Don D. Mishler
Senior Vice President
(215) 786-4132
November 22, 2000
Matlack Leasing Corporation
One Rollins Plaza
P.O. Box 8774
Wilmington, DE 19899
Attention: John Jenchura, Esquire
Matlack Leasing, L.L.C.
c/o Harry J. DiDonato, Esquire
MacElree, Harvey, Gallagher,
Featherman & Sebastian, Ltd.
17 W. Miner Street
P.O. Box 660
West Chester, PA 19381-0660
RE: Purchase of Assets Agreement between Matlack
Leasing Corporation ("MLC") and Matlack Leasing,
L.L.C. and Matlack, Inc. ("MI") (the "Agreement")
Gentlemen:
Pursuant to, among other things, that certain Amended
and Restated Security Agreement dated as of October 9, 2000
by, among others, MLC and MI in favor of First Union
National Bank, as agent (the "Agent"), together with certain
UCC-1 financing statements and amendments thereto and
pursuant to properly recorded vehicle titles, the Agent has
a properly perfected security interest in certain of the
Assets (as such term is defined in the Agreement) being sold
to Matlack Leasing, L.L.C. (the "Buyer"). MLC and MI have
requested the Agent to consent to the sale of the Assets
(the "Sale") free and clear of the security interests of the
Agent.
The Agent consents to the Sale and releases its liens
on and security interests in the Assets; provided, however,
that the foregoing release by the Agent of its liens on and
security interests in the Assets shall not be effective
until receipt by the Agent of the following: (i) an amount
equal to $4,435,996, which constitutes 95% of the
immediately available net proceeds of the Sale (the "Bank
Group Share"); and (ii) $300,000 (the "Sales Tax Escrow
Funds") to be placed into an escrow account at the Agent
(the "Agent Sales Tax Escrow Account") for payment of sales
tax liability, if any, incurred by MLC in connection with
the Sale; and (iii) $4,400,000 (the "Title Escrow Funds") to
be placed in escrow accounts at the Agent and disbursed in
accordance with the terms and conditions of that certain
Escrow Agreement dated the date hereof by and between, among
others, MLC, MI, LLC, Summit (hereinafter defined) and the
Agent, as escrow agent (the "Escrow Agreement"). The Bank
Group Share and the Sales Tax Escrow Funds and the Title
Escrow Funds must be paid in immediately available funds by
wire transfer as follows: First Union National Bank,
ABA#053000219, Attention Agency Services, Account #
5000000016866, Credit Account Name: Matlack. The Bank Group
Share of $4,435,996 will be applied to reduce amounts
outstanding under the Credit Agreement (hereinafter
defined). The Sales Tax Escrow funds will be deposited into
the First Union National Bank/Matlack Leasing Sales Tax
Escrow, Account #2000003273379. The Title Escrow funds will
deposited into two accounts as follows: (i) $4,180,000 into
the First Union National/Matlack Leasing Equipment Sales
Proceeds #1, Account #2000003273366; and (ii) $220,000 into
the First Union National Bank/Matlack Leasing Equipment
Sales Proceeds #2, Account #2000003273382.
As of the writing of this letter, it is the Agent's
understanding that the purchase price of the Assets is
$12,000,000, and that the allocation thereof is as follows:
(i) $2,255,531 will be paid to Fleet National Bank (a
portion of which is to be held in escrow by Fleet pending
delivery of certificates of title by Fleet) in consideration
of the release by Fleet National Bank of liens in favor of
Fleet National Bank on certain equipment owned by MLC; (ii)
the Buyer is receiving a $125,000 credit for damage to
certain of the Sale Assets; (iii) $250,000 is being placed
into an escrow account (the "Indemnification Escrowed
Proceeds") pursuant to the Agreement; (iv) $300,000
constituting the Sales Tax Escrow Funds is being deposited
into the Agent Sales Tax Escrow Account; and (v) $4,400,000
constituting the Title Escrow Funds is being deposited into
escrow accounts with the Agent in accordance with the terms
and conditions of the Escrow Agreement.
Therefore, the Agent will require receipt in
immediately available funds of $4,435,996 plus the Sales Tax
Escrow Funds plus the Title Escrow Funds prior to the
release of its liens and security interests becoming
effective. If the purchase price is greater than
$12,000,000, or if the amounts
due to Fleet National Bank or the amounts being credited to
the Buyer or escrowed are less than as set forth herein,
then the Agent will require receipt from MLC of an amount
commensurate with any such changes. In addition, upon
receipt by the Agent in immediately available funds of
amounts equal to the Bank Group Share plus the Sales Tax
Escrow Funds plus the Title Escrow Funds, the Agent will
deliver to Summit Business Capital Corp. ("Summit"") the
following items: (i) all Customer Leases (as such term is
defined in the Agreement) in the possession of the Agent or
its counsel; (ii) to the extent in the possession of the
Agent or its counsel, all original titles to any of the
Equipment (as such term is defined in the Agreement)
together with any endorsements or other documents necessary
to effectuate a release by the Agent of its liens on such
titles; and (iii) a UCC-3 release indicating that the Agent
releases its liens on and security interests in the Assets
being conveyed to the Buyer by MLC under the Agreement.
With respect to titles to Equipment which have been
delivered by MLC to the Agent or its counsel and which are
not in the possession of the Agent or its counsel because
such titles are currently being processed by the appropriate
state agencies to reflect the Agent's lien thereon
(collectively, the "In-Process Titles"), the Agent agrees,
promptly after receipt back from such state agencies of any
In-Process Titles, to deliver such In-Process Titles to
Summit together with any endorsements or other documents
necessary to effectuate a release by the Agent of its liens,
if any, on such In-Process Titles. The Agent hereby assigns
any and all of its rights and interests in the In-Process
Titles to Summit Business Capital Corp.; provided, however,
that the foregoing assignment is without representation or
warranty of any kind by the Agent or any members of the bank
group with respect to such rights and interests and provided
further that such assignment is without recourse of any kind
against the Agent or any member of the bank group by Summit
Business Capital Corp, MLC, MI or any other person or
entity. The foregoing assignment by the Agent to Summit
shall cease to be effective and enforceable with respect to
any In-Process Title automatically and immediately upon
delivery by the Agent to Summit of such In-Process Title
with any endorsement or other documents necessary to
effectuate a release by the Agent of its lien, if any, on
such In-Process Title. In addition, Summit, on behalf of
itself and its successors and assigns, agrees that any
claims, rights or remedies it may have which are in any way
related to the In-Process Titles and the assignment by the
Agent to Summit of its rights and interests therein, shall
not be enforceable against MLC (except to the extent
permitted under the Agreement), MI or any other Borrower, as
such term is defined in the Credit Agreement (hereinafter
defined). Summit, on behalf of itself and any successors or
assigns, shall indemnify, defend and hold harmless the Agent
and its successors and assigns and each of the members of
the bank group and their successors or assigns with respect
to any and all claims, expenses, demands, losses, costs,
fines or liabilities of any kind, including reasonable
attorneys' fees and costs, arising from or in any way
related to any acts or conduct of Summit or its successors
or assigns pursuant to or related to the assignment by the
Agent to Summit hereunder.
MLC hereby agrees that, immediately upon release to
MLC, MI or any affiliate of MLC or MI of any of the
Indemnification Escrowed Proceeds, 95% of the amount of such
Indemnification Escrowed Proceeds released to MLC, MI or
their affiliate shall be paid to the Agent. MLC, MI and
each of their affiliates which have executed this letter
below hereby acknowledge and agree that a failure by MLC or
MI or any such affiliate to pay to the Agent 95% of that
portion of the Indemnification Escrowed Proceeds which are
released to MLC or MI or an affiliate of MLC is an immediate
and automatic Event of Default under that certain Credit
Agreement dated as of August 19, 1998 by and between, among
others, MLC, MI and the Agent, as such Credit Agreement has
been amended from time to time through the date hereof and
as such Credit Agreement may be further amended or modified
subsequent to the date hereof (the "Credit Agreement").
MLC, MI and the Agent also hereby agree that the Sales
Tax Escrow Funds shall remain in the Agent Sales Tax Escrow
Account until the first of the following to occur: (i) May
15, 2001 (the "Sales Tax Escrow Termination Date"); (ii) the
date upon which MLC or an affiliate of MLC pays any sales
tax liability directly attributable to the Sale (the "Sales
Tax Payment Date"); or (iii) the date upon which all amounts
outstanding under the Credit Agreement become due and owing
in full to the Agent and the other banks thereunder (the
"Maturity Date"). Upon the occurrence of the Sales Tax
Escrow Termination Date or the Sales Tax Payment Date, the
Agent shall immediately receive 95% of the Sales Tax Escrow
Funds remaining in the Agent Sales Tax Escrow Account after
payment of any sales tax liability. Upon the occurrence of
the Maturity Date, the Agent shall immediately receive all
Sales Tax Escrow Funds.
Each of the parties hereto agree that the Title Escrow
Funds shall be disbursed in accordance with the terms and
conditions contained in the Escrow Agreement.
This letter agreement may be executed in any number of
counterparts and all such counterparts shall together
constitute one and the same letter agreement.
FIRST UNION NATIONAL BANK, as agent
/s/ Don D. Mishler
Don D. Mishler
Senior Vice President
ACKNOWLEDGED AND AGREED TO
this 16th day of November, 2000 by:
MATLACK (DE), INC.
By: John R. Jenchura
Title: Vice President
MATLACK, INC., for itself and as successor by merger to
Specialized Dedicated Fleets, Inc. and Brite-Sol Services,
Inc.
By: John R. Jenchura
Title: Vice President
MATLACK LEASING CORPORATION
By: John R. Jenchura
Title: Vice President
MATLACK PROPERTIES, INC., formerly known as Super Service,
Inc.
By: John R. Jenchura
Title: Vice President
MATLACK SYSTEMS, INC.
By: John R. Jenchura
Title: Vice President
SUMMIT BUSINESS CAPITAL CORP.
By: Richard Stern
Title: Vic President
