipt thereof, deliver to the Agent any promissory note or similar
instrument representing any Pledged Indebtedness, after having endorsed
such promissory note or instrument in blank.
10.3.3. [Intentionally Omitted].
10.3.4. No Liens or Restrictions on Transfer or Change of Control.
---------------------------------------------------------
All Credit Security shall be free and clear of any Liens and restrictions
on the transfer thereof, including contractual provisions which prohibit
the assignment of rights under contracts, except for Liens permitted by
Section 6.8. Without limiting the generality of the foregoing, each Obligor
will exclude from contracts to which it becomes a party after the date
hereof (other than partnership and joint venture agreements) provisions
that would prevent such Obligor from creating a security interest in such
contract or any property acquired thereunder as contemplated hereby. None
of the Pledged Stock is subject to any adverse claims, option to purchase
or similar rights of any Person. Except with the written consent of the
Agent, no Obligor is, and none of them will be, party to or bound by any
agreement, instrument, deed or lease that restricts the change of control
or ownership, or the creation of a security interest in the ownership, of
the Company or any of its Subsidiaries (other than a Subsidiary which is a
partnership).
10.3.5. [Intentionally Omitted].
10.3.6. Trade Names. No Obligor will adopt or do business under
-----------
any name other than its name or names designated in Exhibit 7.1 or any
other name specified by notice actually received by the Agent not less than
ten Banking Days prior to the conduct of business under such additional
name. Since its incorporation, no Obligor has changed its corporate name or
adopted or conducted business under any trade name other than a name
specified on Exhibit 7.1.
-82-
<PAGE>
10.3.7. [Intentionally Omitted].
10.3.8. Modifications to Credit Security. Except with the prior
--------------------------------
written consent of the Agent, no Obligor shall amend or modify, or waive
any of its rights under or with respect to, any Pledged Securities if the
effect of such amendment, modification or waiver would be to reduce the
amount of any such items or to extend the time of payment thereof, to waive
any default by any other party thereto, or to waive or impair any remedies
of the Obligors or the Lenders under or with respect to any Pledged
Securities, in each case other than consistent with past practice in the
ordinary course of business and on an arm's-length basis. Each Obligor will
promptly give the Agent written notice of any request by any Person for any
credit or adjustment with respect to any Pledged Securities.
10.3.9. Delivery of Documents. At the Agent's request, each
---------------------
Obligor shall deliver to the Agent, promptly upon such Obligor's receipt
thereof, copies of any agreements, instruments, documents or invoices
comprising or relating to the Credit Security. Pending such request, such
Obligor shall keep such items at its chief executive office and principal
place of business, which office and place of business shall be set forth in
Exhibit 7.1, or at such other address as such Obliger may specify by notice
actually received by the Agent not less than ten Banking Days prior to such
change of address.
10.3.10. Perfection of Credit Security. Upon the Agent's request
-----------------------------
from time to time, the Obligors will execute and deliver, and file and
record in the proper filing and recording places, all such instruments,
including financing statements, collateral assignments of copyrights,
trademarks and patents, mortgages or deeds of trust, and notations on
certificates of title and will take all such other action, as the Agent
deems advisable for confirming to it the Credit Security or to carry out
any other purposes of this Agreement or any other Credit Document.
10.4. Administration of Credit Security. The Credit Security shall be
---------------------------------
administered as follows; and if an Event of Default shall have occurred, Section
10.5 shall also apply.
10.4.1. Use of Credit Security. Until the Agent provides written
----------------------
notice to the contrary, each Obligor may use, commingle and dispose of any
part of the Credit Security in the ordinary course of its business, all
subject to Section 6.11.
10.4.1. [Intentionally Omitted].
10.4.3. Pledged Securities.
------------------
(a) Distributions.
-------------
(i) Until an Event of Default shall occur, the respective
Obligors shall be entitled to receive all Distributions on or with
respect to the Pledged Securities
-83-
<PAGE>
(other than Distributions constituting additional Pledged
Securities). All Distributions constituting additional Pledged
Securities will be retained by the Agent (or if received by any
Obligor shall be held by such Person in trust and shall be
immediately delivered by such Person to the Agent in the original
form received, endorsed in blank) and held by the Agent as part of
the Credit Security.
(ii) If an Event of Default shall have occurred, all
Distributions on or with respect to the Pledged Securities shall be
retained by the Agent (or if received by any Obligor shall be held
by such Person in trust and shall be immediately delivered by it to
the Agent in the original form received, endorsed in blank) and
held by the Agent as part of the Credit Security or applied by the
Agent to the payment of the Credit Obligations in accordance with
Section 10.5.6.
(b) Voting.
------
(i) Until an Event of Default shall occur, the respective
Obligors shall be entitled to vote or consent or refrain from
voting or consenting with respect to the Pledged Securities in any
manner not inconsistent with the terms of any Credit Document, and
the Agent will, if so requested, execute appropriate revocable
proxies therefor.
(ii) If an Event of Default shall have occurred, if and to
the extent that the Agent shall so notify in writing the Obligor
pledging the Pledged Securities in question, only the Agent shall
be entitled to vote or consent or take any other action with
respect to the Pledged Securities (and any Obligor will, if so
requested, execute or cause to be executed appropriate proxies
therefor).
10.5. Right to Realize upon Credit Security. Except to the extent
-------------------------------------
prohibited by applicable law that cannot be waived, this Section 10.5 shall
govern the Lenders' right to realize upon the Credit Security if any Event of
Default shall have occurred. The provisions of this Section 10.5 are in addition
to any rights and remedies available at law or in equity and in addition to the
provisions of any other Credit Document. In the case of a conflict between this
Section 10.5 and any other Credit Document, this Section 10.5 shall govern.
10.5.1. Assembly of Credit Security; Receiver. Each of the
-------------------------------------
Obligors shall, upon the Agent's request, assemble the Credit Security and
otherwise make it available to the Agent. The Agent may have a receiver
appointed for all or any portion of the Obligor's assets or business which
constitutes the Credit Security in order to manage, protect, preserve, sell
and otherwise dispose of all or any portion of the Credit Security in
accordance with the terms of the Credit Documents, to continue the
operations of the Obligors and to collect all revenues and profits
therefrom to be applied to the payment of the Credit Obligations, including
the compensation and expenses of such receiver.
-84-
<PAGE>
10.5.2. General Authority. To the extent specified in written
-----------------
notice from the Agent to the Obligor in question, each Obligor grants the
Agent full and exclusive power and authority, subject to the other terms
hereof and applicable law, to take any of the following actions (for the
sole benefit of the Agent on behalf of the Lenders and the holders from
time to time of any Credit Obligations, but at the Obligor's expense):
(a) To ask for, demand, take, collect, sue for and receive all
payments in respect of any Pledged Securities which the Obligor could
otherwise ask for, demand, take, collect, sue for and receive for its own
use.
(b) To extend the time of payment of any Pledged Securities and to
make any allowance or other adjustment with respect thereto.
(c) To settle, compromise, prosecute or defend any action or
proceeding with respect to any Pledged Securities and to enforce all rights
and remedies thereunder which the Obligor could otherwise enforce.
(d) To enforce the payment of any Pledged Securities, either in the
name of the Obligor or in its own name, and to endorse the name of the
Obligor on all checks, drafts, money orders and other instruments tendered
to or received in payment of any Credit Security.
(e) To notify the third party payor with respect to any Pledged
Securities of the existence of the security interest created hereby and to
cause all payments in respect thereof thereafter to be made directly to the
Agent; provided, however, that whether or not the Agent shall have so
-------- -------
notified such payor, the Obligors will at their expense render all
reasonable assistance to the Agent in collecting such items and in
enforcing claims thereon.
(f) To sell, transfer, assign or otherwise deal in or with any
Credit Security or the proceeds thereof, as fully as any Obligor otherwise
could do.
10.5.3. Marshaling, etc. Neither the Agent nor the Lenders shall
---------------
be required to make any demand upon, or pursue or exhaust any of their
rights or remedies against, any Obligor or any other guarantor, pledgor or
any other Person with respect to the payment of the Credit Obligations or
to pursue or exhaust any of their rights or remedies with respect to any
collateral therefor or any direct or indirect guarantee thereof. Neither
the Agent nor the Lenders shall be required to marshal the Credit Security
or any guarantee of the Credit Obligations or to resort to the Credit
Security or any such guarantee in any particular order, and all of its and
their rights hereunder or under any other Credit Document shall be
cumulative. To the extent it may lawfully do so, each of the Obligors
absolutely and irrevocably waives and relinquishes the benefit and
advantage of, and covenants not to assert against the Agent or the Lenders,
any valuation, stay, appraisement, extension, redemption or similar laws
now or hereafter existing which, but
-85-
<PAGE>
for this provision, might be applicable to the sale of any Credit Security
made under the judgment, order or decree of any court, or privately under
the power of sale conferred by this Agreement, or otherwise. Without
limiting the generality of the foregoing, each of the Obligors (a) agrees
that it will not invoke or utilize any law which might prevent, cause a
delay in or otherwise impede the enforcement of the rights of the Agent or
any Lender in the Credit Security, (b) waives all such laws, and (c) agrees
that it will not invoke or raise as a defense to any enforcement by the
Agent or any Lender of any rights and remedies relating to the Credit
Security or the Credit Obligations any legal or contractual requirement
with which the Agent or any Lender may have in good faith failed to comply.
In addition, each of the Obligors waives any right to prior notice (except
to the extent expressly required by this Agreement) or judicial hearing in
connection with foreclosure on or disposition of any Credit Security,
including any such right which such Obligor would otherwise have under the
Constitution of the United States of America, any state or territory
thereof or any other jurisdiction.
10.5.4. Sales of Credit Security. All or any part of the Credit
------------------------
Security may be sold for cash or other value in any number of lots at
public or private sale, without demand, advertisement or notice; provided,
--------
however, that unless the Credit Security to be sold threatens to decline
-------
speedily in value or is of a type customarily sold on a recognized market,
the Agent shall give the Obligor granting the security interest in such
Credit Security ten days' prior written notice of the time and place of any
public sale, or the time after which a private sale may be made, which
notice each of the Obligors and the Lenders hereby agrees to be reasonable.
At any sale or sales of Credit Security, any Lender or any of its
respective officers acting on its behalf, or such Lender's assigns, may bid
for and purchase all or any part of the property and rights so sold, may
use all or any portion of the Credit Obligations owed to such Lender as
payment for the property or rights so purchased, and upon compliance with
the terms of such sale may hold and dispose of such property and rights
without further accountability to the respective Obligor, except for the
proceeds of such sale or sales pursuant to Section 10.5.6. The Obligors
acknowledge that any such sale will be made by the Agent on an "as is"
basis with disclaimers of all warranties, whether express or implied. The
respective Obligors will execute and deliver or cause to be executed and
delivered such instruments, documents, assignments, waivers, certificates
and affidavits, will supply or cause to be supplied such further
information and will take such further action as the Agent shall request in
connection with any such sale.
10.5.5. Sale Without Registration. If, at any time when the
-------------------------
Agent shall determine to exercise its rights hereunder to sell all or part
of the securities included in the Credit Security, the securities in
question shall not be effectively registered under the Securities Act (or
other applicable law), the Agent may, in its sole discretion, sell such
securities by private or other sale not requiring such registration in such
manner and in such circumstances as the Agent may deem necessary or
advisable in order that such sale may be effected in accordance with
applicable securities laws without such registration and the related
delays, uncertainty and expense. Without limiting the generality of the
foregoing, in any event the Agent may, in its sole discretion, (a) approach
and negotiate with a single
-86-
<PAGE>
purchaser or one or more possible purchasers to effect such sale, (b)
restrict such sale to one or more purchasers each of whom will represent
and agree that such purchaser is purchasing for its own account, for
investment and not with a view to the distribution or sale of such
securities and (c) cause to be placed on certificates representing the
securities in question a legend to the effect that such securities have not
been registered under the Securities Act (or other applicable law) and may
not be disposed of in violation of the provisions thereof. Each of the
Obligors agrees that such manner of disposition is commercially reasonable,
that it will upon the Agent's request give any such purchaser access to
such information regarding the issuer of the securities in question as the
Agent may reasonably request and that the Agent and the Lenders shall not
incur any responsibility for selling all or part of the securities included
in the Credit Security at any private or other sale not requiring such
registration, notwithstanding the possibility that a substantially higher
price might be realized if the sale were deferred until after registration
under the Securities Act (or other applicable law) or until made in
compliance with certain other rules or exemptions from the registration
provisions under the Securities Act (or other applicable law). Each of the
Obligors acknowledges that no adequate remedy at law exists for breach by
it of this Section 10.5.5 and that such breach would not be adequately
compensable in damages and therefore agrees that this Section 10.5.5 may be
specifically enforced.
10.5.6. Application of Proceeds. The proceeds of all sales and
-----------------------
collections in respect of any Credit Security or other assets of any
Obligor, all funds collected from the Obligors and any cash contained in
the Credit Security, the application of which is not otherwise specifically
provided for herein, shall be applied as follows:
First, to the payment of the costs and expenses of such sales and
collections, the reasonable expenses of the Agent and the reasonable fees
and expenses of its special counsel;
Second, any surplus then remaining to the payment of the Credit
Obligations (other than in respect of Interest Rate Protection Agreements)
in such order and manner as the Agent may in its sole discretion determine;
provided, however, that any such payment of Credit Obligations owed to all
-------- -------
Lenders shall be pro rata in accordance with the respective Percentage
Interests of the Lenders;
Third, any surplus then remaining to the payment of the Credit
Obligations in respect of Interest Rate Protection Agreements with any
Lender in such order and manner as the Agent may in its sole discretion
determine; and
Fourth, any surplus then remaining shall be paid to the Obligors,
subject, however, to the rights of the holder of any then existing Lien of
which the Agent has actual notice.
10.6. Custody of Credit Security. Except as provided by applicable law
--------------------------
that cannot be waived, the Agent will have no duty as to the custody and
protection of the Credit Security, the
-87-
<PAGE>
collection of any part thereof or of any income thereon or the preservation or
exercise of any rights pertaining thereto, including rights against prior
parties, except for the use of reasonable care in the custody and physical
preservation of any Credit Security in its possession. The Lenders will not be
liable or responsible for any loss or damage to any Credit Security, or for any
diminution in the value thereof, by reason of the act or omission of any agent
selected by the Agent acting in good faith.
11. Expenses; Indemnity.
-------------------
11.1. Expenses. Whether or not the transactions contemplated hereby
--------
shall be consummated, the Company will pay:
(a) all reasonable expenses of the Agent (including the out-of-
pocket expenses related to forming the group of Lenders and reasonable fees
and disbursements of the counsel to the Agent) incurred on and prior to the
Restatement Date in connection with the preparation and duplication of this
Agreement and each other Credit Document, or in connection with any
environmental audit or review reports or examinations by and reports of the
Agent's commercial financial examiners (which expenses are estimated not to
exceed $100,000, any increase of such estimate to require the consent, not
to be unreasonably withheld, of the Company);
(b) all reasonable expenses of the Agent (including the reasonable
fees and disbursements of counsel to the Agent) in connection with
amendments, waivers, consents and other operations under this Agreement or
the Credit Documents;
(c) all recording and filing fees and transfer and documentary
stamp and similar taxes at any time payable in respect of this Agreement,
any other Credit Document, any Credit Security or the incurrence of the
Credit Obligations; and
(d) all other reasonable expenses incurred by the Lenders or the
holder of any Credit Obligation in connection with the enforcement of any
rights hereunder or under any other Credit Document, including costs of
collection and reasonable attorneys' fees (including a reasonable allowance
for the hourly cost of attorneys employed by the Lenders on a salaried
basis) and expenses.
11.2. General Indemnity. The Company shall indemnify the Lenders and
-----------------
the Agent and hold them harmless from any liability, loss or damage resulting
from the violation by the Company of Section 2.5. In addition, the Company shall
indemnify each Lender, the Agent, each of the Lenders' or the Agent's directors,
officers and employees, and each Person, if any, who controls any Lender or the
Agent (each Lender, the Agent and each of such directors, officers, employees
and control Persons is referred to as an "Indemnified Party") and hold each of
-----------------
them harmless from and against any and all claims, damages, liabilities, losses
and reasonable expenses (including reasonable fees and disbursements of counsel
with whom any Indemnified Party may consult in connection therewith and all
reasonable expenses of litigation or preparation therefor)
-88-
<PAGE>
which any Indemnified Party may incur or which may be asserted against any
Indemnified Party in connection with (a) the Indemnified Party's compliance with
or contest of any subpoena or other process issued against it in any proceeding
involving the Company or any of its Subsidiaries or their Affiliates, (b) any
litigation or investigation involving the Company, any of its Subsidiaries or
their Affiliates, or any officer, director or employee thereof, (c) the
existence or exercise of any security rights with respect to the Credit Security
in accordance with the Credit Documents, or (d) this Agreement, any other Credit
Document or any transaction contemplated hereby or thereby; provided, however,
-------- -------
that the foregoing indemnity shall not apply to litigation commenced by the
Company against the Lenders or the Agent which seeks enforcement of any of the
rights of the Company hereunder or under any other Credit Document and is
determined adversely to the Lenders or the Agent in a final nonappealable
judgment or to the extent such claims, damages, liabilities and expenses result
from a Lender's or the Agent's gross negligence or willful misconduct.
11.3. Indemnity With Respect to Letters of Credit. The Company shall
-------------------------------------------
indemnify each Letter of Credit Issuer and its correspondents and hold each of
them harmless from and against any and all claims, losses, liabilities, damages
and reasonable expenses (including reasonable attorneys' fees) arising from or
in connection with any Letter of Credit, including any such claim, loss,
liability, damage or expense arising out of any transfer, sale, delivery,
surrender or endorsement of any invoice, bill of lading, warehouse receipt or
other document at any time held by the Agent, any other Letter of Credit Issuer
or held for their respective accounts by any of their correspondents, in
connection with any Letter of Credit, except to the extent such claims, losses,
liabilities, damages and expenses result from gross negligence or willful
misconduct on the part of the Agent or any other Letter of Credit Issuer.
12. Operations; Agent.
-----------------
12.1. Interests in Credits. The Percentage Interest of each Lender in
--------------------
the Loan and the Letters of Credit, and the related Commitments, shall be
computed based on the maximum principal amount for each Lender as set forth in
the Register, as from time to time in effect. The current Percentage Interests
are set forth in Exhibit 12.1, which may be updated by the Agent from time to
time to conform to the Register.
12.2. Agent's Authority to Act, etc. Each of the Lenders appoints and
-----------------------------
authorizes BankBoston to act for the Lenders as the Lenders' Agent in connection
with the transactions contemplated by this Agreement and the other Credit
Documents on the terms set forth herein. In acting hereunder, the Agent is
acting for the account of BankBoston to the extent of its Percentage Interest
and for the account of each other Lender to the extent of the Lenders'
respective Percentage Interests, and all action in connection with the
enforcement of, or the exercise of any remedies (other than the Lenders' rights
of set-off as provided in Section 8.2.4 or in any Credit Document) in respect of
the Credit Obligations and Credit Documents shall be taken by the Agent.
-89-
<PAGE>
12.3.3 Company to Pay Agent, etc. The Company and each Guarantor shall
-------------------------
be fully protected in making all payments in respect of the Credit Obligations
to the Agent, in relying upon consents, modifications and amendments executed by
the Agent purportedly on the Lenders' behalf, and in dealing with the Agent as
herein provided. The Agent may charge the accounts of the Company, on the dates
when the amounts thereof become due and payable, with the amounts of the
principal of and interest on the Loan, any amounts paid by the Letter of Credit
Issuers to third parties under Letters of Credit or drafts presented thereunder,
facility fees, Letter of Credit fees and all other fees and amounts owing under
any Credit Document.
12.4. Lender Operations for Advances, Letters of Credit, etc.
------------------------------------------------------
12.4.1. Advances. On each Closing Date, each Lender shall
--------
advance to the Agent in immediately available funds such Lender's Revolving
Loan Percentage Interest or Term Loan Percentage Interest, as the case may
be, in the portion of the Revolving Loan or the Term Loan, respectively,
advanced on such Closing Date prior to 3:30 p.m. (Boston time). If such
funds are not received at such time, but all applicable conditions set
forth in Section 5 have been satisfied, each Lender authorizes and requests
the Agent to advance for the Lender's account, pursuant to the terms
hereof, the Lender's respective Revolving Loan Percentage Interest or Term
Loan Percentage Interest, as the case may be, in such portion of the Loan
and agrees to reimburse the Agent in immediately available funds for the
amount thereof prior to 4:30 p.m. (Boston time) on the day any portion of
the Loan is advanced hereunder; provided, however, that the Agent is not
-------- -------
authorized to make any such advance for the account of any Lender who has
previously notified the Agent in writing that such Lender will not be
performing its obligations to make further advances hereunder; and
provided, further, that the Agent shall be under no obligation to make any
-------- -------
such advance.
12.4.2. Letters of Credit. Each of the Lenders authorizes and
-----------------
requests each Letter of Credit Issuer to issue the Letters of Credit
provided for in Section 2.4 and to grant each Lender a participation in
each of such Letters of Credit in an amount equal to its Revolving Loan
Percentage Interest in the amount of each such Letter of Credit. Promptly
upon the request of the Letter of Credit Issuer, each Lender shall
reimburse the Letter of Credit Issuer in immediately available funds for
such Lender's Revolving Loan Percentage Interest in the amount of all
obligations to third parties incurred by the Letter of Credit Issuer in
respect of each Letter of Credit and each draft accepted under a Letter of
Credit to the extent not reimbursed by the Company. The Letter of Credit
Issuer will notify each Lender of the issuance of any Letter of Credit, the
amount and date of payment of any draft drawn or accepted under a Letter of
Credit and whether in connection with the payment of any such draft the
amount thereof was added to the Revolving Loan or was reimbursed by the
Company.
12.4.3. Agent to Allocate Payments, etc. All payments of
--------------------------------
principal and interest in respect of the extensions of credit made pursuant
to this Agreement, reimbursement of amounts paid by any Letter of Credit
Issuer to third parties under Letters of Credit or
-90-
<PAGE>
drafts presented thereunder, facility fees, Letter of Credit fees and other
fees under this Agreement shall, as a matter of convenience, be made by the
Company and the Guarantors to the Agent in immediately available funds. The
share of each Lender shall be credited to such Lender by the Agent in
immediately available funds in such manner that the principal amount of the
Credit Obligations to be paid shall be paid proportionately in accordance
with the Lenders' respective Revolving Loan Percentage Interests or Term
Loan Percentage Interests, as applicable, in such Credit Obligations,
except as otherwise provided in this Agreement. Under no circumstances
shall any Lender be required to produce or present its Notes as evidence of
its interests in the Credit Obligations in any action or proceeding
relating to the Credit Obligations.
12.4.4. Delinquent Lenders; Nonperforming Lenders. In the event
-----------------------------------------
that any Lender fails to reimburse the Agent pursuant to Section 12.4.1 for
the Revolving Loan Percentage Interest or Term Loan Percentage Interest of
such lender (a "Delinquent Lender") in any credit advanced by the Agent
-----------------
pursuant hereto, overdue amounts (the "Delinquent Payment") due from the
------------------
Delinquent Lender to the Agent shall bear interest, payable by the
Delinquent Lender on demand, at a per annum rate equal to (a) the Federal
Funds Rate for the first three days overdue and (b) the sum of 2% plus the
----
Federal Funds Rate for any longer period. Such interest shall be payable to
the Agent for its own account for the period commencing on the date of the
Delinquent Payment and ending on the date the Delinquent Lender reimburses
the Agent on account of the Delinquent Payment (to the extent not paid by
the Company as provided below) and the accrued interest thereon (the
"Delinquency Period"), whether pursuant to the assignments referred to
------------------
below or otherwise. Upon notice by the Agent, the Company will pay to the
Agent the principal (but not the interest) portion of the Delinquent
Payment. During the Delinquency Period, in order to make reimbursements for
the Delinquent Payment and accrued interest thereon, the Delinquent Lender
shall be deemed to have assigned to the Agent all interest, facility fees
and other payments made by the Company under Section 3 that would have
thereafter otherwise been payable under the Credit Documents to the
Delinquent Lender. During any other period in which any Lender is not
performing its obligations to extend credit under Section 2 (a
"Nonperforming Lender"), the Nonperforming Lender shall be deemed to have
--------------------
assigned to each Lender that is not a Nonperforming Lender (a "Performing
----------
Lender") all principal and other payments made by the Company under Section
------
4 that would have thereafter otherwise been payable under the Credit
Documents to the Nonperforming Lender. The Agent shall credit a portion of
such payments to each Performing Lender in an amount equal to the Revolving
Loan Percentage Interest or Term Loan Percentage Interest, as applicable,
of such Performing Lender in an amount equal to the Revolving Loan
Percentage Interest or Term Loan Percentage Interest of such Performing
Lender divided by one minus the Revolving Loan Percentage Interest or Term
-----
Loan Percentage Interest of the Nonperforming Lender until the respective
portions of the Revolving Loan or the Term Loan, as applicable, owed to all
the Lenders are the same as the Revolving Loan Percentage Interest or Term
Loan Percentage Interests, respectively, of the Lenders immediately prior
to the failure of the Nonperforming Lender to perform its obligations under
Section 2. The foregoing provisions shall be in addition to any other
-91-
<PAGE>
remedies the Agent, the Performing Lenders or the Company may have under
law or equity against the Delinquent Lender as a result of the Delinquent
Payment or against the Nonperforming Lender as a result of its failure to
perform its obligations under Section 2.
12.5. Sharing of Payments, etc. Each Lender agrees that (a) if by
-------------------------
exercising any right of set-off or counterclaim or otherwise, it shall receive
payment of (i) a proportion of the aggregate amount due with respect to its
Percentage Interest in the Loan and Letter of Credit Exposure which is greater
than (ii) the proportion received by any other Lender in respect of the
aggregate amount due with respect to such other Lender's Percentage Interest in
the Loan and Letter of Credit Exposure and (b) if such inequality shall continue
for more than 10 days, the Lender receiving such proportionately greater payment
shall purchase participations in the Percentage Interests in the Loan and Letter
of Credit Exposure held by the other Lenders, and such other adjustments shall
be made from time to time (including rescission of such purchases of
participations in the event the unequal payment originally received is recovered
from such Lender through bankruptcy proceedings or otherwise), as may be
required so that all such payments of principal and interest with respect to the
Loan and Letter of Credit Exposure held by the Lenders shall be shared by the
Lenders pro rata in accordance with their respective Percentage Interests;
provided, however, that this Section 12.5 shall not impair the right of any
- -------- -------
Lender to exercise any right of set-off or counterclaim it may have and to apply
the amount subject to such exercise to the payment of Indebtedness of any
Obligor other than such Obligor's Indebtedness with respect to the Loan and
Letter of Credit Exposure; provided, further, that such application may be
-------- -------
affected by Section 4.05 of the Intercreditor Agreement. Each Lender that grants
a participation in the Credit Obligations to a Credit Participant shall require
as a condition to the granting of such participation that such Credit
Participant agree to share payments received in respect of the Credit
Obligations as provided in this Section 12.5. The provisions of this Section
12.5 are for the sole and exclusive benefit of the Lenders and no failure of any
Lender to comply with the terms hereof shall be available to any Obligor as a
defense to the payment of the Credit Obligations.
12.6. Amendments, Consents, Waivers, etc. Except as otherwise set forth
----------------------------------
herein, the Agent may (and upon the written request of the Required Lenders the
Agent shall) take or refrain from taking any action under this Agreement or any
other Credit Document, including giving its written consent to any modification
of or amendment to and waiving in writing compliance with any covenant or
condition in this Agreement or any other Credit Document (other than an Interest
Rate Protection Agreement) or any Default or Event of Default, all of which
actions shall be binding upon all of the Lenders; provided, however, that:
-------- -------
(a) Except as provided below, without the written consent of the
Required Lenders, no written modification of, amendment to, consent with
respect to, waiver of compliance with or waiver of a Default under, any of
the Credit Documents (other than an Interest Rate Protection Agreement)
shall be made.
-92-
<PAGE>
(b) Without the written consent of such Lenders as own 100% of the
Percentage Interests (other than Delinquent Lenders during the existence of
a Delinquency Period so long as such Delinquent Lender is treated the same
as the other Lenders with respect to any actions enumerated below):
(i) No reduction shall be made in (A) the amount of
principal of the Loan or reimbursement obligations for payments
made under Letters of Credit, (B) the interest rate on the Loan or
(C) the Letter of Credit fees (except those owed solely to the
Letter of Credit Issuer, which may be reduced by agreement solely
between the Company and the Letter of Credit Issuer) or facility
fees.
(ii) No change shall be made in the stated time of payment
(or any required prepayment, including without limitation any
contingent mandatory prepayment, in the event that any contingent
mandatory prepayment requirement shall have been incorporated into
this Agreement by amendment, without in any way obligating the
Company or any other party to agree to any such amendment) of all
or any portion of the Loan or interest thereon or reimbursement of
payments made under Letters of Credit or fees relating to any of
the foregoing or in the allocation of such payments provided
pursuant to Section 12.4.3 of this Agreement, and no waiver shall
be made of any Default under Section 8.1.1.
(iii) No alteration shall be made of the Lenders' rights of
set-off contained in Section 8.2.4.
(iv) No release of any Credit Security or of any Guarantor
shall be made (except that the Agent may release particular items
of Credit Security or particular Guarantors in dispositions
permitted by Section 6.11 and may release all Credit Security
pursuant to Section 18 upon payment in full of the Credit
Obligations and termination of the Commitments without the written
consent of the Lenders).
(v) No amendment to or modification of this Section 12.6(b)
or of Section 12.6(c) shall be made.
(c) No increase shall be made in the amount of any Commitment of
any Lender, and no extension shall be made of the term of any Commitment of
any Lender, unless such increase or extension, respectively, shall have
received the prior written consent of such Lender.
12.7. Agent's Resignation. The Agent may resign at any time by giving at
-------------------
least 60 days' prior written notice of its intention to do so to each other of
the Lenders and the Company and upon the appointment by the Required Lenders of
a successor Agent satisfactory to the Company. If no successor Agent shall have
been so appointed and shall have accepted such appointment within 45 days after
the retiring Agent's giving of such notice of resignation, then the retiring
Agent may with the consent of the Company, which shall not be unreasonably
withheld, appoint
-93-
<PAGE>
a successor Agent which shall be a bank or a trust company organized under the
laws of the United States of America or any state thereof and having a combined
capital, surplus and undivided profit of at least $100,000,000; provided,
--------
however, that any successor Agent appointed under this sentence may be removed
- -------
upon the written request of the Required Lenders, which request shall also
appoint a successor Agent satisfactory to the Company. Upon the appointment of a
new Agent hereunder, the term "Agent" shall for all purposes of this Agreement
thereafter mean such successor. After any retiring Agent's resignation hereunder
as Agent, or the removal hereunder of any successor Agent, the provisions of
this Agreement shall continue to inure to the benefit of such Agent as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.
12.8. Concerning the Agent.
--------------------
12.8.1. Action in Good Faith, etc. The Agent and its officers,
-------------------------
directors, employees and agents shall be under no liability to any of the
Lenders or to any future holder of any interest in the Credit Obligations
for any action or failure to act taken or suffered in good faith, and any
action or failure to act in accordance with an opinion of its counsel shall
conclusively be deemed to be in good faith. The Agent shall in all cases be
entitled to rely, and shall be fully protected in relying, on instructions
given to the Agent by the required holders of Credit Obligations as
provided in this Agreement.
12.8.2. No Implied Duties, etc. The Agent shall have and may
----------------------
exercise such powers as are specifically delegated to the Agent under this
Agreement or any other Credit Document together with all other powers
incidental thereto. The Agent shall have no implied duties to any Person or
any obligation to take any action under this Agreement or any other Credit
Document except for action specifically provided for in this Agreement or
any other Credit Document to be taken by the Agent. Before taking any
action under this Agreement or any other Credit Document, the Agent may
request an appropriate specific indemnity satisfactory to it from each
Lender in addition to the general indemnity provided for in Section 12.11.
Until the Agent has received such specific indemnity, the Agent shall not
be obligated to take (although it may in its sole discretion take) any such
action under this Agreement or any other Credit Document. Each Lender
confirms that the Agent does not have a fiduciary relationship to it under
the Credit Documents. Each of the Company and its Subsidiaries party hereto
confirms that neither the Agent nor any other Lender has a fiduciary
relationship to it under the Credit Documents.
12.8.3. Validity, etc. The Agent shall not be responsible to any
-------------
Lender or any future holder of any interest in the Credit Obligations (a)
for the legality, validity, enforceability or effectiveness of this
Agreement or any other Credit Document, (b) for any recitals, reports,
representations, warranties or statements contained in or made in
connection with this Agreement or any other Credit Document, (c) for the
existence or value of any assets included in any security for the Credit
Obligations, (d) for the effectiveness of any Lien purported to be included
in the Credit Security, (e) for the specification or failure to specify any
particular assets to be included in the Credit
-94-
<PAGE>
Security, or (f) unless the Agent shall have failed to comply with Section
12.8.1, for the perfection of the security interests in the Credit
Security.
12.8.4. Compliance. The Agent shall not be obligated to
----------
ascertain or inquire as to the performance or observance of any of the
terms of this Agreement or any other Credit Document; and in connection
with any extension of credit under this Agreement or any other Credit
Document, the Agent shall be fully protected in relying on a certificate of
the Company as to the fulfillment by the Company of any conditions to such
extension of credit.
12.8.5. Employment of Agents and Counsel. The Agent may execute
--------------------------------
any of its duties as Agent under this Agreement or any other Credit
Document by or through employees, agents and attorneys-in-fact and shall
not be responsible to any of the Lenders, the Company or any other Obligor
for the default or misconduct of any such agents or attorneys-in-fact
selected by the Agent acting in good faith. The Agent shall be entitled to
advice of counsel concerning all matters pertaining to the agency hereby
created and its duties hereunder or under any other Credit Document.
12.8.6. Reliance on Documents and Counsel. The Agent shall be
---------------------------------
entitled to rely, and shall be fully protected in relying, upon any
affidavit, certificate, cablegram, consent, instrument, letter, notice,
order, document, statement, telecopy, telegram, telex or teletype message
or writing reasonably believed in good faith by the Agent to be genuine and
correct and to have been signed, sent or made by the Person in question,
including any telephonic or oral statement made by such Person, and, with
respect to legal matters, upon an opinion or the advice of counsel selected
by the Agent.
12.8.7. Agent's Reimbursement. Each of the Lenders severally
---------------------
agrees to reimburse the Agent, in the amount of such Lender's Percentage
Interest, for any reasonable expenses not reimbursed by the Company or the
Guarantors (without limiting the obligation of the Company or the
Guarantors to make such reimbursement): (a) for which the Agent is entitled
to reimbursement by the Company or the Guarantors under this Agreement or
any other Credit Document, and (b) after the occurrence of a Default, for
any other reasonable expenses incurred by the Agent on the Lenders' behalf
in connection with the enforcement of the Lenders' rights under this
Agreement or any other Credit Document.
12.8.8. Agent's Fees. The Company shall pay to the Agent for its
------------
own account an agent's fee in the amounts separately agreed to from time to
time by the Company and the Agent.
12.9. Rights as a Lender. With respect to any credit extended by it
------------------
hereunder, BankBoston shall have the same rights, obligations and powers
hereunder as any other Lender and may exercise such rights and powers as though
it were not the Agent, and unless the context otherwise specifies, BankBoston
shall be treated in its individual capacity as though it were not
-95-
<PAGE>
the Agent hereunder. Without limiting the generality of the foregoing, the
Percentage Interest of BankBoston shall be included in any computations of
Percentage Interests. BankBoston and its Affiliates may accept deposits from,
lend money to, act as trustee for and generally engage in any kind of banking or
trust business with the Company, any of its Subsidiaries or any Affiliate of any
of them and any Person who may do business with or own an equity interest in the
Company, any of its Subsidiaries or any Affiliate of any of them, all as if
BankBoston were not the Agent and without any duty to account therefor to the
other Lenders.
12.10. Independent Credit Decision. Each of the Lenders acknowledges
---------------------------
that it has independently and without reliance upon the Agent, based on the
financial statements and other documents referred to in Section 7.2, on the
other representations and warranties contained herein and on such other
information with respect to the Company and its Subsidiaries as such Lender
deemed appropriate, made such Lender's own credit analysis and decision to enter
into this Agreement and to make the extensions of credit provided for hereunder.
Each Lender represents to the Agent that such Lender will continue to make its
own independent credit and other decisions in taking or not taking action under
this Agreement or any other Credit Document. 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
such Lender, and no act by the Agent taken under this Agreement or any other
Credit Document, including any review of the affairs of the Company and its
Subsidiaries, shall be deemed to constitute any representation or warranty by
the Agent. Except for notices, reports and other documents expressly required to
be furnished to each Lender by the Agent under this Agreement or any other
Credit Document, the Agent shall not have any duty or responsibility to provide
any Lender with any credit or other information concerning the business,
operations, property, condition, financial or otherwise, or creditworthiness of
the Company or any Subsidiary which may come into the possession of the Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates.
12.11. Indemnification. The holders of the Credit Obligations shall
---------------
indemnify the Agent and its officers, directors, employees and agents (to the
extent not reimbursed by the Obligors and without limiting the obligation of any
of the Obligors to do so), pro rata in accordance with their respective
Percentage Interests, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time be imposed on,
incurred by or asserted against the Agent or such Persons relating to or arising
out of this Agreement, any other Credit Document, the transactions contemplated
hereby or thereby, or any action taken or omitted by the Agent in connection
with any of the foregoing; provided, however, that the foregoing shall not
--------- -------
extend to actions or omissions which are taken by the Agent with gross
negligence or willful misconduct.
13. Successors and Assigns; Lender Assignments and Participations. Any
-------------------------------------------------------------
reference in this Agreement to any of the parties hereto shall be deemed to
include the successors and assigns of such party, and all covenants and
agreements by or on behalf of the Company, the Guarantors, the Agent or the
Lenders that are contained in this Agreement or any other Credit Documents shall
bind and inure to the benefit of their respective successors and assigns;
provided, however,
- -------- -------
-96-
<PAGE>
that (a) the Company and its Subsidiaries may not assign their rights or
obligations under this Agreement except for mergers or liquidations permitted by
Section 6.11, and (b) the Lenders shall be not entitled to assign their
respective Percentage Interests in the Loan hereunder except as set forth below
in this Section 13.
13.1. Assignments by Lenders.
----------------------
13.1.1. Assignees and Assignment Procedures. Each Lender may (a)
-----------------------------------
without the consent of the Agent or the Company if the proposed assignee is
already a Lender hereunder or an Affiliate of the assigning Lender, or (b)
otherwise with the consents of the Agent and (so long as no Event of
Default exists) the Company (which consents will not be unreasonably
withheld), in compliance with applicable laws in connection with such
assignment, assign to one or more Eligible Assignees (each, an "Assignee")
--------
all or a portion of its interests, rights and obligations under this
Agreement and the other Credit Documents, including all or a portion, which
need not be pro rata between the Loan and the Letter of Credit Exposure, of
its Commitment, the portion of the Loan and Letter of Credit Exposure at
the time owing to it and the Notes held by it, but excluding its rights and
obligations as a Letter of Credit Issuer; provided, however, that:
-------- -------
(i) the aggregate amount of the Commitment of the
assigning Lender subject to each such assignment (A) to any
Assignee other than another Lender or (B) to any group of Assignees
the members of which are Affiliates of one another and which does
not include an existing Lender (determined in each case as of the
date the Assignment and Acceptance with respect to such assignment
is delivered to the Agent) shall be not less than $5,000,000;
provided, however, that in the case of an assignment to an
Affiliate of the assigning Lender the amount assigned may be less
than $5,000,000; and
(ii) the parties to each such assignment shall execute and
deliver to the Agent an Assignment and Acceptance (the "Assignment
----------
and Acceptance") substantially in the form of Exhibit 13.1.1,
--------------
together with the Note subject to such assignment and a processing
and recordation fee of $3,500 payable to the Agent by the assigning
Lender.
Upon acceptance and recording pursuant to Section 13.1.4, from and after
the effective date specified in each Assignment and Acceptance (which
effective date shall be at least five Banking Days after the execution
thereof unless waived by the Agent):
(1) the Assignee shall be a party hereto and, to the extent
provided in such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement and
(2) the assigning Lender shall, to the extent provided in such
assignment, be released from its obligations under this
Agreement (and, in the case of an
-97-
<PAGE>
Assignment and Acceptance covering all or the remaining portion
of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto but
shall continue to be entitled to the benefits of Sections
3.2.4, 3.5, 3.6, 3.7, 3.8 and 11, as well as to any fees
accrued for its account hereunder and not yet paid).
13.1.1A. Assignment Among Lenders. Notwithstanding the provisions
------------------------
of Section 13.1.1, in the event that the debt obligations of any Lender
shall be rated less than "A3" by Moody's or less than "A-" by S&P, each
other Lender party hereto or any two or more of them acting together shall
be entitled on ten Business Days' prior written notice to the Agent, the
Company, and such Lender to purchase the interest of such Lender hereunder
in the Commitments relating to the Revolving Loan, in whole and not in
part, at a purchase price equal to the outstanding principal amount of such
Lender's Percentage Interest in the Revolving Loans advanced hereunder and
its share of Letter of Credit Exposure plus accrued and unpaid interest
thereon to the purchase date, together with any fees or other amounts that
may be owing to such Lender hereunder, including without limitation
additional interest with respect to such Lender's Percentage Interest in
any Eurodollar Rate Loan included in such Revolving Loans, calculated as
provided in Section 3.2.4. Such transfer shall be effected by the
execution and delivery of an Assignment and Acceptance.
13.1.2. Terms of Assignment and Acceptance. By executing and
----------------------------------
delivering an Assignment and Acceptance, the assigning Lender and Assignee
shall be deemed to confirm to and agree with each other and the other
parties hereto as follows:
(a) other than the representation and warranty that it is the legal
and beneficial owner of the interest being assigned thereby free and clear
of any adverse claim, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement
or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, any other Credit Document or any
other instrument or document furnished pursuant hereto;
(b) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Company and its Subsidiaries or the performance or observance by the
Company or any of its Subsidiaries of any of its obligations under this
Agreement, any other Credit Document or any other instrument or document
furnished pursuant hereto;
(c) such Assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 7.2 or Section 6.4 and such other documents
and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance;
-98-
<PAGE>
(d) such Assignee will independently and without reliance upon the
Agent, such assigning Lender 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 decisions in taking or not taking action
under this Agreement;
(e) such Assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to the Agent by the terms hereof, together with
such powers as are reasonably incidental thereto; and
(f) such Assignee agrees that it will perform in accordance with
the terms of this Agreement all the obligations which are required to be
performed by it as a Lender.
13.1.3. Register. The Agent shall maintain at the Boston Office
--------
a register (the "Register") for the recordation of (a) the names and
--------
addresses of the Lenders and the Assignees which assume rights and
obligations pursuant to an assignment under Section 13.1.1, (b) the
Percentage Interest of each such Lender as set forth in Section 12.1 and
(c) the amount of the Loan and Letter of Credit Exposure owing to each
Lender from time to time. The entries in the Register shall be conclusive,
in the absence of demonstrable error, and the Company, the Agent and the
Lenders may treat each Person whose name is registered therein for all
purposes as a party to this Agreement. The Register shall be available for
inspection by the Company or any Lender at any reasonable time and from
time to time upon reasonable prior notice. In maintaining the Register as
provided in this Section 13.1.3, and for no other purpose of this
Agreement, the Agent shall be acting solely as agent of the Company and not
of the Lenders.
13.1.4. Acceptance of Assignment and Assumption. Upon its
---------------------------------------
receipt of a completed Assignment and Acceptance executed by an assigning
Lender and an Assignee together with the Note subject to such assignment,
and the processing and recordation fee referred to in Section 13.1.1, the
Agent shall (a) accept such Assignment and Acceptance, (b) record the
information contained therein in the Register and (c) give prompt notice
thereof to the Company. Within five Banking Days after receipt of notice,
the Company, at its own expense, shall execute and deliver to the Agent, in
exchange for the surrendered Note, a new Note to the order of such Assignee
in a principal amount equal to the applicable Commitment and Loan assumed
by it pursuant to such Assignment and Acceptance and, if the assigning
Lender has retained a Commitment and Loan, a new Note to the order of such
assigning Lender in a principal amount equal to the applicable Commitment
and Loan retained by it. Such new Note shall be in an aggregate principal
amount equal to the aggregate principal amount of such surrendered Note,
and shall be dated the date of the surrendered Note which it replaces.
13.1.5. Federal Reserve Bank. Notwithstanding the foregoing
--------------------
provisions of this Section 13, any Lender may at any time pledge or assign
all or any portion of such
-99-
<PAGE>
Lender's rights under this Agreement and the other Credit Documents to a
Federal Reserve Bank; provided, however, that no such pledge or assignment
-------- -------
shall release such Lender from such Lender's obligations hereunder or under
any other Credit Document.
13.1.6. Further Assurances. The Company and its Subsidiaries
------------------
shall sign such documents and take such other actions from time to time
reasonably requested by an Assignee to enable it to share in the benefits
of the rights created by the Credit Documents.
13.2. Credit Participants. Each Lender may, in compliance with
-------------------
applicable laws in connection with such participation, sell to one or more
commercial banks or other financial institutions (each a "Credit Participant")
------------------
participations in all or a portion of its interests, rights and obligations
under this Agreement and the other Credit Documents (including all or a portion
of its Commitment, the Loan and Letter of Credit Exposure owing to it and the
Note held by it); provided, however, that:
-------- -------
(a) such Lender's obligations under this Agreement shall remain
unchanged;
(b) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations;
(c) the Credit Participant shall be entitled to the benefit of the
cost protection provisions contained in Sections 3.2.4, 3.5, 3.6, 3.7, 3.8
and 11, but shall not be entitled to receive any greater payment thereunder
than the selling Lender would have been entitled to receive with respect to
the interest so sold if such interest had not been sold; and
(d) the Company, the Agent and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement, and such Lender shall retain
the sole right as one of the Lenders to vote with respect to the
enforcement of the obligations of the Company relating to the Loan and
Letter of Credit Exposure and the approval of any amendment, modification
or waiver of any provision of this Agreement (other than amendments,
modifications, consents or waivers described in clause (b) of the proviso
to Section 12.6).
Each Obligor agrees, to the fullest extent permitted by applicable law, that any
Credit Participant and any Lender purchasing a participation from another Lender
pursuant to Section 12.5 may exercise all rights of payment (including the right
of set-off), with respect to its participation as fully as if such Credit
Participant or such Lender were the direct creditor of the Obligors and a Lender
hereunder in the amount of such participation.
13.3. Replacement of Lender. In the event that any Lender or, to the
---------------------
extent applicable, any Credit Participant (the "Affected Lender"):
---------------
-100-
<PAGE>
(a) fails to perform its obligations to fund any portion of the
Loan or to issue any Letter of Credit on any Closing Date when required to
do so by the terms of the Credit Documents;
(b) demands payment under the Reserve provisions of Section 3.5,
the Tax provisions of Section 3.6, the capital adequacy provisions of
Section 3.7 or the regulatory change provisions in Section 3.8 in an amount
the Company deems materially in excess of the amounts with respect thereto
demanded by the other Lenders; or
(c) refuses to consent to a proposed amendment, modification,
waiver or other action requiring consent of the holders of 100% of the
Percentage Interests under Section 12.6(b) that is consented to by the
other Lenders;
then, so long as no Event of Default exists, the Company shall have the right to
seek a replacement lender which is reasonably satisfactory to the Agent (the
"Replacement Lender"). The Replacement Lender shall purchase the interests of
------------------
the Affected Lender in the Loan, Letters of Credit and its Commitment and shall
assume the obligations of the Affected Lender hereunder and under the other
Credit Documents upon execution by the Replacement Lender of an Assignment and
Acceptance and the tender by it to the Affected Lender of a purchase price
agreed between it and the Affected Lender (or, if they are unable to agree, a
purchase price in the amount of the Affected Lender's Percentage Interest in the
Loan and Letter of Credit Exposure, or appropriate credit support for contingent
amounts included therein, and all other outstanding Credit Obligations then owed
to the Affected Lender). Such assignment by the Affected Lender shall be deemed
an early termination of any Eurodollar Pricing Option to the extent of the
Affected Lender's portion thereof, and the Company will pay to the Affected
Lender any resulting amounts due under Section 3.2.4. Upon consummation of such
assignment, the Replacement Lender shall become party to this Agreement as a
signatory hereto and shall have all the rights and obligations of the Affected
Lender under this Agreement and the other Credit Documents with a Percentage
Interest equal to the Percentage Interest of the Affected Lender, the Affected
Lender shall be released from its obligations hereunder and under the other
Credit Documents, and no further consent or action by any party shall be
required. Upon the consummation of such assignment, the Company, the Agent and
the Affected Lender shall make appropriate arrangements so that a new Revolving
Note is issued to the Replacement Lender if it has acquired a portion of the
Revolving Loan. The Company and the Guarantors shall sign such documents and
take such other actions reasonably requested by the Replacement Lender to enable
it to share in the benefits of the rights created by the Credit Documents.
Until the consummation of an assignment in accordance with the foregoing
provisions of this Section 13.3, the Company shall continue to pay to the
Affected Lender any Credit Obligations as they become due and payable.
14. Confidentiality. Each Lender will make no disclosure of confidential
---------------
information furnished to it directly or indirectly by the Company or any of its
Subsidiaries unless such information shall have become public, except:
-101-
<PAGE>
(a) in connection with operations under or the enforcement of this
Agreement or any other Credit Document;
(b) pursuant to any statutory or regulatory requirement or any
mandatory court order, subpoena or other legal process;
(c) to any parent or corporate Affiliate of such Lender or to any
Credit Participant, proposed Credit Participant or proposed Assignee;
provided, however, that any such Person shall agree to comply with the
-------- -------
restrictions set forth in this Section 14 with respect to such information;
(d) to its independent counsel, auditors and other professional
advisors with an instruction to such Person to keep such information
confidential;
(e) to the National Association of Insurance Commissioners or any
similar organization, or any nationally recognized rating agency that
requires access to information about the investment portfolio of such
Lender;
(f) in the case of any Lender holding Indebtedness issued under the
Master Shelf Agreement, any disclosure that is not prohibited under the
Master Shelf Agreement; and
(g) with the prior written consent of the Company, to any other
Person.
15. Foreign Lenders. If any Lender is not incorporated or organized under the
---------------
laws of the United States of America or a state thereof, such Lender shall
deliver to the Company and the Agent the following:
(a) Two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224 or successor form, as the case may be, certifying
in each case that such Person is entitled to receive payments under this
Agreement, the Notes and reimbursement obligations under Letters of Credit
payable to it, without deduction or withholding of any United States
federal income taxes; provided, however, that in the case of such a Lender
claiming exemption from United States withholding tax under section 871(h)
or 881(c) of the Code with respect to payments of "portfolio interest", a
Form W-8, or any subsequent version thereof or successor thereto (and, if
such Lender delivers a Form W-8, a certificate representing that such
Lender is not a bank for purposes of section 881(c) of the Code, is not a
10-percent shareholder (within the meaning of section 871(h)(3)(B) of the
Code) of the Company and is not a controlled foreign corporation related to
the Company (within the meaning of section 864(d)(4) of the Code)),
properly completed and duly executed by such Lender claiming complete
exemption from United States withholding tax on payments of interest by the
Company under this Agreement; and
-102-
<PAGE>
(b) A duly completed Internal Revenue Service Form W-8 or W-9 or
successor form, as the case may be, to establish an exemption from United
States backup withholding tax.
Each such Lender that delivers to the Company and the Agent a Form 1001,
4224, W-8 and/or W-9 pursuant to this Section 15 further undertakes to deliver
to the Company and the Agent two further copies of such Form, or successor
applicable form, or other manner of certification, as the case may be, on or
before the date that any such form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent form previously
delivered by it to the Company and the Agent. Such Forms 1001 or 4224 shall
certify that such Lender is entitled to receive payments under this Agreement
without deduction or withholding of any United States federal income taxes. The
foregoing documents need not be delivered in the event any change in treaty, law
or regulation or official interpretation thereof has occurred which renders all
such forms inapplicable or which would prevent such Lender from delivering any
such form with respect to it, or such Lender advises the Company that it is not
capable of receiving payments without any deduction or withholding of United
States federal income tax and, in the case of a Form W-8 or W-9, establishing an
exemption from United States backup withholding tax. Until such time as the
Company and the Agent have received such forms indicating that payments
hereunder are not subject to United States withholding tax or are subject to
such tax at a rate reduced by an applicable tax treaty, the Company shall
withhold taxes from such payments at the applicable statutory rate without
regard to Section 3.6.
16. Notices. Except as otherwise specified in this Agreement, any notice
-------
required to be given pursuant to this Agreement shall be given in writing. Any
notice, consent, approval, demand or other communication in connection with this
Agreement shall be deemed to be given if given in writing (including telex,
telecopy or similar teletransmission) addressed as provided below (or to the
addressee at such other address as the addressee shall have specified by notice
actually received by the addressor), and if actually delivered in fully legible
form to such address (evidenced in the case of a telex, telecopy or similar
teletransmission by receipt of the correct answerback).
If to the Company or any of its Subsidiaries, to it at its address set
forth in Exhibit 7.1 (as supplemented pursuant to Sections 6.4.1 and 6.4.2), to
the attention of the chief financial officer.
If to any Lender or the Agent, to it at its address set forth on the
signature pages of this Agreement or in the Register, with a copy to the Agent.
17. Course of Dealing; Amendments and Waivers. No course of dealing between
-----------------------------------------
any Lender or the Agent, on one hand, and the Company or any other Obligor, on
the other hand, shall operate as a waiver of any of the Lenders' or the Agent's
rights under this Agreement or any other Credit Document or with respect to the
Credit Obligations. Each of the Company and the Guarantors acknowledges that if
the Lenders or the Agent, without being required to do so by this Agreement or
any other Credit Document, give any notice or information to, or obtain any
consent from, the Company or any other Obligor, the Lenders and the Agent shall
not by
-103-
<PAGE>
implication have amended, waived or modified any provision of this Agreement or
any other Credit Document, or created any duty to give any such notice or
information or to obtain any such consent on any future occasion. No delay or
omission on the part of any Lender of the Agent in exercising any right under
this Agreement or any other Credit Document or with respect to the Credit
Obligations shall operate as a waiver of such right or any other right hereunder
or thereunder. A waiver on any one occasion shall not be construed as a bar to
or waiver of any right or remedy on any future occasion. No waiver, consent or
amendment with respect to this Agreement or any other Credit Document shall be
binding unless it is in writing and signed by the Agent or the Required Lenders.
18. Defeasance. When all Credit Obligations have been paid and all Letters of
----------
Credit terminated and returned to the Letter of Credit Issuer or cash
collateralized in a manner satisfactory to the Lenders, and if at the time no
Lender continues to be committed to extend any credit to the Company hereunder
or under any other Credit Document, this Agreement shall terminate and, at the
Company's written request, accompanied by such certificates and other items as
the Agent shall reasonably deem necessary, the Credit Security shall revert to
the Obligors and the right, title and interest of the Lenders therein shall
terminate. Thereupon, on the Obligor's demand and at their cost and expense,
the Agent shall execute proper instruments, acknowledging satisfaction of and
discharging this Agreement, and shall redeliver to the Obligors any Credit
Security then in its possession; provided, however, that Sections 3.2.4, 3.5,
-------- -------
3.6, 3.7, 3.8, 11, 12.8.7, 12.11, 14, 19 and 20 shall survive the termination of
this Agreement.
19. Venue; Service of Process. Each of the Company and the other Obligors:
-------------------------
(a) Irrevocably submits to the nonexclusive jurisdiction of the
state courts of The Commonwealth of Massachusetts and to the nonexclusive
jurisdiction of the United States District Court for the District of
Massachusetts for the purpose of any suit, action or other proceeding
arising out of or based upon this Agreement or any other Credit Document or
the subject matter hereof or thereof.
(b) Waives to the extent not prohibited by applicable law that
cannot be waived, and agrees not to assert, by way of motion, as a defense
or otherwise, in any such proceeding brought in any of the above-named
courts, any claim that it is not subject personally to the jurisdiction of
such court, that its property is exempt or immune from attachment or
execution, that such proceeding is brought in an inconvenient forum, that
the venue of such proceeding is improper, or that this Agreement or any
other Credit Document, or the subject matter hereof or thereof, may not be
enforced in or by such court.
Each of the Company and the other Obligors consents to service of process in any
such proceeding in any manner at the time permitted by Chapter 223A of the
General Laws of The Commonwealth of Massachusetts and agrees that service of
process by registered or certified mail, return receipt requested, at its
address specified in or pursuant to Section 16 is reasonably calculated to give
actual notice.
-104-
<PAGE>
20. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT
--------------------
CANNOT BE WAIVED, EACH OF THE COMPANY, THE OTHER OBLIGORS, THE AGENT AND THE
LENDERS WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF,
DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF
ANY ISSUE, CLAIM OR PROCEEDING ARISING OUT OF THIS AGREEMENT OR ANY OTHER CREDIT
DOCUMENT OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY CREDIT OBLIGATION OR IN
ANY WAY CONNECTED WITH THE DEALINGS OF THE LENDERS, THE AGENT, THE COMPANY OR
ANY OTHER OBLIGOR IN CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT, TORT OR OTHERWISE. Each
of the Company and the other Obligors acknowledges that it has been informed by
the Agent that the provisions of this Section 20 constitute a material
inducement upon which each of the Lenders has relied and will rely in entering
into this Agreement and any other Credit Document, and that it has reviewed the
provisions of this Section 20 with its counsel. Any Lender, the Agent, the
Company or any other Obligor may file an original counterpart or a copy of this
Section 20 with any court as written evidence of the consent of the Company, the
other Obligors, the Agent and the Lenders to the waiver of their rights to trial
by jury.
21. General. All covenants, agreements, representations and warranties made in
-------
this Agreement or any other Credit Document or in certificates delivered
pursuant hereto or thereto shall be deemed to have been relied on by each
Lender, notwithstanding any investigation made by any Lender on its behalf, and
shall survive the execution and delivery to the Lenders hereof and thereof. The
invalidity or unenforceability of any provision hereof shall not affect the
validity or enforceability of any other provision hereof. The headings in this
Agreement are for convenience of reference only and shall not limit or otherwise
affect the meaning hereof. This Agreement and the other Credit Documents
constitute the entire understanding of the parties with respect to the subject
matter hereof and thereof and supersede all prior and contemporaneous
understandings and agreements, whether written or oral; provided, however, that
the terms of the Commitment Letter dated June 4, 1999 among the Company,
BankBoston and BancBoston Robertson Stephens Inc. shall survive with respect to
all provisions of such Commitment Letter and the term sheet attached thereto
which relate to the syndication of the Credit Obligations. This Agreement may
be executed in any number of counterparts which together shall constitute one
instrument. This Agreement shall be governed by and construed in accordance
with the laws (other than the conflict of laws rules) of The Commonwealth of
Massachusetts, except as may be required by the UCC with respect to matters
involving the perfection of the Agent's Lien on the Credit Security.
-105-
<PAGE>
Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
date first above written.
TRANSMONTAIGNE INC.
By /s/ Richard E. Gathright
-----------------------------------------
Richard E. Gathright, President
TRANSMONTAIGNE PRODUCT SERVICES INC.
TRANSMONTAIGNE PRODUCT SERVICES
MIDWEST INC.
TRANSMONTAIGNE TRANSPORTATION
SERVICES INC.
TRANSMONTAIGNE PIPELINE INC.
TRANSMONTAIGNE TERMINALING INC.
BEAR PAW ENERGY INC.
By /s/ Richard E. Gathright
-----------------------------------------
Richard E. Gathright, Chief Executive
Officer of each of the foregoing
corporations
-106-
<PAGE>
BANKBOSTON, N.A.,
for Itself and as Agent and on Behalf of
the Required Lenders Under the Existing
Credit Agreement
By /s/ Terrance Ronan
-----------------------------------------
Authorized Officer
BankBoston, N.A.
Energy and Utilities Division
100 Federal Street
Boston, Massachusetts 02110
Telecopy: (617) 434-3652
-107-
<PAGE>
NATIONSBANK, N.A., for Itself and
as Documentation Agent
By /s/ David Rubenking
---------------------------------
Authorized Officer: David Rubenking
-108-
<PAGE>
FIRST UNION NATIONAL BANK, for Itself
and as Syndication Agent
By /s/ Robert R. Wetteroff
-----------------------
Authorized Officer: Robert R. Wetteroff
Senior Vice President
-109-
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Joseph C. Giampetroni
-------------------------
Authorized Officer: Joseph C. Giampetroni
Vice President
-110-
<PAGE>
U.S. BANK NATIONAL ASSOCIATION
By /s/ Kathryn Gaiter
---------------------------------------
Authorized Officer: Kathryn Gaiter
-111-
<PAGE>
UNION BANK OF CALIFORNIA, N.A.
By /s/ Gary Shekerjian
----------------------------------
Authorized Officer: Gary Shekerjian
Assistant Vice President
-112-
<PAGE>
CIBC INC.
By /s/ Roger Colden
------------------------------
Authorized Officer:
-113-
<PAGE>
BANK OF MONTREAL
By /s/ Mary Lee Latta
--------------------------------------
Authorized Officer: Mary Lee Latta
-114-
<PAGE>
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By /s/ Ric E. Abel
-----------------------------------
Authorized Officer: Ric E. Abel
-115-
<PAGE>
BANK AUSTRIA CREDITANSTALT CORPORATE
FINANCE, INC.
By /s/ John G. Taylor
----------------------------------------
Authorized Officer: John G. Taylor
Vice President
By /s/ Robert M. Biringer
----------------------------------------
Authorized Officer: Robert M. Biringer
Executive Vice President
-116-
<PAGE>
HIBERNIA NATIONAL BANK
By /s/ David R. Reid
--------------------------------
Authorized Officer:
-117-
<PAGE>
THE TRAVELERS INSURANCE COMPANY
By /s/ Robert M. Mills
-------------------------------------
Authorized Officer: Robert M. Mills
Investment Officer
TRAVELERS CORPORATE LOAN FUND INC.
By: Travelers Asset Management International Corporation
By /s/ Robert M. Mills
-------------------------------------
Authorized Officer: Robert M. Mills
Investment Officer
-118-
<PAGE>
TORONTO DOMINION (NEW YORK), INC.
By /s/ Jorge A. Garcia
------------------------------------
Authorized Officer: Jorge A. Garcia
Vice President
-119-
<PAGE>
UMB Bank
By /s/ Mariner Kemper
---------------------
Authorized Officer:
-120-
<PAGE>
EXHIBIT 10.20
LETTER AMENDMENT NO. 5
As of June 29, 1999
The Prudential Insurance Company
of America
U.S. Private Placement Fund
c/o Prudential Capital Group
2200 Ross Avenue, Suite 4200E
Dallas, Texas 75201
Ladies and Gentlemen:
We refer to the Master Shelf Agreement dated as of April 17,
1997, as amended by Letter Amendment No. 1 dated March 31, 1998, Letter
Amendment No. 2 dated as of June 30, 1998, Letter Amendment No. 3 dated as of
October 30, 1998 and Letter Amendment No. 4 dated as of March 25, 1999 (as
amended, the "Agreement"), among the undersigned, TransMontaigne Inc., formerly
known as TransMontaigne Oil Company, (the "Company") and The Prudential
Insurance Company of America ("Prudential") and U.S. Private Placement Fund
(collectively, the "Purchasers"). Unless otherwise defined herein, the terms
defined in the Agreement shall be used herein as therein defined.
The Company has requested that you agree to certain amendments
of the terms of the Agreement, including the modification of financial covenants
and other covenants. You have indicated your willingness to so agree.
Accordingly, it is hereby agreed by you and us as follows:
1. Amendments to the Agreement. The Agreement is, effective as of the date
first above written, hereby amended as follows:
(a) Paragraph 5A. Financial Statements and Reports. Paragraph 5A is amended
by deleting the words "KPMG Peat Marwick LLP" in clause (i)(a) and replacing
them with "KPMG LLP" and by deleting clause (ii)(e) in its entirety.
(b) Paragraph 5J. Trading Policy. Paragraph 5J is amended by deleting the
date "May 1998" and replacing it with "October 31, 1998" and by deleting the
date "October 30, 1998" and replacing it with "May 28, 1999".
(c) Paragraph 5L. Inventory Accounting. Paragraph 5L is amended in its
entirety to read as follows:
<PAGE>
"5L. Inventory Accounting. The Company shall, and shall cause each of
its Subsidiaries to, account for substantially all of their inventory on
the basis of the "mark to market" method."
(d) Paragraph 5Q. Credit Fee. Paragraph 5Q is amended in its entirety to
read as follows:
"5Q. Credit Fee. On June 30, 1999, the Company shall pay in respect of
the fiscal quarter commencing July 1, 1999 to each holder a credit fee
equal to 0.375% of the principal amount of Notes held by such holder on
June 30, 1999. On each day after June 30, 1999 on which, pursuant to
paragraph 5A, delivery is made, or should have been made (without any
grace), whichever is earlier (the "Delivery Date"), of financial statements
for the fiscal year ended June 30, 1999 and each fiscal quarter or fiscal
year, as the case may be, thereafter (the quarter in respect of which, or
ending the period for which, such financial statements are being, or should
have been, delivered is herein referred to as the "Reference Quarter"), the
Company shall pay, in respect of the next fiscal quarter commencing after
such Delivery Date (unless, in the case of annual financial statements,
such Delivery Date falls within the second quarter after the Reference
Quarter, in which case such payment shall be in respect of the quarter in
which such Delivery Date falls), to each holder a credit fee equal to
0.375% of the principal amount of Notes held by such holder as of the last
day of such Reference Quarter, if both (i) on such Delivery Date, the
senior unsecured debt of the Company is not rated BBB- or higher by S&P or
Baa3 or higher by Moody's and (ii) on the last day of such Reference
Quarter, the Company is not in compliance with one or more of the covenants
contained in paragraphs 6A and 6B, provided, however, that for purposes of
this paragraph 5Q only, compliance with the covenants contained in
paragraphs 6A(1), 6A(2), 6A(3) and 6A(4) shall be determined using the
percentages set forth in the table below for the Reference Quarters ending
on the dates set forth in the table below in place of the relevant
percentages set forth in such paragraph, and provided, further that, for
purposes of this paragraph 5Q, the proviso at the end of clause (a) of
paragraph 6A(1) providing that the ratio used to determine compliance with
such paragraph may be as low as 150% so long as for the next succeeding
period of four consecutive fiscal quarters (which shall include the last
three quarters of the prior period) such ratio equals or exceeds 200% shall
not apply for purposes of determining compliance with paragraph 6A(1):
2
<PAGE>
--------------------------------------------------------------
Covenant June 30, 1999, September 30, 1999 March 31, 2001
December 31, 1999, March 31, 2000, thereafter
June 30, 2000, September and 30, 2000
December 31, 2000
--------------------------------------------------------------
6A(1) 250% 275%
--------------------------------------------------------------
6A(2) 60% 55%
--------------------------------------------------------------
6A(3) 70% 60%
--------------------------------------------------------------
6A(4) 300% 250%
--------------------------------------------------------------
(a) Paragraph 5R. Paragraph 5R is amended in its entirety to read as
follows:
"5R. [Intentionally Omitted.]"
(b) Paragraph 6A. Certain Financial Tests. Paragraph 6A is amended in its
entirety to read as follows:
"6A. Certain Financial Tests.5. Certain Financial Tests.5. Certain
Financial Tests.
6A(1) Interest Coverage.5.1. Interest Coverage.5.1. Interest Coverage.
The Company will not permit
(i) For any fiscal quarter of the Company, commencing with the fiscal
quarter ended June 30, 1999, the ratio (expressed as a percentage) of (i)
the Consolidated EBITDA of the Company and its Subsidiaries for the period
of four consecutive fiscal quarters then ended to (ii) the Consolidated
Interest Expense of the Company and its Subsidiaries for such period, to be
less than 200%; provided, however, that for any single period of four
-------- -------
consecutive fiscal quarters such ratio may be as low as 150% so long as for
the next succeeding period of four consecutive fiscal quarters (which shall
include the last three quarters of the prior period) such ratio equals or
exceeds 200%.
(ii) For the purposes of this paragraph 6A(1) (and paragraph 5Q), the
Consolidated EBITDA of the Company and its Subsidiaries for any period
prior to October 30, 1998 shall be deemed to be the Consolidated EBITDA of
the Company and its Subsidiaries for such period plus the Consolidated
EBITDA of Louis Dreyfus Energy Corp., a Delaware corporation, for such
period, combined in accordance with GAAP.
3
<PAGE>
(iii) For the purposes of this paragraph 6A(1) (and paragraph 5Q), the
Consolidated Interest Expense of the Company and its Subsidiaries for each
period listed below shall be the amount set forth next to such period:
Period Amount
------ ------
Twelve months ended $10,310,000 plus Consolidated
June 30, 1999 Interest Expense for the portion of
the period commencing November 1,
1998
Twelve months ended $2,980,000 plus Consolidated Interest
September 30, 1999 Expense for the portion of the period
commencing November 1, 1998
6A(2) Leverage.5.2. Leverage.5.2. Leverage Ratio. The Company will not
permit at any time on and after June 30, 1999 the Leverage Ratio of the
Company and its Subsidiaries to exceed 65%.
6A(3) Fixed Asset Reliance.5.3. Fixed Asset Reliance.5.3. Fixed Asset
Reliance. The Company will not permit at any time on and after June 30,
1999 the ratio of (a) the difference of (i) the Consolidated Total
Liabilities of the Company and its Subsidiaries minus (ii) the Consolidated
Current Assets of the Company and its Subsidiaries to (b) the Consolidated
Tangible Net Worth of the Company and its Subsidiaries (expressed as a
percentage) to be greater than 80%.
6A(4) Cash Flow Leverage Ratio.5.4. Cash Flow Leverage Ratio.5.4. Cash
Flow Leverage Ratio. The Company will not permit at any time on the last
day of each fiscal quarter of the Company, commencing with the fiscal
quarter ended June 30, 1999, the ratio (expressed as a percentage) of (a)
the Consolidated Net Liabilities of the Company and its Subsidiaries to (b)
the Consolidated Pro Forma EBITDA of the Company and its Subsidiaries for
the period of four consecutive fiscal quarters then ended to exceed 350%.
6A(5) Consolidated Tangible Net Worth.5.5. Consolidated Tangible Net
-------------------------
Worth.5.5. Consolidated Tangible Net Worth. The Company will not permit at
----- -------------------------------
any time on or after June 30, 1999 the Consolidated Tangible Net Worth to
be less than $300,000,000; provided, however, that on the last day of each
-------- -------
fiscal quarter of the
4
<PAGE>
Company commencing with the fiscal quarter ended September 30, 1999, the
then effective dollar amount in this paragraph 6A(5) (including any prior
increases of such amount pursuant to clauses (a) and (b) below) shall be
increased by the sum of (a) 50% of the net proceeds of common stock,
preferred stock or other equity securities issued during the fiscal quarter
then ended by the Company and its Subsidiaries, calculated on a
Consolidated basis in accordance with GAAP, plus (b) 50% of Consolidated
----
Net Income (if positive) for the fiscal quarter then ended."
(a) Paragraph 6B. Distributions. Paragraph 6B is amended by amending clause
(ii) in its entirety to read as follows:
"(ii) So long as immediately before and after giving effect thereto no
Default or Event of Default exists, the Company may make Distributions to
its stockholders; provided, that the cumulative amount distributed shall
not exceed the remainder of (a) the sum of (i) $30,000,000 plus (ii) 50% of
----
the cumulative Consolidated Net Income of the Company and its Subsidiaries
commencing July 1, 1998 minus (b) the aggregate cumulative amount of the
-----
Investments made by the Company and its Subsidiaries under paragraph 6C(4);
provided, however, that if the Company shall have gained control of West
-------- -------
Shore Pipeline Company, a Delaware corporation, the amount in the preceding
clause (b) shall be zero."
(b) Paragraph 6C(2). Indebtedness. Paragraph 6C(2) is amended (I) by
deleting the term "Adjusted Consolidated Net Tangible Assets" and replacing it
with the term "Consolidated Net Tangible Assets" in each place it appears in
clause (vii), (II) by deleting the paragraph reference "6C(4)(vii)" in clause
(xi) and replacing it with "6C(4)(viii)", (III) by amending clause (xii) in its
entirety to read as follows:
"(xii) So long as the Intercreditor Agreement is in effect, Funded
Debt of the Company under the Bank Agreement not exceeding $600,000,000,
and other "Credit Obligations" (as defined in the Bank Agreement) of the
Company and the Guarantors under the Bank Agreement."
(IV) by amending clause (xiv) in its entirety to read as follows:
"(xiv) Indebtedness outstanding on June 30, 1999 and described in
Schedule 8D."
-----------
(V) by deleting the words "issued in a Capital Markets Transaction" in
clause (xvi) and (VI) by deleting clause (xvii).
(c) Paragraph 6C(3). Guarantees, Letter of Credit. Paragraph 6C(3) is
amended by deleting the paragraph reference "6C(4)(vii)" and replacing it with
"6C(4)(viii)" in each place it appears in clause (iv).
5
<PAGE>
(d) Paragraph 6C(4). Investments and Acquisitions. Paragraph 6C(4) is
amended (I) by deleting the date "October 30, 1998" and replacing it with "June
30, 1999" in each place it appears in clauses (v) and (vi), (II) by deleting the
term "Adjusted Consolidated Net Tangible Assets" and replacing it with the term
"Consolidated Net Tangible Assets" in each place it appears in clause (v), (III)
by amending clause (vii) in its entirety to read as follows:
"(vii) Investments in West Shore Pipe Line Company, a Delaware
corporation, made after June 30, 1999; provided, that the aggregate
--------
cumulative amount of the Investments made under this clause (vii) of
paragraph 6C(4) shall not exceed the remainder of (a) the sum of (i)
$30,000,000 plus (ii) 50% of the cumulative Consolidated Net Income of the
----
Company and its Subsidiaries commencing July 1, 1998 minus (b) the
-----
aggregate cumulative amount of Distributions theretofore paid by the
Company permitted by clause (ii) of paragraph 6B; and provided, further,
-------- -------
however, that the limitation set forth in the preceding proviso to this
-------
clause (vii) of paragraph 6C(4) shall not apply to any Investment in West
Shore Pipeline Company which will give the Company control of West Shore
Pipeline Company and which is made in compliance with the clause (ix) of
this paragraph 6C(4) (including delivery of the pro forma compliance
certificate described therein)."
(IV) by deleting the paragraph reference "6C(4)(vii)" and the date "December18,
1996" in clause (viii) and replacing them with "6C(4)(viii)" and "June 30,
1999", respectively, (V) by deleting the dollar amount "$20,000,000" in clause
(ix) and replacing it with "$40,000,000" and (VI) by deleting the parenthetical
clause reading "(or, from and after the date that the Bank Term Loan shall have
been repaid in full, $40,000,000 for any single acquisition)" in clause (ix).
(e) Paragraph 6C(5). Merger, Consolidation and Disposition of Assets.
Paragraph 6C(5) is amended by deleting the term "Adjusted Consolidated Net
Tangible Assets" and replacing it with the term "Consolidated Net Tangible
Assets" in each place it appears in clause (i).
(f) Paragraph 6C(6). Lease Obligations. Paragraph 6C(6) is amended by
deleting the term "Adjusted Consolidated Net Tangible Assets" and replacing it
with the term "Consolidated Net Tangible Assets" in each place it appears in
clause (ii).
(g) Paragraph 7A. Acceleration. Paragraph 7A is amended by amending clause
(xvii) in its entirety to read as follows:
"(vvii) there shall occur any "Event of Default" as defined in Section
11.1 of the Subordinated Debentures Agreement, or any of the Obligations
shall fail to be "Superior
6
<PAGE>
Indebtedness" within the meaning of Section 9(a) of the Subordinated
Debentures Agreement;"
(h) Paragraph 8B. Financial Statements. Paragraph 8B is amended by amending
clause (ii) in its entirety to read as follows:
"(ii) The Company has furnished to each Purchaser of Accepted Notes
(a) the financial and operational projections and current capital
expenditures plan of the Company and its Subsidiaries dated May 28, 1999
and (b) calculations demonstrating pro forma compliance with the
Computation Covenants as of the end of the most recent month or quarter, as
applicable, preceding the date hereof. In the Company's judgment, the
financial and operational projections referred to in clause (a) above
constitute a reasonable basis as of October 30, 1998 for the assessment of
the future performance of the Company and its Subsidiaries during the
periods indicated therein, it being understood that any projected financial
information represents an estimate, based on various assumptions, of future
results of operations, which assumptions may prove to have been incorrect
and which results may not in fact occur."
(i) Paragraph 8T. Material Agreements. Paragraph 8T is amended in its
entirety to read as follows:
"8T. Material Agreements. The Company has previously furnished to the
Purchasers a correct and complete copy of the Amended and Restated
Debenture Agreement dated December 23, 1997 (the "Subordinated Debentures
Agreement") between the Company, Massachusetts Mutual Life Insurance
Company, Mass Mutual Corporate Investors and Mass Mutual Participation
Investors, and correct and complete copies, including all exhibits,
schedules and amendments thereto, of the agreements, each as in effect on
June 29, 1999, listed on Schedule 8T (together with the Subordinated
Debentures, the Subordinated Debentures Agreement, the Subordinated
Debentures Guarantee, the Acquisition Agreement and the Bank Agreement, the
"Material Agreements"). The Notes constitute "Superior Indebtedness" as
defined in the Subordinated Debentures Agreement.
(j) Paragraph 10B. Other Terms. Paragraph 10B of the Agreement is amended
(I) by adding the following new definitions in alphabetical order and amending
existing definitions in full to read as follows, as applicable:
"Acquired Assets" shall mean the property being purchased by
TransMontaigne Terminaling Inc. under the Acquisition Agreement.
"Acquisition Agreement" shall mean the Sale of Assets Agreement dated
May 3, 1999 between TransMontaigne Terminaling Inc., an Arkansas
corporation, and the Seller providing for the acquisition by TransMontaigne
Terminaling Inc. of certain
7
<PAGE>
terminals and pipeline assets of the Seller, as amended by Amendment No. 1
to Sale of Assets Agreement dated as of June 30, 1999.
"Bank Agreement" shall mean the Third Amended and Restated Credit
Agreement dated as of June 29, 1999 between the Company and the Bank Agent,
as amended from time to time.
"Computation Covenants" shall mean paragraph 5O, paragraph 6A, clause
(ii) of paragraph 6B, clauses (vii) and (xv) of paragraph 6C(2), clauses
(v), (vii) and (viii) of paragraph 6C(4), clause (i) of paragraph 6C(5) and
clause (ii) of paragraph 6C(6).
"Consolidated Current Assets" shall mean, at any date, all amounts
that are or should be carried as current assets on the balance sheet of the
Company and its Subsidiaries (other than cash and Cash Equivalents)
determined in accordance with GAAP on a Consolidated basis.
"Consolidated Current Liabilities" shall mean, at any date, all
amounts that are or should be carried as current liabilities on the balance
sheet of the Company and its Subsidiaries determined in accordance with
GAAP on a Consolidated basis, including the current portion of all Funded
Debt.
"Consolidated EBITDA" shall mean, for any period, the total of:
(a) Consolidated Net Income; plus
----
(b) all amounts deducted in computing such Consolidated Net Income in
respect of (i) depreciation, amortization and other non-cash charges
(including increases of reserves), (ii) Consolidated Interest Expense and
(iii) taxes based upon or measured by net income; plus
----
(c) all amounts included in computing such Consolidated Net Income in
respect of any non-cash inventory writedowns in the fiscal year ended June
30, 1999; minus
-----
(d) all amounts included in computing such Consolidated Net Income in
respect of dividends received in any form other than cash; minus
-----
(e) taxes based upon or measured by net income that are actually paid
in cash during such period; minus
-----
(f) all amounts included in Consolidated Net Income in respect of
deferred income tax benefits; minus
-----
8
<PAGE>
(g) all amounts representing payments from reserves to pay liabilities
during such period that were not deducted in computing such Consolidated
Net Income.
"Consolidated Interest Expense" shall mean, for any period, the total
of:
(a) the aggregate amount of interest, including without limitation
commitment fees, payments in the nature of interest under Capitalized
Leases and net payments under Interest Rate Protection Agreements, accrued
by the Company and its Subsidiaries (whether such interest is reflected as
an item of expense or capitalized) in accordance with GAAP on a
Consolidated basis; minus
-----
(b) to the extent included in clause (a) above, the amortization of
deferred financing fees and costs, original issue discount relating to
Indebtedness and accrued interest on Indebtedness not paid in cash to the
extent permitted by the terms, including subordination terms, of such
Indebtedness (including PIK Interest); plus
----
(c) actual cash payments with respect to accrued and unpaid interest
(including PIK Interest) that has previously reduced Consolidated Interest
Expense pursuant to clause (b) above.
"Consolidated Net Income" shall mean, for any period, the net earnings
(or loss) before dividend requirements for preferred stock of the Company
and its Subsidiaries, determined in accordance with GAAP on a Consolidated
basis; provided, however, that Consolidated Net Income shall not include:
-------- -------
(a) the earnings (or loss) of any Person accrued prior to the date
such Person becomes a Subsidiary or is merged into or consolidated with the
Company or any of its Subsidiaries;
(b) the earnings (or loss) of any Person (other than a Subsidiary) in
which the Company or any of its Subsidiaries has an ownership interest;
provided, however, that (i) Consolidated Net Income shall include amounts
-------- -------
in respect of the earnings of such Person when actually received in cash by
the Company or such Subsidiary in the form of dividends or similar
Distributions and (ii) Consolidated Net Income shall be reduced by the
aggregate amount of all Investments, regardless of the form thereof, made
by the Company or any of its Subsidiaries in such Person for the purpose of
funding any deficit or loss of such Person;
(c) all amounts included in computing such net earnings (or loss) in
respect of the write-up of any asset or the retirement of any Indebtedness
or equity at less than face value after April 30, 1998;
(d) extraordinary and nonrecurring gains;
9
<PAGE>
(e) the earnings of any Subsidiary to the extent the payment of such
earnings in the form of a Distribution or repayment of Indebtedness to the
Company or a Wholly Owned Subsidiary is not permitted, whether on account
of any Charter or By-law restriction, any agreement, instrument, deed or
lease or any law, statute, judgment, decree or governmental order, rule or
regulation applicable to such Subsidiary; and
(f) any after-tax gains or losses attributable to returned surplus
assets of any Plan.
"Consolidated Net Liabilities" shall mean, on any date, the difference
of (a) Consolidated Total Liabilities of the Company and its Subsidiaries
on such date minus (b) an amount equal to 75% of the Consolidated Current
Assets of the Company and its Subsidiaries on such date.
"Consolidated Net Tangible Assets" shall mean at any date the total
of:
(a) the total assets of the Company and its Subsidiaries determined
in accordance with GAAP on a Consolidated basis;
minus (b) Consolidated Current Liabilities;
-----
minus (c) all other liabilities of the Company and its Subsidiaries
-----
determined in accordance with GAAP on a Consolidated basis other than
liabilities for Funded Debt;
minus (d) the amount of intangible assets carried on the balance sheet
-----
of the Company and its Subsidiaries determined in accordance with GAAP on a
Consolidated basis, including goodwill, patents, patent applications,
copyrights, trademarks, tradenames, research and development expense,
organizational expense, annualized debt discount and expense, deferred
financing charges and debt acquisition costs;
minus (e) the amount at which any minority interest in a Subsidiary
-----
appears as a liability on the Consolidated balance sheet of the Company and
its Subsidiaries.
"Consolidated Pro Forma EBITDA" shall mean, for any period, the
Consolidated EBITDA of the Company and its Subsidiaries for such period
adjusted to include the results of operations of any Person, business or
assets acquired by the Company or a Subsidiary, and exclude the results of
operations of any Person, business or assets disposed of, during such
period for the portion of such period which preceded such acquisition or
disposition, as the case may be, the method of making any such adjustment
to be reasonably satisfactory to the Majority Holders.
10
<PAGE>
"Consolidated Tangible Net Worth" shall mean, at any date, the total
of:
(a) stockholders' equity of the Company and its Subsidiaries
determined in accordance with GAAP on a Consolidated basis, excluding the
effect of any foreign currency translation adjustments (but in any event
including in such equity, on a Consolidated basis, the Series A Convertible
Preferred Stock and any other convertible preferred stock of the Company at
the time outstanding);
minus (b) the amount by which such stockholders' equity has been
-----
increased after April 30, 1998 by the items described in clause (a), (b),
(c), (e) or (f) of the definition of Consolidated Net Income;
minus (c) to the extent not already deducted from the amount in clause
-----
(a) above, (i) treasury stock, (ii) receivables due from an employee stock
ownership plan and (iii) Guarantees of Indebtedness incurred by an employee
stock ownership plan;
minus (d) the amount of intangible assets carried on the balance sheet
-----
of the Company and its Subsidiaries determined in accordance with GAAP on a
Consolidated basis, including goodwill, patents, patent applications,
copyrights, trademarks, tradenames, research and development expense,
organizational expense, unamortized debt discount and expense, deferred
financing charges and debt acquisition costs.
"Consolidated Total Liabilities" shall mean, at any date, all
Indebtedness of the Company and its Subsidiaries on a Consolidated basis.
"PIK Interest" shall mean any accrued interest payments on Financing
Debt that are postponed or made through the issuance of "payment-in-kind"
notes on other similar securities (including book-entry accrual with
respect to such postponed interest payments), all in accordance with the
terms of such Financing Debt; provided, however, that in no event shall PIK
Interest include payments made with cash or Cash Equivalents.
"Seller" shall mean Amerada Hess Corporation, a Delaware corporation.
"Year 2000 Compliant" shall have the meaning specified in paragraph
8U.
(II) by deleting the definitions of "Acquisition", "Adjusted Consolidated Funded
Debt", "Adjusted Consolidated Net Tangible Assets", "Adjusted Leverage Ratio",
"Capital Markets Transaction", "Consolidated Income from Operations", "Contango
Market Obligations", "New Equity Securities", "Permitted Contango Market
Transaction", "Permitted Preferred Trust Securities", "Permitted Subordinated
Trust Indebtedness" and "Qualified Person";
11
<PAGE>
(III) by amending the definition of "Distribution" by adding the word "and"
immediately after the semicolon at the end of clause (d), by deleting the
semicolon and the word "and" at the end of clause (e) and replacing them with a
period, by deleting clause (f) in its entirety and by deleting the paragraph
reference "6C4(vii)" and replacing it with "6C4(viii)";
(IV) by amending the definition of "Indebtedness" by amending clause (j) in its
entirety to read as follows:
"(j) all Guarantees in respect of Indebtedness of others."
and (V) by amending the definition of "Investment" by (A) deleting the word "or"
at the end of clause (iv) in the second sentence and replacing it with a comma,
(B) adding the word "or" at the end of clause (v) in the second sentence, (C)
adding to the end of the second sentence a new clause (vi) reading as follows:
"(vi) joint operating agreements conducted by Wholly Owned
Subsidiaries of the Company with each other or with third parties"
and (D) by amending clause (A) in the third sentence in its entirety to read as
follows:
"(A) the amount of any Investment shall be the cost thereof
(excluding any amounts paid in respect of inventory or other working
capital items) minus any returns of capital in cash on such Investment
(determined in accordance with GAAP without regard to amounts realized as
income on such Investment);"
(k) Schedule 5A(i). Covenant Compliance Certificate. Schedule 5A(i)
is replaced in its entirety by Schedule 5A(i) attached hereto.
(l) Schedule 8A. Company and Subsidiary Information. Schedule 8A is
replaced in its entirety by Schedule 8A attached hereto.
(m) Schedule 8D. Financing Debt, Liens, Guarantees and Investments.
Schedule 8D is replaced in its entirety by Schedule 8D attached hereto.
(n) Schedule 8T. Material Agreements. Schedule 8T is replaced in its
entirety by Schedule 8T attached hereto.
1. Consent of Guarantors. Each Guarantor under the Guaranty contained in
paragraph 11 of the Agreement, hereby consents to this letter amendment and
hereby confirms and agrees that the Guaranty is, and shall continue to be,
in full force and effect and is hereby confirmed and ratified in all
respects except that, upon the effectiveness of, and on and after the date
of, said letter amendment, all references in the Guaranty to the
12
<PAGE>
Agreement, "thereunder", "thereof", or words of like import referring to
the Agreement shall mean the Agreement as amended by said letter amendment.
2. Consent of Pledgors. Each of the Company, TransMontaigne Transportation
Services Inc., TransMontaigne Product Services Inc. and TransMontaigne
Pipeline Inc. is a Pledgor under the Pledge Agreement (the "Pledgors"), and
each hereby agrees that (i) the Pledge Agreement shall continue to be, in
full force and effect and is hereby confirmed and ratified in all respects
except that, upon the effectiveness of, and on and after the date of, this
letter amendment, all references in the Pledge Agreement to the Loan
Documents shall mean the Loan Documents as amended by this Amendment and
(ii) all of the Loan Security described therein does, and shall continue
to, secure the payment by the Pledgors of their obligations under the Loan
Documents, as amended by this letter amendment.
3. Representations and Warranties. In order to induce you to enter into this
Amendment, each of the Obligors hereby represents and warrants that each of
the representations and warranties contained in paragraph 8 of the
Agreement, as amended hereby, is true and correct on the date hereof. The
Company further represents and warrants that the Subsidiary Pledgors
constitute all of Subsidiaries which own any form of equity interest in any
Subsidiary or any form of intercompany Indebtedness from another Subsidiary
or the Company.
4. Miscellaneous.
(a) Effect on Agreement. On and after the effective date of this
letter amendment, each reference in the Agreement to "this Agreement",
"hereunder", "hereof", or words of like import referring to the Agreement, each
reference in the Notes to "the Agreement", "thereunder", "thereof", or words of
like import referring to the Agreement, and each reference in the Pledge
Agreement to "the Shelf Agreement" "thereunder", "thereof", or words of like
import referring to the Agreement, shall mean the Agreement as amended by this
letter amendment. The Agreement, as amended by this letter amendment, is and
shall continue to be in full force and effect and is hereby in all respects
ratified and confirmed. The execution, delivery and effectiveness of this letter
amendment shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy under the Agreement nor constitute a waiver of any
provision of the Agreement.
(b) Counterparts. This letter amendment may be executed in any
number of counterparts and by any combination of the parties hereto in separate
counterparts, each of which counterparts shall be an original and all of which
taken together shall constitute one and the same letter amendment.
13
<PAGE>
(c) Effectiveness. This letter amendment shall become effective as
of the date first above written when and if each of the conditions set forth in
this subparagraph (c) shall have been satisfied.
(I) Executed Counterparts. Counterparts of this letter amendment
shall have been executed by the Company, each Guarantor, each Pledgor and
you.
(II) Credit Fee. The Purchasers shall have received the credit fee
payable on June 30, 1999 referred to in paragraph 5Q of the Agreement, as
amended hereby.
(III) No Default or Event of Default. No Default or Event of Default
under the Agreement shall have occurred and be continuing.
(IV) Payment of Fees. Without limiting the provisions of paragraph
12B of the Agreement, Baker & Botts, L.L.P. shall have received its fees
and expenses incurred to the extent such fees and expenses are reflected in
a statement rendered to the Company on or prior to June 29, 1999.
(V) Legal Opinions. On the date hereof, the Purchasers shall have
received from the following counsel their respective opinions with respect
to the transactions contemplated by this letter amendment, which opinions
shall be in form and substance satisfactory to the Purchasers:
(a) Erik B. Carlson, general counsel of the Company and its
Subsidiaries.
(b) Jennifer J. May, associate counsel of certain Subsidiaries
of the Company.
Each of the Company and its Subsidiaries authorizes and directs its
counsel to furnish the foregoing opinions.
(I) Bank Consent. The Bank Agent and each other requisite holder, if
any, of Indebtedness issued under the Bank Agreement shall have consented,
to the extent required under the Bank Agreement and the Intercreditor
Agreement, to the modifications of the Agreement effected hereby, the terms
and conditions of such consent to be satisfactory to the Purchasers, and
shall have acknowledged that the Intercreditor Agreement remains in full
force and effect; and the covenants of the Company set forth in the Bank
Agreement shall have been amended to reflect the covenant modifications of
the Agreement made herein.
14
<PAGE>
(II) No Material Adverse Change.1.7. No Material Adverse Change.1.7.
No Material Adverse Change. There shall have been no Material Adverse
Change in the Company since April 30, 1998.
(III) Acquisition.1.10. Acquisition.1.10. Acquisition. Other than as
consented to by the Purchasers in writing:
(a) The provisions of the Acquisition Agreement shall not have
been amended, modified, waived or terminated.
(b) All of the representations and warranties of the Seller set
forth in the Acquisition Agreement shall be complete and correct in
all material respects on and as of June 30, 1999 with the same force
and effect as though made on and as of such date.
(c) All of the other conditions to the obligations of the
Company set forth in the Acquisition Agreement shall have been
satisfied.
(d) Any material consent, authorization, order or approval of
any Person required in connection with the transactions contemplated
by the Acquisition Agreement shall have been obtained and shall be in
full force and effect.
(e) All of the items required to be delivered under the
Acquisition Agreement shall have been so delivered.
(f) On June 30, 1999, the Company shall have furnished to the
Purchasers, a certificate, signed by a Financial Officer, to the
effect that the closing has occurred under the Acquisition Agreement.
(IV) Year 2000 Plan..1.11. Year 2000 Plan..1.11. Year 2000 Plan. The
Company and its Subsidiaries will have informed the Purchasers, in
reasonable detail, of the actions the Company and its Subsidiaries have
taken and will be taking to become Year 2000 Compliant.
(V) Pro forma Compliance.1.12. Pro forma Compliance.1.12. Pro forma
Compliance.
(a) After giving effect to the closing under the Acquisition
Agreement and the incurrence of the Indebtedness contemplated to be
incurred on June 30, 1999 under the Bank Agreement, the Company and
its Subsidiaries, taken as a whole:
15
<PAGE>
(i) will be solvent;
(ii) will have assets having a fair saleable value in
excess of the amount required to pay their probable liability on
their existing debts as such debts become absolute and mature;
(iii) will have access to adequate capital for the conduct
of their business; and
(iv) will have the ability to pay their debts from time to
time incurred as such debts mature.
(b) The Company shall have furnished to the Purchasers a
certificate, signed by a Financial Officer, to such effect, together
with calculations pursuant to paragraph 6C(4) and clause (ii)(b) of
paragraph 8B with respect to the Computation Covenants, in each case
using the financial statements of the Company and its Subsidiaries as
of March 31, 1999 and of the property being purchased by
TransMontaigne Terminaling Inc. under the Acquisition Agreement as of
March 31, 1999 and giving pro forma effect to the closing under the
Acquisition Agreement and the incurrence of the Indebtedness
contemplated to be incurred on June 30, 1999 under the Bank Agreement.
(VI) Proper Proceedings.2.2. Proper Proceedings.2.2. Proper
Proceedings. This letter amendment and each other Loan Document to be
delivered in connection herewith and the transactions contemplated hereby
and thereby shall have been authorized by all necessary corporate or other
proceedings. All necessary consents, approvals and authorizations of any
governmental or administrative agency or any other Person of any of the
transactions contemplated hereby or by any other Loan Document to be
delivered in connection herewith shall have been obtained and shall be in
full force and effect.
(VII) General.2.4. General.2.4. General. All legal and corporate
proceedings in connection with the transactions contemplated by this letter
amendment shall be satisfactory in form and substance to the Purchasers;
and the Purchasers shall have received copies of all documents, including
certified copies of the Charter and By-Laws of the Company and the other
Obligors, records of corporate proceedings, certificates as to signatures
and incumbency of officers and opinions of counsel, which the Purchasers
may have reasonably requested in connection therewith, such documents where
appropriate to be certified by proper corporate or governmental
authorities.
(d) Expenses. The Company confirms its agreement, pursuant to paragraph
12B of the Agreement, to pay promptly all expenses of the Purchasers related to
this letter amendment
16
<PAGE>
and all matters contemplated by this letter amendment, including without
limitation all fees and expenses of the Purchasers' special counsel.
(e) Governing Law. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF
THE STATE OF NEW YORK.
[Remainder of page intentionally left blank; signature pages follows]
17
<PAGE>
If you agree to the terms and provisions hereof, please evidence your
agreement by executing and returning at least a counterpart of this letter
amendment to TransMontaigne Inc., 370 17th Street, Suite 2750, Denver, Colorado
80202, Attention of Harold R. Logan, Jr.
Very truly yours,
TRANSMONTAIGNE INC.
(f/k/a TransMontaigne Oil Company)
By: /s/ Richard E. Gathright
------------------------
Title: President
Guarantors/Pledgors
TRANSMONTAIGNE PRODUCT SERVICES
MIDWEST INC. (f/k/a TransMontaigne Product
Services Inc.)
TRANSMONTAIGNE PIPELINE INC.
TRANSMONTAIGNE TERMINALING INC.
TRANSMONTAIGNE TRANSPORTATION
SERVICES INC.
BEAR PAW ENERGY INC.
TRANSMONTAIGNE PRODUCT SERVICES INC.
By: /s/ Richard E. Gathright
------------------------
As C.E.O. of each of the foregoing
corporations
18
<PAGE>
Agreed as of the date first above written:
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ Ric E. Abel
----------------------------------------
Vice President
U.S. PRIVATE PLACEMENT FUND
By: Prudential Private Placement
Investors, L.P., Investment Advisor
By: Prudential Private Placement
Investors, Inc., its General Partner
By: /s/ Ric E. Abel
----------------------------------------
Vice President
19
<PAGE>
EXHIBIT 21
TransMontaigne Inc.
List of Subsidiaries
<TABLE>
<CAPTION>
State/Country of Ownership of
Name of Subsidiary Organization Subsidiary Trade Name
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bear Paw Energy Inc. Colorado 100% None
Bear Paw Processing Company (Canada) Ltd. Canada 100% None
GOIN Inc. Colorado 100% None
K123 Corporation Colorado 100% None
Republic Natural Gas Company Kansas 100% None
TransMontaigne Canada Ltd. Canada 100% None
TransMontaigne Holding Inc. Arkansas 65% None
TransMontaigne Pipeline Inc. Arkansas 100% None
TransMontaigne Product Services Inc. Delaware 100% None
TransMontaigne Product Services Midwest Inc. Arkansas 100% None
TransMontaigne Terminaling Inc. Arkansas 100% Razorback Terminaling Co.
TransMontaigne Transportation Services Inc. Arkansas 100% None
</TABLE>
<PAGE>
Exhibit 23.1
The Board of Directors
TransMontaigne Inc.:
We consent to the incorporation by reference in the registration statement (No.
333-23691) on Form S-3 and the registration statements (Nos. 333-04405, 333-
15055 and 333-34579) on Form S-8 of TransMontaigne Inc. of our report dated
September 10, 1999, relating to the consolidated balance sheets of
TransMontaigne Inc. and subsidiaries as of June 30,1999 and April 30, 1998, and
the related consolidated statements of operations, stockholders' equity, and
cash flows for the year ended June 30, 1999, the two months ended June 30, 1998,
and the years ended April 30, 1998 and 1997, which report appears in the June
30, 1999, annual report on Form 10-K of TransMontaigne Inc..
KPMG LLP
Atlanta, Georgia
September 27, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> JUN-30-1999
<CASH> 13,926,666
<SECURITIES> 0
<RECEIVABLES> 174,121,534
<ALLOWANCES> 0
<INVENTORY> 378,207,319
<CURRENT-ASSETS> 570,610,653
<PP&E> 473,913,557
<DEPRECIATION> (37,571,926)
<TOTAL-ASSETS> 1,095,508,365
<CURRENT-LIABILITIES> 223,005,375
<BONDS> 495,671,800
0
1,701
<COMMON> 304,791
<OTHER-SE> 375,744,698
<TOTAL-LIABILITY-AND-EQUITY> 1,095,508,365
<SALES> 0
<TOTAL-REVENUES> 3,047,060,694
<CGS> 0
<TOTAL-COSTS> 3,016,881,956
<OTHER-EXPENSES> 1,289,825<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,495,361
<INCOME-PRETAX> 3,393,552
<INCOME-TAX> 1,454,793
<INCOME-CONTINUING> 1,938,759
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (335,362)<F2>
<EPS-BASIC> (0.01)<F3>
<EPS-DILUTED> (0.01)
<FN>
<F1>NET OF OTHER INCOME
<F2>NET LOSS AVAILABLE FOR COMMON STOCKHOLDERS AFTER $2,274,121 PREFERRED
STOCK DIVIDENDS
<F3>REPRESENTS BASIC EARNINGS PER SHARE
</FN>
</TABLE>
