___________________________________________________________________________
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 [FEE REQUIRED]
For the fiscal year ended September 30, 1996 or
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________________ to _______________
Commission file number 1-10105
MATLACK SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 51-0310173
(State of Incorporation) I.R.S. Employer Identification Number)
ONE ROLLINS PLAZA, WILMINGTON, DELAWARE 19803
(Address of principal executive offices)
Registrant's telephone number including area code (302) 426-2700
Securities registered pursuant to Section 12(b) of the Act:
Title of Class Name of exchange on which
registered
Common Stock, $1 Par Value NEW YORK 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 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
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. / /
The aggregate market value of the voting stock held by non-affiliates of
the registrant was $49,775,000 as of October 31, 1996.
The number of shares of registrant's common stock outstanding as of
October 31, 1996 was 8,756,896.
The following documents are incorporated by reference:
Part of this form into which
Document incorporated
Proxy Statement in connection with
Annual Meeting of Shareholders to be
held January 30, 1997 III
PART I
ITEM 1. BUSINESS.
The Registrant, Matlack Systems, Inc., together with its subsidiaries
(herein collectively referred to as the "Company" unless the context
indicates otherwise) is a specialized logistics and transportation company
that provides specialized transportation of bulk commodities in tank trailers
and tank containers to the nation's leading chemical and dry bulk shippers.
In addition to specialized trucking, the Company provides intermodal
transportation services, trailer leasing, dedicated contract carriage
services, international bulk transportation, tank cleaning services and
logistics management services to the chemical industry. The Company operates
approximately 1,100 tractors and 2,600 trailers out of approximately 100
terminals located in 37 states and four Canadian provinces.
(a) General Development of Business
There have been no significant changes in the business of the Company
since September 30, 1995.
(b) Financial Information about Industry Segments
The Company's principal operation is the transportation of bulk
commodities in tank trailers. Financial information concerning this business
is included on pages 2 to 5 and 8 through 18 of this 1996 Annual Report on
Form 10-K.
(c) Narrative Description of Business
The business discussed in this section is that of the Company's major
operating subsidiary Matlack, Inc. ("Matlack"), the bulk carrier.
In terms of revenues, Matlack is one of the largest companies in the
country engaged in highway transportation of bulk commodities primarily in
tank trailers. Matlack is one of the few nationwide interstate tank truck
carriers authorized to transport chemicals and other dry and liquid products
in bulk. Matlack also operates on an intrastate basis in 37 states.
Matlack is subject to regulation by the Interstate Commerce Commission and
various state regulatory agencies. As a common and contract carrier by motor
vehicle, Matlack holds certificates of public convenience and necessity
issued by the regulatory agencies. These certificates define the commodities
that the holder is authorized to transport and the points of origin and
destination for carriers of such commodities. Matlack has terminals in
Toronto and Sarnia, Ontario; Montreal, Quebec; Vancouver, British Columbia
and Leduc, Alberta and it holds operating licenses under which it may
transport various commodities into and out of certain Canadian Provinces via
specific border entry points from the United States. To the best of its
knowledge, Matlack is in compliance with the regulations of the Interstate
Commerce Commission and those of the various state and provincial regulatory
agencies where it operates.
The business of the Company is generally not subject to seasonal
variations, however, highway transportation activities can be adversely
affected depending on the severity of the weather in the various sections of
the country during the winter months. No customer accounts for more than 7%
of the Company's consolidated revenues.
Competition
For the most part, Matlack's competition consists of those bulk carriers
having operating authority in the relevant jurisdictions. Competition is
based primarily on service, rates and convenience. Competition in the bulk
trucking industry formerly was restricted and was based primarily on a
carrier's ability to obtain certificates of public convenience and necessity
to transport defined commodities in specific geographic areas. Since the
passage of the Motor Carrier Act of 1980, many bulk carriers have obtained
authority to serve expanded geographic areas on an interstate basis, which,
together with excess capacity, has resulted in the intensification of price
competition.
To the extent that competition is based on service and convenience, the
number and location of Matlack's terminals, together with its ability to
clean tank trailers places Matlack in a favorable position to increase its
business. Management believes that Matlack's fleet of trailers is one of the
largest and most diversified in the tank truck industry. Matlack's network
of strategically located terminal facilities is, in management's opinion, one
of the largest and the best in the industry.
Matlack's largest competitors in the tank truck industry, based upon a
comparison of gross revenues, are Trimac Limited, MTL Inc. and Chemical
Leaman Tank Lines, Inc. In addition, there are approximately 190 other
recognized competitors operating in the various regions where Matlack has
operating authority.
The Company believes that its contractual arrangements and business
policies are adequate in securing rate increases to recover rising costs and
expenses to the extent permitted by competitive circumstances, which remain
intense. Unusual increases in fuel costs can generally be offset by fuel
surcharges to customers. Accordingly, while inflation has had some impact on
the Company's operations during the last three fiscal years, competition
within the industry has been a major factor in establishing the rates that
the Company can charge for its services.
Employees
At September 30, 1996, a total of 1,069 persons were employed by the
Company.
ITEM 2. PROPERTIES.
The Company maintains its headquarters in space leased from Rollins
Properties, Inc., a wholly-owned subsidiary of Rollins Truck Leasing Corp.,
at 2200 Concord Pike, Wilmington, Delaware. The Company's principal
properties consist of land and buildings used in its bulk trucking business.
Matlack owns or leases approximately 100 truck terminals in 37 states and
five terminals in four Canadian provinces.
ITEM 3. LEGAL PROCEEDINGS.
There are various claims and legal actions pending against the Company.
In the opinion of management, based on the advice of counsel, it is only
remotely likely that the ultimate resolution of these claims and actions will
be material.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
NONE.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS.
For the fiscal years ended September 30, 1996 and 1995, the range of
share prices for the Common Stock on the New York Stock Exchange is as
follows:
1996 1995
Fiscal Quarter High Low High Low
First . . . . $10 1/2 $8 1/4 $10 7/8 $9 3/8
Second . . . . $ 9 3/4 $7 7/8 $12 $9 5/8
Third . . . . $ 9 3/8 $8 $12 1/4 $9 7/8
Fourth . . . . $ 8 3/8 $7 3/8 $11 $9 1/2
No dividends have been paid since the Company became publicly held in January
of 1989.
At September 30, 1996, there were 1,811 holders of record of the Common
Stock.
ITEM 6. SELECTED FINANCIAL DATA.
FIVE-YEAR SELECTED FINANCIAL DATA
(Dollars in Thousands, Except Per Share Amounts)
Year Ended September 30, 1996 1995 1994 1993 1992
Revenues $224,866 $236,257 $217,880 $204,809 $199,488
Earnings (loss)
before income
taxes (benefit) $ (1,703)(1) $ 11,211 $ 10,516 $ 8,054 $ 4,043(3)
Net earnings (loss) $ (1,477)(1) $ 6,601 $ 6,182 $ 4,414(2) $ 2,153(4)
Earnings (loss)
per share $ (.17)(1) $ .74 $ .69 $ .50(2) $ .25(4)
At September 30,
Total assets $128,127 $131,974 $122,526 $105,363 $101,091
Long-term
indebtedness $ 29,878 $ 32,970 $ 24,800 $ 20,360 $ 22,418
Shareholders'
equity $ 55,676 $ 57,532 $ 50,726 $ 44,297 $ 39,763
(1) Includes a special charge of $4,000 ($2,432 after tax benefit or $.28
per share).
(2) Reduced by additional deferred income tax provision of $169 ($.02 per
share) to reflect the increase in the federal
income tax rate from 34% to 35%.
(3) Before charge of $328 to reflect a change in the method of revenue
recognition.
(4) Reduced by $190 ($.02 per share) representing the cumulative after-tax
effect to September 30, 1991 of a change
in the method of revenue recognition as of October 1, 1991.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Liquidity and Capital Resources
The Company's operations require periodic investment in equipment and
facilities. Net capital expenditures for equipment and facilities were $7.6
million in 1996, $25.7 million in 1995 and $20.0 million in 1994. Capital
expenditures are funded principally by the cash flows from operations, which
were $11.2 million in 1996, $14.6 million in 1995 and $16.4 million in 1994.
The increased capital spending in 1995 required additional funding provided
by equipment term loans from various financial institutions. The Company's
strong cash flows from operations in 1996 were used in part to reduce debt by
approximately $3.0 million. Based on its relationship with current lenders,
the Company expects to continue to be able to obtain required financing at
market rates and under satisfactory terms and conditions.
At September 30, 1996, the Company had commitments of $3.4 million to
purchase transportation equipment. As necessary, additional funds are
available to the Company from its unsecured revolving credit facility and
from other financial institutions who have expressed an interest in providing
equipment financing. The revolving credit agreement with two banks provides
for an aggregate commitment of $30.0 million to meet equipment financing
needs and letter of credit requirements. The agreement expires on March 31,
1997, but may be renewed on a year-to-year basis thereafter upon agreement of
the parties thereto. At September 30, 1996, a total of $4.7 million was
available under this credit facility.
In the normal course of its business, Matlack, Inc. ("Matlack") is subject
to numerous state and federal environmental laws and regulations and also is
exposed to the cost and risk of transporting and handling materials and
wastes characterized as hazardous by various regulatory agencies. Matlack
has received notices from the United States Environmental Protection Agency
("EPA") and others indicating that it is a "potentially responsible party"
with respect to the cleanup of hazardous wastes at several waste disposal
sites. Matlack has been named as a defendant in several lawsuits brought
under the Comprehensive Environmental Response, Compensation and Liability
Act ("CERCLA") for recovery of costs associated with the cleanup of waste
disposal sites. In addition, Matlack has responded to various governmental
requests, principally those of the EPA pursuant to CERCLA, for information
with respect to possible disposition of waste materials attributable to it at
various waste disposal sites. Based on information currently available, the
Company's management believes its ultimate liability at these sites will not
have a material adverse effect upon the Company.
Results of Operations
The Company's principal line of business is the transportation of liquid
and dry material by tank trucks. Competition in this industry remained
intense during the past three years due to the excess capacity of the
carriers.
The Company believes that its contractual arrangements and business
policies generally are adequate in securing rate increases to recover rising
fuel and other costs and expenses to the extent permitted by competitive
circumstances, which remain intense.
Fiscal Year 1996 vs. 1995
Revenues for 1996 decreased by $11.4 million (4.8%) to $224.9 million from
the $236.3 million reported in 1995. Total revenue miles decreased by 5.7%
in 1996 while the number of loads carried decreased by 7.0% compared with the
prior year. The Company's ancillary service revenues increased during the
current year but the increase was not sufficient to offset the decline
experienced in domestic bulk trucking revenues.
Operating expenses decreased by $3.4 million (1.8%) reflecting the
decrease in revenues and a significant reduction in the Company's utilization
of leased operators. Operating expenses were 84.3% of revenues in 1996 and
81.7% of revenues in 1995.
During the fourth quarter of 1996, the Company recorded a special charge
of $4,000,000 ($2,432,000 after tax benefit or $.28 per share). The charge
included costs associated with a reduction in the tractor fleet, reflecting
the weak business conditions of the bulk trucking industry, and provision for
closing certain terminals, the operation of which is no longer cost-
effective, and related costs of $1,350,000. Also included in the charge was
$1,900,000 related to reserves for medical, disability, workers' compensation
and other insurance claims that continue to be evaluated and $750,000 for
third party claims.
Depreciation expense increased by $1.8 million (17.8%) principally due to
the increase in capital expenditures associated with the Company's tractor
replacement program and several major new facilities completed in 1995.
Selling and administrative expenses decreased by $.5 million (2.7%)
reflecting the lower level of business. These expenses were 8.1% and 7.9% of
revenue in 1996 and 1995, respectively.
Interest expense decreased by $.3 million (9.4%) due to a reduction of
borrowings and lower average interest rates during 1996.
The rate of income tax benefit in 1996 was 13.3%. The low effective rate
of benefit was caused by the impact that non-deductible expenses had upon the
tax computations. The effective income tax rate in 1995 was 41.1%.
The Company's net loss for the year was $1,477,000 or $.17 per share
compared with net earnings of $6,601,000 or $.74 per share in 1995.
Exclusive of the special charge, the Company's reported net earnings were
$955,000 or $.11 per share.
Fiscal Year 1995 vs. 1994
Revenues for 1995 increased by $18.4 million (8.4%) to $236.3 million from
the $217.9 million reported in 1994. Total revenue miles increased by 7.9%
in 1995 while the number of loads carried increased by 4.7% over the prior
year. In addition to the bulk transportation revenue growth, the Company
noted strong increases in tank cleaning and other service revenues.
Operating expenses increased by $13.5 million (7.5%) mainly due to costs
associated with the increased revenues and fleet size. Operating expenses
were 81.7% of revenues in 1995 and 82.5% of revenues in 1994.
Depreciation expense increased by $1.8 million (21.7%) principally due to
the increase in capital expenditures associated with the Company's tractor
replacement program, which was completed in 1995.
Selling and administrative expenses increased by $.9 million (5.1%)
reflecting the increased level of business. These expenses were 7.9% and
8.2% of revenue in 1995 and 1994, respectively.
Interest expense increased by $1.1 million (52.4%) due to the higher
borrowing levels associated with the Company's increased level of capital
spending in 1995.
The effective income tax rates for 1995 and 1994 were 41.1% and 41.2%,
respectively.
The Company's net earnings increased by 6.5% to $6.6 million in 1995
compared with $6.2 million in 1994. The improvement in net earnings resulted
mainly from the increased revenues offset in large part by higher
depreciation and interest expense.
Impact of Recent Accounting Pronouncements
During 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of"
(SFAS 121) and SFAS No. 123, "Accounting for Stock-Based Compensation" (SFAS
123), which are both effective in fiscal 1997. The Company has determined
that SFAS 121 will not have a material effect on its financial statements.
The Company has also decided to adopt only the disclosure provisions of SFAS
123 when required in fiscal 1997.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements of the Company, the Independent
Auditors' Report and the financial statement schedules included in this
report are shown on the Index to the Consolidated Financial Statements and
Schedules on page 8.
ITEM 9. DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
NONE.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Except as presented below, the information called for by this Item 10
is incorporated by reference from the Company's Proxy Statement to be filed
pursuant to Regulation 14A for the Annual Meeting of Shareholders to be held
on January 30, 1997.
Executive Officers of the Registrant. As of October 31, 1996, the
Executive Officers of the registrant were:
Name Position Age Term of Office
Patrick J. Bagley Vice President-Finance and 49 7/88 to date
Treasurer
Michael B. Kinnard Vice President-General Counsel 39 6/94 to date
and Secretary
John W. Rollins, Jr. Chairman of the Board 54 7/88 to date
G. J. Trippitelli President and Chief Executive 53 7/88 to date
Officer
Eugene C. Bonacci Senior Vice President and 56 10/96 to date
Chief Operating Officer
The Company's Executive Officers are elected for the ensuing year and
until their successors are elected.
ITEM 11. EXECUTIVE COMPENSATION.
The information called for by this Item 11 is incorporated by
reference from the Company's Proxy Statement to be filed pursuant to
Regulation 14A for the Annual Meeting of Shareholders to be held on January
30, 1997.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The information called for by this Item 12 is incorporated by
reference from the Company's Proxy Statement to be filed pursuant to
Regulation 14A for the Annual Meeting of Shareholders to be held on January
30, 1997.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
During the year ended September 30, 1996, the following officers
and/or directors of the Company were also officers and/or directors of
Rollins Environmental Services, Inc.; Patrick J. Bagley, Michael B. Kinnard,
William B. Philipbar, Jr., John W. Rollins, John W. Rollins, Jr. and Henry B.
Tippie. The following officers and/or directors of the Company were also
officers and/or directors of Rollins Truck Leasing Corp.; Patrick J. Bagley,
Michael B. Kinnard, William B. Philipbar, Jr., John W. Rollins, John W.
Rollins, Jr. and Henry B. Tippie. John W. Rollins owns directly and of
record 6.1% and 11.2% of the outstanding shares of Common Stock of Rollins
Environmental Services, Inc. and Rollins Truck Leasing Corp., respectively at
October 31, 1996. The description of transactions between the Company and
Rollins Environmental Services, Inc. and between the Company and Rollins
Truck Leasing Corp. appears under the caption "Transactions with Related
Parties" on page 17 of this 1996 Annual Report on Form 10-K.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) (1) Financial Statements - See accompanying Index to Consolidated
Financial Statements and Schedules on page 8.
(2) Financial Statement Schedules - See accompanying Index to
Consolidated Financial Statements and Schedules on page 8.
(3) Exhibits:
(3) Articles of Incorporation and By-Laws of Matlack Systems,
Inc. as filed with Registration Statement No. 33-23524
dated August 5, 1988 are incorporated herein by
reference.
(4) (a) Credit Agreements and Amendment, see Exhibit 10.
(b) Rights Agreement dated as of June 14, 1989 as filed as an
Exhibit to Registration Statement on Form 8-A filed by
Registrant on June 15, 1989 is incorporated herein by
reference.
(10) (a) Master Credit Agreement dated as of March 27, 1996
between Matlack (DE), Inc. et al, Bank of America
Illinois and First Union National Bank.
(b) Credit Agreement dated as of March 27, 1996 between
Matlack (DE), Inc. et al and Bank of America Illinois.
(c) Credit Agreement dated as of May 22, 1996 between Matlack
(DE), Inc. et al and First Union National Bank.
(d) First Amendment to Master Credit Agreement dated August
9, 1996 between Matlack (DE), Inc. et al, Bank of America
Illinois and First Union National Bank.
(e) Matlack Systems, Inc. 1988 Stock Option Plan as filed
with Registration Statement No. 33-23524 dated August 5,
1988 is incorporated herein by reference.
(f) Matlack Systems, Inc. 1995 Stock Option Plan, as filed
with the Company's Proxy Statement for the Annual Meeting
of Shareholders held on January 25, 1996, is incorporated
hereby by reference.
(21) Matlack Systems, Inc. Subsidiaries at September 30, 1996.
(27) Matlack Systems, Inc. Financial Data Schedule at
September 30, 1996.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed by Matlack Systems, Inc. during the last
quarter of the period covered by this report.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
DATED: November , 1996 Matlack Systems, Inc.
(Registrant)
BY:
G. J. Trippitelli
President and Chief Executive Officer
and Director
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
Director, Vice President-Finance November ,
1996
Patrick J. Bagley and Treasurer
Chief Financial Officer
Chief Accounting Officer
Director, Chairman of the November ,
1996
John W. Rollins, Jr. Board
Director November , 1996
John W. Rollins
Chairman of the Executive November ,
1996
Henry B. Tippie Committee and Director
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
DATED: November , 1996 Matlack Systems, Inc.
(Registrant)
BY: /s/ G. J. Trippitelli
G. J. Trippitelli
President and Chief Executive Officer
and Director
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
/s/ Patrick J. Bagley Director, Vice President-Finance November 26, 1996
Patrick J. Bagley and Treasurer
Chief Financial Officer
Chief Accounting Officer
/s/ John W. Rollins, Jr. Director, Chairman of the November 26, 1996
John W. Rollins, Jr. Board
/s/ John W. Rollins Director November 26, 1996
John W. Rollins
/s/ Henry B. Tippie Chairman of the Executive November 26, 1996
Henry B. Tippie Committee and Director
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
(1) Consolidated
Page(s)
Independent Auditors' Report on Financial Statements and
Financial Statement Schedules 9
Consolidated Statement of Earnings for the years ended
September 30, 1996, 1995 and 1994 10
Consolidated Balance Sheet at September 30, 1996 and 1995 11
Consolidated Statement of Cash Flows for the years ended
September 30, 1996, 1995 and 1994 12
Notes to the Consolidated Financial Statements 13 to 18
(2) Financial Statement Schedules
Matlack Systems, Inc.
Schedule I - Condensed Financial Information
Balance Sheet at September 30, 1996 and 1995 19
Statement of Earnings for the years ended
September 30, 1996, 1995 and 1994 20
Statement of Cash Flows for the years ended
September 30, 1996, 1995 and 1994 21
Note to the Financial Statements 22
Matlack Systems, Inc. and Subsidiaries Consolidated
Schedule II - Valuation and Qualifying Accounts
for the years ended September 30,
1996, 1995 and 1994 23
Any financial statement schedules otherwise required have been omitted
because they are not applicable or the required information is shown in the
financial statements or notes thereto.
<PAGE>
Independent Auditors' Report
The Shareholders and Board of Directors
Matlack Systems, Inc.:
We have audited the consolidated financial statements of Matlack
Systems, Inc. and subsidiaries as listed in the accompanying index. In
connection with our audits of the consolidated financial statements, we also
have audited the financial statement schedules as listed in the accompanying
index. These consolidated financial statements and financial statement
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedules 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 Matlack
Systems, Inc. and subsidiaries as of September 30, 1996 and 1995, and the
results of their operations and their cash flows for each of the years in the
three-year period ended September 30, 1996, in conformity with generally
accepted accounting principles. Also in our opinion, the related financial
statement schedules, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly, in all material
respects, the information set forth therein.
KPMG Peat Marwick LLP
Philadelphia, Pennsylvania
October 23, 1996
<PAGE>
CONSOLIDATED STATEMENT OF EARNINGS
Year Ended September 30
1996 1995 1994
Revenues $224,866,000 $236,257,000 $217,880,000
Expenses:
Operating 189,653,000 193,131,000 179,648,000
Special charge 4,000,000 - -
Depreciation 11,917,000 10,079,000 8,261,000
Selling and administrative 18,197,000 18,708,000 17,837,000
Other income (101,000) (110,000) (433,000)
223,666,000 221,808,000 205,313,000
Operating earnings 1,200,000 14,449,000 12,567,000
Interest expense 2,903,000 3,238,000 2,051,000
Earnings (loss) before income
taxes (benefit) (1,703,000) 11,211,000 10,516,000
Income taxes (benefit) (226,000) 4,610,000 4,334,000
Net earnings (loss) $ (1,477,000) $ 6,601,000 $ 6,182,000
Earnings (loss) per share $ (.17) $ .74 $ .69
Common shares and equivalents
outstanding 8,812,000 8,907,000 8,899,000
The Notes to the Consolidated Financial Statements are an integral part of
these statements.<PAGE>
CONSOLIDATED BALANCE SHEET
September 30,
1996 1995
ASSETS
Current assets
Cash $ 3,019,000 $ 2,845,000
Accounts receivable, net of allowance
for doubtful accounts: 1996-$414,000;
1995-$391,000 24,282,000 24,688,000
Inventories 5,439,000 6,307,000
Other current assets 2,907,000 3,071,000
Refundable income taxes 1,114,000 -
Deferred income taxes 1,885,000 1,586,000
Total current assets 38,646,000 38,497,000
Property and equipment, net 89,267,000 93,454,000
Other assets 214,000 23,000
Total assets $128,127,000 $131,974,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 10,047,000 $ 10,603,000
Accrued liabilities 10,174,000 9,146,000
Income taxes payable - 53,000
Current maturities of long-term debt 6,213,000 6,169,000
Total current liabilities 26,434,000 25,971,000
Long-term debt 29,878,000 32,970,000
Insurance reserves 1,716,000 1,795,000
Other liabilities 2,023,000 2,157,000
Deferred income taxes 12,400,000 11,549,000
Commitments and contingencies (see Notes to
the Consolidated Financial Statements)
Shareholders' equity:
Common stock $1.00 par value
Outstanding: 1996-8,762,116 shares;
1995-8,800,050 shares 8,762,000 8,800,000
Additional paid-in capital 10,553,000 10,894,000
Retained earnings 36,361,000 37,838,000
Total shareholders' equity 55,676,000 57,532,000
Total liabilities and shareholders' equity $128,127,000 $131,974,000
The Notes to the Consolidated Financial Statements are an integral part of
these
statements.<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended September 30,
1996 1995 1994
Cash flows from operating activities:
Net earnings (loss) $(1,477,000) $ 6,601,000 $ 6,182,000
Adjustments to reconcile
net earnings (loss) to
net cash provided by
operating activities:
Special charge 4,000,000 - -
Depreciation and amortization 11,921,000 10,079,000 8,386,000
Net gain on sale of equipment (102,000) (110,000) (433,000)
Changes in assets and liabilities:
Accounts receivable 406,000 2,697,000 (3,323,000)
Inventories and other assets 841,000 849,000 (616,000)
Accounts payable and accrued
liabilities (2,317,000) (6,970,000) 6,362,000
Current and deferred
income taxes (615,000) 2,174,000 279,000
Other, net (1,424,000) (750,000) (406,000)
Net cash provided by operating
activities 11,233,000 14,570,000 16,431,000
Cash flows from investing activities:
Purchase of property and equipment (7,895,000) (28,474,000) (22,561,000)
Proceeds from the sale of equipment 263,000 2,822,000 2,573,000
Net cash used in investing activities (7,632,000) (25,652,000) (19,988,000)
Cash flows from financing activities:
Proceeds of long-term debt 37,960,000 41,002,000 26,601,000
Repayment of long-term debt (41,008,000) (32,319,000) (22,285,000)
Exercise of stock options 46,000 205,000 263,000
Common stock acquired and retired (425,000) - -
Other - - (16,000)
Net cash (used in) provided by
financing activities (3,427,000) 8,888,000 4,563,000
Net increase (decrease) in cash 174,000 (2,194,000) 1,006,000
Cash beginning of period 2,845,000 5,039,000 4,033,000
Cash end of period $ 3,019,000 $ 2,845,000 $ 5,039,000
Supplemental information:
Interest paid $ 2,861,000 $ 3,233,000 $ 2,043,000
Income taxes paid $ 389,000 $ 2,436,000 $ 4,055,000
The Notes to the Consolidated Financial Statements are an integral part of
these
statements.
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Organization and Accounting Policies
Organization - Matlack Systems, Inc., together with its subsidiaries, is a
specialized logistics and transportation company that provides specialized
transportation of bulk commodities in tank trailers and tank containers to
the nation's leading chemical and dry bulk shippers. In addition to
specialized trucking, the Company provides intermodal transportation
services, trailer leasing, dedicated contract carriage services,
international bulk transportation, tank cleaning services and logistics
management services to the chemical industry.
Consolidation - The consolidated financial statements include the accounts
of all subsidiaries with appropriate elimination of intercompany transactions
and balances.
Revenue recognition - The Company recognizes revenue when shipments are
delivered.
Earnings per share - Earnings per share are computed assuming the
conversion of all potentially dilutive securities, namely options to purchase
shares of the Company's stock.
Inventories - Inventories of transportation equipment parts and supplies
are valued at the lower of first-in, first-out cost or market. Tires on
vehicles, including new or recapped replacement tires, are valued at cost and
are written off over the expected aggregate useful life which approximates
two to three years.
Property and equipment - Property and equipment are recorded at cost.
Depreciation is provided on a straight-line basis net of salvage or residual
values. Gains or losses on sales or retirements of property and equipment
are included in other income in the Consolidated Statement of Earnings.
Repairs and maintenance are expensed as incurred. Improvements which extend
the original life of the assets are capitalized and depreciated over the
remaining lives of the assets.
Claims and insurance reserves - The Company retains a specific portion of
insurable risks with regard to public liability and workers' compensation
claims. Retention levels are currently $500,000. Reserves are established
for claims incurred plus an estimate for claims incurred but not reported.
Reserve requirements are evaluated and established utilizing historical
trends, the Company's experience, claim severity and other factors. Claims
estimated to be paid within one year have been classified in accrued
liabilities with the balance reflected as non-current insurance reserves.
Use of estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Fair values of financial instruments - The carrying amounts reported in the
balance sheet for current assets and current liabilities approximate their
fair value at September 30, 1996.
Special Charge
During the fourth quarter of 1996, the Company recorded a special charge of
$4,000,000 ($2,432,000 after tax benefit or $.28 per share). The charge
included costs associated with a reduction in the tractor fleet, reflecting
the weak business conditions of the bulk trucking industry, and provision for
closing certain terminals, the operation of which is no longer cost-
effective, and related costs of $1,350,000. Also included in the charge was
$1,900,000 related to reserves for medical, disability, workers' compensation
and other insurance claims which continue to be evaluated and $750,000 for
third party claims.
Property and Equipment
The Company's property and equipment accounts are as follows:
Useful
September 30, 1996 1995 Lives
Land $ 13,861,000 $ 13,576,000
Transportation equipment 137,434,000 136,261,000 4 to 12 years
Transportation service facilities 63,830,000 58,968,000 5 to 40 years
Less accumulated depreciation (125,858,000) (115,351,000)
$ 89,267,000 $ 93,454,000
The Company had commitments for the purchase of transportation equipment
of $3,433,000 at September 30, 1996.
Long-Term Debt
Long-term debt is as follows:
September 30,
1996 1995
Revolving credit agreement - $30,000,000 line $17,700,000 $14,750,000
Equipment financing obligations due banks
and other financial institutions with
equipment pledged as security at interest
rates ranging from 6.5% to 8.0%, payable
in installments to 2003 16,170,000 21,692,000
Real estate mortgage obligations, at interest
rates ranging from 5.8% to 8.0%, with land
and buildings of $5,131,000 pledged as
collateral, payable in installments over
various periods to 2001 2,221,000 2,697,000
Less amounts due within one year (6,213,000) (6,169,000)
$29,878,000 $32,970,000
The revolving credit agreement is unsecured but, at the option of the
banks, amounts outstanding under the agreement may be secured with unpledged
equipment and accounts receivable. Interest rates on borrowings under the
agreement averaged 6.9% at September 30, 1996. The agreement requires the
maintenance of certain financial ratios, restricts the payment of dividends
and regulates payments to affiliated companies. As of September 30, 1996, a
subsidiary was not in compliance with one of the agreement's covenants but
has received a waiver with respect to such covenant and management believes
it will be in compliance with this covenant for fiscal year 1997. The credit
agreement expires on March 31, 1997 but may be renewed on a year-to-year
basis thereafter upon agreement of the parties thereto. Termination of the
agreement would result in the repayment of the outstanding loan balance over
a period of 60 months in equal monthly installments. Otherwise, no
repayments are required unless the financing value of the equipment and
accounts receivable falls below the outstanding principal balance of the
loan.
The aggregate amounts of maturities for all indebtedness during the next
five fiscal years are as follows: 1997-$6,213,000; 1998-$5,213,000; 1999-
$4,341,000; 2000-$1,280,000 and 2001-$630,000.
Based upon borrowing rates available to the Company for long-term debt
with similar terms and maturities, the carrying amounts approximate the fair
value of such financial instruments.
Accrued Liabilities
Accrued liabilities are as follows:
September 30,
1996 1995
Employee compensation $ 3,722,000 $3,851,000
Insurance reserves 2,577,000 2,373,000
Taxes other than income 1,394,000 1,206,000
Other 2,481,000 1,716,000
$10,174,000 $9,146,000
<TABLE>
Shareholders' Equity
Changes in the components of shareholders' equity are as follows:
<CAPTION>
$1 Par Value Additional Total
Common Paid-in Retained Shareholders'
Stock Capital Earnings Equity
<S> <C> <C> <C> <C>
Balance at September 30, 1993 $5,779,000 $13,463,000 $25,055,000 $ 44,297,000
Net earnings 6,182,000 6,182,000
Three-for-two common stock split 2,916,000 (2,932,000) (16,000)
Exercise of stock options 62,000 201,000 263,000
Balance at September 30, 1994 8,757,000 10,732,000 31,237,000 50,726,000
Net earnings 6,601,000 6,601,000
Exercise of stock options 43,000 162,000 205,000
Balance at September 30, 1995 8,800,000 10,894,000 37,838,000 57,532,000
Net loss (1,477,000) (1,477,000)
Exercise of stock options 17,000 29,000 46,000
Common stock acquired and retired (55,000) (370,000) (425,000)
Balance at September 30, 1996 $8,762,000 $10,553,000 $36,361,000 $655,676,000
The Company is authorized to issue 24,000,000 shares of $1 Par Value Common Stock and 1,000,000
shares of $1 Par Value Preferred Stock. The terms and conditions of each issue of preferred shares
will be determined by the Board of Directors. No preferred shares have been issued.
Each share of common stock includes one common stock purchase right ("Right") which is non-
exercisable until certain defined events occur, including tender offers or the acquisition by a person
or group of affiliated or associated persons of 20% of the Company's common stock. Upon the occurrence
of certain defined events, the Right entitles the holder to purchase additional stock of the Company
or stock of an acquiring company at a 50% discount. The Right expires on June 30, 1999 unless earlier
redeemed by the Company at a price of $.0067 per Right.
Under the terms of the revolving credit agreement, the Company's major subsidiary may not make
equity distributions to the Company in an amount which exceeds $4,000,000 plus 25% of its aggregate net
earnings after September 30, 1995. Net assets of this subsidiary not restricted under the agreement
totaled $4,000,000 at September 30, 1996.
</TABLE>
Stock Option Plans
Under the Company's stock option plans, options to purchase common stock
of the Company may be granted to officers and key salaried employees at not
less than 100% of the fair market value on the date of grant. Option
activity is summarized as follows:
Year Ended September 30,
1996 1995 1994
Number of options:
Outstanding at beginning
of year 491,018 424,128 505,969
Granted 181,200 124,900 20,115
Exercised (17,066) (43,724) (87,473)
Expired or canceled (10,725) (14,286) (14,483)
Outstanding at September 30 644,427 491,018 424,128
At September 30:
Options available for grant 374,079 44,554 155,168
Options exercisable 227,638 136,265 92,610
Per share prices:
Options granted $8.25 $9.50 to $ 9.75 $9.25 to $11.33
Options exercised $2.42 to $ 3.00 $2.42 to $ 9.00 $2.42 to $ 8.92
Options outstanding at
September 30 $2.42 to $11.33 $2.42 to $11.33 $2.42 to $11.33
Lease Commitments
The Company leases certain of its transportation service and
administrative facilities, office space and transportation equipment. These
leases are classified as operating leases and expire on various dates during
the next nine years. Minimum future payments required under operating leases
having non-cancelable terms in excess of one year as of September 30 are
considered in the lease commitments.
Total rent expense incurred under operating leases for the fiscal years
ended September 30, 1996, 1995 and 1994 amounted to $14,643,000, $13,732,000
and $6,672,000, respectively.
Minimum future payments are as follows:
Year Ending September 30,
1997 $ 9,602,000
1998 6,994,000
1999 4,404,000
2000 1,626,000
2001 789,000
Later years 296,000
Total minimum payments required $23,711,000
Income Taxes
The tax provisions (benefit) for the three years ended September 30, 1996
are comprised as follows:
Year Ended September 30,
1996 1995 1994
Current: Federal $(223,000) $2,270,000 $2,699,000
State 77,000 556,000 739,000
Deferred: Federal (68,000) 1,469,000 759,000
State (12,000) 315,000 137,000
Total income taxes (benefit) $(226,000) $4,610,000 $4,334,000
A reconciliation of the tax provisions (benefit) for the three years ended
September 30, 1996 with amounts calculated by applying the statutory federal
income tax rate for those years to earnings (loss) before income taxes
(benefit) is as follows:
Year Ended September 30,
1996 1995 1994
Federal tax at statutory rate $(596,000) $3,924,000 $3,580,000
State taxes, net of federal benefit 43,000 567,000 577,000
Non-deductible business expenses 294,000 298,000 130,000
Other, net 33,000 (179,000) 47,000
Total income taxes (benefit) $(226,000) $4,610,000 $4,334,000
The tax effect of temporary differences that comprise the current and non-
current deferred income tax amounts shown on the balance sheet are as
follows:
September 30,
1996 1995
Depreciation $12,808,000 $11,590,000
Expenses deductible when paid (2,334,000) (1,815,000)
Other 41,000 188,000
Deferred income taxes, net $10,515,000 $ 9,963,000
Pension Plans
The Company maintains a noncontributory pension plan for eligible
employees not covered by pension plans under collective bargaining
agreements. Pension costs for this plan are funded in accordance with the
provisions of the Internal Revenue Code. The Company also maintains a
nonqualified, non-contributory defined benefit pension plan for certain
employees to restore pension benefits reduced by federal income tax
regulations. The cost associated with the plan is determined using the same
actuarial methods and assumptions as those used for the Company's qualified
pension plan.
The components of net periodic pension cost are as follows:
Year Ended September 30,
1996 1995 1994
Service cost $ 545,000 $ 510,000 $ 496,000
Interest cost 686,000 591,000 520,000
Return on plan assets (1,004,000) (1,309,000) 7,000)
Net amortization and deferral 280,000 772,000 (551,000)
Net periodic pension cost $ 507,000 $ 564,000 $ 458,000
The following table sets forth the funded status and the amount recognized
in the Company's balance sheet for the plans:
September 30,
1996 1995
Actuarial present value of accumulated
benefit obligation:
Vested $7,733,000 $6,581,000
Non-vested 271,000 251,000
$8,004,000 $6,832,000
Projected benefit obligation $9,651,000 $8,408,000
Plan assets at market value 9,239,000 7,627,000
Projected benefit obligation in
excess of plan assets 412,000 781,000
Unrecognized gain 1,141,000 1,110,000
Unrecognized prior service cost
(104,000) (113,000)
Unrecognized overfunding at adoption 65,000 81,000
Accrued pension liability $1,514,000 $1,859,000
The discount rate and the rate of assumed compensation increase for all
three years were 8.0% and 5.0%, respectively. The expected long-term rate of
return on assets was 9.0% for 1996 and 1995 and 9.5% for 1994.
At September 30, 1996, the assets of the pension plans were invested 66%
in equity securities, 22% in fixed income securities and the balance in other
short-term interest bearing accounts.
Effective October 1, 1994, the Company established a defined contribution
401(k) plan which permits participation by substantially all employees not
represented under a collective bargaining agreement.
The Company expensed payments to multi-employer pension plans required by
collective bargaining agreements of $3,248,000 in 1996, $3,082,000 in 1995
and $2,731,000 in 1994. The actuarial present value of accumulated plan
benefits and net assets available for benefits to employees under these plans
are not available.
Transactions with Related Parties
Certain directors and officers of the Company are also directors and
officers of Rollins Environmental Services, Inc. and of Rollins Truck Leasing
Corp.
The Company provided transportation services to Rollins Environmental
Services, Inc. and realized revenues therefrom of $13,916,000 in 1996,
$13,265,000 in 1995 and $3,175,000 in 1994.
The Company purchased materials, administrative services, insurance and
rented office space from Rollins Truck Leasing Corp., its subsidiaries and
affiliates. The aggregate cost of these materials, services and rents, which
have been included in operating expenses or selling and administrative
expenses, as appropriate, in the Consolidated Statement of Earnings, was
$3,542,000 in 1996, $3,286,000 in 1995 and $2,949,000 in 1994.
In connection with a note payable to Rollins Truck Leasing Corp. (which was
repaid in March of 1995), the Company incurred interest expense that was paid
to Rollins Truck Leasing Corp. of $272,000 in 1995 and $593,000 in 1994.
An officer of the Company is the trustee of an employee benefits trust
which provides certain insurance and health care benefits to employees of the
Company. Contributions to the trust, which were charged to operating or
selling and administrative expenses, as appropriate, were $2,598,000 in 1996,
$2,567,000 in 1995 and $2,529,000 in 1994.
In the opinion of management of the Company, the foregoing transactions
were effected at rates which approximate those which the Company would have
realized or incurred had such transactions been effected with independent
third parties.
Commitments and Contingencies
In the normal course of its business, Matlack is subject to numerous state
and federal environmental laws and regulations and is also exposed to the
cost and risk of transporting and handling materials and wastes characterized
as hazardous by various regulatory agencies. Matlack has received notices
from the United States Environmental Protection Agency ("EPA") and others
indicating that it is a "potentially responsible party" with respect to the
cleanup of hazardous wastes at several waste disposal sites. Matlack has
been named as a defendant in several lawsuits brought under the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") for
recovery of costs associated with the cleanup of waste disposal sites. In
addition, Matlack has responded to various governmental requests, principally
those of the EPA pursuant to CERCLA, for information with respect to possible
disposition of waste materials attributable to it at various waste disposal
sites.
Where losses are probable, provision has been made based on available
information with respect to the cost of all such claims. In determining the
Company's liability with respect to such claims, consideration is given to
the total cost to remediate the site, the Company's contribution of waste at
the site, the participation of other responsible parties and all other
relevant circumstances of the claim. All claims and litigations are reviewed
to determine the likelihood that their ultimate resolution would have a
material adverse effect upon the Company.
Matlack is involved in ordinary routine litigation incidental to the
operation of its business. In the opinion of management, based on the advice
of counsel, it is only remotely likely that the ultimate resolution of these
claims and actions will be material.
Quarterly Results (Unaudited)
December March June September
1996 31 31 30 30
Revenues $55,562,000 $57,666,000 $57,600,000 $54,038,000
Gross profit $ 5,807,000 $ 6,527,000 $ 5,922,000 $ 1,040,000(1)
Earnings (loss)
before income taxes
(benefit) $ 469,000 $ 1,164,000 $ 622,000 $(3,958,000)(1)
Net earnings (loss) $ 274,000 $ 629,000 $ 270,000 $(2,650,000)(1)
Earnings (loss)
per share $ .03 $ .07 $ .03 $ (.30)(1)
1995
Revenues $57,085,000 $60,750,000 $61,301,000 $57,121,000
Gross profit $ 7,078,000 $ 8,252,000 $ 9,125,000 $ 8,592,000
Earnings before
income taxes $ 1,734,000 $ 2,739,000 $ 3,789,000 $ 2,949,000
Net earnings $ 1,014,000 $ 1,602,000 $ 2,238,000 $ 1,747,000
Earnings per share $ .11 $ .18 $ .25 $ .20
(1) Includes special charge of $4,000,000 ($2,432,000 after tax benefit or
$.28 per share).
<PAGE>
SCHEDULE I - Condensed Financial Information
MATLACK SYSTEMS, INC.
BALANCE SHEET
($000 Omitted)
Assets September 30,
1996 1995
Current assets
Cash $ 273 $ 18
Accounts receivable from subsidiaries 4 -
Other current assets 97 111
Total current assets 374 129
Investments in subsidiaries, at equity* 57,448 59,108
Other assets - 35
Total assets $57,822 $59,272
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $ 12 $ 14
Accrued liabilities 271 130
Income taxes payable 247 135
Total current liabilities 530 279
Advance from subsidiary* 1,364 1,257
Other liabilities 53 -
Deferred federal income taxes 199 204
Shareholders' equity
Common stock $1 par value, 24,000,000 shares
authorized; issued and outstanding:
1996: 8,762,116; 1995: 8,800,050 8,762 8,800
Additional paid-in capital 10,553 10,894
Retained earnings 36,361 37,838
Total shareholders' equity 55,676 57,532
Total liabilities and shareholders' equity $57,822 $59,272
* Eliminated in consolidation.
The Note to the Financial Statements is an integral part of these
statements.
<PAGE>
SCHEDULE I - Condensed Financial Information
(continued)
MATLACK SYSTEMS, INC.
STATEMENT OF EARNINGS
($000 Omitted)
Year Ended September 30,
1996 1995 1994
Revenues:
Dividends from subsidiaries $ 720 $ 250 $ 900
Administrative expenses 116 110 315
Earnings before income taxes (benefits) 604 140 585
Income tax (benefits) (17) 84 (129)
Net earnings of Matlack Systems, Inc. 621 56 714
Equity in undistributed net earnings (loss)
of subsidiaries (2,098) 6,545 5,468
Net earnings (loss) $(1,477) $6,601 $6,182
The Note to the Financial Statements is an integral part of these
statements.<PAGE>
SCHEDULE I - Condensed Financial Information
(continued)
MATLACK SYSTEMS, INC.
STATEMENT OF CASH FLOWS
($000 Omitted)
Year Ended September 30,
1996 1995 1994
Cash flows from operating activities:
Earnings prior to equity in subsidiaries'
undistributed earnings (loss) $621 $ 56 $ 714
Adjustments to reconcile earnings to
net cash provided by operating activities:
Changes in assets and liabilities:
Accounts receivable (4) - 63
Accounts payable and accrued liabilities 139 47 (10)
Current and deferred income taxes 107 152 135
Other, net 102 (129) 1
Net cash provided by operating activities 965 126 903
Cash flows from investing activities - - -
Cash flows from financing activities:
Exercise of stock options 46 205 263
Common stock acquired and retired (425) - -
Capital contribution to subsidiary (438) (2,178) (700)
Advance from subsidiary 107 1,257 -
Other - - (16)
Net cash flows used in financing activities (710) (716) (453)
Net increase (decrease) in cash 255 (590) 450
Cash beginning of period 18 608 158
Cash end of period $273 $ 18 $ 608
Supplemental information:
Interest paid $ - $ - $ -
Income taxes paid $119 $1,743 $3,249
The Note to the Financial Statements is an integral part of these
statements.<PAGE>
SCHEDULE I - Condensed Financial Information
(continued)
MATLACK SYSTEMS, INC.
Note to the Financial Statements
Accounting Policies
The accounting policies of the Registrant and its subsidiaries are set
forth on page 13 of this 1996 Annual Report on Form 10-K.
The Company's principal source of earnings is dividends paid by its
subsidiaries. Certain loan agreements restrict payments to the Company by
its subsidiaries. Net assets of subsidiaries not restricted under such loan
agreements totaled $6,605,000 at September 30, 1996. The Company also
realizes cash receipts by assessing subsidiaries for federal taxes on income
and expends cash in payment of such taxes on a consolidated basis. Tax
assessments are based on the amount of federal income taxes which would be
payable (recoverable) by each subsidiary company based on its current year's
earnings (loss) reduced by that subsidiary's applicable portion of any
consolidated credits utilized currently in the consolidated federal income
tax return.
<TABLE>
<PAGE>
MATLACK SYSTEMS, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
($000 OMITTED)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
Additions
Balance at Charged to Charged Balance at
Beginning Costs and to Other End of
Description of Period Expenses Accounts Deductions Period
Year Ended
September 30,
<S> <C> <C> <C> <C> <C>
1996: Allowance for
doubtful accounts $ 391 $355 $162(1) $494(2) $414
1995: Allowance for
doubtful accounts $390 $129 $146(1) $274(2) $391
1994: Allowance for
doubtful accounts $381 $194 $196(1) $381(2) $390
(1) Recoveries.
(2) Bad debt write-offs.<PAGE>
</TABLE>
Matlack Systems, Inc.
Exhibits to Form 10-K
For Fiscal Year Ended September 30, 1996
Index to Exhibits Page Nos.
Exhibit 10 (a) Master Credit Agreement dated as of
March 27, 1996 between Matlack (DE),
Inc. et al, Bank of America Illinois
and First Union National Bank.
Exhibit 10 (b) Credit Agreement dated as of March 27,
1996 between Matlack (DE), Inc. et al
and Bank of America Illinois.
Exhibit 10 (c) Credit Agreement dated as of May 22, 1996
between Matlack (DE), Inc. et al and First
Union National Bank.
Exhibit 10 (d) First Amendment to Master Credit Agreement
dated August 9, 1996 between Matlack (DE),
Inc. et al, Bank of America Illinois and
First Union National Bank.
Exhibit 21 Matlack Systems, Inc. Subsidiaries at
September 30, 1996
Exhibit 27 Matlack Systems, Inc. Financial Data Schedule
at September 30, 1996
<PAGE>
Exhibit 21
Matlack Systems, Inc.
Subsidiaries at September 30, 1996
Jurisdiction of
Name Incorporation
Matlack (DE), Inc. Delaware
Bayonne Terminals, Inc. Pennsylvania
Matlack International, Inc. Delaware
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<CASH> 3,019
<SECURITIES> 0
<RECEIVABLES> 24,696
<ALLOWANCES> 414
<INVENTORY> 5,439
<CURRENT-ASSETS> 38,646
<PP&E> 215,125
<DEPRECIATION> 125,858
<TOTAL-ASSETS> 128,127
<CURRENT-LIABILITIES> 26,434
<BONDS> 29,878
0
0
<COMMON> 8,762
<OTHER-SE> 46,914
<TOTAL-LIABILITY-AND-EQUITY> 128,127
<SALES> 224,866
<TOTAL-REVENUES> 224,866
<CGS> 0
<TOTAL-COSTS> 205,570
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,903
<INCOME-PRETAX> (1,703)
<INCOME-TAX> (226)
<INCOME-CONTINUING> (1,477)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,477)
<EPS-PRIMARY> (.17)
<EPS-DILUTED> (.17)
</TABLE>
CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of March 27, 1996
among Matlack DE, Inc. (the "Company"), Matlack, Inc. ("MI),
Safeway Chemical Transportation, Inc. ("SCI"), Brite Sol
Services, Inc. ("BSS"), (the Company, MI, SCI and BSS Inc. are
individually and collectively referred to as "the Borrower") and
Bank of America Illinois (the "Bank").
WHEREAS, the Bank has agreed to make available to the
Borrower a credit facility upon the terms and conditions set
forth in this Agreement and the Master Credit Agreement;
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained herein, the parties agree as
follows:
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms. Terms not otherwise defined
herein shall have the same meaning as in the master credit
agreement. The following terms have the following meanings:
"Agreement" means this Credit Agreement.
"Applicable Margin" means
(i) with respect to Base Rate Loans, 0%;
(ii) with respect to Offshore Rate Loans and
Letter of Credit Fees, (A) 2% if Level I Status exists,
(B) 1.5% if Level II Status exists, (C) 1.125% if Level
III Status exists, (D) .875% if Level IV Status exists
and (E) .625% if Level V Status exists; and
(iii) with respect to the Non-Use Fee, (A)
.500% if Level I Status exists, (B) .500% if Level II
Status exists, (C) .375% if Level III Status exists,
(D) .250% if Level IV Status exists and (E) .250% if
Level V Status exists.
As of the Effective Date, Level III Status shall exist.
"Attorney Costs" means and includes all fees and
disbursements of any law firm or other external counsel, the
allocated cost of internal legal services and all
disbursements of internal counsel.
"Bank" means Bank of America Illinois. Unless the
context otherwise clearly requires, references to such
institution as a "Bank" shall also include any of such
institution's Affiliates.
"Base Rate" means, for any day, the higher of:
(a) 0.50% per annum above the latest Federal Funds Rate; and
(b) the rate of interest in effect for such day as publicly
announced from time to time by the Bank in Chicago,
Illinois, as its "reference rate." (The "reference rate" is
a rate set by the Bank based upon various factors including
the Bank's costs and desired return, general economic
conditions and other factors, and is used as a reference
point for pricing some loans, which may be priced at, above,
or below such announced rate.) Any change in the reference
rate announced by the Bank shall take effect at the opening
of business on the day specified in the public announcement
of such change.
"Base Rate Loan" means a Loan that bears interest based
on the Base Rate.
"Borrowing" means a borrowing hereunder consisting of
Revolving Loans or Term Loans of the same Type made to the
Borrower on the same day by the Bank under Article II, and,
other than in the case of Base Rate Loans, having the same
Interest Period.
"Borrowing Base" means, as of any date of determination
thereof, an amount equal to the sum of (x) 90% of the net
book value of unencumbered Equipment plus a 75% reserve for
replacement tires plus (y) 85% of all Eligible Accounts
outstanding at such date.
"Borrowing Base Certificate" means a certificate duly
executed by a Responsible Officer of the Borrower,
substantially in the form of Exhibit A.
"Borrowing Date" means any date on which a Loan is
disbursed.
"Business Day" means any day other than a Saturday,
Sunday or other day on which commercial banks in New York
City or Chicago, Illinois are authorized or required by law
to close and, if the applicable Business Day relates to any
Offshore Rate Loan, means such a day on which dealings are
carried on in the applicable offshore dollar interbank
market.
"Capital Adequacy Regulation" means any guideline,
request or directive of any central bank or other
Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each
case, regarding capital adequacy of any bank or of any
corporation controlling a bank.
"Cash Collateralize" means to pledge and deposit with
or deliver to the Bank, as collateral for the L/C
Obligations, cash or deposit account balances pursuant to
documentation in form and substance satisfactory to the
Bank. The Borrower hereby grants the Bank, a security
interest in all such cash and deposit account balances.
Cash collateral shall be maintained in blocked, non-interest
bearing deposit accounts at Bank.
"Closing Date" means the date on which all conditions
precedent set forth in Section 5.01 are satisfied or waived
by the Bank.
"Code" means the Internal Revenue Code of 1986, and
regulations promulgated thereunder.
"Collateral Agent" means Bank of America Illinois in
its capacity as collateral agent under the Master Credit
Agreement.
"Collateral Documents" means, collectively, (i) the
Master Credit Agreement, the Security Agreement, and all
other security agreements, mortgages, deeds of trust, patent
and trademark assignments, lease assignments, guarantees and
other similar agreements between the Borrower or any
Subsidiary or any Guarantor and the Collateral Agent now or
hereafter delivered to the Bank pursuant to or in connection
with the transactions contemplated hereby, and all financing
statements (or comparable documents now or hereafter filed
in accordance with the Uniform Commercial Code or comparable
law) against the Borrower or any Subsidiary or any Guarantor
as debtor in favor of the Bank as secured party, and
(ii) any amendments, supplements, modifications, renewals,
replacements, consolidations, substitutions and extensions
of any of the foregoing.
"Commitment" means, at any time and as the context may
require, either the Revolving Commitment, the L/C Commitment
or the Term Commitment (collectively the aggregate of the
then Revolving Commitment, the L/C Commitment and the then
Term Commitment).
"Compliance Certificate" means a certificate
substantially in the form of Exhibit B.
"Consolidated Net Worth" means, at any time, the total
of shareholders' equity (including capital stock, additional
paid-in capital and retained earnings after deducting
treasury stock) of the Borrower and its consolidated
Subsidiaries prepared in accordance with GAAP.
"Contingent Obligation" means, as to any Person, any
direct or indirect liability of that Person, whether or not
contingent, with or without recourse, (a) with respect to
any Indebtedness, lease, dividend, letter of credit or other
obligation (the "primary obligations") of another Person
(the "primary obligor"), including any obligation of that
Person (i) to purchase, repurchase or otherwise acquire such
primary obligations or any security therefor, (ii) to
advance or provide funds for the payment or discharge of any
such primary obligation, or to maintain working capital or
equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet
item, level of income or financial condition of the primary
obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to
make payment of such primary obligation, or (iv) otherwise
to assure or hold harmless the holder of any such primary
obligation against loss in respect thereof (each, a
"Guaranty Obligation"); (b) with respect to any Surety
Instrument issued for the account of that Person or as to
which that Person is otherwise liable for reimbursement of
drawings or payments; (c) to purchase any materials,
supplies or other property from, or to obtain the services
of, another Person if the relevant contract or other related
document or obligation requires that payment for such
materials, supplies or other property, or for such services,
shall be made regardless of whether delivery of such
materials, supplies or other property is ever made or
tendered, or such services are ever performed or tendered.
"Contractual Obligation" means, as to any Person, any
provision of any security issued by such Person or of any
agreement, undertaking, contract, indenture, mortgage, deed
of trust or other instrument, document or agreement to which
such Person is a party or by which it or any of its property
is bound.
"Conversion/Continuation Date" means any date on which,
under Section 2.04, the Borrower (a) converts Loans of one
Type to another Type, or (b) continues as Loans of the same
Type, but with a new Interest Period, Loans having Interest
Periods expiring on such date.
"Current Maturities" means Indebtedness due within one
year.
"Default" means any event or circumstance which, with
the giving of notice, the lapse of time, or both, would (if
not cured or otherwise remedied during such time) constitute
an Event of Default.
"Dollars", "dollars" and "$" each mean lawful money of
the United States.
"EBITDA" means with respect to the Company and its
Subsidiaries for any fiscal period, an amount equal to
Consolidated Net Income for such period, plus to the extent
deducted in the calculation of Consolidated Net Income and
without duplication, (a) depreciation and amortization for
such period, (b) other noncash charges for such period, (c)
income tax expense for such period and (d) Consolidated
Total Interest Expense (including, without limitation, fees,
commissions and other charges associated with standby
letters of credit and other financing charges) paid or
accrued during such period.
"Event of Default" means any of the events or
circumstances specified in Section 9.01.
"FDIC" means the Federal Deposit Insurance Corporation,
and any Governmental Authority succeeding to any of its
principal functions.
"Federal Funds Rate" means, for any day, the rate set
forth in the weekly statistical release designated as
H.15(519), or any successor publication, published by the
Federal Reserve Bank of New York (including any such
successor, "H.15(519)") on the preceding Business Day
opposite the caption "Federal Funds (Effective)"; or, if for
any relevant day such rate is not so published on any such
preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Bank of the rates for
the last transaction in overnight Federal funds arranged
prior to 9:00 a.m. (New York City time) on that day by each
of three leading brokers of Federal funds transactions in
New York City selected by the Bank.
"Fixed Charge Ratio Coverage" means the ratio of EBITDA
plus Rental and Lease Expense to the sum of Interest
Expense, Rental and Lease Expense, Current Maturities and
20% of Obligations (as defined in the Master Credit
Agreement), determined on a rolling four quarter basis.
"FRB" means the Board of Governors of the Federal
Reserve System, and any Governmental Authority succeeding to
any of its principal functions.
"Future Lease Obligations" means the aggregate minimum
payments required under all operating leases.
"GAAP" means generally accepted accounting principles
set forth from time to time in the opinions and
pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting
Standards Board (or agencies with similar functions of
comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of
the date of determination.
"Governmental Authority" means any nation or
government, any state or other political subdivision
thereof, any central bank (or similar monetary or regulatory
authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any
corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the
foregoing.
"Guaranty Obligation" has the meaning specified in the
definition of "Contingent Obligation."
"Indebtedness" of any Person means, without
duplication, (a) all indebtedness for borrowed money;
(b) all obligations issued, undertaken or assumed as the
deferred purchase price of property or services (other than
trade payables entered into in the ordinary course of
business on ordinary terms); (c) all non-contingent
reimbursement or payment obligations with respect to Surety
Instruments; (d) all obligations evidenced by notes, bonds,
debentures or similar instruments, including obligations so
evidenced incurred in connection with the acquisition of
property, assets or businesses; (e) all indebtedness created
or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either
case with respect to property acquired by the Person (even
though the rights and remedies of the seller or bank under
such agreement in the event of default are limited to
repossession or sale of such property); (f) all obligations
with respect to capital leases; (g) all indebtedness
referred to in clauses (a) through (f) above secured by (or
for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien
upon or in property (including accounts and contracts
rights) owned by such Person, even though such Person has
not assumed or become liable for the payment of such
Indebtedness; and (h) all Guaranty Obligations in respect of
indebtedness or obligations of others of the kinds referred
to in clauses (a) through (g) above.
"Interest Expense" means for any period the amount
which, in conformity with GAAP would be set forth opposite
the caption "interest expense" on a consolidated income
statement of the Borrower and its Subsidiaries for such
period.
"Interest Payment Date" means, as to any Loan other
than a Base Rate Loan, the last day of each Interest Period
applicable to such Loan and, as to any Base Rate Loan, the
last Business Day of each calendar quarter and each date
such Loan is converted into another Type of Loan, provided,
however, that if any Interest Period for an Offshore Rate
Loan exceeds 90 days or three months, respectively, the date
that falls 90 days or three months (as the case may be)
after the beginning of such Interest Period and after each
Interest Payment Date thereafter is also an Interest Payment
Date.
"Interest Period" means, as to any Offshore Rate Loan,
the period commencing on the Borrowing Date of such Loan or
on the Conversion/Continuation Date on which the Loan is
converted into or continued as an Offshore Rate Loan, and
ending on the date one through thirty days, or one, two,
three or six months thereafter;
provided that:
(i) if any Interest Period would otherwise end on
a day that is not a Business Day, that Interest Period
shall be extended to the following Business Day unless,
in the case of an Offshore Rate Loan, the result of
such extension would be to carry such Interest Period
into another calendar month, in which event such
Interest Period shall end on the preceding Business
Day;
(ii) any Interest Period pertaining to an
Offshore Rate Loan that begins on the last Business Day
of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such
Interest Period;
(iii) no Interest Period for any Term Loan shall
extend beyond the Term Maturity Date and no Interest
Period for any Revolving Loan shall extend beyond the
Revolving Termination Date; and
(iv) no Interest Period applicable to a Term Loan
or portion thereof shall extend beyond any date upon
which is due any scheduled principal payment in respect
of the Term Loans unless the aggregate principal amount
of Term Loans represented by Base Rate Loans, or by
Offshore Rate Loans having Interest Periods that will
expire on or before such date, equals or exceeds the
amount of such principal payment.
"IRS" means the Internal Revenue Service, and any
Governmental Authority succeeding to any of its principal
functions under the Code.
"Issue" means with respect to any Letter of Credit to
issue or to extend the expiry of, or to renew or increase
the amount of, such Letter of Credit; and the terms "Issued"
"Issuing" and "Issuance" have corresponding meaning.
"L/C Amendment Application" means an application form
for amendment of outstanding standby letters of credit as
shall at any time be in use as Bank shall request.
"L/C Application" means an application form for
issuances of standby or commercial documentary letters of
credit as shall at any time be in use at the Issuing Bank,
as the Issuing Bank shall request.
"L/C Borrowing" means an extension of credit resulting
from a drawing under any Letter of Credit which shall not
have been reimbursed on the date when made nor converted
into a Borrowing of Revolving Loans under Section 2.04.
"L/C Commitment" means the commitment of Bank to Issue
Letters of Credit from time to time Issued or outstanding
under Article III, in an aggregate amount not to exceed on
any date the Revolving Commitment minus outstanding
Revolving Loans, as such commitment shall be reduced as a
result of a reduction in the L/C Commitment pursuant to
Section 2.05; provided that the L/C Commitment is a part of
the combined Commitments, rather than a separate,
independent commitment.
"L/C Obligations" means at any time the sum of (a) the
aggregate undrawn amount of all Letters of Credit then
outstanding, plus (b) the amount of all unreimbursed
drawings under all Letters of Credit, including all
outstanding L/C Borrowings.
"L/C-Related Documents" means the Letters of Credit,
the L/C Applications, the L/C Amendment Applications and any
other document relating to any Letter of Credit, including
any of Bank's standard form documents for letter of credit
issuances.
"Lending Office" means the office or offices of the
Bank specified as its "Lending Office" or "Domestic Lending
Office" or "Offshore Lending Office", as the case may be, on
the signature pages of this Agreement, or such other office
or offices as the Bank may from time to time notify the
Borrower.
"Letters of Credit" means any standby letters of credit
issued by Bank pursuant to Article III.
"Level I Status" shall exist at any date if, at such
date of calculation, the Borrower's Fixed Charge Coverage
Ratio as reported pursuant to Section 4.02 of the Master
Credit Agreement is less than 1.25.
"Level II Status" shall exist at any date if, at such
date of calculation, the Borrower's Fixed Charge Coverage
Ratio as reported pursuant to Section 4.02 of the Master
Credit Agreement is greater than or equal to 1.25.
"Level III Status" shall exist at any date if, at such
date of calculation, the Borrower's Fixed Charge Coverage
Ratio as reported pursuant to Section 4.02 of the Master
Credit Agreement is greater than or equal to 1.50.
"Level IV Status" shall exist at any date if, at such
date of calculation, the Borrower's Fixed Charge Coverage
Ratio as reported pursuant to Section 4.02 of the Master
Credit Agreement is greater than or equal to 1.75.
"Level V Status" shall exist at any date if, at such
date of calculation, the Borrower's Fixed Charge Coverage
Ratio as reported pursuant to Section 4.02 of the Master
Credit Agreement is greater than or equal to 2.0.
"Leverage Ratio" means the ratio of Senior Indebtedness
plus the net present value (in calculating the net present
value the discount rate shall be 10%) of Future Lease
Obligations plus L/C Obligations to Consolidated Adjusted
Net Worth.
"Loan" means an extension of credit by the Bank to the
Borrower under Article II or Article III in the form of a
Revolving Loan, Term Loan or L/C Advance.
"Loan Documents" means this Agreement, any Notes, the
Collateral Documents, the Fee Letters, the L/C-Related
Documents and all other documents delivered to the Bank in
connection with the transactions contemplated by this
Agreement and the Master Credit Agreement.
"Master Credit Agreement" means the master credit
agreement among the Borrower, BofA and First Union National
Bank dated as of the same date hereof.
"Non-Use Fee" means the percentage per annum of the
unused commitment.
"Notice of Borrowing" means a notice in substantially
the form of Exhibit C.
"Notice of Conversion/Continuation" means a notice in
substantially the form of Exhibit D.
"Offshore Rate" means, for any Interest Period, with
respect to an Offshore Rate Loan, the rate of interest per
annum at which dollar deposits in the approximate amount of
the Bank's Offshore Rate Loan would be offered by the Bank's
Grand Cayman Branch, Grand Cayman, B.W.I. (or such other
office as may be designated for such purpose by the Bank) to
major banks in the offshore dollar interbank market upon
request of such banks at approximately 11:00 a.m. (New York
City time) two Business Days prior to the commencement of
such Interest Period.
"Offshore Rate Loan" means a Loan that bears interest
based on the Offshore Rate.
"Organization Documents" means, for any corporation,
the certificate or articles of incorporation, the bylaws,
any certificate of determination or instrument relating to
the rights of preferred shareholders of such corporation,
any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee
thereof) of such corporation.
"Person" means an individual, partnership, corporation,
limited liability company, business trust, joint stock
company, trust, unincorporated association, joint venture or
Governmental Authority.
"Rental and Lease Expense" means principal and interest
payments paid under operating leases.
"Requirement of Law" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or
determination of an arbitrator or of a Governmental
Authority, in each case applicable to or binding upon the
Person or any of its property or to which the Person or any
of its property is subject.
"Responsible Officer" means the chief executive officer
or the president of the Company, or any other officer having
substantially the same authority and responsibility; or,
with respect to compliance with financial covenants, the
chief financial officer or the treasurer of the Borrower, or
any other officer having substantially the same authority
and responsibility.
"Revolving Commitment" means $18,000,000 provided,
however, that the aggregate outstandings to both Banks under
the Master Credit Agreement shall not exceed the Borrowing
Base.
"Revolving Loan" has the meaning specified in
Section 2.01.
"Revolving Termination Date" means the earlier to occur
of:
(a) March 31, 1997 provided, however, that such
day may be extended an additional year if the Borrower
and Bank agree to such extension; and
(b) the date on which the Revolving Commitment
terminates in accordance with the provisions of this
Agreement.
"Security Agreement" means the Security Agreement
executed and delivered by the Borrower pursuant to the
Master Credit Agreement, as applicable, as amended,
supplemented, or restated from time to time.
"Subsidiary" of a Person means any corporation,
association, partnership, limited liability company, joint
venture or other business entity of which more than 50% of
the voting stock, membership interests or other equity
interests (in the case of Persons other than corporations),
is owned or controlled directly or indirectly by the Person,
or one or more of the Subsidiaries of the Person, or a
combination thereof. Unless the context otherwise clearly
requires, references herein to a "Subsidiary" refer to a
Subsidiary of the Borrower.
"Surety Instruments" means all letters of credit
(including standby and commercial), banker's acceptances,
bank guaranties, shipside bonds, surety bonds and similar
instruments.
"Taxes" means any and all present or future taxes,
levies, assessments, imposts, duties, deductions, fees,
withholdings or similar charges, and all liabilities with
respect thereto, excluding, in the case of the Bank, taxes
imposed on or measured by the Bank's net income by the
jurisdiction (or any political subdivision thereof) under
the laws of which the Bank is organized or maintains a
lending office.
"Termination Date" means the earlier of (a) five years
from the Revolving Termination Date and (b) the date on
which the Commitment terminates in accordance with the
provisions of this Agreement.
"Term Commitment" has the meaning specified in Section
2.01(b).
"Term Loan" has the meaning specified in Section 2.01.
"Type" has the meaning specified in the definition of
"Loan."
"UCC" means the Uniform Commercial Code as in effect in
the State of Illinois.
"United States" and "U.S." each means the United States
of America.
"Wholly-Owned Subsidiary" means any corporation in
which (other than directors' qualifying shares required by
law) 100% of the capital stock of each class having ordinary
voting power, and 100% of the capital stock of every other
class, in each case, at the time as of which any
determination is being made, is owned, beneficially and of
record, by the Borrower, or by one or more of the other
Wholly-Owned Subsidiaries, or both.
1.02 Other Interpretive Provisions.
(a) The meanings of defined terms are equally
applicable to the singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and
similar words refer to this Agreement as a whole and not to any
particular provision of this Agreement; and subsection, Section,
Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(c) (1) The term "documents" includes any and all
instruments, documents, agreements, certificates,
indentures, notices and other writings, however evidenced.
(2) The term "including" is not limiting and
means "including without limitation."
(3) In the computation of periods of time from a
specified date to a later specified date, the word "from"
means "from and including"; the words "to" and "until" each
mean "to but excluding", and the word "through" means "to
and including."
(4) The term "property" includes any kind of
property or asset, real, personal or mixed, tangible or
intangible.
(d) Unless otherwise expressly provided herein,
(i) references to agreements (including this Agreement) and other
contractual instruments shall be deemed to include all subsequent
amendments and other modifications thereto, but only to the
extent such amendments and other modifications are not prohibited
by the terms of any Loan Document, and (ii) references to any
statute or regulation are to be construed as including all
statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting the statute or
regulation.
(e) The captions and headings of this Agreement are
for convenience of reference only and shall not affect the
interpretation of this Agreement.
(f) This Agreement and other Loan Documents may use
several different limitations, tests or measurements to regulate
the same or similar matters. All such limitations, tests and
measurements are cumulative and shall each be performed in
accordance with their terms. Unless otherwise expressly
provided, any reference to any action of the Bank by way of
consent, approval or waiver shall be deemed modified by the
phrase "in its sole discretion."
(g) This Agreement and the other Loan Documents are
the result of negotiations among and have been reviewed by
counsel to the Bank, the Borrower and the other parties, and are
the products of all parties. Accordingly, they shall not be
construed against the Bank merely because of the Bank's
involvement in their preparation.
1.03 Accounting Principles.
(a) Unless the context otherwise clearly requires, all
accounting terms not expressly defined herein shall be construed,
and all financial computations required under this Agreement
shall be made, in accordance with GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal
quarter" refer to such fiscal periods of the Borrower.
ARTICLE II
THE CREDITS
2.01 Amounts and Terms of Commitment.
(a) The Revolving Credit. The Bank agrees, on the
terms and conditions set forth herein and in the Master Credit
Agreement, to make loans to the Borrower (each such loan, a
"Revolving Loan") from time to time on any Business Day during
the period from the Closing Date to the Revolving Termination
Date, in an aggregate amount not to exceed at any time
outstanding the Revolving Commitment less L/C Obligations.
Within the limits of the Revolving Commitment, and subject to the
other terms and conditions hereof, the Borrower may borrow under
this subsection prepay under Section 2.06 and reborrow under this
subsection.
(b) The Term Credit. On the Revolving Termination
Date, the Bank agrees, on the terms and conditions set forth
herein, to convert the amount of Revolving Loans to a Term Loan
(a "Term Loan", the "Term Commitment")) which shall then amortize
in equal monthly principal payments from the Revolving
Termination Date to the Termination Date. Amounts borrowed as
Term Loans which are repaid or prepaid by the Borrower may not be
reborrowed.
(c) The L/C Commitment. The L/C Commitment is
described in Article III. On the Revolving Termination Date and
each anniversary thereafter through the Termination Date, the
Bank may elect on an annual basis to continue the L/C Commitment,
on the terms and conditions set forth herein, in an amount not to
exceed the Borrowing Base less the aggregate principal amount of
the Term Loan.
(d) Joint and Several Liability. The obligations of
each Borrower hereunder are joint and several.
2.02 Loan Accounts. The Loans made by the Bank shall be
evidenced by one or more loan accounts or records maintained by
the Bank in the ordinary course of business. The loan accounts
or records maintained by the Bank shall be conclusive absent
manifest error evidence of the amount of the Loans made by the
Bank to the Borrower and the interest and payments thereon. Any
failure so to record or any error in doing so shall not, however,
limit or otherwise affect the obligation of the Borrower
hereunder to pay any amount owing with respect to the Loans.
2.03 Procedure for Borrowing.
(a) Each Loan shall be made upon the Borrower's
irrevocable written notice delivered to the Bank in the form of a
Notice of Borrowing (which notice must be received by the Bank
prior to 11:00 a.m.) (Chicago, Illinois time) (i) two Business
Days prior to the requested Borrowing Date, in the case of
Offshore Rate Loans; and (ii) on the requested Borrowing Date, in
the case of Base Rate Loans, specifying:
(1) The amount of the Loan, which shall be in a
minimum amount of $100,000 or any multiple of $100,000
in excess thereof;
(2) The requested Borrowing Date, which shall be
a Business Day;
(3) Whether the Loan is to be an Offshore Rate
Loan or a Base Rate Loan;
(4) The duration of the Interest Period
applicable to the Loan included in such notice. If the
Notice of Borrowing fails to specify the duration of
the Interest Period for an Offshore Rate Loan, such
Interest Period shall be 90 days or three months,
respectively.
(b) The proceeds of the Loans will be made available
to the Borrower by the Bank by crediting the account of the
Borrower on the books of the Bank with such proceeds or by wire
transfer in accordance with written instructions provided to the
Bank by the Borrower.
(c) After disbursing any Loan, unless the Bank shall
otherwise consent, there may not be more than three different
Interest Periods in effect.
2.04 Conversion and Continuation Elections.
(a) The Borrower may, upon irrevocable written notice
to the Bank in accordance with subsection 2.04(b):
(1) elect, as of any Business Day, in the case of
Base Rate Loans, or as of the last day of the applicable
Interest Period, in the case of any other Type of Loans, to
convert any such Loans (or any part thereof in an amount not
less than $100,000, or that is in an integral multiple of
$100,000 in excess thereof) into Loans of any other Type; or
(2) elect, as of the last day of the applicable
Interest Period, to continue any Loans having Interest
Periods expiring on such day (or any part thereof in an
amount not less than $100,000, or that is in an integral
multiple of $100,000 in excess thereof);
provided, that if at any time the amount of an Offshore Rate Loan
is reduced, by payment, prepayment, or conversion of part thereof
to be less than $100,000, such Offshore Rate Loan shall
automatically convert into a Base Rate Loan, and on and after
such date the right of the Borrower to continue such Loans as,
and convert such Loans into, Offshore Rate Loans, shall
terminate.
(b) The Borrower shall deliver a Notice of
Conversion/Continuation to be received by the Bank not later than
11:00 a.m. (Chicago, Illinois time) at least (i) two Business
Days in advance of the Conversion/Continuation Date, if the Loans
are to be converted into or continued as Offshore Rate Loans; and
(ii) on the same Business Day as the Conversion/ Continuation
Date, if the Loans are to be converted into Base Rate Loans,
specifying:
(A) The proposed Conversion/Continuation
Date;
(B) The aggregate amount of Loans to be
converted or continued;
(C) The Type of Loans resulting from the
proposed conversion or continuation; and
(D) Other than in the case of conversions
into Base Rate Loans, the duration of the requested
Interest Period.
(c) If upon the expiration of any Interest Period
applicable to Offshore Rate Loans, the Borrower has failed to
select timely a new Interest Period to be applicable to such
Offshore Rate Loans, or if any Default or Event of Default then
exists, the Borrower shall be deemed to have elected to convert
such Offshore Rate Loans into Base Rate Loans effective as of the
expiration date of such Interest Period.
(d) Unless the Bank otherwise consents, during the
existence of a Default or Event of Default, the Borrower may not
elect to have a Loan converted into or continued as an Offshore
Rate Loan.
(e) After giving effect to any conversion or
continuation of Loans, unless the Bank shall otherwise consent,
there may not be more than three different Interest Periods in
effect.
2.05 Voluntary Termination or Reduction of Commitment. The
Borrower may, upon not less than five Business Days' prior notice
to the Bank, terminate the Commitment, or permanently reduce the
Commitment by a minimum amount of $1,000,000 or any multiple of
$1,000,000 in excess thereof; unless, after giving effect thereto
and to any prepayments of Loans made on the effective date
thereof, the then-outstanding principal amount of the Loans would
exceed the amount of the Commitment then in effect. Once reduced
in accordance with this Section, the Commitment may not be
increased. All accrued commitment fees to, but not including the
effective date of any reduction or termination of the Commitment,
shall be paid on the effective date of such reduction or
termination.
2.06 Optional Prepayments. Subject to Section 4.04, the
Borrower may, at any time or from time to time, upon not less
than two Business Days' irrevocable notice to the Bank, ratably
prepay Loans in whole or in part, in minimum amounts of $100,000
or any multiple of $100,000 in excess thereof. Such notice of
prepayment shall specify the date and amount of such prepayment
and the Type(s) of Loans to be prepaid. If such notice is given
by the Borrower, the Borrower shall make such prepayment and the
payment amount specified in such notice shall be due and payable
on the date specified therein, together with accrued interest to
each such date on the amount prepaid and any amounts required
pursuant to Section 4.04. Optional prepayments of Term Loans
shall be applied to the principal installments in inverse order
of maturity.
2.07 Mandatory Prepayments of Loans; Mandatory Commitment
Reductions.
(a) Borrowing Base Overage. On each date when the
aggregate outstanding principal amount of the Loans exceeds the
lesser of the Borrowing Base or the aggregate Commitments, the
Borrower shall make a mandatory prepayment of the Loans in an
amount equal to such excess.
(b) General. Any prepayments pursuant to this Section
shall be applied first to any Base Rate Loans then outstanding
and then to Offshore Rate Loans with the shortest Interest
Periods remaining; provided, however, that if the amount of Base
Rate Loans then outstanding is not sufficient to satisfy the
entire prepayment requirement, the Borrower may, at its option,
place any amounts which it would otherwise be required to use to
prepay Offshore Rate Loans or on a day other than the last day of
the Interest Period therefor in an interest-bearing account
pledged to the Bank until the end of such Interest Period at
which time such pledged amounts will be applied to prepay such
Offshore Rate Loans. The Borrower shall pay, together with each
prepayment under this Section, accrued interest on the amount
prepaid and any amounts required pursuant to Section 4.04.
(c) Reduction of Commitment. Upon the making of any
mandatory prepayment under this Section 2.07, the Commitment of
the Bank shall automatically be reduced by an amount equal to the
Bank's aggregate of principal repaid, effective as of the earlier
of the date that such prepayment is made or the date by which
such prepayment is due and payable hereunder. All accrued
commitment fees to, but not including the effective date of any
reduction or termination of the Commitment, shall be paid on the
effective date of such reduction or termination.
2.08 Repayment.
(a) The Term Credit. The Borrower shall repay the Term
Loans in equal monthly installments on the last Business Day of
each month commencing on the Revolving Termination Date and
ending on the Termination Date.
(b) The Revolving Credit. The Borrower shall repay to
the Bank in full on the Revolving Termination Date the aggregate
principal amount of Revolving Loans outstanding on such date,
except as provided in Section 2.01(b).
2.09 Interest.
(a) Each Loan shall bear interest on the outstanding
principal amount thereof from its Borrowing Date at a rate per
annum equal to the Offshore Rate or the Base Rate, as the case
may be (and subject to the Borrower's right to convert to other
Types of Loans under Section 2.04), plus the Applicable Margin.
(b) Interest on each Loan shall be paid in arrears on
each Interest Payment Date. Interest shall also be paid on the
date of any prepayment of Loans under Section 2.06 or 2.07 for
the portion of the Loans so prepaid and upon payment (including
prepayment) in full thereof and, during the existence of any
Event of Default, interest shall be paid on demand of the Bank.
(c) Notwithstanding subsection (a) of this Section,
while any Event of Default exists or after acceleration, the
Borrower shall pay interest (after as well as before entry of
judgment thereon to the extent permitted by law) on the principal
amount of all outstanding obligations, at a rate per annum which
is determined by adding 2% per annum to the Applicable Margin
then in effect for such Loans and, in the case of Obligations not
subject to an Applicable Margin, at a rate per annum equal to the
Base Rate plus 2%; provided, however, that, on and after the
expiration of any Interest Period applicable to any Offshore Rate
Loan outstanding on the date of occurrence of such Event of
Default or acceleration, the principal amount of such Loan shall,
during the continuation of such Event of Default or after
acceleration, bear interest at a rate per annum equal to the Base
Rate plus 2%.
(d) Anything herein to the contrary notwithstanding,
the obligations of the Borrower to the Bank hereunder shall be
subject to the limitation that payments of interest shall not be
required for any period for which interest is computed hereunder,
to the extent (but only to the extent) that contracting for or
receiving such payment by the Bank would be contrary to the
provisions of any law applicable to the Bank limiting the highest
rate of interest that may be lawfully contracted for, charged or
received by the Bank, and in such event the Borrower shall pay
the Bank interest at the highest rate permitted by applicable
law.
2.10 Fees. The Borrower shall pay to the Bank a Non-Use
fee on the average daily unused portion of the Bank's Commitment,
computed on a quarterly basis in arrears on the last Business Day
of each calendar quarter based upon the daily utilization for
that quarter as calculated by the Bank, equal to the Applicable
Margin. Such commitment fee shall accrue from the Closing Date
to the Termination Date and shall be due and payable quarterly in
arrears on the last Business Day of each quarter commencing on
the Closing Date through the Termination Date, with the final
payment to be made on the Termination Date. The commitment fees
provided in this subsection shall accrue at all times after the
above-mentioned commencement date, including at any time during
which one or more conditions in Article V are not met.
2.11 Computation of Fees and Interest.
(a) All computations of interest for Base Rate Loans
when the Base Rate is determined by the Bank's "reference rate"
shall be made on the basis of a year of 365 or 366 days, as the
case may be, and actual days elapsed. All other computations of
fees and interest shall be made on the basis of a 360-day year
and actual days elapsed (which results in more interest being
paid than if computed on the basis of a 365-day year). Interest
and fees shall accrue during each period during which interest or
such fees are computed from the first day thereof to the last day
thereof.
(b) Each determination of an interest rate by the Bank
shall be conclusive and binding on the Borrower in the absence of
manifest error.
2.12 Payments by the Borrower.
(a) All payments to be made by the Borrower shall be
made without set-off, recoupment or counterclaim. Except as
otherwise expressly provided herein, all payments by the Borrower
shall be made to the Bank at the place indicated as the place of
payment in the signature pages of this Agreement or such other
address as the Bank may specify in writing to the Borrower from
time to time, and shall be made in dollars and in immediately
available funds, no later than 12:00 p.m. (Chicago, Illinois
time) on the date specified herein. Any payment received by the
Bank later than 12:00 p.m. (Chicago, Illinois time) shall be
deemed to have been received on the following Business Day and
any applicable interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the
definition of "Interest Period" herein, whenever any payment is
due on a day other than a Business Day, such payment shall be
made on the following Business Day, and such extension of time
shall in such case be included in the computation of interest or
fees, as the case may be.
2.13 Collateral All obligations of the Borrower under
this Agreement and all other Loan Documents are subject to the
provisions with respect to Collateral as set forth in the Master
Agreement.
ARTICLE III
THE LETTERS OF CREDIT
3.01 The Letter of Credit facility. (a) On the terms and
conditions set forth herein the Bank agrees, (A) from time to
time on any Business Day during the period from the Closing Date
to the Revolving Termination Date, and during any such additional
period pursuant to Section 2.01(c), to issue Letters of Credit
for the account of the Borrower, and to amend or renew Letters of
Credit previously issued by it, in accordance with the provisions
herein, and (B) to honor drafts under the Letters of Credit;
provided, that the Bank shall not be obligated to Issue, any
Letter of Credit if as of the date of Issuance of such Letter of
Credit (the "Issuance Date") (1) the Effective Amount of all L/C
Obligations plus the Effective Amount of all Revolving Loans
exceeds the combined Commitments, or (2) the Effective Amount of
L/C Obligations exceeds the L/C Commitment. Within the foregoing
limits, and subject to the other terms and conditions hereof, the
Borrower's ability to obtain Letters of Credit shall be fully
revolving, and, accordingly, the Borrower may, during the
foregoing periods, obtain Letters of Credit to replace Letters of
Credit which have expired or which have been drawn upon and
reimbursed.
(b) The Bank is under no obligation to Issue any
Letter of Credit if:
(i) any order, judgment or decree of any
Governmental Authority or arbitrator shall by its terms
purport to enjoin or restrain the Bank from Issuing such
Letter of Credit, or any Requirement of Law applicable to
the Bank or any request or directive (whether or not having
the force of law) from any Governmental Authority with
jurisdiction over the Bank shall prohibit, or request that
the Bank refrain from, the Issuance of letters of credit
generally or such Letter of Credit in particular or shall
impose upon the Bank with respect to such Letter of Credit
any restriction, reserve or capital requirement (for which
the Bank is not otherwise compensated hereunder) not in
effect on the Closing Date, or shall impose upon the Bank
any unreimbursed loss, cost or expense which was not
applicable on the Closing Date and which the Bank in good
faith deems material to it;
(ii) the Bank has received written notice from
the Borrower, on or prior to the Business Day prior to the
requested date of Issuance of such Letter of Credit, that
one or more of the applicable conditions contained in
Article V is not then satisfied;
(iii) the expiry date of any requested Letter of
Credit is (A) more than 360 days after the date of Issuance,
or (B) more than 360 days after the Revolving Termination
Date;
(iv) the expiry date of any requested Letter of
Credit is prior to the maturity date of any financial
obligation to be supported by the requested Letter of
Credit;
(v) any requested Letter of Credit does not
provide for drafts, or is not otherwise in form and
substance acceptable to the Bank, or the Issuance of a
Letter of Credit shall violate any applicable policies of
the Bank;
(vi) any standby Letter of Credit is for the
purpose of supporting the issuance of any letter of credit
by any other Person; or
(vii) such Letter of Credit is in a face amount
less than $100,000 or denominated in a currency other than
Dollars.
3.02 Issuance, Amendment and Renewal of Letters of Credit.
(a) Each Letter of Credit shall be issued upon the irrevocable
written request of the Borrower received by the Bank at least
four days (or such shorter time as the Bank may agree in a
particular instance in its sole discretion) prior to the proposed
date of issuance. Each such request for issuance of a Letter of
Credit shall be by facsimile, confirmed immediately in an
original writing, in the form of an L/C Application, and shall
specify in form and detail satisfactory to the Bank: (i) the
proposed date of issuance of the Letter of Credit (which shall be
a Business Day); (ii) the face amount of the Letter of Credit;
(iii) the expiry date of the Letter of Credit; (iv) the name and
address of the beneficiary thereof; (v) the documents to be
presented by the beneficiary of the Letter of Credit in case of
any drawing thereunder; (vi) the full text of any certificate to
be presented by the beneficiary in case of any drawing
thereunder; and (vii) such other matters as the Bank may require.
(b) From time to time while a Letter of Credit is
outstanding and prior to the Revolving Termination Date, the Bank
will, upon the written request of the Borrower received by the
Bank at least five days (or such shorter time as the Bank may
agree in a particular instance in its sole discretion) prior to
the proposed date of amendment, amend any Letter of Credit issued
by it. Each such request for amendment of a Letter of Credit
shall be made by facsimile, confirmed immediately in an original
writing, made in the form of an L/C Amendment Application and
shall specify in form and detail satisfactory to the Bank: (i)
the Letter of Credit to be amended; (ii) the proposed date of
amendment of the Letter of Credit (which shall be a Business
Day); (iii) the nature of the proposed amendment; and (iv) such
other matters as the Bank may require. The Bank shall be under
no obligation to amend any Letter of Credit if: (A) the Bank
would have no obligation at such time to issue such Letter of
Credit in its amended form under the terms of this Agreement; or
(B) the beneficiary of any such letter of Credit does not accept
the proposed amendment to the Letter of Credit.
(c) The Bank agrees that, while a Letter of Credit is
outstanding and prior to the Revolving Termination Date, at the
option of the Borrower and upon the written request of the
Borrower received by the Bank at least five days (or such shorter
time as the Bank may agree in a particular instance in its sole
discretion) prior to the proposed date of notification of
renewal, the Bank shall be entitled to authorize the automatic
renewal of any Letter of Credit issued by it. Each such request
for renewal of a Letter of Credit shall be made by facsimile,
confirmed immediately in an original writing, in the form of an
L/C Amendment Application, and shall specify in form and detail
satisfactory to the Bank: (i) the Letter of Credit to be renewed;
(ii) the proposed date of notification of renewal of the Letter
of Credit (which shall be a Business Day); (iii) the revised
expiry date of the Letter of Credit; and (iv) such other matters
as the Bank may require. The Bank shall be under no obligation
so to renew any Letter of Credit if: (A) the Bank would have no
obligation at such time to issue or amend such Letter of Credit
in its renewed form under the terms of this Agreement; or (B) the
beneficiary of any such Letter of Credit does not accept the
proposed renewal of the Letter of Credit. If any outstanding
Letter of Credit shall provide that it shall be automatically
renewed unless the beneficiary thereof receives notice from the
Bank that such Letter of Credit shall not be renewed, and if at
the time of renewal the Bank would be entitled to authorize the
automatic renewal of such Letter of Credit in accordance with
this Section 3.02 upon the request of the Borrower but the Bank
shall not have received any L/C Amendment Application from the
Borrower with respect to such renewal or other written direction
by the Borrower with respect thereto, the Bank shall nonetheless
be permitted to allow such Letter of Credit to renew, and the
Borrower hereby authorizes such renewal, and, accordingly, the
Bank shall be deemed to have received an L/C Amendment
Application from the Borrower requesting such renewal.
(d) The Bank may, at its election, deliver any notices
of termination or other communications to any Letter of Credit
beneficiary or transferee, and take any other action as necessary
or appropriate, at any time and from time to time, in order to
cause the expiry date of such Letter of Credit to be a date not
later than the Revolving Termination Date.
(e) This Agreement shall control in the event of any
conflict with any L/C-Related Document (other than any Letter of
Credit).
3.03 Drawings and Reimbursements. (a) In the event of any
request for a drawing under a Letter of Credit by the beneficiary
or transferee thereof, the Bank will promptly notify the
Borrower. The Borrower shall reimburse the Bank prior to 10:00
a.m. (Chicago time)], on each date that any amount is paid by the
Bank under any Letter of Credit (each such date, an "Honor
Date"), in an amount equal to the amount so paid by the Bank. In
the event the Borrower fails to reimburse the Bank for the full
amount of any drawing under any Letter of Credit by 10:00 a.m.
(Chicago time) on the Honor Date, and the Borrower shall be
deemed to have requested that Base Rate Loans be made by the Bank
to be disbursed on the Honor Date under such Letter of Credit,
subject to the amount of the unutilized portion of the Revolving
Commitment and subject to the conditions set forth in Section
5.02. Any notice given by the Bank pursuant to this subsection
3.03(a) may be oral if immediately confirmed in writing
(including by facsimile); provided that the lack of such an
immediate confirmation shall not affect the conclusiveness or
binding effect of such notice.
(b) With respect to any unreimbursed drawing that is
not converted into Revolving Loans consisting of Base Rate Loans
to the Borrower in whole or in part, because of the Borrower's
failure to satisfy the conditions set forth in Section 5.02 or
for any other reason, the Borrower shall be deemed to have
incurred from the Bank an L/C Borrowing in the amount of such
drawing, which L/C Borrowing shall be due and payable on demand
(together with interest) and shall bear interest at a rate per
annum equal to the Base Rate plus 2% per annum.
3.04 Bank's Role as the Issuing Bank. (a) The Borrower
agrees that, in paying any drawing under a Letter of Credit, the
Bank shall not have any responsibility to obtain any document
(other than any sight draft and certificates expressly required
by the Letter of Credit) or to ascertain or inquire as to the
validity or accuracy of any such document or the authority of the
Person executing or delivering any such document.
(b) The Borrower hereby assumes all risks of the acts
or omissions of any beneficiary or transferee with respect to its
use of any Letter of Credit; provided, however, that this
assumption is not intended to, and shall not, preclude the
Borrower's pursuing such rights and remedies as it may have
against the beneficiary or transferee at law or under any other
agreement. No Agent-Related Person, nor any of the respective
correspondents, participants or assignees of the Bank, shall be
liable or responsible for any of the matters described in clauses
(i) through (vii) of Section 3.05; provided, however, anything in
such clauses to the contrary notwithstanding, that the Borrower
may have a claim against the Bank, and the Bank may be liable to
the Borrower, to the extent, but only to the extent, of any
direct, as opposed to consequential or exemplary, damages
suffered by the Borrower which the Borrower proves were caused by
the Bank's willful misconduct or gross negligence or the Bank's
willful failure to pay under any Letter of Credit after the
presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions
of a Letter of Credit. In furtherance and not in limitation of
the foregoing: (i) the Bank may accept documents that appear on
their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the
contrary; and (ii) the Bank shall not be responsible for the
validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit
or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective
for any reason.
3.05 Obligations Absolute. The obligations of the Borrower
under this Agreement and any L/C-Related Document to reimburse
the Bank for a drawing under a Letter of Credit, and to repay any
L/C Borrowing and any drawing under a Letter of Credit converted
into Revolving Loans, shall be unconditional and irrevocable, and
shall be paid strictly in accordance with the terms of this
Agreement and each such other L/C-Related Document under all
circumstances, including the following:
(i) any lack of validity or enforceability of
this Agreement or any L/C-Related Document;
(ii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the
obligations of the Borrower in respect of any Letter of
Credit or any other amendment or waiver of or any consent to
departure from all or any of the L/C-Related Documents;
(iii) the existence of any claim, set-off,
defense or other right that the Borrower may have at any
time against any beneficiary or any transferee of any Letter
of Credit (or any Person for whom any such beneficiary or
any such transferee may be acting), the Bank or any other
Person, whether in connection with this Agreement, the
transactions contemplated hereby or by the L/C-Related
Documents or any unrelated transaction;
(iv) any draft, demand, certificate or other
document presented under any Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any
respect; or any loss or delay in the transmission or
otherwise of any document required in order to make a
drawing under any Letter of Credit;
(v) any payment by the Bank under any Letter of
Credit against presentation of a draft or certificate that
does not strictly comply with the terms of any Letter of
Credit; or any payment made by the Bank under any Letter of
Credit to any Person purporting to be a trustee in
bankruptcy, debtor-in-possession, assignee for the benefit
of creditors, liquidator, receiver or other representative
of or successor to any beneficiary or any transferee of any
Letter of Credit, including any arising in connection with
any Insolvency Proceeding;
(vi) any exchange, release or non-perfection of
any collateral, or any release or amendment or waiver of or
consent to departure from any other guarantee, for all or
any of the obligations of the Borrower in respect of any
Letter of Credit; or
(vii) any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing,
including any other circumstance that might otherwise
constitute a defense available to, or a discharge of, the
Borrower or a guarantor.
3.06 Cash Collateral Pledge. Upon (i) the request of the
Bank, if, as of the Termination Date, any Letters of Credit may
for any reason remain outstanding and partially or wholly
undrawn, or (ii) the occurrence of the circumstances described in
subsection 2.07 requiring the Borrower to Cash Collateralize
Letters of Credit, then, the Borrower shall immediately Cash
Collateralize the L/C Obligations in an amount equal to the L/C
Obligations.
3.07 Letter of Credit Fees.
(a) The Borrower shall pay to the Bank a letter of
credit fee with respect to the Letters of Credit equal to the
Applicable Margin per annum of the average daily maximum amount
available to be drawn of the outstanding Letters of Credit,
computed on a quarterly basis in arrears on the last Business Day
of each calendar quarter based upon Letters of Credit outstanding
for that quarter as calculated by the Bank. Such letter of
credit fees shall be due and payable quarterly in arrears on the
last Business Day of each calendar quarter during which Letters
of Credit are outstanding, commencing on the first such quarterly
date to occur after the Closing Date, through the Revolving
Termination Date (or such later date upon which the outstanding
Letters of Credit shall expire), with the final payment to be
made on the Revolving Termination Date (or such later expiration
date).
(b) The Borrower shall pay to the Bank from time to
time the normal issuance, presentation, amendment and other
processing fees, and other standard costs and charges, of the
Bank relating to letters of credit as from time to time in
effect.
3.08 Uniform Customs and Practice. The Uniform Customs and
Practice for Documentary Credits as published by the
International Chamber of Commerce most recently at the time of
issuance of any Letter of Credit shall (unless otherwise
expressly provided in the Letters of Credit) apply to the Letters
of Credit.
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
4.01 Taxes.
(a) Any and all payments by the Borrower to the Bank
under this Agreement and any other Loan Document shall be made
free and clear of, and without deduction or withholding for, any
Taxes.
(b) If the Borrower shall be required by law to deduct
or withhold any Taxes from or in respect of any sum payable
hereunder to the Bank, then the Borrower shall pay to the Bank,
on demand, amounts equal to any Taxes (other than Federal, state
or local taxes on the overall income of the Bank), domestic or
foreign, which the Bank is required to pay by reason of its
funding or disbursement of any portion of the Loans.
(c) The Bank shall use its best efforts (consistent
with legal and regulatory restrictions) to reduce or eliminate
the causes referenced in subclause (b) (if any) including without
limitation to change the jurisdiction of its Lending Office so as
to eliminate any such additional payment by the Borrower which
may thereafter accrue, if such action or change in the sole
judgment of the bank is not otherwise disadvantageous to the
Bank.
4.02 Illegality.
(a) If the Bank determines that the introduction of
any Requirement of Law, or any change in any Requirement of Law,
or in the interpretation or administration of any Requirement of
Law, has made it unlawful, or that any central bank or other
Governmental Authority has asserted that it is unlawful, for the
Bank or its applicable Lending Office to make Offshore Rate
Loans, then, on notice thereof by the Bank to the Borrower, any
obligation of the Bank to make Offshore Rate Loans shall be
suspended until the Bank notifies the Borrower that the
circumstances giving rise to such determination no longer exist.
(b) If the Bank determines that it is unlawful to
maintain any Offshore Rate Loan, the Borrower shall, upon its
receipt of notice of such fact and demand from the Bank, prepay
in full such Offshore Rate Loans of the Bank then outstanding,
together with interest accrued thereon and amounts required under
Section 4.04, either on the last day of the Interest Period
thereof, if the Bank may lawfully continue to maintain such
Offshore Rate Loans to such day, or immediately, if the Bank may
not lawfully continue to maintain such Offshore Rate Loan. If
the Borrower is required to so prepay any Offshore Rate Loan,
then concurrently with such prepayment, the Borrower shall borrow
from the Bank, in the amount of such repayment, a Base Rate Loan.
(c) If the obligation of the Bank to make or maintain
Offshore Rate Loans has been so terminated or suspended, the
Borrower may elect, by giving notice to the Bank, that all Loans
which would otherwise be made by the Bank as Offshore Rate Loans
shall be instead Base Rate Loans.
4.03 Increased Costs and Reduction of Return. If the Bank
shall have determined that (i) the introduction of any Capital
Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or
administration of any Capital Adequacy Regulation by any central
bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance by
the Bank (or its Lending Office) or any corporation controlling
the Bank with any Capital Adequacy Regulation, affects or would
affect the amount of capital required or expected to be
maintained by the Bank or any corporation controlling the Bank
and (taking into consideration the Bank's or such corporation's
policies with respect to capital adequacy and the Bank's desired
return on capital) determines that the amount of such capital is
increased as a consequence of its Commitment, loans, credits or
obligations under this Agreement, then, upon demand of the Bank
to the Borrower, the Borrower shall pay to the Bank, from time to
time as specified by the Bank, additional amounts sufficient to
compensate the Bank for such increase.
4.04 Funding Losses. The Borrower shall reimburse the Bank
and hold the Bank harmless from any loss or expense which the
Bank may sustain or incur as a consequence of:
(a) The failure of the Borrower to make on a timely
basis any payment of principal of any Offshore Rate Loan;
(b) The failure of the Borrower to borrow, continue or
convert a Loan after the Borrower has given (or is deemed to have
given) a Notice of Borrowing or a Notice of Conversion/
Continuation;
(c) The failure of the Borrower to make any prepayment
in accordance with any notice delivered under Section 2.06;
(d) The prepayment (including pursuant to Section
2.07) or other payment (including after acceleration thereof) of
an Offshore Rate Loan on a day that is not the last day of the
relevant Interest Period; or
(e) The automatic conversion under Section 2.04 of any
Offshore Rate Loan to a Base Rate Loan on a day that is not the
last day of the relevant Interest Period;
including any such loss or expense arising from the liquidation
or reemployment of funds obtained by it to maintain its Offshore
Rate Loans or from fees payable to terminate the deposits from
which such funds were obtained.
4.05 Inability to Determine Rates. If the Bank determines
that for any reason adequate and reasonable means do not exist
for determining the Offshore Rate for any requested Interest
Period with respect to a proposed Offshore Rate Loan, or that the
Offshore Rate applicable pursuant to subsection 2.09 for any
requested Interest Period with respect to a proposed Offshore
Rate Loan does not adequately and fairly reflect the cost to the
Bank of funding such Loan, the Bank will promptly so notify the
Borrower. Thereafter, the obligation of the Bank to make or
maintain Offshore Rate Loans, hereunder shall be suspended until
the Bank revokes such notice in writing. Upon receipt of such
notice, the Borrower may revoke any Notice of Borrowing or Notice
of Conversion/Continuation then submitted by it. If the Borrower
does not revoke such Notice, the Bank shall make, convert or
continue the Loans, as proposed by the Borrower, in the amount
specified in the applicable notice submitted by the Borrower, but
such Loans shall be made, converted or continued as Base Rate
Loans instead of Offshore Rate Loans.
4.06 Reserves on Offshore Rate Loans. The Borrower shall
pay to the Bank, as long as the Bank shall be required under
regulations of the FRB to maintain reserves with respect to
liabilities or assets consisting of or including Eurocurrency
funds or deposits (currently known as "Eurocurrency
liabilities"), additional costs on the unpaid principal amount of
each Offshore Rate Loan equal to the actual costs of such
reserves allocated to such Loan by the Bank (as determined by the
Bank in good faith, which determination shall be conclusive),
payable on each date on which interest is payable on such Loan,
provided the Borrower shall have received at least 15 days' prior
written notice of such additional interest from the Bank. If the
Bank fails to give notice 15 days prior to the relevant Interest
Payment Date, such additional interest shall be payable 15 days
from receipt of such notice.
4.07 Certificates of Bank. If the Bank claims
reimbursement or compensation under this Article IV, it shall
deliver to the Borrower a certificate setting forth in reasonable
detail the amount payable to the Bank hereunder.
4.08 Survival. The agreements and obligations of the
Borrower in this Article IV shall survive the payment of all
other Obligations.
ARTICLE V
CONDITIONS PRECEDENT
5.01 Conditions of Initial Credit Extensions. The
obligation of the Bank to make its initial Credit Extension
hereunder is subject to the condition that the Bank shall have
received on or before the Closing Date all of the following, in
form and substance satisfactory to the Bank:
(a) Credit Agreement. This Agreement, the Master
Credit Agreement and other Loan Documents executed by each party
thereto;
(b) Resolutions; Incumbency.
(1) Copies of the resolutions of the board of
directors of the Borrower and each Subsidiary that may become
party to a Loan Document authorizing the transactions
contemplated hereby, certified as of the Closing Date by the
Secretary or an Assistant Secretary of the Borrower; and
(2) A certificate of the Secretary or Assistant
Secretary of the Borrower, and each Subsidiary that may
become party to a Loan Document certifying the names and
true signatures of the officers of the Borrower or such
Subsidiary authorized to execute, deliver and perform, as
applicable, this Agreement, and all other Loan Documents to
be delivered by it hereunder;
(c) Legal Opinions.
(1) An opinion of Klaus Belohoubek, counsel to
the Borrower and addressed to the Bank;
(d) Payment of Fees. Evidence of payment by the
Borrower of all accrued and unpaid fees, costs and expenses to
the extent then due and payable on the Closing Date;
(e) Certificate. A certificate signed by a
Responsible Officer, dated as of the Closing Date, stating that:
(1) the representations and warranties contained
in Article VI are true and correct on and as of such date,
as though made on and as of such date;
(2) no Default or Event of Default exists or
would result from the Credit Extension; and
(3) there has occurred since September 30, 1995,
no event or circumstance that has resulted or could
reasonably be expected to result in a Material Adverse
Effect;
(f) Other Documents. Such other approvals, opinions,
documents or materials as the Bank may request.
5.02 Conditions to All Credit Extensions. The obligation
of the Bank to make any Loan to be made by it (including its
initial Loan) [or to continue or convert any Loan under Section
2.04 and the obligation to Issue any Letter of Credit (including
the initial Letter of Credit is subject to the satisfaction of
the following conditions precedent on the relevant Borrowing
Date, Conversion/Continuation Date of Issuance Date:
(a) Notice, Application. The Bank shall have received
a Notice of Borrowing or a Notice of Conversion/Continuation, as
applicable or in the case of any Issuance of any Letter of
Credit, an L/C application or L/C Amendment application;
(b) Continuation of Representations and Warranties.
The representations and warranties in Article VI shall be true
and correct on and as of such Borrowing Date or Conversion/
Continuation Date or Issuance Date with the same effect as if
made on and as of such Borrowing Date [or Conversion/Continuation
Date or Issuance Date (except to the extent such representations
and warranties expressly refer to an earlier date, in which case
they shall be true and correct as of such earlier date);
(c) No Existing Default. No Default or Event of
Default shall exist or shall result from the making of such Loan
or its continuation or conversion or Issuance; and
Each Notice of Borrowing, Notice of Conversion/Continuation and
L/C application or L/C amendment application submitted by the
Borrower hereunder shall constitute a representation and warranty
by the Borrower hereunder, as of the date of each such notice and
as of each Borrowing Date, Conversion/Continuation Date, or
Issuance Date as applicable, that the conditions in this Section
5.02 are satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Borrower covenants and agrees that it will comply with
the representations and warranties as contained in Article III of
the Master Credit Agreement. All of the aforementioned
representations and warranties, together with any other
provisions of the Master Agreement to which reference is made
therein, as well as the related definitions are hereby
incorporated herein by reference and shall be deemed to continue
in effect for the benefit of the Bank, whether or not the Master
Agreement remains in effect between the parties thereto.
ARTICLE VII
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that it will comply with
the affirmative covenants as contained in Article IV of the
Master Credit Agreement. All of the aforementioned covenants,
together with any other provisions of the Master Agreement to
which reference is made therein, as well as the related
definitions are hereby incorporated herein by reference and shall
be deemed to continue in effect for the benefit of the Bank,
whether or not the Master Agreement remains in effect between the
parties thereto.
ARTICLE VIII
NEGATIVE COVENANTS
The Borrower covenants and agrees that it will comply with
the negative covenants as contained in Article V of the Master
Credit Agreement. All of the aforementioned covenants, together
with any other provisions of the Master Agreement to which
reference is made therein, as well as the related definitions are
hereby incorporated herein by reference and shall be deemed to
continue in effect for the benefit of the Bank, whether or not
the Master Agreement remains in effect between the parties
thereto.
<PAGE>
ARTICLE IX
EVENTS OF DEFAULT
9.01 Event of Default. Any of the following shall
constitute an "Event of Default":
(a) Non-Payment. The Borrower fails to make, (i) when
and as required to be made herein, payments of any amount of
principal of any Loan or of any L/C obligation, or (ii) within
five days after the same becomes due, payment of any interest,
fee or any other amount payable hereunder or under any other Loan
Document; or
(b) Representation or Warranty. Any representation or
warranty by the Borrower or any Subsidiary made or deemed made
herein, in any other Loan Document, or which is contained in any
certificate, document or financial or other statement by the
Borrower, any Subsidiary, or any Responsible Officer, furnished
at any time under this Agreement, or in or under any other Loan
Document, is incorrect in any material respect on or as of the
date made or deemed made; or
(c) Specific Defaults. The Borrower fails to perform
or observe any term, covenant or agreement contained in any of
Section 4.14, 5.10 or 5.11 of the Master Agreement; or
(d) An Event of Default occurs under the Master
Agreement.
9.02 Remedies. If any Event of Default occurs, the Bank
may:
(a) Declare its commitment to make Loans and any
obligation to Issue Letters of Credit to be terminated, whereupon
such commitment and obligation shall be terminated;
(b) Declare an amount equal to the maximum aggregate
amount that is or at any time thereafter may become available for
drawing under any outstanding Letters of Credit (whether or not
any beneficiary shall have presented, or shall be entitled at
such time to present, the drafts or other documents required to
draw under such Letters of Credit) to be immediately due and
payable, and declare the unpaid principal amount of all
outstanding Loans, all interest accrued and unpaid thereon, and
all other amounts owing or payable hereunder or under any other
Loan Document to be immediately due and payable, without
presentment, demand, protest or other notice of any kind, all of
which are hereby expressly waived by the Borrower; and
(c) Exercise on behalf of itself all rights and
remedies available to it under the Loan Documents or applicable
law;
provided, however, that upon the occurrence of any event
specified in subsection (e) or (f) of Section 7.01 of the Master
Agreement, the obligation of the Bank to make Loans and any
obligation to Issue Letters of Credit shall automatically
terminate and the unpaid principal amount of all outstanding
Loans and all interest and other amounts as aforesaid shall
automatically become due and payable without further act of the
Bank.
9.03 Rights Not Exclusive. The rights provided for in this
Agreement and the other Loan Documents are cumulative and are not
exclusive of any other rights, powers, privileges or remedies
provided by law or in equity, or under any other instrument,
document or agreement now existing or hereafter arising.
ARTICLE X
MISCELLANEOUS
10.01 Amendments and Waivers. No amendment or waiver of
any provision of this Agreement or any other Loan Document, and
no consent with respect to any departure by the Borrower or any
applicable Subsidiary therefrom, shall be effective unless the
same shall be in writing and signed by the Bank and the Borrower,
and then any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which
given.
10.02 Notices.
(a) All notices, requests, consents, approvals,
waivers and other communications shall be in writing (including,
unless the context expressly otherwise provides, by facsimile
transmission, provided that any matter transmitted by the
Borrower by facsimile (i) shall be immediately confirmed by a
telephone call to the recipient at the number specified on
Schedule 10.02, and (ii) shall be followed promptly by delivery
of a hard copy original thereof) and mailed, faxed or delivered,
to the address or facsimile number specified for notices on
Schedule 10.02; or, as directed to the Borrower or the Bank, to
such other address as shall be designated by such party in a
written notice to the other party, and as directed to any other
party, at such other address as shall be designated by such party
in a written notice to the other party.
(b) All such notices, requests and communications
shall, when transmitted by overnight delivery, or faxed, be
effective when delivered for overnight (next-day) delivery, or
transmitted in legible form by facsimile machine, respectively,
or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery;
except that notices pursuant to Article II to the Bank shall not
be effective until actually received by the Bank.
(c) Any agreement of the Bank herein to receive
certain notices by telephone or facsimile is solely for the
convenience and at the request of the Borrower. The Bank shall
be entitled to rely on the authority of any Person purporting to
be a Person authorized by the Borrower to give such notice and
the Bank shall not have any liability to the Borrower or other
Person on account of any action taken or not taken by the Bank in
reliance upon such telephonic or facsimile notice. The
obligation of the Borrower to repay the Loans shall not be
affected in any way or to any extent by any failure by the Bank
to receive written confirmation of any telephonic or facsimile
notice or the receipt by the Bank of a confirmation which is at
variance with the terms understood by the Bank to be contained in
the telephonic or facsimile notice.
10.03 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Bank, any
right, remedy, power or privilege hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right,
remedy, power or privilege.
10.04 Costs and Expenses. The Borrower shall:
Pay or reimburse the Bank within five Business Days after demand
for all costs and expenses (including Attorney Costs) incurred by
Bank in connection with the enforcement, attempted enforcement,
or preservation of any rights or remedies under this Agreement or
any other Loan Document during the existence of an Event of
Default or after acceleration of the Loans (including in
connection with any "workout" or restructuring regarding the
Loans, and including any Insolvency Proceeding or appellate
proceeding).
10.05 Borrower Indemnification.
(a) Whether or not the transactions contemplated
hereby are consummated, the Borrower shall indemnify, defend and
hold the Bank, each of its Affiliates, and each of its respective
officers, directors, employees, counsel, agents and
attorneys-in-fact (each, an "Indemnified Person") harmless from
and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, charges,
expenses and disbursements (including Attorney Costs) of any kind
or nature whatsoever which may at any time (including at any time
following repayment of the Loans be imposed on, incurred by or
asserted against any such Person by a third party including with
respect to any investigation, litigation or proceeding (including
any Insolvency Proceeding or appellate proceeding) related to or
arising out or the use of the proceeds thereof, whether or not
any Indemnified Person is a party thereto (all the foregoing,
collectively, the "Indemnified Liabilities"); provided, that the
Borrower shall have no obligation hereunder to any Indemnified
Person with respect to Indemnified Liabilities resulting solely
from the gross negligence or willful misconduct of such
Indemnified Person. The agreements in this Section shall survive
payment of all other Obligations.
(b) The obligations in this Section shall survive
payment of all other Obligations. At the election of any
Indemnified Person, the Borrower shall defend such Indemnified
Person using legal counsel satisfactory to such Indemnified
Person in such Person's sole discretion, at the sole cost and
expense of the Borrower. All amounts owing under this Section
shall be paid within 30 days after demand.
10.06 Marshalling; Payments Set Aside. The Bank shall be
under no obligation to marshall any assets in favor of the
Borrower or any other Person or against or in payment of any or
all of the Obligations. To the extent that the Borrower makes a
payment to the Bank, or the Bank exercises its right of set-off,
and such payment or the proceeds of such set-off or any part
thereof are subsequently invalidated, declared to be fraudulent
or preferential, set aside or required (including pursuant to any
settlement entered into by the Bank in its discretion) to be
repaid to a trustee, receiver or any other party, in connection
with any Insolvency Proceeding or otherwise, then to the extent
of such recovery the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full
force and effect as if such payment had not been made or such
set-off had not occurred.
10.07 Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns,
except that the Borrower may not assign or transfer any of its
rights or obligations under this Agreement without the prior
written consent of the Bank.
10.08 Assignments, Participations, etc. The Bank may at
any time assign and delegate to one or more Affiliates all, or
any ratable part of all, of the Loans, the Commitment and the
other rights and obligations of the Bank hereunder.
10.09 Confidentiality. The Bank agrees to take and to
cause its Affiliates to take normal and reasonable precautions
and exercise due care to maintain the confidentiality of all
information identified as "confidential" or "secret" by the
Borrower and provided to it by the Borrower or any Subsidiary,
under this Agreement or any other Loan Document, and neither it
nor any of its Affiliates shall use any such information other
than in connection with or in enforcement of this Agreement and
the other Loan Documents or in connection with other business now
or hereafter existing or contemplated with the Borrower or any
Subsidiary; except to the extent such information (i) was or
becomes generally available to the public other than as a result
of disclosure by the Bank, or (ii) was or becomes available on a
non-confidential basis from a source other than the Borrower,
provided that such source is not bound by a confidentiality
agreement with the Borrower known to the Bank; provided, however,
that the Bank may disclose such information (A) at the request or
pursuant to any requirement of any Governmental Authority to
which the Bank is subject or in connection with an examination of
the Bank by any such authority; (B) pursuant to subpoena or other
court process, provided, further that Bank agrees to promptly
give notice thereof to the Borrower; (C) when required to do so
in accordance with the provisions of any applicable Requirement
of Law; (D) to the extent reasonably required in connection with
any litigation or proceeding to which the Bank or its respective
Affiliates may be party; (E) to the extent reasonably required in
connection with the exercise of any remedy hereunder or under any
other Loan Document; (F) to the Bank's independent auditors and
other professional advisors; (G) to any participant or assignee,
actual or potential, provided that such Person agrees in writing
to keep such information confidential to the same extent required
of the Bank hereunder; (H) as to the Bank or its Affiliate, as
expressly permitted under the terms of any other document or
agreement regarding confidentiality to which the Borrower or any
Subsidiary is party or is deemed party with the Bank or such
Affiliate; and (I) to its Affiliates.
10.10 Set-off. In addition to any rights and remedies of
the Bank provided by law, if an Event of Default exists or the
Loans have been accelerated, the Bank is authorized at any time
and from time to time, without prior notice to the Borrower, any
such notice being waived by the Borrower to the fullest extent
permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any
time held by, and other indebtedness at any time owing by, the
Bank to or for the credit or the account of the Borrower against
any and all Obligations owing to the Bank, now or hereafter
existing, irrespective of whether or not the Bank shall have made
demand under this Agreement or any Loan Document and although
such Obligations may be contingent or unmatured.
10.11 Counterparts. This Agreement may be executed in any
number of separate counterparts, each of which, when so executed,
shall be deemed an original, and all of said counterparts taken
together shall be deemed to constitute but one and the same
instrument.
10.12 Severability. The illegality or unenforceability of
any provision of this Agreement or any instrument or agreement
required hereunder shall not in any way affect or impair the
legality or enforceability of the remaining provisions of this
Agreement or any instrument or agreement required hereunder.
10.13 No Third Parties Benefited. This Agreement is made
and entered into for the sole protection and legal benefit of the
Borrower, the Bank, the Bank's Affiliates, and their permitted
successors and assigns, and no other Person shall be a direct or
indirect legal beneficiary of, or have any direct or indirect
cause of action or claim in connection with, this Agreement or
any of the other Loan Documents.
10.14 Governing Law and Jurisdiction.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF ILLINOIS; PROVIDED
THAT THE BANK SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE
COURTS OF THE STATE OF ILLINOIS OR OF THE UNITED STATES FOR THE
NORTHERN DISTRICT OF ILLINOIS, AND BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, EACH OF THE Borrower AND THE BANK CONSENTS, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE Borrower AND THE BANK
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS,
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION
OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT
OR ANY DOCUMENT RELATED HERETO. THE Borrower AND THE BANK EACH
WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER
PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
ILLINOIS LAW.
10.15 Waiver of Jury Trial. THE Borrower AND THE BANK EACH
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR
OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES
AGAINST ANY OTHER PARTY OR ANY AFFILIATE OF THE BANK, PARTICIPANT
OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS, OR OTHERWISE. THE Borrower AND THE BANK EACH AGREE THAT
ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL
WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES
FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS
WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN
PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR
THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS.
10.16 Entire Agreement. This Agreement, together with the
other Loan Documents, embodies the entire agreement and
understanding among the Borrower and the Bank and supersedes all
prior or contemporaneous agreements and understandings of such
Persons, verbal or written, relating to the subject matter hereof
and thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered in Chicago by their
proper and duly authorized officers as of the day and year first
above written.
Matlack DE, INC.
By:
Name:
Title:
By:
Name:
Title:
Matlack, INC.
By:
Name:
Title:
By:
Name:
Title:
Safeway Chemical Transportation, Inc.
By:
Name:
Title:
Brite-Sol Services, Inc.
By:
Name:
Title:
BANK OF AMERICA ILLINOIS
By:
Name:
Title: Vice President
<PAGE>
SCHEDULE 10.02
OFFSHORE AND DOMESTIC LENDING OFFICES,
ADDRESSES FOR NOTICES
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
Domestic and Offshore Lending Office:
1850 Gateway Boulevard, Fourth Floor
Concord, California 94520
Notices (other than Borrowing notices and Notices of
Conversion/Continuation):
Bank of America National Trust
and Savings Association
[Address]
<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS . . . . . . . . . . . . 1
1.01 Certain Defined Terms. . . . . . . . . . . . . . . . . 1
1.02 Other Interpretive Provisions. . . . . . . . . . . . . 12
1.03 Accounting Principles. . . . . . . . . . . . . . . . . 13
ARTICLE II
THE CREDITS . . . . . . . . . . . . 13
2.01 Amounts and Terms of Commitment. . . . . . . . . . . . 13
(a) The Revolving Credit. . . . . . . . . . . . . . . 13
(b) The Term Credit . . . . . . . . . . . . . . . . . 13
(c) The L/C Commitment. . . . . . . . . . . . . . . . 14
(d) Joint and Several Liability . . . . . . . . . . . 14
2.02 Loan Accounts. . . . . . . . . . . . . . . . . . . . . 14
2.03 Procedure for Borrowing. . . . . . . . . . . . . . . . 14
2.04 Conversion and Continuation Elections. . . . . . . . . 15
2.05 Voluntary Termination or Reduction of Commitment . . . 16
2.06 Optional Prepayments . . . . . . . . . . . . . . . . . 16
2.07 Mandatory Prepayments of Loans; Mandatory Commitment
Reductions . . . . . . . . . . . . . . . . . . . . . . 16
(a) Borrowing Base Overage. . . . . . . . . . . . . . 16
(b) General . . . . . . . . . . . . . . . . . . . . . 17
(c) Reduction of Commitment . . . . . . . . . . . . . 17
2.08 Repayment. . . . . . . . . . . . . . . . . . . . . . . 17
(a) The Term Credit . . . . . . . . . . . . . . . . . 17
(b) The Revolving Credit. . . . . . . . . . . . . . . 17
2.09 Interest . . . . . . . . . . . . . . . . . . . . . . . 17
2.10 Fees . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.11 Computation of Fees and Interest . . . . . . . . . . . 18
2.12 Payments by the Borrower . . . . . . . . . . . . . . . 19
2.13 Collateral . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE III
THE LETTERS OF CREDIT. . . . . . . . . . 19
3.01 The Letter of Credit facility. . . . . . . . . . . . . 19
3.02 Issuance, Amendment and Renewal of Letters of Credit . 21
3.03 Drawings and Reimbursements. . . . . . . . . . . . . . 22
3.04 Bank's Role as the Issuing Bank. . . . . . . . . . . . 23
3.05 Obligations Absolute . . . . . . . . . . . . . . . . . 23
3.06 Cash Collateral Pledge . . . . . . . . . . . . . . . . 24
3.07 Letter of Credit Fees. . . . . . . . . . . . . . . . . 25
3.08 Uniform Customs and Practice . . . . . . . . . . . . . 25
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY. . . . . . 25
4.01 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . 25
4.02 Illegality . . . . . . . . . . . . . . . . . . . . . . 26
4.03 Increased Costs and Reduction of Return. . . . . . . . 26
4.04 Funding Losses . . . . . . . . . . . . . . . . . . . . 27
4.05 Inability to Determine Rates . . . . . . . . . . . . . 27
4.06 Reserves on Offshore Rate Loans. . . . . . . . . . . . 28
4.07 Certificates of Bank . . . . . . . . . . . . . . . . . 28
4.08 Survival . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE V
CONDITIONS PRECEDENT . . . . . . . . . . 28
5.01 Conditions of Initial Credit Extensions. . . . . . . . 28
(a) Credit Agreement. . . . . . . . . . . . . . . . . 28
(b) Resolutions; Incumbency . . . . . . . . . . . . . 28
(c) Legal Opinions. . . . . . . . . . . . . . . . . . 29
(d) Payment of Fees . . . . . . . . . . . . . . . . . 29
(e) Certificate . . . . . . . . . . . . . . . . . . . 29
(f) Other Documents . . . . . . . . . . . . . . . . . 29
5.02 Conditions to All Credit Extensions. . . . . . . . . . 29
(a) Notice, Application . . . . . . . . . . . . . . . 29
(b) Continuation of Representations and Warranties. . 29
(c) No Existing Default . . . . . . . . . . . . . . . 29
ARTICLE VI
REPRESENTATIONS AND WARRANTIES. . . . . . . . 30
ARTICLE VII
AFFIRMATIVE COVENANTS. . . . . . . . . . 30
ARTICLE VIII
NEGATIVE COVENANTS. . . . . . . . . . . 30
ARTICLE IX
EVENTS OF DEFAULT. . . . . . . . . . . 31
9.01 Event of Default . . . . . . . . . . . . . . . . . . . 31
(a) Non-Payment . . . . . . . . . . . . . . . . . . . 31
(b) Representation or Warranty. . . . . . . . . . . . 31
(c) Specific Defaults . . . . . . . . . . . . . . . . 31
9.02 Remedies . . . . . . . . . . . . . . . . . . . . . . . 31
9.03 Rights Not Exclusive . . . . . . . . . . . . . . . . . 32
ARTICLE X
MISCELLANEOUS
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.01 Amendments and Waivers. . . . . . . . . . . . . . . . 32
10.02 Notices . . . . . . . . . . . . . . . . . . . . . . . 32
10.03 No Waiver; Cumulative Remedies. . . . . . . . . . . . 33
10.04 Costs and Expenses. . . . . . . . . . . . . . . . . . 33
10.05 Borrower Indemnification. . . . . . . . . . . . . . . 33
10.06 Marshalling; Payments Set Aside . . . . . . . . . . . 34
10.07 Successors and Assigns. . . . . . . . . . . . . . . . 34
10.08 Assignments, Participations, etc. . . . . . . . . . . 34
10.09 Confidentiality . . . . . . . . . . . . . . . . . . . 34
10.10 Set-off . . . . . . . . . . . . . . . . . . . . . . . 35
10.11 Counterparts. . . . . . . . . . . . . . . . . . . . . 35
10.12 Severability. . . . . . . . . . . . . . . . . . . . . 35
10.13 No Third Parties Benefited. . . . . . . . . . . . . . 35
10.14 Governing Law and Jurisdiction. . . . . . . . . . . . 36
10.15 Waiver of Jury Trial. . . . . . . . . . . . . . . . . 36
10.16 Entire Agreement. . . . . . . . . . . . . . . . . . . 36
<PAGE>
SCHEDULES
Schedule 10.02 Lending Office; Addresses for Notices
EXHIBITS
Exhibit A Form of Borrowing Base Certificate
Exhibit B Form of Compliance Certificate
Exhibit C Form of Notice of Borrowing
Exhibit D Form of Notice of Conversion/Continuation
<PAGE>
CREDIT AGREEMENT
Dated as of March 27, 1996
among
Matlack DE, Inc.,
Matlack, Inc.,
Safeway Chemical Transportation, Inc.,
Brite-Sol Services, Inc.,
and
Bank of America Illinois
#16600
FIRST AMENDMENT TO MASTER
CREDIT AGREEMENT
THIS FIRST AMENDMENT TO MASTER CREDIT AGREEMENT ("Amendment")
is entered into as of August 16, 1996 among Matlack DE, Inc. ("the
Company", Matlack, Inc. ("MI"), Safeway Chemical Transportation,
Inc. ("SCI"), Brite-Sol Services, Inc. ("BSS"), (the Company, MI,
SCI and BSS are referred to individually and collectively as the
"Borrower"), Bank of America Illinois, individually and as
Collateral Agent, and First Union National Bank (collectively,
"the Banks").
WHEREAS, the Borrower, the Banks, and Collateral Agent have
entered into that certain Master Credit Agreement dated as of
March 27, 1996 (the "Agreement"); and
WHEREAS, the parties desire to further amend the Agreement as
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and
agreements contained herein, the parties hereto agrees as follows:
1. Definitions. Unless otherwise defined herein, terms used
herein have the meaning assigned to such terms in the Agreement.
2. Amendments. Subject to the terms and conditions of this
Amendment, the Agreement is hereby amended as follows:
(a) Section 1.01, definition of "Consolidated Adjusted Net
Worth" is amended by adding the following sentence at the end
of the definition: "For purposes of this definition,
Subordinated Indebtedness shall not exceed 35% of
Consolidated Net Worth."
(b) Section 4.14 is amended by deleting "Minimum Net Worth"
and substituting "Consolidated Adjusted Net Worth" in place
thereof.
3. Conditions Precedent. This Amendment shall become
effective when all of the following conditions have been met:
(a) the Borrower, the Banks and Collateral Agent shall
each have signed a copy of this Amendment (whether the same
or different copies); and
(b) The Collateral Agent shall have received such other
evidence as it may reasonably request to establish the
consummation of the transactions contemplated hereby, the
taking for all proceedings in connection herewith and
compliance with the conditions set forth in this Amendment.
4. Miscellaneous.
(a) Effect. This Amendment is specific in time and in
intent and does not constitute, nor should be construed as,
an amendment or waiver of any other right, power or privilege
under the Agreement or under any agreement, contract,
document or instrument mentioned in the Agreement; nor does
it preclude other or further exercise hereof or the exercise
of any other right, power or privilege, nor shall any
amendment or waiver of any right, power, privilege or default
hereunder, or under any agreement, contract, document or
instrument mentioned in the Agreement, constitute an
amendment or waiver of any other default of the same or of
any other term or provision. Except as expressly modified
hereby, all of the terms and provisions of the Agreement
shall continue in full force and effect; and the Borrower
hereby confirms each and every one of its respective
obligations under the Agreement, as amended by this
Amendment. Wherever the term "Agreement" is used in the
Agreement and whenever the Agreement is referred to in any of
the instruments, agreements or other documents or papers
executed and delivered in connection therewith, it shall be
deemed to mean the Agreement, as amended by this Amendment.
(b) Counterparts. This Amendment may be executed in
any number of counterparts, and all of such counterparts
taken together shall be deemed to constitute one and the same
instrument.
(c) Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY
THE LAWS OF THE STATE OF ILLINOIS.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment by their duly authorized officers as of the day and year
first above written.
Matlack DE, INC.
By: /s/ G. J. Trippitelli
Title: President
Matlack, Inc.
By: /s/ G. J. Trippitelli
Title: President
Safeway Chemical Transportation, Inc.
By: /s/ G. J. Trippitelli
Title: President
Brite-Sol Services, Inc.
By: /s/ G. J. Trippitelli
Title: President
Bank of America Illinois, as Collateral Agent
By: /s/ Nelson D. Albrecht
Title: Vice President
Bank of America Illinois, as Bank
By: /s/ Nelson D. Albrecht
Title: Vice President
First Union National Bank, as Bank
By: /s/ Patrick A. McGovern
Title: Senior Vice President
CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of May 22, 1996
among Matlack DE, Inc. (the "Company"), Matlack, Inc. ("MI"),
Safeway Chemical Transportation, Inc. (SCT"), Brite-Sol Services,
Inc. ("BSS") (the Company, MI, SCT and BSS are individually and
collectively referred to as "the Borrower") and First Union
National Bank (the "Bank").
WHEREAS, the Bank has agreed to make available to the
Borrower a credit facility upon the terms and conditions set
forth in this Agreement and the Master Credit Agreement;
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained herein, the parties agree as
follows:
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms. Terms not otherwise defined
herein shall have the same meaning as in the Master Credit
Agreement. The following terms have the following meanings:
"Agreement" means this Credit Agreement.
"Applicable Margin" means
(i) with respect to Prime Rate Loans, 0%;
(ii) with respect to Swing Loans, 0%;
(iii) with respect to LIBOR Loans and Letter
of Credit Fees, (A) 2% if Level I Status exists, (B)
1.5% if Level II Status exists, (C) 1.125% if Level III
Status exists, (D) .875% if Level IV Status exists and
(E) .625% if Level V Status exists; and
(iv) with respect to the Non-Use Fee, (A) .500% if
Level I Status exists, (B) .500% if Level II Status
exists, (C) .375% if Level III Status exists, (D) .250%
if Level IV Status exists and (E) .250% if Level V
Status exists.
As of the Effective Date, Level III Status shall exist.
"Attorney Costs" means and includes all fees and
disbursements of any law firm or other external counsel, the
allocated cost of internal legal services and all
disbursements of internal counsel.
"Bank" means First Union National Bank. Unless the
context otherwise clearly requires, references to such
institution as a "Bank" shall also include any of such
institution's affiliates.
"Borrowing" means a borrowing hereunder consisting of
Revolving Loans or Term Loans of the same Type made to the
Borrower on the same day by the Bank under Article II, and,
other than in the case of Prime Rate Loans, having the same
Interest Period.
"Borrowing Base" means, as of any date of determination
thereof, an amount equal to the sum of (x) 90% of the net
book value of Equipment plus a 75% reserve for replacement
tires plus (y) 85% of all Eligible Accounts outstanding at
such date.
"Borrowing Base Certificate" means a certificate duly
executed by a Responsible Officer of the Company,
substantially in the form of Exhibit A.
"Borrowing Date" means any date on which a Loan is
disbursed.
"Business Day" means any day other than a Saturday,
Sunday or other day on which commercial banks in New York
City or Philadelphia, Pennsylvania are authorized or
required by law to close and, if the applicable Business Day
relates to any LIBOR Loan, means any day on which dealings
in foreign currencies and exchanges between banks may be
carried on in New York City, New York.
"Capital Adequacy Regulation" means any guideline,
request or directive of any central bank or other Governmen-
tal Authority, or any other law, rule or regulation, whether
or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation control-
ling a bank.
"Cash Collateralize" means to pledge and deposit with
or deliver to the Bank, as collateral for the L/C
Obligations, cash or deposit account balances pursuant to
documentation in form and substance satisfactory to the
Bank. The Borrower hereby grants the Bank, a security
interest in all such cash and deposit account balances.
Cash collateral shall be maintained in blocked, non-interest
bearing deposit accounts at Bank.
"Closing Date" means the date on which all conditions
precedent set forth in Section 5.01 are satisfied or waived
by the Bank.
"Code" means the Internal Revenue Code of 1986, and
regulations promulgated thereunder.
"Collateral Agent" means Bank of America Illinois in
its capacity as collateral agent under the Master Credit
Agreement.
"Collateral Documents" means, collectively, (i) the
Master Credit Agreement, the Security Agreement, and all
other security agreements, mortgages, deeds of trust, patent
and trademark assignments, lease assignments, guarantees and
other similar agreements between the Borrower or any
Subsidiary or any Guarantor and the Collateral Agent now or
hereafter delivered to the Bank pursuant to or in connection
with the transactions contemplated hereby, and all financing
statements (or comparable documents now or hereafter filed
in accordance with the Uniform Commercial Code or comparable
law) against the Borrower or any Subsidiary or any Guarantor
as debtor in favor of the Bank as secured party, and
(ii) any amendments, supplements, modifications, renewals,
replacements, consolidations, substitutions and extensions
of any of the foregoing.
"Commitment" means, at any time and as the context may
require, either the Revolving Commitment, the L/C Commitment
or the Term Commitment (collectively the aggregate of the
then Revolving Commitment, the L/C Commitment and the then
Term Commitment).
"Compliance Certificate" means a certificate
substantially in the form of Exhibit B.
"Consolidated Net Worth" means, at any time, the total
of shareholders' equity (including capital stock, additional
paid-in capital and retained earnings after deducting
treasury stock) of the Company and its consolidated
Subsidiaries prepared in accordance with GAAP.
"Contingent Obligation" means, as to any Person, any
direct or indirect liability of that Person, whether or not
contingent, with or without recourse, (a) with respect to
any Indebtedness, lease, dividend, letter of credit or other
obligation (the "primary obligations") of another Person
(the "primary obligor"), including any obligation of that
Person (i) to purchase, repurchase or otherwise acquire such
primary obligations or any security therefor, (ii) to
advance or provide funds for the payment or discharge of
any such primary obligation, or to maintain working capital
or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet
item, level of income or financial condition of the primary
obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to
make payment of such primary obligation, or (iv) otherwise
to assure or hold harmless the holder of any such primary
obligation against loss in respect thereof (each, a "Guaran-
ty Obligation"); (b) with respect to any Surety Instrument
issued for the account of that Person or as to which that
Person is otherwise liable for reimbursement of drawings or
payments; (c) to purchase any materials, supplies or other
property from, or to obtain the services of, another Person
if the relevant contract or other related document or obli-
gation requires that payment for such materials, supplies or
other property, or for such services, shall be made regard-
less of whether delivery of such materials, supplies or
other property is ever made or tendered, or such services
are ever performed or tendered.
"Contractual Obligation" means, as to any Person, any
provision of any security issued by such Person or of any
agreement, undertaking, contract, indenture, mortgage, deed
of trust or other instrument, document or agreement to which
such Person is a party or by which it or any of its property
is bound.
"Conversion/Continuation Date" means any date on which,
under Section 2.04, the Borrower (a) converts Loans of one
Type to another Type, or (b) continues as Loans of the same
Type, but with a new Interest Period, Loans having Interest
Periods expiring on such date.
"Current Maturities" means Indebtedness due within one
year.
"Default" means any event or circumstance which, with
the giving of notice, the lapse of time, or both, would (if
not cured or otherwise remedied during such time) constitute
an Event of Default.
"Dollars", "dollars" and "$" each mean lawful money of
the United States.
"EBITDA" means with respect to the Company and its
Subsidiaries for any fiscal period, an amount equal to
Consolidated Net Income for such period, plus to the extent
deducted in the calculation of Consolidated Net Income and
without duplication, (a) depreciation and amortization for
such period, (b) other noncash charges for such period, (c)
income tax expense for such period and (d) Consolidated
Total Interest Expense (including, without limitation, fees,
commissions and other charges associated with standby
letters of credit and other financing charges) paid or
accrued during such period.
"Event of Default" means any of the events or
circumstances specified in Section 9.01.
"FDIC" means the Federal Deposit Insurance Corporation,
and any Governmental Authority succeeding to any of its
principal functions.
"Fixed Charge Ratio Coverage" means the ratio of EBITDA
plus Rental and Lease Expense to the sum of Interest
Expense, Rental and Lease Expense, Current Maturities and
20% of Obligations (as defined in the Master Credit Agree-
ment), determined on a rolling four quarter basis.
"FRB" means the Board of Governors of the Federal
Reserve System, and any Governmental Authority succeeding to
any of its principal functions.
"Future Lease Obligations" means the aggregate minimum
payments required under all operating leases.
"GAAP" means generally accepted accounting principles
set forth from time to time in the opinions and pro-
nouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting
Standards Board (or agencies with similar functions of
comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of
the date of determination.
"Governmental Authority" means any nation or
government, any state or other political subdivision there-
of, any central bank (or similar monetary or regulatory
authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any
corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the
foregoing.
"Guaranty Obligation" has the meaning specified in the
definition of "Contingent Obligation."
"Indebtedness" of any Person means, without dupli-
cation, (a) all indebtedness for borrowed money; (b) all
obligations issued, undertaken or assumed as the deferred
purchase price of property or services (other than trade
payables entered into in the ordinary course of business on
ordinary terms); (c) all non-contingent reimbursement or
payment obligations with respect to Surety Instruments; (d)
all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced
incurred in connection with the acquisition of property,
assets or businesses; (e) all indebtedness created or
arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with
respect to property acquired by the Person (even though the
rights and remedies of the seller or bank under such
agreement in the event of default are limited to
repossession or sale of such property); (f) all obligations
with respect to capital leases; (g) all indebtedness
referred to in clauses (a) through (f) above secured by (or
for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien
upon or in property (including accounts and contracts
rights) owned by such Person, even though such Person has
not assumed or become liable for the payment of such
Indebtedness; and (h) all Guaranty Obligations in respect of
indebtedness or obligations of others of the kinds referred
to in clauses (a) through (g) above.
"Interest Expense" means for any period the amount
which, in conformity with GAAP would be set forth opposite
the caption "interest expense" on a consolidated income
statement of the Borrower and its Subsidiaries for such
period.
"Interest Payment Date" means, as to a LIBOR Loan, the
last day of each Interest Period applicable to such Loan,
and as to any Prime Rate Loan or Swing Loan, the earlier of
(i) the maturity date for such Loan and (ii) the last
Business Day of each calendar quarter, and each date such
Loan is converted into another Type of Loan, provided,
however, that if any Interest Period for a LIBOR Loan ex-
ceeds 90 days or three months, respectively, the date that
falls 90 days or three months (as the case may be) after the
beginning of such Interest Period and after each Interest
Payment Date thereafter is also an Interest Payment Date.
"Interest Period" means, as to any LIBOR Loan, the
period commencing on the Borrowing Date of such Loan or on
the Conversion/Continuation Date on which the Loan is
converted into or continued as a LIBOR Loan, and ending on
the date one through thirty days, or one, two, three or six
months thereafter;
provided that:
(i) if any Interest Period would otherwise end on
a day that is not a Business Day, that Interest Period
shall be extended to the following Business Day unless,
in the case of a LIBOR Loan, the result of such
extension would be to carry such Interest Period into
another calendar month, in which event such Interest
Period shall end on the preceding Business Day;
(ii) any Interest Period pertaining to a LIBOR
Loan that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Business
Day of the calendar month at the end of such Interest
Period;
(iii) no Interest Period for the Term Loan or any
portion thereof shall extend beyond the Termination
Date and no Interest Period for any Revolving Loan
shall extend beyond the Revolving Termination Date; and
(iv) no Interest Period applicable to the Term
Loan or portion thereof shall extend beyond any date
upon which is due any scheduled principal payment in
respect of the Term Loans unless the aggregate
principal amount of Term Loans represented by Prime
Rate Loans, or by LIBOR Loans having Interest Periods
that will expire on or before such date, equals or
exceeds the amount of such principal payment.
"IRS" means the Internal Revenue Service, and any
Governmental Authority succeeding to any of its principal
functions under the Code.
"Issue" means with respect to any Letter of Credit to
issue or to extend the expiry of, or to renew or increase
the amount of, such Letter of Credit; and the terms "Issued"
"Issuing" and "Issuance" have corresponding meaning.
"LIBOR Rate" means, means, with respect to each day
during each Interest Period, the rate (rounded to the
nearest five decimal places in accordance with the 1991 ISDA
Definitions published by the International Swaps and Deriva-
tives Association, Inc.) for U.S. dollar deposits of a
maturity equal to the applicable Interest Period, as
reported on Telerate page 3750 as of 11:00 a.m., London
time, on the second London business day before the relevant
Interest Period begins (or if not so reported, then as
determined by the Bank from another recognized source or
interbank quotation), adjusted for reserves by dividing that
rate by 1.00 minus the LIBOR Reserve for any Interest
Period.
"LIBOR Loan" means a Loan that bears interest based on
the LIBOR Rate.
"LIBOR Reserve" means the maximum percentage reserve
requirement (rounded to the next higher 1/100 of 1% and
expressed as a decimal) in effect for any day during the
Interest Period under the Federal Reserve Board's Regulation
D for Eurocurrency liabilities as defined therein.
"L/C Amendment Application" means an application form
for amendment of outstanding standby letters of credit as
shall at any time be in use as Bank shall request.
"L/C Application" means an application form for
issuances of standby or commercial documentary letters of
credit as shall at any time be in use at the Issuing Bank,
as the Issuing Bank shall request.
"L/C Borrowing" means an extension of credit resulting
from a drawing under any Letter of Credit which shall not
have been reimbursed on the date when made nor converted
into a Borrowing of Revolving Loans under Section 3.03.
"L/C Commitment" means the commitment of Bank to Issue
Letters of Credit from time to time Issued or outstanding
under Article III, in an aggregate amount not to exceed on
any date the lesser of (i) $4,000,000.00 and (ii) the
Revolving Commitment minus outstanding Revolving Loans, as
such commitment shall be reduced as a result of a reduction
in the L/C Commitment pursuant to Section 2.05; provided
that the L/C Commitment is a part of the combined Commit-
ments, rather than a separate, independent commitment.
"L/C Obligations" means at any time the sum of (a) the
aggregate undrawn amount of all Letters of Credit then
outstanding, plus (b) the amount of all unreimbursed draw-
ings under all Letters of Credit, including all outstanding
L/C Borrowings.
"L/C-Related Documents" means the Letters of Credit,
the L/C Applications, the L/C Amendment Applications and any
other document relating to any Letter of Credit, including
any of Bank's standard form documents for letter of credit
issuances.
"Letters of Credit" means any standby letters of credit
issued by Bank pursuant to Article III.
"Level I Status" shall exist at any date if, at such
date of calculation, the Borrower's Fixed Charge
Coverage Ratio as reported pursuant to Section 4.02 of the Master
Credit Agreement is less than 1.25.
"Level II Status" shall exist at any date if, at such
date of calculation, the Borrower's Fixed Charge Coverage
Ratio as reported pursuant to Section 4.02 of the Master
Credit Agreement is greater than or equal to 1.25.
"Level III Status" shall exist at any date if, at such
date of calculation, the Borrower's Fixed Charge Coverage
Ratio as reported pursuant to Section 4.02 of the Master
Credit Agreement is greater than or equal to 1.50.
"Level IV Status" shall exist at any date if, at such
date of calculation, the Borrower's Fixed Charge Coverage
Ratio as reported pursuant to Section 4.02 of the Master
Credit Agreement is greater than or equal to 1.75.
"Level V Status" shall exist at any date if, at such
date of calculation, the Borrower's Fixed Charge Coverage
Ratio as reported pursuant to Section 4.02 of the Master
Credit Agreement is greater than or equal to 2.0.
"Leverage Ratio" means the ratio of Senior Indebtedness
plus the net present value (in calculating the net present
value the discount rate shall be 10%) of Future Lease
Obligations plus L/C Obligations to Consolidated Adjusted
Net Worth.
"Loan" means an extension of credit by the Bank to the
Borrower under Article II or Article III in the form of a
Revolving Loan, Term Loan or L/C Advance.
"Loan Documents" means this Agreement, any Notes, the
Collateral Documents, the L/C-Related Documents and all
other documents delivered to the Bank in connection with the
transactions contemplated by this Agreement and the Master
Credit Agreement.
"Master Credit Agreement" means the master credit
agreement among the Borrower, the Bank and Bank of America
Illinois, dated as of the same date hereof.
"Non-Use Fee" means the percentage per annum of the
unused commitment.
"Notes" means the Revolving Credit Note and the Term
Note.
"Notice of Borrowing" means a notice in substantially
the form of Exhibit C.
"Notice of Conversion/Continuation" means a notice in
substantially the form of Exhibit D.
"Organization Documents" means, for any corporation,
the certificate or articles of incorporation, the bylaws,
any certificate of determination or instrument relating to
the rights of preferred shareholders of such corporation,
any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee
thereof) of such corporation.
"Person" means an individual, partnership, corporation,
limited liability company, business trust, joint stock
company, trust, unincorporated association, joint venture or
Governmental Authority.
"Prime Rate" means the rate of interest established by
the Bank as its reference rate in making loans, and is not
tied to any external rate of interest or index. The rate of
interest charged hereunder shall change automatically and
immediately as of the date of any change in the Prime Rate,
without notice to the Borrower.
"Prime Rate Loan" means a Loan that bears interest
based on the Prime Rate.
"Rental and Lease Expense" means principal and interest
payments paid under operating leases.
"Requirement of Law" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or
determination of an arbitrator or of a Governmental
Authority, in each case applicable to or binding upon the
Person or any of its property or to which the Person or any
of its property is subject.
"Responsible Officer" means the chief executive officer
or the president of the Company, or any other officer having
substantially the same authority and responsibility; or,
with respect to compliance with financial covenants, the
chief financial officer or the treasurer of the Borrower, or
any other officer having substantially the same authority
and responsibility.
"Revolving Commitment" means $12,000,000 provided,
however, that the aggregate outstandings to both Banks under
the Master Credit Agreement shall not exceed the Borrowing
Base.
"Revolving Credit Note" has the meaning specified in
Section 2.01(a).
"Revolving Loan" has the meaning specified in
Section 2.01.
"Revolving Termination Date" means the earlier to occur
of:
(a) March 31, 1997 provided, however, that such
day may be extended an additional year if the Borrower
and Bank agree to such extension; and
(b) the date on which the Revolving Commitment
terminates in accordance with the provisions of this
Agreement.
"Security Agreement" means the Security Agreement
executed and delivered by the Borrower pursuant to the
Master Credit Agreement, as applicable, as amended,
supplemented, or restated from time to time.
"Subsidiary" of a Person means any corporation,
association, partnership, limited liability company, joint
venture or other business entity of which more than 50% of
the voting stock, membership interests or other equity
interests (in the case of Persons other than corporations),
is owned or controlled directly or indirectly by the Person,
or one or more of the Subsidiaries of the Person, or a
combination thereof. Unless the context otherwise clearly
requires, references herein to a "Subsidiary" refer to a
Subsidiary of the Borrower.
"Surety Instruments" means all letters of credit
(including standby and commercial), banker's acceptances,
bank guaranties, shipside bonds, surety bonds and similar
instruments.
"Swing Loan" means a Loan of a maturity less than
thirty (30) days that bears interest based on the Swing Loan
Rate.
"Swing Loan Rate" means a rate of interest quoted by
the Bank at the request of the Borrower, for a Loan of a
maturity of less than thirty days (as indicated by the
Borrower), and accepted by the Borrower within one hour of
the Banks quotation of the interest rate.
"Taxes" means any and all present or future taxes,
levies, assessments, imposts, duties, deductions, fees,
withholdings or similar charges, and all liabilities with
respect thereto, excluding, in the case of the Bank, taxes
imposed on or measured by the Bank's net income by the
jurisdiction (or any political subdivision thereof) under
the laws of which the Bank is organized or maintains a
lending office.
"Termination Date" means the earlier of (a) five years
from the Revolving Termination Date and (b) the date
on which the Commitment terminates in accordance with the provi-
sions of this Agreement.
"Term Commitment" has the meaning specified in Section
2.01(b).
"Term Loan" has the meaning specified in Section 2.01.
"Term Note" has the meaning specified in Section 2.01
(b).
"Type" has the meaning specified in the definition of
"Loan."
"UCC" means the Uniform Commercial Code as in effect in
the State of Illinois.
"United States" and "U.S." each means the United States
of America.
"Wholly-Owned Subsidiary" means any corporation in
which (other than directors' qualifying shares required by
law) 100% of the capital stock of each class having ordinary
voting power, and 100% of the capital stock of every other
class, in each case, at the time as of which any determina-
tion is being made, is owned, beneficially and of record, by
the Borrower, or by one or more of the other Wholly-Owned
Subsidiaries, or both.
1.02 Other Interpretive Provisions.
(a) The meanings of defined terms are equally applica-
ble to the singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and
similar words refer to this Agreement as a whole and not to any
particular provision of this Agreement; and subsection, Section,
Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(c) (1) The term "documents" includes any and all
instruments, documents, agreements, certificates, inden-
tures, notices and other writings, however evidenced.
(2) The term "including" is not limiting and
means "including without limitation."
(3) In the computation of periods of time from a
specified date to a later specified date, the word "from"
means "from and including"; the words "to" and "until" each
mean "to but excluding", and the word "through" means "to
and including."
(4) The term "property" includes any kind of
property or asset, real, personal or mixed, tangible or
intangible.
(d) Unless otherwise expressly provided herein,
(i) references to agreements (including this Agreement) and other
contractual instruments shall be deemed to include all subsequent
amendments and other modifications thereto, but only to the
extent such amendments and other modifications are not prohibited
by the terms of any Loan Document, and (ii) references to any
statute or regulation are to be construed as including all
statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting the statute or regula-
tion.
(e) The captions and headings of this Agreement are
for convenience of reference only and shall not affect the
interpretation of this Agreement.
(f) This Agreement and other Loan Documents may use
several different limitations, tests or measurements to regulate
the same or similar matters. All such limitations, tests and
measurements are cumulative and shall each be performed in
accordance with their terms. Unless otherwise expressly
provided, any reference to any action of the Bank by way of
consent, approval or waiver shall be deemed modified by the
phrase "in its sole discretion."
(g) This Agreement and the other Loan Documents are
the result of negotiations among and have been reviewed by
counsel to the Bank, the Borrower and the other parties, and are
the products of all parties. Accordingly, they shall not be
construed against the Bank merely because of the Bank's involve-
ment in their preparation.
1.03 Accounting Principles.
(a) Unless the context otherwise clearly requires, all
accounting terms not expressly defined herein shall be construed,
and all financial computations required under this Agreement
shall be made, in accordance with GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal
quarter" refer to such fiscal periods of the Borrower.
ARTICLE II
THE CREDITS
2.01 Amounts and Terms of Commitment.
(a) The Revolving Credit. The Bank agrees, on the
terms and conditions set forth herein and in the Master Credit
Agreement, to make loans to the Borrower (each such loan, a
"Revolving Loan") from time to time on any Business Day during
the period from the Closing Date to the Revolving Termination
Date, in an aggregate amount not to exceed at any time outstand-
ing the lesser of: (i) Revolving Commitment less L/C Obligations;
and (ii) the Borrowing Base at such time. Within the limits of
the Revolving Commitment, and subject to the other terms and
conditions hereof, the Borrower may borrow under this subsection
prepay under Section 2.06 and reborrow under this subsection.
The obligations of the Borrower to repay the Revolving Loans and
to pay accrued interest thereon shall be evidenced by a
promissory note, to be executed and delivered to the Bank
concurrently with the execution and delivery of this Agreement
(the "Revolving Credit Note"). Revolving Loans may be
outstanding as Prime Rate Loans, LIBOR Loans, or Swing Loans.
(b) The Term Credit. On the Revolving Termination
Date, the Bank agrees, on the terms and conditions set forth
herein, to convert the amount of Revolving Loans to a Term Loan
(a "Term Loan", the "Term Commitment")) which shall then amortize
in equal monthly principal payments from the Revolving Termina-
tion Date to the Termination Date. Amounts borrowed as Term
Loans which are repaid or prepaid by the Borrower may not be
reborrowed. The obligations of the Borrower to repay the out-
standing principal of the Term Loan and to pay accrued interest
thereon shall be evidenced by a promissory note, to be executed
and delivered to the Bank on or before the date of conversion in
substantially the form of the Term Note attached hereto as
Exhibit E (the "Term Note").
(c) The L/C Commitment. The L/C Commitment is
described in Article III. On the Revolving Termination Date and
each anniversary thereafter through the Termination Date, the
Bank may elect on an annual basis to continue the L/C Commitment,
on the terms and conditions set forth herein, in an amount not to
exceed the Borrowing Base less the aggregate principal amount of
the Term Loan.
(d) Joint and Several Liability. The obligations of
each Borrower hereunder are joint and several.
2.02 Loan Accounts. The Loans made by the Bank shall be
evidenced by the Notes and by one or more loan accounts or
records maintained by the Bank in the ordinary course of
business. The loan accounts or records maintained by the Bank
shall be conclusive (absent manifest error) evidence of the
amount of the Loans made by the Bank to the Borrower, the
interest rate applicable thereto and all payments thereon. Any
failure so to record or any error in doing so shall not, however,
limit or otherwise affect the obligation of the Borrower
hereunder to pay any amount owing with respect to the Loans.
2.03 Procedure for Borrowing.
(a) Each Loan shall be made upon the Borrower's
irrevocable written notice delivered to the Bank in the form of a
Notice of Borrowing (which notice must be received by the Bank
prior to 11:00 a.m.) (Philadelphia, Pennsylvania time) (i) two
Business Days prior to the requested Borrowing Date, in the case
of LIBOR Loans; and (ii) on the requested Borrowing Date, in the
case of Prime Rate Loans or Swing Loans, specifying:
(1) The amount of the Loan, which shall be in a
minimum amount of $100,000 or any multiple of $100,000
in excess thereof;
(2) The requested Borrowing Date, which shall be
a Business Day;
(3) Whether the Loan is to be a LIBOR Loan, a
Prime Rate Loan or a Swing Loan;
(4) In the case of a Swing Loan, the maturity
date and Swing Loan Rate applicable thereto, or in the
case of a LIBOR Loan, the duration of the Interest
Period applicable to the Loan included in such notice.
If the Notice of Borrowing fails to specify the dura-
tion of the Interest Period for a LIBOR Loan, such
Interest Period shall be three months.
(b) The proceeds of the Loans will be made available
to the Borrower by the Bank by crediting the account of the
Borrower on the books of the Bank with such proceeds or by wire
transfer in accordance with written instructions provided to the
Bank by the Borrower.
(c) After disbursing any Loan, unless the Bank shall
otherwise consent, in the case of LIBOR Loans there may not be
more than three different Interest Periods in effect, and in the
case of Swing Loans there may not be more than five Swing Loans
outstanding at any time.
2.04 Conversion and Continuation Elections.
(a) The Borrower may, upon irrevocable written notice
to the Bank in accordance with subsection 2.04(b):
(1) elect, as of any Business Day, in the case of
Prime Rate Loans, or as of the last day of the applicable
Interest Period, in the case of LIBOR Loans, or as of the
maturity date applicable thereto in the case of Swing Loans,
to convert any such Loans (or any part thereof in an amount
not less than $100,000, or that is in an integral multiple
of $100,000 in excess thereof) into Loans of any other Type;
or
(2) elect, as of the maturity date applicable
thereto, in the case of Swing Loans or the last day of the
applicable Interest Period in the case of LIBOR Loans, to
continue any Swing Loans or LIBOR Loans (or any part thereof
in an amount not less than $100,000, or that is in an
integral multiple of $100,000 in excess thereof);
provided, that if at any time the amount of a LIBOR Loan is
reduced, by payment, prepayment, or conversion of part thereof to
be less than $100,000, such LIBOR Loan shall automatically
convert into a Prime Rate Loan, and on and after such date the
right of the Borrower to continue such Loans as, and convert such
Loans into, LIBOR Loans, shall terminate.
(b) The Borrower shall deliver a Notice of Conversion/
Continuation to be received by the Bank not later than 11:00 a.m.
(Philadelphia, Pennsylvania time) at least (i) two Business Days
in advance of the Conversion/Continuation Date, if the Loans are
to be converted into or continued as LIBOR Loans; and (ii) on the
same Business Day as the Conversion/Continuation Date, if the
Loans are to be converted into Prime Rate Loans or Swing Loans,
specifying:
(A) The proposed Conversion/Continuation
Date;
(B) The aggregate amount of Loans to be
converted or continued;
(C) The Type of Loans resulting from the
proposed conversion or continuation; and
(D) The duration of the requested Interest
Period, in the case of LIBOR Loans, or the maturity
date, in the case of Swing Loans.
(c) If upon the expiration of any Interest Period
applicable to LIBOR Loans or maturity date applicable to any
Swing Loans, the Borrower has failed to select timely a new
Interest Period or maturity date to be applicable to such LIBOR
Loans or Swing Loans, as applicable, or if any Default or Event
of Default then exists, the Borrower shall be deemed to have
elected to convert such LIBOR Loans or Swing Loans into Prime
Rate Loans effective as of the applicable maturity date or
expiration date of such Interest Period.
(d) Unless the Bank otherwise consents, during the
existence of a Default or Event of Default, the Borrower may not
elect to have a Loan converted into or continued as a LIBOR Loan.
(e) After giving effect to any conversion or
continuation of Loans, unless the Bank shall otherwise consent,
there may not be more than three different Interest Periods in
effect and there may not be more than five Swing Loans outstand-
ing.
2.05 Voluntary Termination or Reduction of Commitment. The
Borrower may, upon not less than five Business Days' prior notice
to the Bank, terminate the Commitment, or permanently reduce the
Commitment by a minimum amount of $1,000,000 or any multiple of
$1,000,000 in excess thereof; unless, after giving effect thereto
and to any prepayments of Loans made on the effective date
thereof, the then-outstanding principal amount of the Loans would
exceed the amount of the Commitment then in effect. Once reduced
in accordance with this Section, the Commitment may not be
increased. All accrued commitment fees to, but not including the
effective date of any reduction or termination of the Commitment,
shall be paid on the effective date of such reduction or
termination.
2.06 Optional Prepayments. Subject to Section 4.04, the
Borrower may, at any time or from time to time, upon not less
than two Business Days' irrevocable notice to the Bank, ratably
prepay Loans in whole or in part, in minimum amounts of $100,000
or any multiple of $100,000 in excess thereof. Such notice of
prepayment shall specify the date and amount of such prepayment
and the Type(s) of Loans to be prepaid. If such notice is given
by the Borrower, the Borrower shall make such prepayment and the
payment amount specified in such notice shall be due and payable
on the date specified therein, together with accrued interest to
each such date on the amount prepaid and any amounts required
pursuant to Section 4.04. Optional prepayments of Term Loans
shall be applied to the principal installments in inverse order
of maturity.
2.07 Mandatory Prepayments of Loans; Mandatory Commitment
Reductions.
(a) Borrowing Base Overage. On each date when the
aggregate outstanding principal amount of the Loans exceeds the
lesser of the Borrowing Base or the aggregate Commitments, the
Borrower shall make a mandatory prepayment of the Loans in an
amount equal to such excess.
(b) General. Any prepayments pursuant to this Section
shall be applied first to any Prime Rate Loans then outstanding,
then to Swing Loans then outstanding, and then to LIBOR Loans
with the shortest Interest Periods remaining; provided, however,
that if the amount of Prime Rate Loans then outstanding is not
sufficient to satisfy the entire prepayment requirement, the
Borrower may, at its option, place any amounts which it would
otherwise be required to use to prepay Swing Loans on a day other
than the maturity dates applicable thereto or LIBOR Loans on a
day other than the last day of the Interest Period therefor in an
interest-bearing account pledged to the Bank until such maturity
date or the end of such Interest Period at which time such
pledged amounts will be applied to prepay such Swing Loans or
LIBOR Loans. The Borrower shall pay, together with each
prepayment under this Section, accrued interest on the amount
prepaid and any amounts required pursuant to Section 4.04.
(c) Reduction of Commitment. Upon the making of any
mandatory prepayment under this Section 2.07, the Commitment of
the Bank shall automatically be reduced by an amount equal to the
aggregate amount of principal repaid, effective as of the earlier
of the date that such prepayment is made or the date by which
such prepayment is due and payable hereunder. All accrued
commitment fees to, but not including the effective date of any
reduction or termination of the Commitment, shall be paid on the
effective date of such reduction or termination.
2.08 Repayment.
(a) The Term Credit. The Borrower shall repay the Term
Loan in equal monthly installments on the last Business Day of
each month commencing on the last day of the first month
following the Revolving Termination Date and on the last day of
each month thereafter and ending on the Termination Date.
(b) The Revolving Credit. The Borrower shall repay to
the Bank in full on the Revolving Termination Date the aggregate
principal amount of Revolving Loans outstanding on such date,
except as provided in Section 2.01(b).
2.09 Interest.
(a) Each Revolving Loan shall bear interest on the
outstanding principal amount thereof from its Borrowing Date at a
rate per annum equal to the LIBOR Rate, the Swing Loan Rate or
the Prime Rate, as the case may be (and subject to the Borrower's
right to convert to other Types of Loans under Section 2.04),
plus the Applicable Margin.
(b) The Term Loan, or portions thereof, shall bear
interest on the outstanding principal amount thereof at a rate
per annum equal to the LIBOR Rate or the Prime Rate, as the case
may be (and subject to the Borrower's right to convert to other
Types of Loans under Section 2.04), plus the Applicable Margin.
(c) Interest on each Loan shall be paid in arrears on
each Interest Payment Date. Interest shall also be paid on the
date of any prepayment of Loans under Section 2.06 or 2.07 for
the portion of the Loans so prepaid and upon payment (including
prepayment) in full thereof and, during the existence of any
Event of Default, interest shall be paid on demand of the Bank.
(d) Notwithstanding subsections (a) and (b) of this
Section, while any Event of Default exists or after acceleration,
the Borrower shall pay interest (after as well as before entry of
judgment thereon to the extent permitted by law) on the principal
amount of all outstanding Obligations, at a rate per annum which
is determined by adding 2% per annum to the Applicable Margin
then in effect for such Loans and, in the case of Obligations not
subject to an Applicable Margin, at a rate per annum equal to the
Prime Rate plus 2%; provided, however, that, on and after the
expiration of any Interest Period applicable to any LIBOR Loan or
the maturity date of any Swing Loan outstanding on the date of
occurrence of such Event of Default or acceleration, the
principal amount of such Loan shall, during the continuation of
such Event of Default or after acceleration, bear interest at a
rate per annum equal to the Prime Rate plus 2%.
(d) Anything herein to the contrary notwithstanding,
the obligations of the Borrower to the Bank hereunder shall be
subject to the limitation that payments of interest shall not be
required for any period for which interest is computed hereunder,
to the extent (but only to the extent) that contracting for or
receiving such payment by the Bank would be contrary to the
provisions of any law applicable to the Bank limiting the highest
rate of interest that may be lawfully contracted for, charged or
received by the Bank, and in such event the Borrower shall pay
the Bank interest at the highest rate permitted by applicable
law.
2.10 Fees. The Borrower shall pay to the Bank a Non-Use
Fee on the average daily unused portion of the Bank's Commitment,
computed on a quarterly basis in arrears on the last Business Day
of each calendar quarter based upon the daily utilization for
that quarter as calculated by the Bank, equal to the Applicable
Margin. Such commitment fee shall accrue from the Closing Date
to the Termination Date and shall be due and payable quarterly in
arrears on the last Business Day of each quarter commencing on
the Closing Date through the Termination Date, with the final
payment to be made on the Termination Date. The commitment fees
provided in this subsection shall accrue at all times after the
above-mentioned commencement date, including at any time during
which one or more conditions in Article V are not met.
2.11 Computation of Fees and Interest.
(a) All computations of interest for Swing Loans and
Prime Rate Loans shall be made on the basis of a year of 365 or
366 days, as the case may be, and actual days elapsed. All other
computations of fees and interest shall be made on the basis of a
360-day year and actual days elapsed (which results in more
interest being paid than if computed on the basis of a 365-day
year). Interest and fees shall accrue during each period during
which interest or such fees are computed from the first day
thereof to the last day thereof.
(b) Each determination of an interest rate by the Bank
shall be conclusive and binding on the Borrower in the absence of
manifest error.
2.12 Payments by the Borrower.
(a) All payments to be made by the Borrower shall be
made without set-off, recoupment or counterclaim. Except as
otherwise expressly provided herein, all payments by the Borrower
shall be made to the Bank at the place indicated as the place of
payment in the signature pages of this Agreement or such other
address as the Bank may specify in writing to the Borrower from
time to time, and shall be made in dollars and in immediately
available funds, no later than 12:00 p.m. (Philadelphia, Pennsyl-
vania time) on the date specified herein. Any payment received
by the Bank later than 12:00 p.m. (Philadelphia, Pennsylvania
time) shall be deemed to have been received on the following
Business Day and any applicable interest or fee shall continue to
accrue.
(b) Subject to the provisions set forth in the defini-
tion of "Interest Period" herein, whenever any payment is due on
a day other than a Business Day, such payment shall be made on
the following Business Day, and such extension of time shall in
such case be included in the computation of interest or fees, as
the case may be.
2.13 Collateral All obligations of the Borrower under
this Agreement and all other Loan Documents are subject to the
provisions with respect to Collateral as set forth in the Master
Agreement.
<PAGE>
ARTICLE III
THE LETTERS OF CREDIT
3.01 The Letter of Credit facility. (a) On the terms and
conditions set forth herein the Bank agrees, (A) from time to
time on any Business Day during the period from the Closing Date
to the Revolving Termination Date, and during any such additional
period pursuant to Section 2.01(c), to issue Letters of Credit
for the account of the Borrower, and to amend or renew Letters of
Credit previously issued by it, in accordance with the provisions
herein, and (B) to honor drafts under the Letters of Credit;
provided, that the Bank shall not be obligated to Issue, any
Letter of Credit if as of the date of Issuance of such Letter of
Credit (the "Issuance Date") (1) the Effective Amount of all L/C
Obligations plus the Effective Amount of all Revolving Loans
exceeds the lesser of: (i) the Borrowing Base; and (ii) the
combined Commitments, or (2) the Effective Amount of L/C Obliga-
tions exceeds the L/C Commitment. Within the foregoing limits,
and subject to the other terms and conditions hereof, the
Borrower's ability to obtain Letters of Credit shall be fully
revolving, and, accordingly, the Borrower may, during the
foregoing periods, obtain Letters of Credit to replace Letters of
Credit which have expired or which have been drawn upon and
reimbursed.
(b) The Bank is under no obligation to Issue any
Letter of Credit if:
(i) any order, judgment or decree of any
Governmental Authority or arbitrator shall by its terms
purport to enjoin or restrain the Bank from Issuing such
Letter of Credit, or any Requirement of Law applicable to
the Bank or any request or directive (whether or not having
the force of law) from any Governmental Authority with
jurisdiction over the Bank shall prohibit, or request that
the Bank refrain from, the Issuance of letters of credit
generally or such Letter of Credit in particular or shall
impose upon the Bank with respect to such Letter of Credit
any restriction, reserve or capital requirement (for which
the Bank is not otherwise compensated hereunder) not in
effect on the Closing Date, or shall impose upon the Bank
any unreimbursed loss, cost or expense which was not
applicable on the Closing Date and which the Bank in good
faith deems material to it;
(ii) the Bank has received written notice
from the Borrower, on or prior to the Business Day prior to
the requested date of Issuance of such Letter of Credit,
that one or more of the applicable conditions contained in
Article V is not then satisfied;
(iii) the expiry date of any requested
Letter of Credit is (A) more than 360 days after the date of
Issuance, or (B) more than 360 days after the Revolving
Termination Date;
(iv) the expiry date of any requested Letter
of Credit is prior to the maturity date of any financial
obligation to be supported by the requested Letter of
Credit;
(v) any requested Letter of Credit does not
provide for drafts, or is not otherwise in form and
substance acceptable to the Bank, or the Issuance of a
Letter of Credit shall violate any applicable policies of
the Bank;
(vi) any standby Letter of Credit is for the
purpose of supporting the issuance of any letter of credit
by any other Person; or
(vii) such Letter of Credit is in a face
amount less than $100,000 or denominated in a currency other
than Dollars.
3.02 Issuance, Amendment and Renewal of Letters of Credit.
(a) Each Letter of Credit shall be issued upon the irrevocable
written request of the Borrower received by the Bank at least
four days (or such shorter time as the Bank may agree in a
particular instance in its sole discretion) prior to the proposed
date of issuance. Each such request for issuance of a Letter of
Credit shall be by facsimile, confirmed immediately in an
original writing, in the form of an L/C Application, and shall
specify in form and detail satisfactory to the Bank: (i) the
proposed date of issuance of the Letter of Credit (which shall be
a Business Day); (ii) the face amount of the Letter of Credit;
(iii) the expiry date of the Letter of Credit; (iv) the name and
address of the beneficiary thereof; (v) the documents to be
presented by the beneficiary of the Letter of Credit in case of
any drawing thereunder; (vi) the full text of any certificate to
be presented by the beneficiary in case of any drawing
thereunder; and (vii) such other matters as the Bank may require.
(b) From time to time while a Letter of Credit is
outstanding and prior to the Revolving Termination Date, the Bank
will, upon the written request of the Borrower received by the
Bank at least five days (or such shorter time as the Bank may
agree in a particular instance in its sole discretion) prior to
the proposed date of amendment, amend any Letter of Credit issued
by it. Each such request for amendment of a Letter of Credit
shall be made by facsimile, confirmed immediately in an original
writing, made in the form of an L/C Amendment Application and
shall specify in form and detail satisfactory to the Bank: (i)
the Letter of Credit to be amended; (ii) the proposed date of
amendment of the Letter of Credit (which shall be a Business
Day); (iii) the nature of the proposed amendment; and (iv) such
other matters as the Bank may require. The Bank shall be under
no obligation to amend any Letter of Credit if: (A) the Bank
would have no obligation at such time to issue such Letter of
Credit in its amended form under the terms of this Agreement; or
(B) the beneficiary of any such Letter of Credit does not accept
the proposed amendment to the Letter of Credit.
(c) The Bank agrees that, while a Letter of Credit is
outstanding and prior to the Revolving Termination Date, at the
option of the Borrower and upon the written request of the
Borrower received by the Bank at least five days (or such shorter
time as the Bank may agree in a particular instance in its sole
discretion) prior to the proposed date of notification of renew-
al, the Bank shall be entitled to authorize the automatic renewal
of any Letter of Credit issued by it. Each such request for
renewal of a Letter of Credit shall be made by facsimile, con-
firmed immediately in an original writing, in the form of an L/C
Amendment Application, and shall specify in form and detail
satisfactory to the Bank: (i) the Letter of Credit to be renewed;
(ii) the proposed date of notification of renewal of the Letter
of Credit (which shall be a Business Day); (iii) the revised
expiry date of the Letter of Credit; and (iv) such other matters
as the Bank may require. The Bank shall be under no obligation
so to renew any Letter of Credit if: (A) the Bank would have no
obligation at such time to issue or amend such Letter of Credit
in its renewed form under the terms of this Agreement; or (B) the
beneficiary of any such Letter of Credit does not accept the
proposed renewal of the Letter of Credit. If any outstanding
Letter of Credit shall provide that it shall be automatically
renewed unless the beneficiary thereof receives notice from the
Bank that such Letter of Credit shall not be renewed, and if at
the time of renewal the Bank would be entitled to authorize the
automatic renewal of such Letter of Credit in accordance with
this Section 3.02 upon the request of the Borrower but the Bank
shall not have received any L/C Amendment Application from the
Borrower with respect to such renewal or other written direction
by the Borrower with respect thereto, the Bank shall nonetheless
be permitted to allow such Letter of Credit to renew, and the
Borrower hereby authorizes such renewal, and, accordingly, the
Bank shall be deemed to have received an L/C Amendment Applica-
tion from the Borrower requesting such renewal.
(d) The Bank may, at its election, deliver any notices
of termination or other communications to any Letter of Credit
beneficiary or transferee, and take any other action as necessary
or appropriate, at any time and from time to time, in order to
cause the expiry date of such Letter of Credit to be a date not
later than the Revolving Termination Date.
(e) This Agreement shall control in the event of any
conflict with any L/C-Related Document (other than any Letter of
Credit).
3.03 Drawings and Reimbursements. (a) In the event of any
request for a drawing under a Letter of Credit by the beneficiary
or transferee thereof, the Bank will promptly notify the Borrow-
er. The Borrower shall reimburse the Bank prior to 10:00 a.m.
(Philadelphia time), on each date that any amount is paid by the
Bank under any Letter of Credit (each such date, an "Honor
Date"), in an amount equal to the amount so paid by the Bank. In
the event the Borrower fails to reimburse the Bank for the full
amount of any drawing under any Letter of Credit by 10:00 a.m.
(Philadelphia time) on the Honor Date, the Borrower shall be
deemed to have requested that Prime Rate Loans be made by the
Bank to be disbursed on the Honor Date under such Letter of
Credit, subject to the amount of the unutilized portion of the
Revolving Commitment and subject to the conditions set forth in
Section 5.02. Any notice given by the Bank pursuant to this
subsection 3.03(a) may be oral if immediately confirmed in
writing (including by facsimile); provided that the lack of such
an immediate confirmation shall not affect the conclusiveness or
binding effect of such notice.
(b) With respect to any unreimbursed drawing that is
not converted into Revolving Loans, because of the Borrower's
failure to satisfy the conditions set forth in Section 5.02 or
for any other reason, the Borrower shall be deemed to have
incurred from the Bank an L/C Borrowing in the amount of such
drawing, which L/C Borrowing shall be due and payable on demand
(together with interest) and shall bear interest at a rate per
annum equal to the Prime Rate plus 2% per annum.
3.04 Bank's Role as the Issuing Bank. (a) The Borrower
agrees that, in paying any drawing under a Letter of Credit, the
Bank shall not have any responsibility to obtain any document
(other than any sight draft and certificates expressly required
by the Letter of Credit) or to ascertain or inquire as to the
validity or accuracy of any such document or the authority of the
Person executing or delivering any such document.
(b) The Borrower hereby assumes all risks of the acts
or omissions of any beneficiary or transferee with respect to its
use of any Letter of Credit; provided, however, that this
assumption is not intended to, and shall not, preclude the
Borrower's pursuing such rights and remedies as it may have
against the beneficiary or transferee at law or under any other
agreement. No Agent-Related Person, nor any of the respective
correspondents, participants or assignees of the Bank, shall be
liable or responsible for any of the matters described in clauses
(i) through (vii) of Section 3.05; provided, however, anything in
such clauses to the contrary notwithstanding, that the Borrower
may have a claim against the Bank, and the Bank may be liable to
the Borrower, to the extent, but only to the extent, of any
direct, as opposed to consequential or exemplary, damages
suffered by the Borrower which the Borrower proves were caused by
the Bank's willful misconduct or gross negligence or the Bank's
willful failure to pay under any Letter of Credit after the
presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions
of a Letter of Credit. In furtherance and not in limitation of
the foregoing: (i) the Bank may accept documents that appear on
their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the
contrary; and (ii) the Bank shall not be responsible for the
validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit
or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective
for any reason.
3.05 Obligations Absolute. The obligations of the Borrower
under this Agreement and any L/C-Related Document to reimburse
the Bank for a drawing under a Letter of Credit, and to repay any
L/C Borrowing and any drawing under a Letter of Credit converted
into Revolving Loans, shall be unconditional and irrevocable, and
shall be paid strictly in accordance with the terms of this
Agreement and each such other L/C-Related Document under all
circumstances, including the following:
(i) any lack of validity or enforceability of
this Agreement or any L/C-Related Document;
(ii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the
obligations of the Borrower in respect of any Letter of
Credit or any other amendment or waiver of or any consent to
departure from all or any of the L/C-Related Documents;
(iii) the existence of any claim, set-off,
defense or other right that the Borrower may have at any
time against any beneficiary or any transferee of any Letter
of Credit (or any Person for whom any such beneficiary or
any such transferee may be acting), the Bank or any other
Person, whether in connection with this Agreement, the
transactions contemplated hereby or by the L/C-Related
Documents or any unrelated transaction;
(iv) any draft, demand, certificate or other
document presented under any Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any
respect; or any loss or delay in the transmission or
otherwise of any document required in order to make a draw-
ing under any Letter of Credit;
(v) any payment by the Bank under any Letter of
Credit against presentation of a draft or certificate that
does not strictly comply with the terms of any Letter of
Credit; or any payment made by the Bank under any Letter of
Credit to any Person purporting to be a trustee in
bankruptcy, debtor-in-possession, assignee for the benefit
of creditors, liquidator, receiver or other representative
of or successor to any beneficiary or any transferee of any
Letter of Credit, including any arising in connection with
any Insolvency Proceeding;
(vi) any exchange, release or non-perfection of
any collateral, or any release or amendment or waiver of or
consent to departure from any other guarantee, for all or
any of the obligations of the Borrower in respect of any
Letter of Credit; or
(vii) any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing,
including any other circumstance that might otherwise
constitute a defense available to, or a discharge of, the
Borrower or a guarantor.
3.06 Cash Collateral Pledge. Upon (i) the request of the
Bank, if, as of the Termination Date, any Letters of Credit may
for any reason remain outstanding and partially or wholly
undrawn, or (ii) the occurrence of the circumstances described in
subsection 2.07 requiring the Borrower to Cash Collateralize
Letters of Credit, then, the Borrower shall immediately Cash
Collateralize the L/C Obligations in an amount equal to the L/C
Obligations.
3.07 Letter of Credit Fees.
(a) The Borrower shall pay to the Bank a letter of
credit fee with respect to the Letters of Credit equal to the
Applicable Margin per annum of the average daily maximum amount
available to be drawn of the outstanding Letters of Credit,
computed on a quarterly basis in arrears on the last Business Day
of each calendar quarter based upon Letters of Credit outstanding
for that quarter as calculated by the Bank. Such letter of
credit fees shall be due and payable quarterly in arrears on the
last Business Day of each calendar quarter during which Letters
of Credit are outstanding, commencing on the first such quarterly
date to occur after the Closing Date, through the Revolving
Termination Date (or such later date upon which the outstanding
Letters of Credit shall expire), with the final payment to be
made on the Revolving Termination Date (or such later expiration
date).
(b) The Borrower shall pay to the Bank from time to
time the normal issuance, presentation, amendment and other
processing fees, and other standard costs and charges, of the
Bank relating to letters of credit as from time to time in
effect.
3.08 Uniform Customs and Practice. The Uniform Customs and
Practice for Documentary Credits as published by the
International Chamber of Commerce most recently at the time of
issuance of any Letter of Credit shall (unless otherwise
expressly provided in the Letters of Credit) apply to the Letters
of Credit.
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
4.01 Taxes.
(a) Any and all payments by the Borrower to the Bank
under this Agreement and any other Loan Document shall be made
free and clear of, and without deduction or withholding for, any
Taxes.
(b) If the Borrower shall be required by law to deduct
or withhold any Taxes from or in respect of any sum payable
hereunder to the Bank, then the Borrower shall pay to the Bank,
on demand, amounts equal to any Taxes (other than Federal, state
or local taxes on the overall income of the Bank), domestic or
foreign, which the Bank is required to pay by reason of its
funding or disbursement of any portion of the Loans.
(c) The Bank shall use its best efforts (consistent
with legal and regulatory restrictions) to reduce or eliminate
the causes referenced in subclause (b) (if any) so as to elimi-
nate any such additional payment by the Borrower which may
thereafter accrue, if such action or change in the sole judgment
of the Bank is not otherwise disadvantageous to the Bank.
4.02 Illegality.
(a) If the Bank determines that the introduction of
any Requirement of Law, or any change in any Requirement of Law,
or in the interpretation or administration of any Requirement of
Law, has made it unlawful, or that any central bank or other
Governmental Authority has asserted that it is unlawful, for the
Bank to make LIBOR Loans, then, on notice thereof by the Bank to
the Borrower, any obligation of the Bank to make LIBOR Loans or
to convert Loans into LIBOR Loans shall be suspended until the
Bank notifies the Borrower that the circumstances giving rise to
such determination no longer exist.
(b) If the Bank determines that it is unlawful to
maintain any LIBOR Loan, the Borrower shall, upon its receipt of
notice of such fact and demand from the Bank, prepay in full such
LIBOR Loans of the Bank then outstanding, together with interest
accrued thereon and amounts required under Section 4.04, either
on the last day of the Interest Period thereof, if the Bank may
lawfully continue to maintain such LIBOR Loans to such day, or
immediately, if the Bank may not lawfully continue to maintain
such LIBOR Loan. If the Borrower is required to so prepay any
LIBOR Loan, then concurrently with such prepayment, the Borrower
shall borrow from the Bank, in the amount of such repayment, a
Prime Rate Loan or a Swing Loan.
(c) If the obligation of the Bank to make or maintain
LIBOR Loans has been so terminated or suspended, the Borrower may
elect, by giving notice to the Bank, that all Loans which would
otherwise be made by the Bank as LIBOR Loans shall be instead
Prime Rate Loans or Swing Loans.
4.03 Increased Costs and Reduction of Return. If the Bank
shall have determined that (i) the introduction of any Capital
Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or
administration of any Capital Adequacy Regulation by any central
bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance by
the Bank or any corporation controlling the Bank with any Capital
Adequacy Regulation, affects or would affect the amount of
capital required or expected to be maintained by the Bank or any
corporation controlling the Bank and (taking into consideration
the Bank's or such corporation's policies with respect to capital
adequacy and the Bank's desired return on capital) determines
that the amount of such capital is increased as a consequence of
its Commitment, loans, credits or obligations under this
Agreement, then, upon demand of the Bank to the Borrower, the
Borrower shall pay to the Bank, from time to time as specified by
the Bank, additional amounts sufficient to compensate the Bank
for such increase.
4.04 Funding Losses. The Borrower shall reimburse the Bank
and hold the Bank harmless from any loss or expense which the
Bank may sustain or incur as a consequence of:
(a) The failure of the Borrower to make on a timely
basis any payment of principal of any LIBOR Loan or Swing Loan;
(b) The failure of the Borrower to borrow, continue or
convert a Loan after the Borrower has given (or is deemed to have
given) a Notice of Borrowing or a Notice of Conversion/
Continuation;
(c) The failure of the Borrower to make any prepayment
in accordance with any notice delivered under Section 2.06;
(d) The prepayment (including pursuant to Section
2.07) or other payment (including after acceleration thereof) of
a LIBOR Loan on a day that is not the last day of the relevant
Interest Period or of a Swing Loan on a day that is not the
maturity date applicable thereto; or
(e) The automatic conversion under Section 2.04 of any
LIBOR Loan or Swing Loan to a Prime Rate Loan on a day that is
not the last day of the relevant Interest Period or the maturity
date applicable thereto;
including any such loss or expense arising from the liquidation
or reemployment of funds obtained by it to maintain its LIBOR
Loans or from fees payable to terminate the deposits from which
such funds were obtained.
4.05 Inability to Determine Rates. If the Bank determines
that for any reason adequate and reasonable means do not exist
for determining the LIBOR Rate for any requested Interest Period
with respect to a proposed LIBOR Loan, or that the LIBOR Rate
applicable pursuant to subsection 2.09 for any requested Interest
Period with respect to a proposed LIBOR Loan does not adequately
and fairly reflect the cost to the Bank of funding such Loan, the
Bank will promptly so notify the Borrower. Thereafter, the
obligation of the Bank to make or maintain LIBOR Loans, hereunder
shall be suspended until the Bank revokes such notice in writing.
Upon receipt of such notice, the Borrower may revoke any Notice
of Borrowing or Notice of Conversion/Continuation then submitted
by it. If the Borrower does not revoke such Notice, the Bank
shall make, convert or continue the Loans, as proposed by the
Borrower, in the amount specified in the applicable notice
submitted by the Borrower, but such Loans shall be made,
converted or continued as Prime Rate Loans instead of LIBOR
Loans.
4.06 Reserves on LIBOR Loans. The Borrower shall pay to
the Bank, as long as the Bank shall be required under regulations
of the FRB to maintain reserves with respect to liabilities or
assets consisting of or including Eurocurrency funds or deposits
(currently known as "Eurocurrency liabilities"), additional costs
on the unpaid principal amount of each LIBOR Loan equal to the
actual costs of such reserves allocated to such Loan by the Bank
(as determined by the Bank in good faith, which determination
shall be conclusive), payable on each date on which interest is
payable on such Loan, provided the Borrower shall have received
at least 15 days' prior written notice of such additional
interest from the Bank. If the Bank fails to give notice 15 days
prior to the relevant Interest Payment Date, such additional
interest shall be payable 15 days from receipt of such notice.
4.07 Certificates of Bank. If the Bank claims reimburse-
ment or compensation under this Article IV, it shall deliver to
the Borrower a certificate setting forth in reasonable detail the
amount payable to the Bank hereunder.
4.08 Survival. The agreements and obligations of the
Borrower in this Article IV shall survive the payment of all
other Obligations.
<PAGE>
ARTICLE V
CONDITIONS PRECEDENT
5.01 Conditions of Initial Credit Extensions. The obliga-
tion of the Bank to make its initial Revolving Loan hereunder is
subject to the condition that the Bank shall have received on or
before the Closing Date all of the following, in form and sub-
stance satisfactory to the Bank:
(a) Credit Agreement. This Agreement, the Master
Credit Agreement, the Notes and other Loan Documents executed by
each party thereto;
(b) Resolutions; Incumbency.
(1) Copies of the resolutions of the board of
directors of the Borrower and each Subsidiary that may become
party to a Loan Document authorizing the transactions
contemplated hereby, certified as of the Closing Date by the
Secretary or an Assistant Secretary of the Borrower; and
(2) A certificate of the Secretary or Assistant
Secretary of the Borrower, and each Subsidiary that may become
party to a Loan Document certifying the names and true signatures
of the officers of the Borrower or such Subsidiary authorized to
execute, deliver and perform, as applicable, this Agreement, and
all other Loan Documents to be delivered by it hereunder;
(c) Legal Opinions.
(1) An opinion of Klaus Belohoubek, counsel to
the Borrower addressed to the Bank;
(d) Payment of Fees. Evidence of payment by the
Borrower of all accrued and unpaid fees, costs and expenses to
the extent then due and payable on the Closing Date;
(e) Certificate. A certificate signed by a Responsi-
ble Officer, dated as of the Closing Date, stating that:
(1) the representations and warranties contained
in Article VI are true and correct on and as of such date,
as though made on and as of such date;
(2) no Default or Event of Default exists or
would result from the Loan; and
(3) there has occurred since September 30, 1995,
no event or circumstance that has resulted or
could reasonably be expected to result in a Material Adverse
Effect;
(f) Other Documents. Such other approvals, opinions,
documents or materials as the Bank may request.
5.02 Conditions to All Credit Extensions. The obligation
of the Bank to make any Loan to be made by it (including its
initial Loan) or to continue or convert any Loan under Section
2.04 and the obligation to Issue any Letter of Credit (including
the initial Letter of Credit) is subject to the satisfaction of
the following conditions precedent on the relevant Borrowing
Date, Conversion/Continuation Date of Issuance Date:
(a) Notice, Application. The Bank shall have received
a Notice of Borrowing or a Notice of Conversion/Continuation, as
applicable or in the case of any Issuance of any Letter of
Credit, an L/C Application or L/C Amendment Application;
(b) Continuation of Representations and Warranties.
The representations and warranties in Article VI shall be true
and correct on and as of such Borrowing Date or Conversion/
Continuation Date or Issuance Date with the same effect as if
made on and as of such Borrowing Date or Conversion/Continuation
Date or Issuance Date (except to the extent such representations
and warranties expressly refer to an earlier date, in which case
they shall be true and correct as of such earlier date);
(c) No Existing Default. No Default or Event of
Default shall exist or shall result from the making of such Loan
or its continuation or conversion or Issuance; and
Each Notice of Borrowing, Notice of Conversion/Continuation and
L/C Application or L/C Amendment Application submitted by the
Borrower hereunder shall constitute a representation and warranty
by the Borrower hereunder, as of the date of each such notice and
as of each Borrowing Date, Conversion/Continuation Date, or
Issuance Date as applicable, that the conditions in this Section
5.02 are satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Borrower covenants and agrees that it will comply with
the representations and warranties as contained in Article III of
the Master Credit Agreement. All of the aforementioned represen-
tations and warranties, together with any other provisions of the
Master Credit Agreement to which reference is made therein, as
well as the related definitions are hereby incorporated herein by
reference and shall be deemed to continue
in effect for the benefit of the Bank, whether or not the Master
Agreement remains in effect between the parties thereto.
ARTICLE VII
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that it will comply with
the affirmative covenants as contained in Article IV of the
Master Credit Agreement. All of the aforementioned covenants,
together with any other provisions of the Master Credit Agreement
to which reference is made therein, as well as the related
definitions are hereby incorporated herein by reference and shall
be deemed to continue in effect for the benefit of the Bank,
whether or not the Master Agreement remains in effect between the
parties thereto.
ARTICLE VIII
NEGATIVE COVENANTS
The Borrower covenants and agrees that it will comply with
the negative covenants as contained in Article V of the Master
Credit Agreement. All of the aforementioned covenants, together
with any other provisions of the Master Credit Agreement to which
reference is made therein, as well as the related definitions are
hereby incorporated herein by reference and shall be deemed to
continue in effect for the benefit of the Bank, whether or not
the Master Agreement remains in effect between the parties
thereto.
ARTICLE IX
EVENTS OF DEFAULT
9.01 Event of Default. Any of the following shall consti-
tute an "Event of Default":
(a) Non-Payment. The Borrower fails to make, (i) when
and as required to be made herein, payments of any amount of
principal of any Loan or of any L/C obligation, or (ii) within
five days after the same becomes due, payment of any interest,
fee or any other amount payable hereunder or under any other Loan
Document; or
(b) Representation or Warranty. Any representation or
warranty by the Borrower or any Subsidiary made or deemed made
herein, in any other Loan Document, or which is contained in any
certificate, document or financial or other statement by the
Borrower, any Subsidiary, or any Responsible Officer, furnished
at any time under this Agreement, or in or under any other Loan
Document, is incorrect in any material respect on or as of the
date made or deemed made; or
(c) Specific Defaults. The Borrower fails to perform
or observe any term, covenant or agreement contained in any of
Section 4.14, 5.10 or 5.11 of the Master Credit Agreement; or
(d) An Event of Default occurs under the Master Credit
Agreement.
9.02 Remedies. If any Event of Default occurs, the Bank
may:
(a) Declare its commitment to make Loans and any
obligation to Issue Letters of Credit to be terminated, whereupon
such commitment and obligation shall be terminated;
(b) Declare an amount equal to the maximum aggregate
amount that is or at any time thereafter may become available for
drawing under any outstanding Letters of Credit (whether or not
any beneficiary shall have presented, or shall be entitled at
such time to present, the drafts or other documents required to
draw under such Letters of Credit) to be immediately due and
payable, and declare the unpaid principal amount of all outstand-
ing Loans, all interest accrued and unpaid thereon, and all other
amounts owing or payable hereunder or under any other Loan
Document to be immediately due and payable, without presentment,
demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrower; and
(c) Exercise on behalf of itself all rights and
remedies available to it under the Loan Documents or applicable
law;
provided, however, that upon the occurrence of any event speci-
fied in subsection (e) or (f) of Section 7.01 of the Master
Credit Agreement, the obligation of the Bank to make Loans and
any obligation to Issue Letters of Credit shall automatically
terminate and the unpaid principal amount of all outstanding
Loans and all interest and other amounts as aforesaid shall
automatically become due and payable without further act of the
Bank.
9.03 Rights Not Exclusive. The rights provided for in this
Agreement and the other Loan Documents are cumulative and are not
exclusive of any other rights, powers, privileges or remedies
provided by law or in equity, or under any other instrument,
document or agreement now existing or hereafter arising.
ARTICLE X
MISCELLANEOUS
10.01 Amendments and Waivers. No amendment or waiver of
any provision of this Agreement or any other Loan Document, and
no consent with respect to any departure by the Borrower or any
applicable Subsidiary therefrom, shall be effective unless the
same shall be in writing and signed by the Bank and the Borrower,
and then any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which
given.
10.02 Notices.
(a) All notices, requests, consents, approvals,
waivers and other communications shall be in writing (including,
unless the context expressly otherwise provides, by facsimile
transmission, provided that any matter transmitted by the
Borrower by facsimile (i) shall be immediately confirmed by a
telephone call to the recipient at the number specified on
Schedule 10.02, and (ii) shall be followed promptly by delivery
of a hard copy original thereof) and mailed, faxed or delivered,
to the address or facsimile number specified for notices on
Schedule 10.02; or, as directed to the Borrower or the Bank, to
such other address as shall be designated by such party in a
written notice to the other party, and as directed to any other
party, at such other address as shall be designated by such party
in a written notice to the other party.
(b) All such notices, requests and communications
shall, when transmitted by overnight delivery, or faxed, be
effective when delivered for overnight (next-day) delivery, or
transmitted in legible form by facsimile machine, respectively,
or if mailed, upon the third Business Day after the date deposit-
ed into the U.S. mail, or if delivered, upon delivery; except
that notices pursuant to Article II to the Bank shall not be
effective until actually received by the Bank.
(c) Any agreement of the Bank herein to receive
certain notices by telephone or facsimile is solely for the
convenience and at the request of the Borrower. The Bank shall
be entitled to rely on the authority of any Person purporting to
be a Person authorized by the Borrower to give such notice and
the Bank shall not have any liability to the Borrower or other
Person on account of any action taken or not taken by the Bank in
reliance upon such telephonic or facsimile notice. The
obligation of the Borrower to repay the Loans shall not be
affected in any way or to any extent by any failure by the Bank
to receive written confirmation of any telephonic or facsimile
notice or the receipt by the Bank of a confirmation which is at
variance with the terms understood by the Bank to be contained in
the telephonic or facsimile notice.
10.03 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Bank, any
right, remedy, power or privilege hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right,
remedy, power or privilege.
10.04 Costs and Expenses. The Borrower shall pay or
reimburse the Bank within five Business Days after demand for all
costs and expenses (including Attorney Costs) incurred by Bank in
connection with the enforcement, attempted enforcement, or
preservation of any rights or remedies under this Agreement or
any other Loan Document during the existence of an Event of
Default or after acceleration of the Loans (including in connec-
tion with any "workout" or restructuring regarding the Loans, and
including any Insolvency Proceeding or appellate proceeding).
10.05 Borrower Indemnification.
(a) Whether or not the transactions contemplated
hereby are consummated, the Borrower shall indemnify, defend and
hold the Bank, each of its Affiliates, and each of its respective
officers, directors, employees, counsel, agents and attorneys-in-
- -fact (each, an "Indemnified Person") harmless from and against
any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, charges, expenses and disburse-
ments (including Attorney Costs) of any kind or nature whatsoever
which may at any time (including at any time following repayment
of the Loans) be imposed on, incurred by or asserted against any
such Person by a third party including with respect to any
investigation, litigation or proceeding (including any Insolvency
Proceeding or appellate proceeding) related to or arising out or
the use of the proceeds thereof, whether or not any Indemnified
Person is a party thereto (all the foregoing, collectively, the
"Indemnified Liabilities"); provided, that the Borrower shall
have no obligation hereunder to any Indemnified Person with
respect to Indemnified Liabilities resulting solely from the
gross negligence or willful misconduct of such Indemnified
Person. The agreements in this Section shall survive payment of
all other Obligations.
(b) At the election of any Indemnified Person, the
Borrower shall defend such Indemnified Person using legal counsel
satisfactory to such Indemnified Person in such Person's sole
discretion, at the sole cost and expense of the Borrower. All
amounts owing under this Section shall be paid within 30 days
after demand.
10.06 Marshalling; Payments Set Aside. The Bank shall be
under no obligation to marshall any assets in favor of the
Borrower or any other Person or against or in payment of any or
all of the Obligations. To the extent that the Borrower makes a
payment to the Bank, or the Bank exercises its right of set-off,
and such payment or the proceeds of such set-off or any part
thereof are subsequently invalidated, declared to be fraudulent
or preferential, set aside or required (including pursuant to any
settlement entered into by the Bank in its discretion) to be
repaid to a trustee, receiver or any other party, in connection
with any Insolvency Proceeding or otherwise, then to the extent
of such recovery the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full
force and effect as if such payment had not been made or such
set-off had not occurred.
10.07 Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns,
except that the Borrower may not assign or transfer any of its
rights or obligations under this Agreement without the prior
written consent of the Bank.
10.08 Assignments, Participations, etc. The Bank may at
any time assign and delegate to one or more Affiliates all, or
any ratable part of all, of the Loans, the Commitment and the
other rights and obligations of the Bank hereunder.
10.09 Confidentiality. The Bank agrees to take and to
cause its Affiliates to take normal and reasonable precautions
and exercise due care to maintain the confidentiality of all
information identified as "confidential" or "secret" by the
Borrower and provided to it by the Borrower or any Subsidiary,
under this Agreement or any other Loan Document, and neither it
nor any of its Affiliates shall use any such information other
than in connection with or in enforcement of this Agreement and
the other Loan Documents or in connection with other business now
or hereafter existing or contemplated with the Borrower or any
Subsidiary; except to the extent such information (i) was or
becomes generally available to the public other than as a result
of disclosure by the Bank, or (ii) was or becomes available on a
non-confidential basis from a source other than the Borrower,
provided that such source is not bound by a confidentiality
agreement with the Borrower known to the Bank; provided, however,
that the Bank may disclose such information (A) at the request or
pursuant to any requirement of any Governmental Authority to
which the Bank is subject or in connection with an examination of
the Bank by any such authority; (B) pursuant to subpoena or other
court process, provided, further that Bank agrees to promptly
give notice thereof to the Borrower; (C) when required to do so
in accordance with the provisions of any applicable Requirement
of Law; (D) to the extent reasonably required in connection with
any litigation or proceeding to which the Bank or its respective
Affiliates may be party; (E) to the extent reasonably required
in connection with the exercise of any remedy hereunder or under
any other Loan Document; (F) to the Bank's independent auditors
and other professional advisors; (G) to any participant or
assignee, actual or potential, provided that such Person agrees
in writing to keep such information confidential to the same
extent required of the Bank hereunder; (H) as to the Bank or its
Affiliate, as expressly permitted under the terms of any other
document or agreement regarding confidentiality to which the
Borrower or any Subsidiary is party or is deemed party with the
Bank or such Affiliate; and (I) to its Affiliates.
10.10 Set-off. In addition to any rights and remedies of
the Bank provided by law, if an Event of Default exists or the
Loans have been accelerated, the Bank is authorized at any time
and from time to time, without prior notice to the Borrower, any
such notice being waived by the Borrower to the fullest extent
permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any
time held by, and other indebtedness at any time owing by, the
Bank to or for the credit or the account of the Borrower against
any and all Obligations owing to the Bank, now or hereafter
existing, irrespective of whether or not the Bank shall have made
demand under this Agreement or any Loan Document and although
such Obligations may be contingent or unmatured.
10.11 Counterparts. This Agreement may be executed in any
number of separate counterparts, each of which, when so executed,
shall be deemed an original, and all of said counterparts taken
together shall be deemed to constitute but one and the same
instrument.
10.12 Severability. The illegality or unenforceability of
any provision of this Agreement or any instrument or agreement
required hereunder shall not in any way affect or impair the
legality or enforceability of the remaining provisions of this
Agreement or any instrument or agreement required hereunder.
10.13 No Third Parties Benefited. This Agreement is made
and entered into for the sole protection and legal benefit of the
Borrower, the Bank, the Bank's Affiliates, and their permitted
successors and assigns, and no other Person shall be a direct or
indirect legal beneficiary of, or have any direct or indirect
cause of action or claim in connection with, this Agreement or
any of the other Loan Documents.
10.14 Governing Law and Jurisdiction.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE COMMONWEALTH OF PENNSYLVANIA;
PROVIDED THAT THE BANK SHALL RETAIN ALL RIGHTS ARISING UNDER
FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN
THE COURTS OF THE COMMONWEALTH OF PENNSYLVANIA OR OF THE UNITED
STATES FOR THE EASTERN DISTRICT OF PENNSYLVANIA, AND BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWER AND THE BANK
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-
EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE BORROWER AND
THE BANK IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJEC-
TION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF
ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE BORROWER AND THE
BANK EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR
OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
PENNSYLVANIA LAW.
10.15 Waiver of Jury Trial. THE BORROWER AND THE BANK EACH
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEM-
PLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY
OTHER PARTY OR ANY AFFILIATE OF THE BANK, PARTICIPANT OR ASSIGN-
EE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR
OTHERWISE. THE BORROWER AND THE BANK EACH AGREE THAT ANY SUCH
CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT
A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER
AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER
PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE
VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
10.16 Entire Agreement. This Agreement, together with the
other Loan Documents, embodies the entire agreement and under-
standing among the Borrower and the Bank and supersedes all prior
or contemporaneous agreements and understandings of such Persons,
verbal or written, relating to the subject matter hereof and
thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and
duly authorized officers as of the day and year first above
written.
Matlack DE, INC.
By:
Name:
Title:
By:
Name:
Title:
Matlack, INC.
By:
Name:
Title:
By:
Name:
Title:
Safeway Chemical Transportation,
Inc.
By:
Name:
Title:
Brite-Sol Services, Inc.
By:
Name:
Title:
FIRST UNION NATIONAL BANK
By:
Name:
Title: Vice President
<PAGE>
SCHEDULES
Schedule - ADDRESSES FOR NOTICES
EXHIBITS
Exhibit A - Form of Borrowing Base Certificate
Exhibit B - Form of Compliance Certificate
Exhibit C - Form of Notice of Borrowing
Exhibit D - Form of Notice of Conversion/Continuation
Exhibit E - Form of Term Note
<PAGE>
SCHEDULE
ADDRESSES FOR NOTICES
FIRST UNION NATIONAL BANK
Notices (other than Borrowing notices and Notices of
Conversion/Continuation):
FIRST UNION NATIONAL BANK
123 S. Broad Street
Philadelphia, PA 19109
Att: Grainne Pergolini
<PAGE>
CREDIT AGREEMENT
Dated as of May 22, 1996
among
Matlack DE, Inc.,
Matlack, Inc.,
Safeway Chemical Transportation, Inc.,
Brite-Sol Services, Inc.
and
First Union National Bank
MASTER CREDIT AGREEMENT
This MASTER CREDIT AGREEMENT is entered into as of March 27,
1996 among Matlack DE, Inc. (the "Company"), Matlack, Inc.
("MI"), Safeway Chemical Transportation, Inc. ("SCI"), Brite-Sol
Services, Inc. ("BSS"), (the Company, MI, SCI and BSS are
referred to individually and collectively as the "Borrower") Bank
of America Illinois ("BofA"), individually and as Collateral
Agent, and First Union National Bank ("FUNB") (collectively, "the
Banks", individually, "a Bank").
WHEREAS, BofA and FUNB have each entered into separate
commitments to extend credit to the Borrower whereby the
borrowing mechanics are set forth therein;
WHEREAS, the Banks and the Borrower desire to set forth the
terms and conditions for such credit facilities and to appoint
BofA as Collateral Agent;
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained herein, the parties agree as
follows:
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms. The following terms have the
following meanings:
"Acquisition" means any transaction or series of
related transactions for the purpose of or resulting,
directly or indirectly, in (a) the acquisition of all or
substantially all of the assets of a Person, or of any
business or division of a Person, (b) the acquisition of in
excess of 50% of the capital stock, partnership interests,
membership interests or equity of any Person, or otherwise
causing any Person to become a Subsidiary, or (c) a merger
or consolidation or any other combination with another
Person (other than a Person that is a Subsidiary) provided
that the Borrower or the Subsidiary is the surviving entity.
"Account Debtor" means any Person who is or who may
become obligated under or on account of an Account.
"Accounts" means all accounts receivable of a Person,
now owned and hereafter arising.
"Affiliate" means, as to any Person, any other Person
which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person.
A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and
policies of the other Person, whether through the ownership
of voting securities, membership interests, by contract, or
otherwise. Affiliate does not include Rollins Truck
Leasing, Corp. or Rollins Environmental Services, Inc.
"Agent-Related Persons" means BofA and any successor
agent arising hereunder, together with their respective
Affiliates, and the officers, directors, employees, agent
and attorneys-in-fact of such Persons and Affiliates.
"Agreement" means this Master Credit Agreement.
"Assigned Vehicle" means a Vehicle as to which the
Borrower shall have executed and delivered to Bank a
security agreement and mortgage on the Vehicle in form and
substance as required hereunder.
"Attorney Costs" means and includes all fees and
disbursements of any law firm or other external counsel, the
allocated cost of internal legal services and all
disbursements of internal counsel.
"Bank Agreements" means the loan agreement, note and
any other loan documents between each Bank and the Borrower
dated as of even date herewith.
"Bankruptcy Code" means the Federal Bankruptcy Reform
Act of 1978 (11 U.S.C. Section 101, et seq.).
"Borrowing Base" means, as of any date of determination
thereof, an amount equal to the sum of (x) 90% of the net
book value of unencumbered Equipment plus a 75% reserve for
replacement tires plus (y) 85% of all Eligible Accounts
outstanding at such date.
"Borrowing Base Certificate" means a certificate duly
executed by a Responsible Officer of the Company,
substantially in the form of Exhibit A.
"Business Day" means any day other than a Saturday,
Sunday or other day on which commercial banks in New York
City or Chicago, Illinois are authorized or required by law
to close and, if the applicable Business Day relates to any
offshore rate Loan, means such a day on which dealings are
carried on in the applicable offshore dollar interbank
market.
"CERCLA" has the meaning specified in the definition of
"Environmental Laws."
"Change of Control" means (i) the replacement of a
majority of the board of directors of Matlack Systems, Inc.,
the Borrower or any Subsidiary ("Matlack") from the
directors who constituted the board of directors on the
Effective Date for any reason other than death, retirement
or disability, and such replacement shall not have been
approved by the board of directors of Matlack as constituted
on the Effective Date (or as changed over time with the
approval of the board of directors of Matlack), or (ii) a
Person or entity or group of Persons or entities acting in
concert, other than the Rollins family, shall, as a result
of a tender or exchange offer, open market purchases,
privately negotiated purchases or otherwise, have become the
beneficial owner (within the meaning of Rule 13d.3 under the
Securities Exchange Act of 1934, as amended) of securities
of Matlack representing more than 50% of the voting stock of
Matlack.
"Closing Date" means the date on which all conditions
precedent set forth in the Bank Agreements are satisfied or
waived by the Banks.
"Code" means the Internal Revenue Code of 1986, and
regulations promulgated thereunder.
"Collateral" means Equipment and Accounts and proceeds
thereof now owned or hereafter acquired by the Borrower or
Subsidiaries in or upon which a Lien now or hereafter exists
in favor of the Collateral Agent whether under this
Agreement or under any other documents executed by any such
Person and delivered to the Collateral Agent.
"Collateral Agent" means Bank of America Illinois in
its capacity as collateral agent under this Agreement.
"Collateral Documents" means, collectively, (i) this
Agreement, the Bank Agreements, the Security Agreement, and
all other security agreements, mortgages, deeds of trust,
patent and trademark assignments, lease assignments,
guarantees and other similar agreements between the Borrower
or any Subsidiary and the Collateral Agent and/or the Banks,
now or hereafter delivered to the Banks pursuant to or in
connection with the transactions contemplated hereby, and
all financing statements (or comparable documents now or
hereafter filed in accordance with the Uniform Commercial
Code or comparable law) against the Borrower or any
Subsidiary as debtor in favor of the Collateral Agent as
secured party, and (ii) any amendments, supplements,
modifications, renewals, replacements, consolidations,
substitutions and extensions of any of the foregoing.
"Compliance Certificate" means a certificate
substantially in the form of Exhibit B.
"Consolidated Net Income" means for any period, the
consolidated net income of the Company and its Subsidiaries,
after deduction of all expenses, taxes, and other proper
charges, determined in accordance with GAAP.
"Consolidated Adjusted Net Worth" means with respect to
the Company and its Subsidiaries the sum of (i) the
Consolidated Net Worth of the Company and its Subsidiaries
at any time determined in accordance with GAAP plus (ii) the
amount remaining outstanding at such time of any
Subordinated Indebtedness, and (iii) 50% of deferred income
taxes.
"Consolidated Net Worth" means, at any time, the total
of shareholders' equity (including capital stock, additional
paid-in capital and retained earnings after deducting
treasury stock) of the Company and its consolidated
Subsidiaries prepared in accordance with GAAP.
"Contingent Obligation" means, as to any Person, any
direct or indirect liability of that Person, whether or not
contingent, with or without recourse, (a) with respect to
any Indebtedness, lease, dividend, letter of credit or other
obligation (the "primary obligations") of another Person
(the "primary obligor"), including any obligation of that
Person (i) to purchase, repurchase or otherwise acquire such
primary obligations or any security therefor, (ii) to
advance or provide funds for the payment or discharge of any
such primary obligation, or to maintain working capital or
equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet
item, level of income or financial condition of the primary
obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to
make payment of such primary obligation, or (iv) otherwise
to assure or hold harmless the holder of any such primary
obligation against loss in respect thereof (each, a
"Guaranty Obligation"); (b) with respect to any Surety
Instrument issued for the account of that Person or as to
which that Person is otherwise liable for reimbursement of
drawings or payments; (c) to purchase any materials,
supplies or other property from, or to obtain the services
of, another Person if the relevant contract or other related
document or obligation requires that payment for such
materials, supplies or other property, or for such services,
shall be made regardless of whether delivery of such
materials, supplies or other property is ever made or
tendered, or such services are ever performed or tendered.
"Contractual Obligation" means, as to any Person, any
provision of any security issued by such Person or of any
agreement, undertaking, contract, indenture, mortgage, deed
of trust or other instrument, document or agreement to which
such Person is a party or by which it or any of its property
is bound.
"Current Maturities" means Indebtedness due within one
year.
"Default" means any event or circumstance which, with
the giving of notice, the lapse of time, or both, would (if
not cured or otherwise remedied during such time) constitute
an Event of Default.
"Disposition" means (i) the sale, lease, conveyance or
other disposition of property, other than sales or other
dispositions expressly permitted hereunder, and (ii) the
sale or transfer by the Company or any Subsidiary of the
Company of any equity securities issued by any Subsidiary of
the Company and held by such transferor Person.
"Dollars", "dollars" and "$" each mean lawful money of
the United States.
"EBITDA" means with respect to the Company and its
Subsidiaries for any fiscal period, an amount equal to
Consolidated Net Income for such period, plus to the extent
deducted in the calculation of Consolidated Net Income and
without duplication, (a) depreciation and amortization for
such period, (b) other noncash charges for such period, (c)
income tax expense for such period and (d) Consolidated
Total Interest Expense (including, without limitation, fees,
commissions and other charges associated with standby
letters of credit and other financing charges) paid or
accrued during such period.
"Eligible Account" means, at the time of any
determination thereof, any Account of the Borrower as to
which each of the following requirements has been met to the
satisfaction of the Bank:
(a) The Borrower has lawful and absolute title to such
Account and such Account is, in the Borrower's reasonable
judgment, collectible in the ordinary course of business;
(b) Such Account is not subject to a bona fide dispute,
setoff, counterclaim or other claim or defense on the part
of any Person (including the Account Debtor of the Account)
denying liability under such Account;
(c) Such Account is not subject to any Lien in favor
of any Person, except Liens permitted by Section 5.01;
(d) Such Account is a bona fide Account (which with
respect to an Account arising from a sale of goods, was
created as a result of a sale on an absolute basis and not
on consignment, approval, or sale-and-return basis) of the
Borrower arising in the ordinary course of the Borrower's
business and which:
(i) if an Account arising from the sale of
goods, covers goods which have been shipped or
delivered and on which have been taken all other
actions necessary to create a binding obligation
on the part of the Account Debtor on such Account;
(ii) if an Account relating to the
furnishing of services, covers services which have
been performed and completed and on which have
been taken all other actions necessary to create a
binding obligation on the part of the Account
Debtor on such Account;
(e) The Account Debtor on such Account is not:
(i) an Affiliate of the Borrower; or
(ii) the subject of any reorganization,
bankruptcy, receivership, custodianship,
insolvency, or other proceeding analogous to those
described in Section 7.01(e) or (f) and
(f) Such Account is not outstanding more than 90 days
past its original due date.
"Environmental Laws" means all federal, state or local
laws, statutes, common law duties, rules, regulations,
ordinances and codes, together with all administrative
orders, directed duties, requests, licenses, authorizations
and permits of, and agreements with, any Governmental
Authority, in each case relating to environmental, health,
safety and land use matters; including the Comprehensive
Environmental Response, Compensation and Liability Act of
1980 ("CERCLA"), the Clean Air Act, the Federal Water
Pollution Control Act of 1972, the Solid Waste Disposal Act,
the Federal Resource Conservation and Recovery Act, the
Toxic Substances Control Act, the Emergency Planning and
Community Right-to-Know Act.
"Equipment" means vehicles which are owned by the
Borrower free and clear of all liens and encumbrances except
those permitted by Section 5.01.
"ERISA" means the Employee Retirement Income Security
Act of 1974, and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether
or not incorporated) under common control with the Borrower
within the meaning of Section 414(b) or (c) of the Code (and
Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect
to a Pension Plan; (b) a withdrawal by the Company or any
ERISA Affiliate from a Pension Plan subject to Section 4063
of ERISA during a plan year in which it was a substantial
employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations which is treated as such a
withdrawal under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal by the Company or any ERISA Affiliate
from a Multiemployer Plan or notification that a
Multiemployer Plan is in reorganization; (d) the filing of a
notice of intent to terminate, the treatment of a Plan
amendment as a termination under Section 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to
terminate a Pension Plan or Multiemployer Plan; (e) an event
or condition which might reasonably be expected to
constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to
administer, any Pension Plan or Multiemployer Plan; or
(f) the imposition of any liability under Title IV of ERISA,
other than PBGC premiums due but not delinquent under
Section 4007 of ERISA, upon the Borrower or any ERISA
Affiliate.
"Event of Default" means any of the events or
circumstances specified in Section 7.01.
"Event of Loss" means, with respect to any property,
any of the following: (a) any loss, destruction or damage of
such property; (b) any pending or threatened institution of
any proceedings for the condemnation or seizure of such
property or for the exercise of any right of eminent domain;
or (c) any actual condemnation, seizure or taking, by
exercise of the power of eminent domain or otherwise, of
such property, or confiscation of such property or the
requisition of the use of such property.
"Exchange Act" means the Securities Exchange Act of
1934, and regulations promulgated thereunder.
"FDIC" means the Federal Deposit Insurance Corporation,
and any Governmental Authority succeeding to any of its
principal functions.
"Fixed Charge Ratio Coverage" means the ratio of EBITDA
plus Rental and Lease Expense to the sum of Interest
Expense, Rental and Lease Expense, Current Maturities and
20% of Obligations, determined on a rolling four quarter
basis.
"FRB" means the Board of Governors of the Federal
Reserve System, and any Governmental Authority succeeding to
any of its principal functions.
"Future Lease Obligations" means the aggregate minimum
payments required under all operating leases.
"GAAP" means generally accepted accounting principles
set forth from time to time in the opinions and
pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting
Standards Board (or agencies with similar functions of
comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of
the date of determination.
"Governmental Authority" means any nation or
government, any state or other political subdivision
thereof, any central bank (or similar monetary or regulatory
authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any
corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the
foregoing.
"Guaranty Obligation" has the meaning specified in the
definition of "Contingent Obligation."
"Hazardous Materials" means all those substances that
are regulated by, or which may form the basis of liability
under, any Environmental Law, including any substance
identified under any Environmental Law as a pollutant,
contaminant, hazardous waste, hazardous constituent, special
waste, hazardous substance, hazardous material, or toxic
substance, or petroleum or petroleum derived substance or
waste.
"Indebtedness" of any Person means, without
duplication, (a) all indebtedness for borrowed money;
(b) all obligations issued, undertaken or assumed as the
deferred purchase price of property or services (other than
trade payables entered into in the ordinary course of
business on ordinary terms); (c) all non-contingent
reimbursement or payment obligations with respect to Surety
Instruments; (d) all obligations evidenced by notes, bonds,
debentures or similar instruments, including obligations so
evidenced incurred in connection with the acquisition of
property, assets or businesses; (e) all indebtedness created
or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either
case with respect to property acquired by the Person (even
though the rights and remedies of the seller or bank under
such agreement in the event of default are limited to
repossession or sale of such property); (f) all obligations
with respect to capital leases; (g) all indebtedness
referred to in clauses (a) through (f) above secured by (or
for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien
upon or in property (including accounts and contracts
rights) owned by such Person, even though such Person has
not assumed or become liable for the payment of such
Indebtedness; and (h) all Guaranty Obligations in respect of
indebtedness or obligations of others of the kinds referred
to in clauses (a) through (g) above.
"Indemnified Liabilities" has the meaning specified in
Section 8.05.
"Indemnified Person" has the meaning specified in
Section 8.05.
"Independent Auditor" has the meaning specified in
Section 4.01(a).
"Insolvency Proceeding" means, with respect to any
Person, (a) any case, action or proceeding with respect to
such Person before any court or other Governmental Authority
relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, winding-up or relief
of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors,
or other, similar arrangement in respect of its creditors
generally or any substantial portion of its creditors;
undertaken under U.S. Federal, state or foreign law,
including the Bankruptcy Code.
"Interest Expense" means for any period the amount
which, in conformity with GAAP would be set forth opposite
the caption "interest expense" on a consolidated income
statement of the Company and its Subsidiaries for such
period.
"IRS" means the Internal Revenue Service, and any
Governmental Authority succeeding to any of its principal
functions under the Code.
"Investments" has the meaning specified in
Section 5.04.
"Joint Venture" means a single-purpose corporation,
partnership, limited liability company, joint venture or
other similar legal arrangement (whether created by contract
or conducted through a separate legal entity) now or
hereafter formed by the Borrower or any of its Subsidiaries
with another Person in order to conduct a common venture or
enterprise with such Person.
"L/C Obligations" means at any time the sum of (a) the
aggregate undrawn amount of all letters of credit then
outstanding, issued by any Bank in favor of the Borrower,
plus (b) the amount of all unreimbursed drawings under all
such letters of credit.
"Leverage Ratio" means the ratio of Indebtedness
(excluding Subordinated Indebtedness) plus the net present
value (in calculating the net present value the discount
rate shall be 10%) of Future Lease Obligations plus L/C
Obligations to Consolidated Adjusted Net Worth.
"Lien" means any security interest, mortgage, deed of
trust, pledge, hypothecation, assignment, charge or deposit
arrangement, encumbrance, lien (statutory or other) or
preferential arrangement of any kind or nature whatsoever in
respect of any property (including those created by, arising
under or evidenced by any conditional sale or other title
retention agreement, the interest of a lessor under a
capital lease, any financing lease having substantially the
same economic effect as any of the foregoing, or the filing
of any financing statement naming the owner of the asset to
which such lien relates as debtor, under the Uniform
Commercial Code or any comparable law) and any contingent or
other agreement to provide any of the foregoing, but not
including the interest of a lessor under an operating lease
"Loan" means an extension of credit by the Banks to the
Borrower pursuant to the Bank Agreements, including without
limitation, L/C Obligations.
"Loan Documents" means this Agreement, the Bank
Agreements, the Collateral Documents, and all other
documents delivered to the Banks and the Collateral Agent in
connection with the transactions contemplated by this
Agreement or the Bank Agreements.
"Margin Stock" means "margin stock" as such term is
defined in Regulation G, T, U or X of the FRB.
"Material Adverse Effect" means (a) a material adverse
change in, or a material adverse effect upon, the
operations, business, properties, condition (financial or
otherwise) of the Borrower or the Borrower and its
Subsidiaries taken as a whole ; (b) a material impairment of
the ability of the Borrower to perform under any Loan
Document and to avoid any Event of Default; or (c) a
material adverse effect upon (i) the legality, validity,
binding effect or enforceability against the Borrower or any
Subsidiary of any Loan Document, or (ii) the perfection or
priority of any Lien granted under any of the Collateral
Documents.
"Multiemployer Plan" means a "multiemployer plan",
within the meaning of Section 4001(a)(3) of ERISA, to which
the Borrower or any ERISA Affiliate makes, is making, or is
obligated to make contributions or, during the preceding
three calendar years, has made, or been obligated to make,
contributions.
"Net Book Value" of a Vehicle is its acquisition cost
(a) less accumulated depreciation thereon, (b) plus the cost
of improvements capitalized in accordance with GAAP, (c)
plus an allowance for tires and tubes installed on the
Vehicle in the amount of 75% of the cost of such tires and
tubes.
"Net Proceeds" means, as to any Disposition by a
Person, proceeds in cash, checks or other cash equivalent
financial instruments as and when received by such Person,
net of: (a) the direct costs relating to such Disposition
excluding amounts payable to such Person or any Affiliate of
such Person, (b) sale, use or other transaction taxes paid
or payable by such Person as a direct result thereof, and
(c) amounts required to be applied to repay principal,
interest and prepayment premiums and penalties on
Indebtedness secured by a Lien on the asset which is the
subject of such Disposition. "Net Proceeds" shall also
include proceeds paid on account of any Event of Loss, net
of (i) all money actually applied to repair or reconstruct
the damaged property or property affected by the
condemnation or taking, (ii) all of the costs and expenses
reasonably incurred in connection with the collection of
such proceeds, award or other payments, and (iii) any
amounts retained by or paid to parties having superior
rights to such proceeds, awards or other payments.
"Obligations" means all advances, debts, liabilities,
obligations, covenants and duties arising under any Loan
Document owing by the Borrower to the Banks or any
Indemnified Person, whether direct or indirect (including
those acquired by assignment), absolute or contingent, due
or to become due, now existing or hereafter arising.
"Organization Documents" means, for any corporation,
the certificate or articles of incorporation, the bylaws,
any certificate of determination or instrument relating to
the rights of preferred shareholders of such corporation,
any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee
thereof) of such corporation.
"Other Taxes" means any present or future stamp or
documentary taxes or any other excise or property taxes,
charges or similar levies which arise from any payment made
hereunder or from the execution, delivery or registration
of, or otherwise with respect to, this Agreement or any
other Loan Documents.
"PBGC" means the Pension Benefit Guaranty Corporation,
or any Governmental Authority succeeding to any of its
principal functions under ERISA.
"Pension Plan" means a pension plan (as defined in
Section 3(2) of ERISA) subject to Title IV of ERISA which
the Borrower sponsors, maintains, or to which it makes, is
making, or is obligated to make contributions, or in the
case of a multiple employer plan (as described in Section
4064(a) of ERISA) has made contributions at any time during
the immediately preceding five (5) plan years.
"Permitted Liens" has the meaning specified in
Section 5.01.
"Person" means an individual, partnership, corporation,
limited liability company, business trust, joint stock
company, trust, unincorporated association, joint venture or
Governmental Authority.
"Plan" means an employee benefit plan (as defined in
Section 3(3) of ERISA) which the Borrower sponsors or
maintains or to which the Borrower makes, is making, or is
obligated to make contributions and includes any Pension
Plan.
"Rental and Lease Expense" means principal and interest
payments paid under operating leases.
"Reportable Event" means, any of the events set forth
in Section 4043(c) of ERISA or the regulations thereunder,
other than any such event for which the 30-day notice
requirement under ERISA has been waived in regulations
issued by the PBGC.
"Requirement of Law" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or
determination of an arbitrator or of a Governmental
Authority, in each case applicable to or binding upon the
Person or any of its property or to which the Person or any
of its property is subject.
"Responsible Officer" means the chief executive officer
or the president of the Company, or any other officer having
substantially the same authority and responsibility; or,
with respect to compliance with financial covenants, the
chief financial officer or the treasurer of the Company, or
any other officer having substantially the same authority
and responsibility.
"SEC" means the Securities and Exchange Commission, or
any Governmental Authority succeeding to any of its
principal functions.
"Security Agreement" means the Security Agreement
executed and delivered by the Borrower pursuant to
Section 2.01, substantially in the form of Exhibit C-1 or
C-2, as applicable, as amended, supplemented, or restated
from time to time.
"Solvent" means, as to any Person at any time, that
(a) the fair value of the property of such Person is greater
than the amount of such Person's liabilities (including
disputed, contingent and unliquidated liabilities) as such
value is established and liabilities evaluated for purposes
of Section 101(31) of the Bankruptcy Code; (b) the present
fair saleable value of the property of such Person is not
less than the amount that will be required to pay the
probable liability of such Person on its debts as they
become absolute and matured; (c) such Person is able to
realize upon its property and pay its debts and other
liabilities (including disputed, contingent and unliquidated
liabilities) as they mature in the normal course of
business; (d) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities
mature; and (e) such Person is not engaged in business or a
transaction, and is not about to engage in business or a
transaction, for which such Person's property would
constitute unreasonably small capital.
"Subordinated Indebtedness" means all indebtedness, if
any, described in the footnotes of the financial statements
described in Section 4.01 which is subordinated to the
indebtedness under the Loan Documents in form and substance
satisfactory to the Banks in their reasonable opinion.
"Subsidiary" of a Person means any corporation,
association, partnership, limited liability company, joint
venture or other business entity of which more than 50% of
the voting stock, membership interests or other equity
interests (in the case of Persons other than corporations),
is owned or controlled directly or indirectly by the Person,
or one or more of the Subsidiaries of the Person, or a
combination thereof. Unless the context otherwise clearly
requires, references herein to a "Subsidiary" refer to a
Subsidiary of the Borrower.
"Surety Instruments" means all letters of credit
(including standby and commercial), banker's acceptances,
bank guaranties, shipside bonds, surety bonds and similar
instruments.
"Taxes" means any and all present or future taxes,
levies, assessments, imposts, duties, deductions, fees,
withholdings or similar charges, and all liabilities with
respect thereto, excluding, in the case of the Bank, taxes
imposed on or measured by the Bank's net income by the
jurisdiction (or any political subdivision thereof) under
the laws of which the Bank is organized or maintains a
lending office.
"UCC" means the Uniform Commercial Code as in effect in
the State of Illinois.
"Unfunded Pension Liability" means the excess of a
Plan's benefit liabilities under Section 4001(a)(16) of
ERISA, over the current value of that Plan's assets,
determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code
for the applicable plan year.
"United States" and "U.S." each means the United States
of America.
"Vehicle" means a revenue-producing truck, truck-
tractor, trailer, container or other similar unit, and all
related equipment and accessories, now or hereafter owned by
the Borrower.
"Wholly-Owned Subsidiary" means any corporation in
which (other than directors' qualifying shares required by
law) 100% of the capital stock of each class having ordinary
voting power, and 100% of the capital stock of every other
class, in each case, at the time as of which any
determination is being made, is owned, beneficially and of
record, by the Borrower, or by one or more of the other
Wholly-Owned Subsidiaries, or both.
1.02 Other Interpretive Provisions.
(a) The meanings of defined terms are equally
applicable to the singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and
similar words refer to this Agreement as a whole and not to any
particular provision of this Agreement; and subsection, Section,
Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(c) (1) The term "documents" includes any and all
instruments, documents, agreements, certificates,
indentures, notices and other writings, however evidenced.
(2) The term "including" is not limiting and
means "including without limitation."
(3) In the computation of periods of time from a
specified date to a later specified date, the word "from"
means "from and including"; the words "to" and "until" each
mean "to but excluding", and the word "through" means "to
and including."
(4) The term "property" includes any kind of
property or asset, real, personal or mixed, tangible or
intangible.
(d) Unless otherwise expressly provided herein,
(i) references to agreements (including this Agreement) and other
contractual instruments shall be deemed to include all subsequent
amendments and other modifications thereto, but only to the
extent such amendments and other modifications are not prohibited
by the terms of any Loan Document, and (ii) references to any
statute or regulation are to be construed as including all
statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting the statute or
regulation.
(e) The captions and headings of this Agreement are
for convenience of reference only and shall not affect the
interpretation of this Agreement.
(f) This Agreement and other Loan Documents may use
several different limitations, tests or measurements to regulate
the same or similar matters. All such limitations, tests and
measurements are cumulative and shall each be performed in
accordance with their terms. Unless otherwise expressly
provided, any reference to any action of the Bank by way of
consent, approval or waiver shall be deemed modified by the
phrase "in its sole discretion."
(g) This Agreement and the other Loan Documents are
the result of negotiations among and have been reviewed by
counsel to the Bank, the Borrower and the other parties, and are
the products of all parties. Accordingly, they shall not be
construed against the Bank merely because of the Bank's
involvement in their preparation.
1.03 Accounting Principles.
(a) Unless the context otherwise clearly requires, all
accounting terms not expressly defined herein shall be construed,
and all financial computations required under this Agreement
shall be made, in accordance with GAAP, consistently applied. If
there is a change in GAAP which adversely affects the calculation
of the financial covenants set forth in this Agreement, the
Borrower and the Banks shall negotiate in good faith to amend the
financial covenants herein.
(b) References herein to "fiscal year" and "fiscal
quarter" refer to such fiscal periods of the Borrower.
ARTICLE II
SECURITY
2.01 Security.
(a) The Borrower agrees that (i) at any time after the
date hereof either Bank may require that all the Borrower's
liabilities and obligations hereunder and under the Loan
Documents be secured by a security interest in and a lien upon
all existing and after acquired Vehicles and (ii) upon an Event
of Default, either Bank may require that all the Borrower's
liabilities and obligations hereunder and under the Loan
Documents be secured by a security interest in and a lien upon
all Accounts.
(b) Within 30 days after such notice pursuant to
subsection (a) (i) above, and upon an Event of Default, the
Borrower will execute and deliver to the Collateral Agent a
Security Agreement, together with such mortgages, certificates of
title (with encumbrances properly noted thereon required to
perfect the Bank's lien), financing statements or other documents
as the Collateral Agent may request and such mortgages, security
agreements, financing statements and other documents as may be
advised by counsel for the Collateral Agent as being necessary or
desirable to perfect the Collateral Agent's security interest in
the Collateral.
(c) At the request of either Bank furnish at monthly
intervals, such information concerning Assigned Vehicles as
security hereunder as may be requested and will show with respect
to the period for which such report is made, all net proceeds
received from the sale, destruction, commandeering, conversion,
loss of or damage to, or use of, attachment, or insurance on or
with respect to Assigned Vehicles.
(d) Cause the insurance arrangements required by
Section 4.06 to be for the benefit of the Borrower and the
Collateral Agent as their interests may appear (the Collateral
Agent's interest to be for the benefit of the Banks) and all
insurance policies shall provide for ten (10) days written
minimum cancellation notice to the Borrower and the Collateral
Agent; and in the event of such cancellation and failure on the
part of the Borrower to provide adequate insurance arrangements
satisfactory to the Bank, the Collateral Agent may at its option
provide such insurance and charge the cost thereof to the
Borrower as security administration charges hereunder.
(e) If in the opinion of the Collateral Agent or its
counsel, changes or modifications in the procedures governing the
titling, registration, mortgaging of, or the recording of
mortgages on, Vehicles are necessary or desirable to better
perfect or otherwise protect the Collateral Agent's security
interest, upon request of the Collateral Agent, exert its best
efforts to cause such changes or modifications to be made or
adopted.
(f) Unless an Event of Default or Default shall have
occurred and be continuing, the Collateral Agent shall release
from the lien of any mortgage or other security instrument held
by it any Vehicle which the Borrower wishes to sell upon payment
to the Collateral Agent of the Net Book Value of such Vehicle.
If and when this Agreement has been terminated and all
indebtedness and liabilities of the Borrower hereunder shall have
been paid in full, the Collateral Agent shall discharge all
mortgages and release to the Borrower all other security, if any,
then held by it.
2.02 Conditions Subsequent. Upon the request of either
Bank pursuant to Section 2.01 of this Agreement, the Borrower
will deliver to the Collateral Agent:
The Collateral Documents, executed by the Borrower, in
appropriate form for recording, where necessary, together with:
(1) Acknowledgment copies of all UCC-l financing
statements filed, registered or recorded to perfect the
security interests of the Collateral Agent and the Banks, or
other evidence satisfactory to the Collateral Agent that
there has been filed, registered or recorded all financing
statements and other filings, registrations and recordings
necessary and advisable to perfect the Liens of the
Collateral Agent and the Banks in accordance with applicable
law;
(2) Written advice relating to such Lien and
judgment searches as the Banks shall have requested, and
such termination statements or other documents as may be
necessary to confirm that the Collateral is subject to no
other Liens in favor of any Persons (other than Permitted
Liens);
(3) evidence that all other actions necessary or,
in the opinion of the Collateral Agent, desirable to perfect
and protect the first priority Lien created by the
Collateral Documents, and to enhance the Collateral Agent's
ability to preserve and protect its interests in and access
to the Collateral, have been taken.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Banks that:
3.01 Corporate Existence and Power. The Borrower and each
of its Subsidiaries:
(a) Is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation;
(b) Has the power and authority and all governmental
licenses, authorizations, consents and approvals to own its
assets, carry on its business and to execute, deliver, and
perform its obligations under the Loan Documents;
(c) Is duly qualified as a corporation and is licensed
and in good standing under the laws of each jurisdiction where
its ownership, lease or operation of property or the conduct of
its business requires such qualification or license; and
(d) Is in compliance with all Requirements of Law;
except, in each case referred to in clause (b) or clause (c), to
the extent that the failure to do so could not reasonably be
expected to have a Material Adverse Effect.
3.02 Corporate Authorization; No Contravention. The
execution, delivery and performance by the Borrower and its
Subsidiaries of this Agreement and each other Loan Document to
which such Person is party, have been duly authorized by all
necessary corporate action, and do not and will not:
(a) Contravene the terms of any of that Person's
Organization Documents;
(b) Conflict with or result in any breach or
contravention of, or the creation of any Lien under, any document
evidencing any Contractual Obligation to which such Person is a
party or any order, injunction, writ or decree of any
Governmental Authority to which such Person or its property is
subject; or
(c) Violate any Requirement of Law.
3.03 Governmental Authorization. No approval, consent,
exemption, authorization, or other action by, or notice to, or
filing with, any Governmental Authority (except for recordings or
filings in connection with the Liens granted to the Bank under
the Collateral Documents) is necessary or required in connection
with the execution, delivery or performance by, or enforcement
against, the Borrower or any of its Subsidiaries of the Agreement
or any other Loan Document.
3.04 Binding Effect. This Agreement and each other Loan
Document to which the Borrower or any of its Subsidiaries is a
party constitute the legal, valid and binding obligations of the
Borrower and any of its Subsidiaries to the extent it is a party
thereto, enforceable against such Person in accordance with their
respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws affecting the
enforcement of creditors' rights generally or by equitable
principles relating to enforceability.
3.05 Litigation. Except as specifically disclosed in
Schedule 3.05, there are no actions, suits, proceedings, claims
or disputes pending, or to the best knowledge of the Borrower,
threatened or contemplated, at law, in equity, in arbitration or
before any Governmental Authority, against the Borrower, or its
Subsidiaries or any of their respective properties which:
(a) Purport to affect or pertain to this Agreement or
any other Loan Document, or any of the transactions contemplated
hereby or thereby; or
(b) If determined adversely to the Borrower or its
Subsidiaries, would reasonably be expected to have a Material
Adverse Effect. No injunction, writ, temporary restraining order
or any order of any nature has been issued by any court or other
Governmental Authority purporting to enjoin or restrain the
execution, delivery or performance of this Agreement or any other
Loan Document, or directing that the transactions provided for
herein or therein not be consummated as herein or therein
provided.
3.06 No Default. No Default or Event of Default exists or
would result from the incurring of any Obligations by the
Borrower or from the grant or perfection of the Liens of the Bank
on the Collateral. As of the Closing Date, neither the Borrower
nor any Subsidiary is in default under or with respect to any
Contractual Obligation in any respect which, individually or
together with all such defaults, could reasonably be expected to
have a Material Adverse Effect, or that would, if such default
had occurred after the Closing Date, create an Event of Default
under subsection 7.01(e).
3.07 ERISA Compliance. The Borrower and its Subsidiaries
are in material compliance with all statutes and governmental
rules and regulations applicable to them, including, without
limitation, ERISA insofar as such Act applies to them. Each
Plan complies in all material respects with all applicable
statutes and governmental rules and regulations, and the Borrower
is not aware that (i) any Reportable Event has occurred and is
continuing with respect to any Plan, (ii) the Borrower, any of
its Subsidiaries or any ERISA Affiliate has withdrawn from any
Multiemployer Plan or instituted steps to do so, and (iii) any
steps have been instituted to terminate any Plan or Multiemployer
Plan, which such occurrence, withdrawal or termination has
resulted or would result in the incurrence by the Company of
liability that could reasonably be expected to have a Material
Adverse Effect.
3.08 Use of Proceeds; Margin Regulations. The proceeds of
the Loans are to be used solely for the purposes set forth in and
permitted hereunder. Neither the Borrower nor any Subsidiary is
generally engaged in the business of purchasing or selling Margin
Stock or extending credit for the purpose of purchasing or
carrying Margin Stock.
3.09 Title to Properties. The Borrower and each Subsidiary
have good record and marketable title in fee simple to, or valid
leasehold interests in, all real property necessary or used in
the ordinary conduct of their respective businesses, except for
such defects in title as could not, individually or in the
aggregate, have a Material Adverse Effect. As of the Closing
Date, the property of the Borrower and its Subsidiaries is
subject to no Liens, other than Permitted Liens.
3.10 Taxes. The Borrower and its Subsidiaries have filed
all Federal and other material tax returns and reports required
to be filed, and have paid all Federal and other material taxes,
assessments, fees and other governmental charges levied or
imposed upon them or their properties, income or assets otherwise
due and payable, except those which are being contested in good
faith by appropriate proceedings and for which adequate reserves
have been provided in accordance with GAAP. There is no proposed
tax assessment against the Borrower or any Subsidiary that would,
if made, have a Material Adverse Effect.
3.11 Financial Condition.
(a) The audited consolidated financial statements of
the Company and its Subsidiaries dated September 30, 1995, and
the related consolidated statements of income or operations,
shareholders' equity and cash flows for the fiscal year ended on
that date:
(1) Were prepared in accordance with GAAP
consistently applied throughout the period covered thereby,
except as otherwise expressly noted therein, subject to
ordinary, good faith year end audit adjustments;
(2) Fairly present the financial condition of the
Company and its Subsidiaries as of the date thereof and
results of operations for the period covered thereby; and
(3) Except as specifically disclosed in Schedule
3.11, show all material indebtedness and other liabilities,
direct or contingent, of the Company and its consolidated
Subsidiaries as of the date thereof, including liabilities
for taxes, material commitments and Contingent Obligations.
(b) Since September 30, 1995, there has been no
Material Adverse Effect.
3.12 Environmental Matters.
The Borrower conducts in the ordinary course of business a
review of the effect of existing Environmental Laws and existing
environmental claims on its business, operations and properties,
and as a result thereof the Borrower has reasonably concluded
that, except as specifically disclosed in Schedule 3.12, such
Environmental Laws and environmental claims could not,
individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect.
3.13 Regulated Entities. None of the Borrower, any Person
controlling the Borrower, or any Subsidiary, is an "Investment
Borrower" within the meaning of the Investment Borrower Act of
1940. The Borrower is not subject to regulation under the Public
Utility Holding Borrower Act of 1935, the Federal Power Act, any
state public utilities code, or any other Federal or state
statute or regulation limiting its ability to incur Indebtedness.
3.14 No Burdensome Restrictions. Neither the Borrower nor
any Subsidiary is a party to or bound by any Contractual
Obligation, or subject to any restriction in any Organization
Document, or any Requirement of Law, which could reasonably be
expected to have a Material Adverse Effect.
3.15 Subsidiaries. As of the Closing Date, the Borrower
has no Subsidiaries other than those specifically disclosed in
Schedule 3.15 hereto and has no equity investments in any other
corporation or entity other than those specifically disclosed in
Schedule 3.15.
3.16 Insurance. Except as specifically disclosed in
Schedule 3.16, the properties of the Borrower and its
Subsidiaries are insured with financially sound and reputable
insurance companies not Affiliates of the Borrower, in such
amounts, with such deductibles and covering such risks as are
customarily carried by companies engaged in similar businesses
and owning similar properties in localities where the Borrower or
such Subsidiary operates.
3.17 Solvency. The Company and MI are each Solvent.
3.18 Borrowing Base Availability. The aggregate outstanding
principal amount of the Loans does not exceed the Borrowing Base.
ARTICLE IV
AFFIRMATIVE COVENANTS
So long as any Bank shall have any commitment to extend
credit under the Loan Documents, or any Loan or other Obligation
shall remain unpaid or unsatisfied or any letter of credit shall
remain outstanding, unless the Banks waive compliance in writing:
4.01 Financial Statements. The Company shall deliver to
the Banks, in form and detail satisfactory to the Banks:
(a) As soon as available, but not later than 90
days after the end of each fiscal year (commencing with the
fiscal year ended September 30, 1996, a copy of the audited
consolidated balance sheet of the Company and its Subsidiaries as
at the end of such year and the related consolidated statements
of income or operations, shareholders' equity and cash flows for
such year, setting forth in each case in comparative form the
figures for the previous fiscal year, and accompanied by the
opinion of KPMG Peat Marwick, L.L.P. or another
nationally-recognized independent public accounting firm
("Independent Auditor") which report shall state that such
consolidated financial statements present fairly the financial
position for the periods indicated in conformity with GAAP
applied on a basis consistent with prior years. Such opinion
shall not be qualified or limited because of a restricted or
limited examination by the Independent Auditor of any material
portion of the Borrower's or any Subsidiary's records;
(b) As soon as available, but not later than 60 days
after the end of each of the first three fiscal quarters of each
fiscal year (commencing with the fiscal quarter ended
December 31, 1995, a copy of the unaudited consolidated balance
sheet of the Company and its Subsidiaries as of the end of such
quarter and the related consolidated statements of income,
shareholders' equity and cash flows for the period commencing on
the first day and ending on the last day of such quarter, and
certified by a Responsible Officer as fairly presenting, in
accordance with GAAP (subject to ordinary, good faith year-end
audit adjustments), the financial position and the results of
operations of the Borrower and the Subsidiaries;
(c) As soon as available, but not later than 90 days
after the end of each fiscal year (commencing with the fiscal
year ended September 30, 1996), a copy of an unaudited
consolidating balance sheet of the Company and its Subsidiaries
as at the end of such year and the related consolidating
statement of income, and cash flows for such year, certified by a
Responsible Officer as having been developed and used in
connection with the preparation of the financial statements
referred to in subsection (a);
4.02 Certificates; Other Information. The Company shall
furnish to the Banks:
(a) Concurrently with the delivery of the financial
statements referred to in subsections 4.01(a) and (b), a
Compliance Certificate executed by a Responsible Officer;
(b) Promptly, copies of all financial statements and
reports that the Borrower sends to its shareholders, and copies
of all financial statements and regular, periodical or special
reports (including Forms 10K, 10Q and 8K) that the Borrower or
any Subsidiary may make to, or file with, the SEC;
(c) as soon as available and in any event within 30
days after the end of each quarter, a Borrowing Base Certificate
and a receivables-aging report as of the end of such quarter; and
(d) Promptly, such additional information regarding
the business, financial or corporate affairs of the Borrower or
any Subsidiary as the Bank, may from time to time request.
4.03 Notices. The Borrower shall promptly notify the
Banks:
(a) Of the occurrence of any Default or Event of
Default, and of the occurrence or existence of any event or
circumstance that foreseeably will become a Default or Event of
Default;
(b) of (i) any breach or non-performance of, or any
default under, any Contractual Obligation of the Borrower or any
of its Subsidiaries which could result in a Material Adverse
Effect; and (ii) any dispute, litigation, investigation,
proceeding or suspension which may exist at any time between the
Borrower or any of its Subsidiaries and any Governmental
Authority which could result in a Material Adverse Effect;
(c) Of the commencement of, or any material
development in, any litigation or proceeding affecting the
Borrower or any Subsidiary which, if adversely determined, would
reasonably be expected to have a Material Adverse Effect, or
(iii) in which the relief sought is an injunction or other stay
of the performance of this Agreement or any Loan Document;
(d) Of any other litigation or proceeding affecting
the Borrower or any of its Subsidiaries which the Borrower would
be required to report to the SEC pursuant to the Exchange Act,
within four days after reporting the same to the SEC;
(e) Of the occurrence of any of the following events
affecting the Borrower or any ERISA Affiliate which could result
in a Material Adverse Effect, and deliver to the Bank a copy of
any notice with respect to such event is filed with a
Governmental Authority and any notice delivered by a Governmental
Authority to the Borrower or any ERISA Affiliate with respect to
such event:
(1) An ERISA Event;
(2) a material increase in the Unfunded Pension
Liability of any Pension Plan;
(3) The adoption of, or the commencement of
contributions to, any Plan subject to Section 412 of the
Code by the Borrower or any ERISA Affiliate;
(4) The adoption of any amendment to a Pension
Plan or other Plan subject to Section 412 of the Code, if
such amendment results in a material increase in
contributions or Unfunded Pension Liability;
(g) of any material change in accounting policies or
financial reporting practices by the Borrower or any of its
consolidated Subsidiaries;
Each notice under this Section shall be accompanied by
a written statement by a Responsible Officer setting forth
details of the occurrence referred to therein, and stating what
action the Borrower or any affected Subsidiary proposes to take
with respect thereto and at what time. Each notice under
subsection 4.03(a) shall describe with particularity any and all
clauses or provisions of this Agreement or other Loan Document
that have been (or foreseeably will be) breached or violated.
4.04 Preservation of Corporate Existence, Etc. The
Borrower shall, and shall cause each Subsidiary to:
(a) Preserve and maintain in full force and effect its
corporate existence and good standing under the laws of its state
or jurisdiction of incorporation;
(b) Preserve and maintain in full force and effect all
governmental rights, privileges, qualifications, permits,
licenses and franchises necessary or desirable in the normal
conduct of its business; and
(c) Use reasonable efforts, in the ordinary course of
business, to preserve its business organization and goodwill.
4.05 Maintenance of Property. The Borrower shall maintain,
and shall cause each Subsidiary to maintain, and preserve all its
property which is used or useful in its business in good working
order and condition, ordinary wear and tear excepted and make all
necessary repairs thereto and renewals and replacements thereof
except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect.
4.06 Insurance. In addition to insurance requirements set
forth in the Collateral Documents (when applicable), the Borrower
shall maintain, and shall cause each of its Subsidiaries to
maintain, with financially sound and reputable independent
insurers, insurance with respect to its properties and business
against loss or damage of the kinds customarily insured against
by Persons engaged in the same or similar business, of such types
and in such amounts as are customarily carried under similar
circumstances by such other Persons; including workers'
compensation insurance, public liability and property and
casualty insurance.
4.07 Payment of Obligations. The Borrower shall, and shall
cause each Subsidiary to, pay and discharge as the same shall
become due and payable, all their respective obligations and
liabilities, including:
(a) All tax liabilities, assessments and governmental
charges or levies upon it or its properties or assets, unless the
same are being contested in good faith by appropriate proceedings
and adequate reserves in accordance with GAAP are being
maintained by the Borrower or such Subsidiary;
(b) All lawful claims which, if unpaid, would by law
become a Lien upon its property; and
(c) All indebtedness, as and when due and payable, but
subject to any subordination provisions contained in any
instrument or agreement evidencing such Indebtedness.
4.08 Compliance with Laws. The Borrower shall comply, and
shall cause each Subsidiary to comply, in all material respects
with all Requirements of Law of any Governmental Authority having
jurisdiction over it or its business (including the Federal Fair
Labor Standards Act), except such as may be contested in good
faith or as to which a bona fide dispute may exist.
4.09 Compliance with ERISA. The Borrower shall, and shall
cause each of its ERISA Affiliates to: (a) maintain each Plan in
compliance in all material respects with the applicable
provisions of ERISA, the Code and other federal or state law;
(b) cause each Plan which is qualified under Section 401(a) of
the Code to maintain such qualification; and (c) make all
required contributions to any Plan subject to Section 412 of the
Code.
4.10 Inspection of Property and Books and Records. The
Borrower shall maintain and shall cause each Subsidiary to
maintain proper books of record and account, in which full, true
and correct entries in conformity with GAAP consistently applied
shall be made of all financial transactions and matters involving
the assets and business of the Borrower and such Subsidiary.
With respect to each unit of Eligible Equipment owned by it,
Borrower shall maintain records on a continuous basis, which
shall be in such form and show such information with respect to
each individual unit of Eligible Equipment as is necessary for
the determination of the Net Book Value of the Eligible Equipment
and the security value of the Vehicle. The Borrower shall permit,
and shall cause each Subsidiary to permit, representatives and
independent contractors of the Banks to visit and inspect any of
their respective properties, to examine their respective
corporate, financial and operating records, and make copies
thereof or abstracts therefrom, and to discuss their respective
affairs, finances and accounts with their respective officers,
all at such reasonable times during normal business hours and as
often as may be reasonably desired, upon reasonable advance
notice to the Borrower; provided, however, when an Event of
Default exists the Banks may do any of the foregoing at the
expense of the Borrower at any time during normal business hours
and without advance notice.
4.11 Environmental Laws. The Borrower shall, and shall
cause each Subsidiary to, conduct its operations and keep and
maintain its property in compliance with all Environmental Laws.
4.12 Use of Proceeds. The Borrower shall use the proceeds
of the Loans for working capital and other general corporate
purposes not in contravention of any Requirement of Law or of any
Loan Document.
4.13 Further Assurances.
(a) The Borrower shall ensure that all written
information, exhibits and reports furnished to the Bank do not
and will not contain any untrue statement of a material fact and
do not and will not omit to state any material fact or any fact
necessary to make the statements contained therein not misleading
in light of the circumstances in which made, and will promptly
disclose to the Banks and correct any defect or error that may be
discovered therein or in any Loan Document or in the execution,
acknowledgement or recordation thereof.
(b) Promptly upon request by the Collateral Agent or
the Banks, the Borrower shall (and shall cause any of its
Subsidiaries to) do, execute, acknowledge, deliver, record,
re-record, file, re-file, register and re-register, any and all
such further acts, deeds, conveyances, security agreements,
mortgages, assignments, estoppel certificates, financing
statements and continuations thereof, termination statements,
notices of assignment, transfers, certificates, assurances and
other instruments the Banks may reasonably require from time to
time in order (i) to carry out more effectively the purposes of
this Agreement or any other Loan Document, (ii) to subject to the
Liens created by any of the Collateral Documents any of the
properties, rights or interests covered by any of the Collateral
Documents, (iii) to perfect and maintain the validity,
effectiveness and priority of any of the Collateral Documents and
the Liens intended to be created thereby, (iv) cause the title to
all Eligible Equipment purchased on or after the date of this
Agreement to be and continue to be in the name of the Borrower;
(v) at any time a Security Agreement is executed hereunder,
continue to be the lawful owner of the Assigned Vehicle and
Accounts free and clear of all Liens, except as otherwise
permitted hereunder and (vi) to better assure, convey, grant,
assign, transfer, preserve, protect and confirm to the Bank the
rights granted or now or hereafter intended to be granted to the
Bank under any Loan Document or under any other document executed
in connection therewith.
4.14 Minimum Net Worth. The Borrower shall maintain Minimum
Net Worth equal to or greater than the sum of (i) $50,000,000 and
(ii) 50% of Net Income since September 30, 1995.
4.15 Acquisitions. The Borrower shall be permitted to make
Acquisitions not in excess of $25,000,000 in the aggregate.
4.16 Significant Subsidiaries. If at any time any
Subsidiary of the Company represents ten percent (10%) or more of
total Accounts and Equipment on a consolidated basis, the Company
shall cause such Subsidiary to become a borrower and party to
this Agreement and the Collateral Documents.
ARTICLE V
NEGATIVE COVENANTS
So long as any Bank shall have any commitment to extend
credit under the Loan Documents, or any Loan or other Obligation
shall remain unpaid or unsatisfied or any letter of credit shall
remain outstanding, unless the Banks waive compliance in writing:
5.01 Limitation on Liens. The Borrower shall not, and
shall not suffer or permit any Subsidiary to, directly or
indirectly, make, create, incur, assume or suffer to exist any
Lien upon or with respect to any part of its property, whether
now owned or hereafter acquired, other than the following
("Permitted Liens"):
(a) Any Lien (other than a Lien on the Collateral)
existing on property of the Borrower or any Subsidiary on the
Closing Date and set forth in Schedule 5.01 securing Indebtedness
outstanding on such date;
(b) Any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other
governmental charges which are not delinquent or remain payable
without penalty, or to the extent that non-payment thereof is
permitted hereunder, provided that no notice of lien has been
filed or recorded under the Code;
(d) Carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the
ordinary course of business which are not delinquent or remain
payable without penalty or which are being contested in good
faith and by appropriate proceedings, which proceedings have the
effect of preventing the forfeiture or sale of the property
subject thereto;
(e) Liens (other than any Lien imposed by ERISA and
other than on the Collateral) consisting of pledges or deposits
required in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other social
security legislation;
(f) Liens (other than Liens on the Collateral) on the
property of the Borrower or its Subsidiary securing (i) the non-
delinquent performance of bids, trade contracts (other than for
borrowed money), leases, statutory obligations which do not
exceed in the aggregate $15,000,000, (ii) contingent obligations
on surety and appeal bonds, and (iii) other non-delinquent
obligations of a like nature; in each case, incurred in the
ordinary course of business, provided all such Liens in the
aggregate would not (even if enforced) cause a Material Adverse
Effect;
(g) Liens (other than Liens on the Collateral)
consisting of judgment or judicial attachment liens, provided
that the enforcement of such Liens is effectively stayed and all
such liens in the aggregate at any time outstanding for the
Borrower and its Subsidiaries do not exceed 10% of Consolidated
Net Worth;
(h) Easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of business
which, in the aggregate, are not substantial in amount, and which
do not in any case materially detract from the value of the
property subject thereto or interfere with the ordinary conduct
of the businesses of the Borrower and its Subsidiaries;
(i) Purchase money security interests on any property
acquired or held by the Borrower or its Subsidiaries in the
ordinary course of business, securing Indebtedness incurred or
assumed for the purpose of financing all or any part of the cost
of acquiring such property; provided that (i) any such Lien
attaches to such property concurrently with or within 20 days
after the acquisition thereof, (ii) such Lien attaches solely to
the property so acquired in such transaction, and (iii) the
principal amount of the debt secured thereby does not exceed 100%
of the cost of such property.
5.02 Disposition of Assets. If the Borrower or any
Subsidiary sells, assigns, conveys, transfers or otherwise
disposes of (whether in one or a series of transactions) any
property, in excess of $2,500,000 during any fiscal quarter, the
Borrower shall deliver to the Banks an interim Borrowing Base
Certificate.
5.03 Consolidations and Mergers. Subject to the provisions
of Section 4.15, the Borrower shall not, and shall not suffer or
permit any Subsidiary to, merge, consolidate with or into, or
convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially
all of its assets (whether now owned or hereafter acquired) to or
in favor of any Person, except:
(a) Any Subsidiary may merge with the Borrower,
provided that the Borrower shall be the continuing or surviving
corporation, or with any one or more Subsidiaries, provided that
if any transaction shall be between a Subsidiary and a
Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary shall be the
continuing or surviving corporation; and
(b) Any Subsidiary may sell all or substantially all
of its assets (upon voluntary liquidation or otherwise), to the
Borrower or another Wholly-Owned Subsidiary.
5.04 Investments. Subject to the provisions of Section
4.15, the Borrower shall not purchase or acquire, or suffer or
permit any Subsidiary to purchase or acquire, or make any
commitment therefor, any capital stock, equity interest, or any
obligations or other securities of, or any interest in, any
Person, or make or commit to make any Acquisitions, or make or
commit to make any advance, loan, extension of credit or capital
contribution to or any other investment in, any Person including
any Affiliate of the Borrower (together, "Investments"), except
for:
(a) Investments held by the Borrower or Subsidiary in
the form of cash equivalents; and
(b) Extensions of credit in the nature of accounts
receivable or notes receivable arising from the sale or lease of
goods or services in the ordinary course of business.
5.05 Guaranties, Loans or Advances. Except as otherwise
provided in Sections 5.01 and 5.04, the Borrower shall not, and
shall not suffer or permit any Subsidiary to, become or be a
guarantor or surety of, or otherwise become or be responsible in
any manner (whether by agreement to purchase any obligations,
stock, assets, goods or services, or to supply or advance any
funds, assets, goods or services or otherwise) with respect to,
any undertaking of any other person or entity, or make or permit
to exist any loans or advances to any other Person or entity,
except for :
(a) the endorsement, in the ordinary course of
collection, of instruments payable to it or its order;
(b) advances not to exceed, in the aggregate for the
Borrower and all Subsidiaries at any one time outstanding,
$200,000 to officers and employees;
(c) guarantees of obligations of lease operators not
to exceed $2,500,000 at any time outstanding, and;
(d) guarantees of obligations of affiliated companies
in connection with surety bonds and guarantees of obligations of
municipal bond issuers financing Borrower facilities, which
obligations do not exceed $5,000,000.
5.06 Transactions with Affiliates. The Borrower shall not,
and shall not suffer or permit any Subsidiary to, enter into any
transaction with any Affiliate of the Borrower, except upon fair
and reasonable terms no less favorable to the Borrower or such
Subsidiary than would obtain in a comparable arm's-length
transaction with a Person not an Affiliate of the Borrower or
such Subsidiary.
5.07 Restricted Payments. The Borrower shall not, and
shall not suffer or permit any Subsidiary to, declare or make any
dividend payment or other distribution of assets, properties,
cash, rights, obligations or securities on account of any shares
of any class of its capital stock, or purchase, redeem or
otherwise acquire for value any shares of its capital stock or
any warrants, rights or options to acquire such shares, now or
hereafter outstanding; except that so long as no Default or Event
of Default has occurred, the Borrower may:
(a) Declare and make dividend payments or other
distributions payable solely in its common stock;
(b) Purchase, redeem or otherwise acquire shares of
its common stock or warrants or options to acquire any such
shares with the proceeds received from the substantially
concurrent issue of new shares of its common stock; and
(c) Make equity distributions to Matlack Systems, Inc.
not in excess of $4,000,000 plus 25% of Consolidated Net Income
subsequent to October 1, 1995.
5.08 ERISA. The Borrower shall not, and shall not suffer
or permit any of its ERISA Affiliates to: (a) engage in a
prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan which has resulted
or could reasonably expected to result in liability of the
Borrower in an aggregate amount in excess of 10% of Consolidated
Net Worth; or (b) engage in a transaction that could be subject
to Section 4069 or 4212(c) of ERISA.
5.09 Change in Business. The Borrower shall not, and shall
not suffer or permit any Subsidiary to, engage in any material
line of business substantially different from those lines of
business carried on by the Borrower and its Subsidiaries on the
date hereof.
5.10 Fixed Charge Coverage Ratio. The Company shall not
incur a Fixed Charge Coverage Ratio of less than 1.15:1.
5.11 Leverage Ratio. The Company shall not incur a
Leverage Ratio of greater than 2.5:1.
5.12 Borrowing Base Overage. On each date when the
aggregate outstanding principal amount of the Loans exceeds the
lesser of the Borrowing Base or the aggregate Commitments, the
Borrower shall make a mandatory prepayment of the Loans to the
Banks in an amount equal to such excess.
ARTICLE VI
COLLATERAL AGENT
6.01 Appointment and Authorization; "Collateral Agent".
Each Bank hereby irrevocably (subject to Section 6.09) appoints,
designates and authorizes Bank of America Illinois as Collateral
Agent to take such action on its behalf under the provisions of
this Agreement and each other Loan Document and to exercise such
powers and perform such duties as are expressly delegated to it
by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere
in this Agreement or in any other Loan Document, the Collateral
Agent shall not have any duties or responsibilities, except those
expressly set forth herein, nor shall the Collateral Agent have
or be deemed to have any fiduciary relationship with any Bank,
and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or
any other Loan Document or otherwise exist against the Collateral
Agent. Without limiting the generality of the foregoing
sentence, the use of the term "agent" in this Agreement with
reference to the Collateral Agent is not intended to connote any
fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable law. Instead, such term is
used merely as a matter of market custom, and is intended to
create or reflect only an administrative relationship between
independent contracting parties.
6.02 Delegation of Duties. The Collateral Agent may
execute any of its duties under this Agreement or any other Loan
Document by or through agents, employees or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters
pertaining to such duties. The Collateral Agent shall not be
responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.
6.03 Liability of Collateral Agent. None of the Collateral
Agent or Agent-Related Persons shall (i) be liable for any action
taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross
negligence or willful misconduct), or (ii) be responsible in any
manner to any of the Banks for any recital, statement,
representation or warranty made by the Borrower or any Subsidiary
or Affiliate of the Borrower, or any officer thereof, contained
in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or
provided for in, or received by the Collateral Agent under or in
connection with, this Agreement or any other Loan Document, or
for the value of or title to any Collateral, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of the
Borrower or any other party to any Loan Document to perform its
obligations hereunder or thereunder. No Collateral Agent or
Agent-Related Person shall be under any obligation to any Bank to
ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the
properties, books or records of the Borrower or any of the
Borrower's Subsidiaries or Affiliates.
6.04 Reliance by Collateral Agent. (a) The Collateral
Agent shall be entitled to rely, and shall be fully protected in
relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, statement or other document or conversation
believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to the Borrower),
independent accountants and other experts selected by the
Collateral Agent. The Collateral Agent shall be fully justified
in failing or refusing to take any action under this Agreement or
any other Loan Document unless it shall first receive such advice
or concurrence of the Banks as it deems appropriate and, if it so
requests, it shall first be indemnified to its satisfaction by
the Banks against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such
action. The Collateral Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request
or consent of the Banks and such request and any action taken or
failure to act pursuant thereto shall be binding upon all of the
Banks.
(b) For purposes of determining compliance with the
conditions specified in the conditions precedent section of each
Credit Agreement, each Bank that has executed this Agreement
shall be deemed to have consented to, approved or accepted or to
be satisfied with, each document or other matter either sent by
the Collateral Agent to such Bank for consent, approval,
acceptance or satisfaction, or required thereunder to be
consented to or approved by or acceptable or satisfactory to the
Bank.
6.05 Notice of Default. The Collateral Agent shall not be
deemed to have knowledge or notice of the occurrence of any
Default or Event of Default, unless the Collateral Agent shall
have received written notice from a Bank or the Borrower
referring to the Credit Agreements, describing such Default or
Event of Default and stating that such notice is a "notice of
default". The Collateral Agent will notify the Banks of its
receipt of any such notice. The Collateral Agent shall take such
action with respect to such Default or Event of Default as may be
requested by either Bank in accordance with the Credit Agreements
and/or applicable law; provided, however, that unless and until
the Collateral Agent has received any such request, the
Collateral Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable or in the
best interest of the Banks.
6.06 Credit Decision. Each Bank acknowledges that none of
the Collateral Agent or Agent-Related Persons has made any
representation or warranty to it, and that no act by the
Collateral Agent hereinafter taken, including any review of the
affairs of the Borrower and its Subsidiaries, shall be deemed to
constitute any representation or warranty by any Agent-Related
Person to any Bank. Each Bank represents to the Collateral Agent
that it has, independently and without reliance upon any Agent-
Related Person and based on such documents and information as it
has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property,
financial and other condition and creditworthiness of the
Borrower and its Subsidiaries, the value of and title to any
Collateral, and all applicable bank regulatory laws relating to
the transactions contemplated hereby, and made its own decision
to enter into this Agreement and to extend credit to the Borrower
hereunder. Each Bank also represents that it will, independently
and without reliance upon any Agent-Related Person and based on
such documents and information as it shall deem appropriate at
the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement
and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition
and creditworthiness of the Borrower. Except for notices,
reports and other documents expressly herein required to be
furnished to the Banks by the Collateral Agent, the Collateral
Agent shall not have any duty or responsibility to provide any
Bank with any credit or other information concerning the
business, prospects, operations, property, financial and other
condition or creditworthiness of the Borrower which may come into
the possession of any of the Agent-Related Persons.
6.07 Indemnification of Collateral Agent. Whether or not
the transactions contemplated hereby are consummated, the Banks
shall indemnify upon demand the Collateral Agent and
Agent-Related Persons (to the extent not reimbursed by or on
behalf of the Borrower and without limiting the obligation of the
Borrower to do so), pro rata, from and against any and all
Indemnified Liabilities; provided, however, that no Bank shall be
liable for the payment to the Collateral Agent or Agent-Related
Persons of any portion of such Indemnified Liabilities resulting
solely from such Person's gross negligence or willful misconduct.
Without limitation of the foregoing, each Bank shall reimburse
the Collateral Agent upon demand for its ratable share of any
costs or out-of-pocket expenses (including Attorney Costs)
incurred by the Collateral Agent in connection with the
preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan
Document, or any document contemplated by or referred to herein,
to the extent that the Collateral Agent is not reimbursed for
such expenses by or on behalf of the Borrower. The undertaking
in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of the Collateral
Agent.
6.08 Collateral Agent in Individual Capacity. BofA and its
Affiliates may make loans to, issue letters of credit for the
account of, accept deposits from, acquire equity interests in and
generally engage in any kind of banking, trust, financial
advisory, underwriting or other business with the Borrower and
its Subsidiaries and Affiliates as though BofA were not the
Collateral Agent hereunder and without notice to or consent of
the Banks. The Banks acknowledge that, pursuant to such
activities, BofA or its Affiliates may receive information
regarding the Borrower or its Affiliates (including information
that may be subject to confidentiality obligations in favor of
the Borrower or such Subsidiary) and acknowledge that the
Collateral Agent shall be under no obligation to provide such
information to them. With respect to its Loans, BofA shall have
the same rights and powers under its Credit Agreement as any
other Bank and may exercise the same as though it were not the
Collateral Agent, and the terms "Bank" and "Banks" include BofA
in its individual capacity.
6.09 Successor Collateral Agent. The Collateral Agent may,
and at the request of the Banks shall, resign as Collateral Agent
upon 30 days' notice to the Banks or upon 30 days from the
receipt of a written request from the Banks. If the Collateral
Agent resigns under this Agreement, the Banks shall appoint a
successor agent for the Banks which successor agent shall be
approved by the Borrower. If no successor agent is appointed
prior to the effective date of the resignation of the Collateral
Agent, the Collateral Agent may appoint, after consulting with
the Banks and the Borrower, a successor agent. Upon the
acceptance of its appointment as successor agent hereunder, such
successor agent shall succeed to all the rights, powers and
duties of the retiring Collateral Agent and the term "Collateral
Agent" shall mean such successor agent and the retiring
Collateral Agent's appointment, powers and duties as Collateral
Agent shall be terminated. After any retiring Collateral Agent's
resignation hereunder as Collateral Agent, the provisions of this
section shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Collateral Agent under
this Agreement. If no successor agent has accepted appointment
as Collateral Agent by the date which is 30 days following a
retiring Collateral Agent's notice of resignation, the retiring
Collateral Agent's resignation shall nevertheless thereupon
become effective and the Banks shall perform all of the duties of
the Collateral Agent hereunder until such time, if any, as the
Banks appoint a successor agent as provided for above.
6.10 Collateral Matters. (a) The Collateral Agent is
authorized on behalf of all the Banks, without the necessity of
any notice to or further consent from the Banks, from time to
time to take any action with respect to any Collateral or the
Collateral Documents which may be necessary to perfect and
maintain perfected the security interest in and Liens upon the
Collateral granted pursuant to the Collateral Documents.
(b) The Banks irrevocably authorize the Collateral
Agent, at its option and in its discretion, to release any Lien
granted to or held by the Collateral Agent upon any Collateral
(i) upon termination of the Commitments and payment in full of
all Loans and all other Obligations known to the Collateral Agent
and payable under this Agreement or any other Loan Document;
(ii) constituting property sold or to be sold or disposed of as
part of or in connection with any disposition permitted
hereunder; (iii) constituting property in which the Borrower or
any Subsidiary owned no interest at the time the Lien was granted
or at any time thereafter; (iv) constituting property leased to
the Borrower or any Subsidiary under a lease which has expired or
been terminated in a transaction permitted under this Agreement
or is about to expire and which has not been, and is not intended
by the Borrower or such Subsidiary to be, renewed or extended;
(v) consisting of an instrument evidencing Indebtedness or other
debt instrument, if the indebtedness evidenced thereby has been
paid in full; or (vi) if approved, authorized or ratified in
writing by the Banks. Upon request by the Collateral Agent at
any time, the Banks will confirm in writing the Collateral
Agent's authority to release particular types or items of
Collateral pursuant to this subsection (b), provided that the
absence of any such confirmation for whatever reason shall not
affect the Collateral Agent's rights under this Section.
ARTICLE VII
EVENTS OF DEFAULT
7.01 Event of Default. Any of the following shall
constitute an "Event of Default":
(a) Non-Payment. The Borrower fails to make, (i) when
and as required to be made under any of the Loan Documents or
herein, payments of any amount of principal of any Loan or of any
L/C obligation, or (ii) within five days after the same becomes
due, payment of any interest, fee or any other amount payable
hereunder or under any other Loan Document; or
(b) Representation or Warranty. Any representation or
warranty by the Borrower or any Subsidiary made or deemed made
herein, in any other Loan Document, or which is contained in any
certificate, document or financial or other statement by the
Borrower, any Subsidiary, or any Responsible Officer, furnished
at any time under this Agreement, or in or under any other Loan
Document, is incorrect in any material respect on or as of the
date made or deemed made; or
(c) Other Defaults. The Borrower or any Subsidiary
fails to perform or observe any other term or covenant contained
in this Agreement or any other Loan Document, and such default
shall continue unremedied for a period of 20 days after the
earlier of (i) the date upon which a Responsible Officer knew or
reasonably should have known of such failure or (ii) the date
upon which written notice thereof is given to the Borrower by
either Bank; or
(d) Cross-Default. (i) The Borrower or any Subsidiary
(A) fails to make any payment in respect of any Indebtedness or
Contingent Obligation, having an aggregate principal amount
(including undrawn committed or available amounts and including
amounts owing to all creditors under any combined or syndicated
credit arrangement) of more than 10% of Consolidated Net Worth
when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) and such failure continues
after the applicable grace or notice period, if any, specified in
the relevant document on the date of such failure; or (B) fails
to perform or observe any other condition or covenant, or any
other event shall occur or condition exist, under any agreement
or instrument relating to any such Indebtedness or Contingent
Obligation, and such failure continues after the applicable grace
or notice period, if any, specified in the relevant document on
the date of such failure if the effect of such failure, event or
condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Indebtedness
(or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause such Indebtedness to be
declared to be due and payable prior to its stated maturity, or
such Contingent Obligation to become payable or cash collateral
in respect thereof to be demanded;
(e) Insolvency; Voluntary Proceedings. The Borrower
or any Subsidiary (i) ceases or fails to be solvent, or generally
fails to pay, or admits in writing its inability to pay, its
debts as they become due, subject to applicable grace periods, if
any, whether at stated maturity or otherwise; (ii) voluntarily
ceases to conduct its business in the ordinary course;
(iii) commences any Insolvency Proceeding with respect to itself;
or (iv) takes any action to effectuate or authorize any of the
foregoing; or
(f) Involuntary Proceedings. (i) Any involuntary
Insolvency Proceeding is commenced or filed against the Borrower
or any Subsidiary, or any writ, judgment, warrant of attachment,
execution or similar process, is issued or levied against a
substantial part of the Borrower's or any Subsidiary's
properties, and any such proceeding or petition shall not be
dismissed, or such writ, judgment, warrant of attachment,
execution or similar process shall not be released, vacated or
fully bonded within 60 days after commencement, filing or levy;
(ii) the Borrower or any Subsidiary admits the material
allegations of a petition against it in any Insolvency
Proceeding, or an order for relief (or similar order under non-
U.S. law) is ordered in any Insolvency Proceeding; or (iii) the
Borrower or any Subsidiary acquiesces in the appointment of a
receiver, trustee, custodian, conservator, liquidator, mortgagee
in possession (or agent therefor), or other similar Person for
itself or a substantial portion of its property or business; or
(g) ERISA. (i) An ERISA Event shall occur with
respect to a Pension Plan or Multiemployer Plan which has
resulted or could reasonably be expected to result in liability
of the Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess
of 10% of Consolidated Net Worth; or (ii) the aggregate amount of
Unfunded Pension Liability among all Pension Plans at any time
exceeds 10% of Consolidated Net Worth; or (iii) the Borrower or
any ERISA Affiliate shall fail to pay when due, after the
expiration of any applicable grace period, any installment
payment with respect to its withdrawal liability under Section
4201 of ERISA under a Multiemployer Plan in an aggregate amount
in excess of 10% of Consolidated Net Worth; or
(h) Monetary Judgments. One or more non-interlocutory
judgments, non-interlocutory orders, decrees or arbitration
awards is entered against the Borrower or any Subsidiary
involving in the aggregate a liability (to the extent not covered
by independent third-party insurance as to which the insurer does
not dispute coverage) as to any single or related series of
transactions, incidents or conditions, of 10% of Consolidated Net
Worth or more, and the same shall remain unsatisfied, unvacated
and unstayed pending appeal for a period of 10 days after the
entry thereof; or
(i) Non-Monetary Judgments. Any non-monetary
judgment, order or decree is entered against the Borrower or any
Subsidiary which does or would reasonably be expected to have a
Material Adverse Effect, and there shall be any period of 10
consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise,
shall not be in effect; or
(j) Change of Control. There occurs any Change of
Control; or
(k) Adverse Change. There occurs a Material Adverse
Effect.
7.02 Remedies. If any Event of Default occurs:
(a) Each Bank may declare its commitment to make Loans
and any obligation to issue letters of credit to be terminated,
whereupon such commitment and obligation shall be terminated;
(b) Each Bank may declare an amount equal to the
maximum aggregate amount that is or at any time thereafter may
become available for drawing under any outstanding Letters of
Credit (whether or not any beneficiary shall have presented, or
shall be entitled at such time to present, the drafts or other
documents required to draw under such Letters of Credit) to be
immediately due and payable, and declare the unpaid principal
amount of all outstanding Loans, all interest accrued and unpaid
thereon, and all other amounts owing or payable hereunder or
under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived by the Borrower; and
(c) The Collateral Agent may exercise on behalf of the
Banks all rights and remedies available to it under the Loan
Documents or applicable law including, without limitation, the
filing of the Security Agreement and UCC-1 financing statements
with respect to accounts;
provided, however, that upon the occurrence of any event
specified in subsection (e) or (f) of Section 7.01 (in the case
of clause (i) of subsection (f) upon the expiration of the 60-day
period mentioned therein), the obligation of the Banks to make
Loans and any obligation to issue letters of credit shall
automatically terminate and the unpaid principal amount of all
outstanding Loans and all interest and other amounts as aforesaid
shall automatically become due and payable without further act of
the Banks.
7.03 Rights Not Exclusive. The rights provided for in this
Agreement and the other Loan Documents are cumulative and are not
exclusive of any other rights, powers, privileges or remedies
provided by law or in equity, or under any other instrument,
document or agreement now existing or hereafter arising.
7.04 Application of Proceeds. The cash proceeds actually
received from the sale or other disposition or collection of
Collateral, and any other amounts received in respect of the
Collateral the application of which is not otherwise provided for
herein, shall be applied (after payment of any amounts payable to
the Collateral Agent hereunder) in whole or in part by the
Collateral Agent, pro rata, for the benefit of the Banks against
all or any part of the Obligations in the following order: (i)
first, to any fees, costs, or other expenses due under the Loan
Documents; (ii) next, to any interest (including default rate
interest due under the Bank Agreements); (iii) next, to any
principal due under the Loan Documents (including without
limitation, L/C Obligations); and (iii) last, to any other
amounts due under the Loan Documents. Any surplus thereof which
exists after payment and performance in full of the Obligations
shall be promptly paid over to the Borrower or otherwise disposed
of in accordance with the UCC or other applicable law. The
Borrower shall remain liable to the Collateral Agent for any
deficiency which exists after any sale or other disposition or
collection of Collateral.
7.05 Remedies. Upon the occurrence of any Event of
Default, the Collateral Agent shall have, in addition to all
other rights and remedies granted to it in this Agreement, the
Credit Agreement or any other Loan Document, all rights and
remedies of a secured party under the UCC and other applicable
laws. Without limiting the generality of the foregoing, the
Borrower agrees that the Collateral Agent may:
(i) peaceably and without notice enter any premises of
the Borrower, take possession of any the Collateral, remove or
dispose of all or part of the Collateral on any premises or
elsewhere, or, in the case of Equipment, render it nonfunctional,
and otherwise collect, receive, appropriate and realize upon all
or any part of the Collateral, and demand, give receipt for,
settle, renew, extend, exchange, compromise, adjust, or sue for
all or any part of the Collateral, as the Collateral Agent may
determine;
(ii) require the Borrower to assemble all or any part
of the Collateral and make it available to the Collateral Agent
at any place and time designated by the Collateral Agent;
(iii) secure the appointment of a receiver of the
Collateral or any part thereof to the extent and in the manner
provided by applicable law;
(iv) withdraw (or cause to be withdrawn) any and all
funds from Deposit Accounts; and
(v) sell, resell, lease, use, assign, transfer or
otherwise dispose of any or all of the Collateral in its then
condition or following any commercially reasonable preparation or
processing (utilizing in connection therewith any of the
Borrower's assets, without charge or liability to the Collateral
Agent therefor) at public or private sale, by one or more
contracts, in one or more parcels, at the same or different
times, for cash or credit, or for future delivery without
assumption of any credit risk, all as the Collateral Agent deems
advisable; provided, however, that the Borrower shall be credited
with the net proceeds of sale only when such proceeds are finally
collected by the Collateral Agent. The Collateral Agent shall
have the right upon any such public sale, and, to the extent
permitted by law, upon any such private sale, to purchase the
whole or any part of the Collateral so sold, free of any right or
equity of redemption, which right or equity of redemption the
Borrower hereby releases, to the extent permitted by law. The
Borrower hereby agrees that the sending of notice by ordinary
mail, postage prepaid, to the address of the Borrower set forth
in the Credit Agreement, of the place and time of any public sale
or of the time after which any private sale or other intended
disposition is to be made, shall be deemed reasonable notice
thereof if such notice is sent ten days prior to the date of such
sale or other disposition or the date on or after which such sale
or other disposition may occur, provided that the Collateral
Agent may provide the Borrower shorter notice or no notice, to
the extent permitted by the UCC or other applicable law.
7.06 Proceeds Account. To the extent that any of the
Obligations may be contingent, unmatured or unliquidated
(including with respect to undrawn amounts under any letter of
credit) at such time as there may exist an Event of Default, the
Collateral Agent may, at its election, (i) retain the proceeds of
any sale, collection, disposition or other realization upon the
Collateral (or any portion thereof) in a special purpose non-
interest-bearing restricted deposit account (the "Proceeds
Account") created and maintained by the Collateral Agent for such
purpose (which shall constitute a Deposit Account included within
the Collateral hereunder) until such time as the Collateral Agent
may elect to apply such proceeds to the Obligations, and the
Borrower agrees that such retention of such proceeds by the
Collateral Agent shall not be deemed strict foreclosure with
respect thereto; (ii) in any manner elected by the Collateral
Agent, estimate the liquidated amount of any such contingent,
unmatured or unliquidated claims and apply the proceeds of the
Collateral against such amount; or (iii) otherwise proceed in any
manner permitted by applicable law. The Borrower agrees that the
Proceeds Account shall be a blocked account and that upon the
irrevocable deposit of funds into the Proceeds Account, the
Borrower shall not have any right of withdrawal with respect to
such funds. Accordingly, the Borrower irrevocably waives until
the termination of the security interests granted under this
Agreement and the right to make any withdrawal from the Proceeds
Account and the right to instruct the Collateral Agent to honor
drafts against the Proceeds Account.
7.07 Certain Waivers. The Borrower waives, to the fullest
extent permitted by law, (i) any right of redemption with respect
to the Collateral, whether before or after sale hereunder, and
all rights, if any, of marshalling of the Collateral or other
collateral or security for the Obligations; (ii) any right to
require the Collateral Agent (A) to proceed against any Person,
(B) to exhaust any other collateral or security for any of the
Obligations, (C) to pursue any remedy in the Collateral Agent's
power, or (D) to make or give any presentments, demands for
performance, notices of nonperformance, protests, notices of
protests or notices of dishonor in connection with any of the
Collateral; and (iii) all claims, damages, and demands against
the Collateral Agent arising out of the repossession, retention,
sale or application of the proceeds of any sale of the
Collateral.
ARTICLE VIII
MISCELLANEOUS
8.01 Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no
consent with respect to any departure by the Borrower or any
applicable Subsidiary therefrom, shall be effective unless the
same shall be in writing and signed by the Banks and the
Borrower, and then any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for
which given.
8.02 Notices.
(a) All notices, requests, consents, approvals,
waivers and other communications shall be in writing (including,
unless the context expressly otherwise provides, by facsimile
transmission, provided that any matter transmitted by the
Borrower by facsimile (i) shall be immediately confirmed by a
telephone call to the recipient at the number specified on
Schedule 8.02, and (ii) shall be followed promptly by delivery of
a hard copy original thereof) and mailed, faxed or delivered, to
the address or facsimile number specified for notices on Schedule
8.02; or, as directed to the Borrower or the Banks, to such other
address as shall be designated by such party in a written notice
to the other party, and as directed to any other party, at such
other address as shall be designated by such party in a written
notice to the other party.
(b) All such notices, requests and communications
shall, when transmitted by overnight delivery, or faxed, be
effective when delivered for overnight (next-day) delivery, or
transmitted in legible form by facsimile machine, respectively,
or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery;
(c) Any agreement of the Banks herein to receive
certain notices by telephone or facsimile is solely for the
convenience and at the request of the Borrower. The Banks shall
be entitled to rely on the authority of any Person purporting to
be a Person authorized by the Borrower to give such notice and
the Bank shall not have any liability to the Borrower or other
Person on account of any action taken or not taken by the Banks
in reliance upon such telephonic or facsimile notice. The
obligation of the Borrower to repay the Loans shall not be
affected in any way or to any extent by any failure by the Banks
to receive written confirmation of any telephonic or facsimile
notice or the receipt by the Banks of a confirmation which is at
variance with the terms understood by the Banks to be contained
in the telephonic or facsimile notice.
8.03 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Banks,
any right, remedy, power or privilege hereunder, shall operate as
a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other
right, remedy, power or privilege.
8.04 Costs and Expenses. Upon an Event of Default, the
Borrower shall pay on demand:
(a) all title, appraisal (including the allocated
costs of internal appraisal services), survey, audit, consulting,
search, recording, filing and similar costs, fees and expenses
incurred or sustained by the Collateral Agent or any of its
Affiliates in connection with this Agreement or the Collateral;
and
(b) all costs and expenses of the Collateral Agent and
its Affiliates and the Banks, including Attorney Costs, in
connection with the enforcement or attempted enforcement of, and
preservation of any rights or interests under, this Agreement,
including in any out-of-court workout or other refinancing or
restructuring or in any bankruptcy case, and the protection, sale
or collection of, or other realization upon, any of the
Collateral, including all expenses of taking, collecting,
holding, sorting, handling, preparing for sale, selling, or the
like, and other such expenses of sales and collections of
Collateral, and any and all losses, costs and expenses sustained
by the Collateral Agent as a result of any failure by the
Borrower to perform or observe its obligations contained herein.
(c) all costs and expenses of the Collateral Agent for
all appraisal (including the allocated cost of internal appraisal
services), audit, environmental inspection and review (including
the allocated cost of such internal services), search and filing
costs, fees and expenses, incurred or sustained by the Collateral
Agent in connection with the matters referred to hereunder.
8.05 Borrower Indemnification.
(a) Whether or not the transactions contemplated
hereby are consummated, the Borrower shall indemnify, defend and
hold the Collateral Agent and each Bank, each of its Affiliates,
and each of its respective officers, directors, employees,
counsel, agents and attorneys-in-fact (each, an "Indemnified
Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, charges, expenses and disbursements (including
Attorney Costs) of any kind or nature whatsoever which may at any
time (including at any time following repayment of the Loans) be
imposed on, incurred by or asserted against any such Person by a
third party including with respect to any investigation,
litigation or proceeding (including any Insolvency Proceeding or
appellate proceeding) related to or arising out or the use of the
proceeds thereof, whether or not any Indemnified Person is a
party thereto (all the foregoing, collectively, the "Indemnified
Liabilities"); provided, that the Borrower shall have no
obligation hereunder to any Indemnified Person with respect to
Indemnified Liabilities resulting solely from the gross
negligence or willful misconduct of such Indemnified Person. The
agreements in this Section shall survive payment of all other
Obligations.
(b) The obligations in this Section shall survive
payment of all other Obligations. At the election of any
Indemnified Person, the Borrower shall defend such Indemnified
Person using legal counsel satisfactory to such Indemnified
Person in such Person's sole discretion, at the sole cost and
expense of the Borrower. All amounts owing under this Section
shall be paid within 30 days after demand.
8.06 Payments Set Aside. To the extent that the Borrower
makes a payment to the Collateral Agent or the Banks, or the
Collateral Agent or the Banks exercise their right of set-off,
and such payment or the proceeds of such set-off or any part
thereof are subsequently invalidated, declared to be fraudulent
or preferential, set aside or required (including pursuant to any
settlement entered into by the Collateral Agent or such Bank in
its discretion) to be repaid to a trustee, receiver or any other
party, in connection with any Insolvency Proceeding or otherwise,
then (a) to the extent of such recovery the obligation or part
thereof originally intended to be satisfied shall be revived and
continued in full force and effect as if such payment had not
been made or such set-off had not occurred, and (b) each Bank
severally agrees to pay to the Collateral Agent upon demand its
pro rata share of any amount so recovered from or repaid by the
Collateral Agent.
8.07 Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns,
except that the Borrower may not assign or transfer any of its
rights or obligations under this Agreement without the prior
written consent of the Bank.
8.08 Set-off. In addition to any rights and remedies of
the Banks provided by law, if an Event of Default exists or the
Loans have been accelerated, each Bank is authorized at any time
and from time to time, without prior notice to the Borrower, any
such notice being waived by the Borrower to the fullest extent
permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any
time held by, and other indebtedness at any time owing by, such
Bank to or for the credit or the account of the Borrower against
any and all Obligations owing to such Bank, now or hereafter
existing, irrespective of whether or not such Bank shall have
made demand under this Agreement or any Loan Document and
although such Obligations may be contingent or unmatured. If any
Bank, by exercising any right of set-off or any Bank receives
payment of principal or interest after an Event of Default has
occurred, such Bank shall immediately give written notice thereof
to the Collateral Agent and shall hold such payment for the
benefit of the Collateral Agent and shall remit any amount in
excess of such Bank's pro rata share, as determined from time to
time by the Collateral Agent, to the order of the Collateral
Agent.
8.09 Counterparts. This Agreement may be executed in any
number of separate counterparts, each of which, when so executed,
shall be deemed an original, and all of said counterparts taken
together shall be deemed to constitute but one and the same
instrument.
8.10 Severability. The illegality or unenforceability of
any provision of this Agreement or any instrument or agreement
required hereunder shall not in any way affect or impair the
legality or enforceability of the remaining provisions of this
Agreement or any instrument or agreement required hereunder.
8.11 No Third Parties Benefited. This Agreement is made
and entered into for the sole protection and legal benefit of the
Borrower, the Collateral Agent, the Banks, Affiliates thereof,
and their permitted successors and assigns, and no other Person
shall be a direct or indirect legal beneficiary of, or have any
direct or indirect cause of action or claim in connection with,
this Agreement or any of the other Loan Documents.
8.12 Governing Law and Jurisdiction.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF ILLINOIS; PROVIDED
THAT THE BANK SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE
COURTS OF THE STATE OF ILLINOIS OR OF THE UNITED STATES FOR THE
NORTHERN DISTRICT OF ILLINOIS, AND BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, EACH OF THE Borrower AND THE BANK CONSENTS, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE Borrower AND THE BANK
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS,
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION
OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT
OR ANY DOCUMENT RELATED HERETO. THE Borrower AND THE BANK EACH
WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER
PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
ILLINOIS LAW.
8.13 Waiver of Jury Trial. THE Borrower AND THE BANK EACH
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR
OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES
AGAINST ANY OTHER PARTY OR ANY AFFILIATE OF THE BANK, PARTICIPANT
OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS, OR OTHERWISE. THE BORROWER AND THE BANK EACH AGREE THAT
ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL
WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES
FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS
WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN
PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR
THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS.
8.14 Entire Agreement. This Agreement, together with the
other Loan Documents, embodies the entire agreement and
understanding among the Borrower and the Bank and supersedes all
prior or contemporaneous agreements and understandings of such
Persons, verbal or written, relating to the subject matter hereof
and thereof. In the event of a conflict between the provisions
of any Bank Agreement and this Agreement, the provisions of this
Agreement shall govern.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered in Chicago by their
proper and duly authorized officers as of the day and year first
above written.
Matlack DE, INC.
By:
Name:
Title:
By:
Name:
Title:
Matlack, Inc.
By:
Name:
Title:
Safeway Chemical Transportation, Inc.
By:
Name:
Title:
Brite-Sol Services, Inc.
By:
Name:
Title:
BANK OF AMERICA ILLINOIS, as
Collateral Agent
By:
Name:
Title: Vice President
BANK OF AMERICA ILLINOIS, as Bank
By:
Name:
Title: Vice President
First Union National Bank, as Bank
By:
Name:
Title: Vice President
<PAGE>
SCHEDULE 8.02
OFFSHORE AND DOMESTIC LENDING OFFICES,
ADDRESSES FOR NOTICES
BANK OF AMERICA ILLINOIS
Domestic and Offshore Lending Office:
231 S. LaSalle
Chicago, Illinois 60697
Attention:
Notices (other than Borrowing notices and Notices of
Conversion/Continuation):
[Address]
<PAGE>
SCHEDULE 3.05
LITIGATION
[None]
<PAGE>
SCHEDULE 8.02
OFFSHORE AND DOMESTIC LENDING OFFICES,
ADDRESSES FOR NOTICES
BANK OF AMERICA ILLINOIS
Domestic and Offshore Lending Office:
231 S. LaSalle
Chicago, Illinois 60697
Attention:
Notices (other than Borrowing notices and Notices of
Conversion/Continuation):
[Address]
<PAGE>
SCHEDULE 3.11
CERTAIN LIABILITIES
[None]
<PAGE>
SCHEDULE 3.12
ENVIRONMENTAL MATTERS
[None]
<PAGE>
SCHEDULE 3.15
SUBSIDIARIES AND MINORITY INTERESTS
<PAGE>
SCHEDULE 3.16
INSURANCE MATTERS
[None]
<PAGE>
SCHEDULE 5.01
LIENS
[None]
<PAGE>
MASTER CREDIT AGREEMENT
Dated as of March 27, 1996
among
Matlack DE, Inc.,
Matlack, Inc.,
Safeway Chemical Transportation, Inc.,
Brite-Sol Services, Inc.,
and
Bank of America Illinois, as Collateral Agent,
Bank of America Illinois, as Bank,
and
First Union National Bank, as Bank.
<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS. . . . . . . . . . . . . 1
1.01 Certain Defined Terms. . . . . . . . . . . . . . . . . . 1
1.02 Other Interpretive Provisions. . . . . . . . . . . . . . 14
1.03 Accounting Principles. . . . . . . . . . . . . . . . . . 15
ARTICLE II
SECURITY. . . . . . . . . . . . . . 15
2.01 Security . . . . . . . . . . . . . . . . . . . . . . . . 15
2.02 Conditions Subsequent. . . . . . . . . . . . . . . . . . 16
ARTICLE III
REPRESENTATIONS AND WARRANTIES . . . . . . . . 17
3.01 Corporate Existence and Power. . . . . . . . . . . . . . 17
3.02 Corporate Authorization; No Contravention. . . . . . . . 17
3.03 Governmental Authorization . . . . . . . . . . . . . . . 18
3.04 Binding Effect . . . . . . . . . . . . . . . . . . . . . 18
3.05 Litigation . . . . . . . . . . . . . . . . . . . . . . . 18
3.06 No Default . . . . . . . . . . . . . . . . . . . . . . . 19
3.07 ERISA Compliance . . . . . . . . . . . . . . . . . . . . 19
3.08 Use of Proceeds; Margin Regulations. . . . . . . . . . . 19
3.09 Title to Properties. . . . . . . . . . . . . . . . . . . 19
3.10 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.11 Financial Condition. . . . . . . . . . . . . . . . . . . 19
3.12 Environmental Matters. . . . . . . . . . . . . . . . . . 20
3.13 Regulated Entities . . . . . . . . . . . . . . . . . . . 20
3.14 No Burdensome Restrictions . . . . . . . . . . . . . . . 20
3.15 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 20
3.16 Insurance. . . . . . . . . . . . . . . . . . . . . . . . 21
3.17 Solvency . . . . . . . . . . . . . . . . . . . . . . . . 21
3.18 Borrowing Base Availability. . . . . . . . . . . . . . . 21
ARTICLE IV
AFFIRMATIVE COVENANTS . . . . . . . . . . 21
4.01 Financial Statements . . . . . . . . . . . . . . . . . . 21
4.02 Certificates; Other Information. . . . . . . . . . . . . 22
4.03 Notices. . . . . . . . . . . . . . . . . . . . . . . . . 22
4.04 Preservation of Corporate Existence, Etc . . . . . . . . 23
4.05 Maintenance of Property. . . . . . . . . . . . . . . . . 24
4.06 Insurance. . . . . . . . . . . . . . . . . . . . . . . . 24
4.07 Payment of Obligations . . . . . . . . . . . . . . . . . 24
4.08 Compliance with Laws . . . . . . . . . . . . . . . . . . 24
4.09 Compliance with ERISA. . . . . . . . . . . . . . . . . . 24
4.10 Inspection of Property and Books and Records . . . . . . 25
4.11 Environmental Laws . . . . . . . . . . . . . . . . . . . 25
4.12 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . 25
4.13 Further Assurances . . . . . . . . . . . . . . . . . . . 25
4.14 Minimum Net Worth. . . . . . . . . . . . . . . . . . . . 26
4.15 Acquisitions . . . . . . . . . . . . . . . . . . . . . . 26
4.16 Significant Subsidiaries . . . . . . . . . . . . . . . . 26
ARTICLE V
NEGATIVE COVENANTS . . . . . . . . . . . 26
5.01 Limitation on Liens. . . . . . . . . . . . . . . . . . . 26
5.02 Disposition of Assets. . . . . . . . . . . . . . . . . . 28
5.03 Consolidations and Mergers . . . . . . . . . . . . . . . 28
5.04 Investments. . . . . . . . . . . . . . . . . . . . . . . 28
5.05 Guaranties, Loans or Advances. . . . . . . . . . . . . . 28
5.06 Transactions with Affiliates . . . . . . . . . . . . . . 29
5.07 Restricted Payments. . . . . . . . . . . . . . . . . . . 29
5.08 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.09 Change in Business . . . . . . . . . . . . . . . . . . . 30
5.10 Fixed Charge Coverage Ratio. . . . . . . . . . . . . . . 30
5.11 Leverage Ratio . . . . . . . . . . . . . . . . . . . . . 30
5.12 Borrowing Base Overage . . . . . . . . . . . . . . . . . 30
ARTICLE VI
COLLATERAL AGENT. . . . . . . . . . . . 30
6.01 Appointment and Authorization; "Collateral Agent". . . . 30
6.02 Delegation of Duties . . . . . . . . . . . . . . . . . . 30
6.03 Liability of Collateral Agent. . . . . . . . . . . . . . 31
6.04 Reliance by Collateral Agent . . . . . . . . . . . . . . 31
6.05 Notice of Default. . . . . . . . . . . . . . . . . . . . 32
6.06 Credit Decision. . . . . . . . . . . . . . . . . . . . . 32
6.07 Indemnification of Collateral Agent. . . . . . . . . . . 33
6.08 Collateral Agent in Individual Capacity. . . . . . . . . 33
6.09 Successor Collateral Agent . . . . . . . . . . . . . . . 33
6.10 Collateral Matters . . . . . . . . . . . . . . . . . . . 34
ARTICLE VII
EVENTS OF DEFAULT . . . . . . . . . . . 34
7.01 Event of Default . . . . . . . . . . . . . . . . . . . . 35
(a) Non-Payment . . . . . . . . . . . . . . . . . . . . 35
(b) Representation or Warranty. . . . . . . . . . . . . 35
(c) Other Defaults. . . . . . . . . . . . . . . . . . . 35
(d) Cross-Default . . . . . . . . . . . . . . . . . . . 35
(e) Insolvency; Voluntary Proceedings . . . . . . . . . 35
(f) Involuntary Proceedings . . . . . . . . . . . . . . 36
(g) ERISA . . . . . . . . . . . . . . . . . . . . . . . 36
(h) Monetary Judgments. . . . . . . . . . . . . . . . . 36
(i) Non-Monetary Judgments. . . . . . . . . . . . . . . 36
(j) Change of Control . . . . . . . . . . . . . . . . . 37
(k) Adverse Change. . . . . . . . . . . . . . . . . . . 37
7.02 Remedies . . . . . . . . . . . . . . . . . . . . . . . . 37
7.03 Rights Not Exclusive . . . . . . . . . . . . . . . . . . 37
7.04 Application of Proceeds. . . . . . . . . . . . . . . . . 37
7.05 Remedies . . . . . . . . . . . . . . . . . . . . . . . . 38
7.06 Proceeds Account . . . . . . . . . . . . . . . . . . . . 39
7.07 Certain Waivers. . . . . . . . . . . . . . . . . . . . . 39
ARTICLE VIII
MISCELLANEOUS
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.01 Amendments and Waivers . . . . . . . . . . . . . . . . . 40
8.02 Notices. . . . . . . . . . . . . . . . . . . . . . . . . 40
8.03 No Waiver; Cumulative Remedies . . . . . . . . . . . . . 41
8.04 Costs and Expenses . . . . . . . . . . . . . . . . . . . 41
8.05 Borrower Indemnification . . . . . . . . . . . . . . . . 41
8.06 Payments Set Aside. . . . . . . . . . . . . . . . . . . 42
8.07 Successors and Assigns . . . . . . . . . . . . . . . . . 42
8.08 Set-off. . . . . . . . . . . . . . . . . . . . . . . . . 42
8.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . 43
8.10 Severability . . . . . . . . . . . . . . . . . . . . . . 43
8.11 No Third Parties Benefited . . . . . . . . . . . . . . . 43
8.12 Governing Law and Jurisdiction . . . . . . . . . . . . . 43
8.13 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . 44
8.14 Entire Agreement . . . . . . . . . . . . . . . . . . . . 44
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SCHEDULES
Schedule 3.05 Litigation
Schedule 3.11 Certain Liabilities
Schedule 3.12 Environmental Matters
Schedule 3.15 Subsidiaries and Minority Interests
Schedule 3.16 Insurance Matters
Schedule 5.01 Liens
Schedule 8.02 Lending Office; Addresses for Notices
EXHIBITS
Exhibit A Form of Borrowing Base Certificate
Exhibit B Form of Compliance Certificate
Exhibit C Form of Security Agreements