<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 3, 1998
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
MTL INC.
AND THE GUARANTORS IDENTIFIED IN FOOTNOTE (1) BELOW
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 4213 59-3239073
(STATE OF OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION INDUSTRIAL IDENTIFICATION NO.)
OF INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
3108 CENTRAL DRIVE
PLANT CITY, FLORIDA 33567
(813) 754-4725
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
ROBERT KASAK
GENERAL COUNSEL
3108 CENTRAL DRIVE
PLANT CITY, FLORIDA 33567
(813) 754-4725
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
---------------
COPIES TO:
MORTON A. PIERCE
DOUGLAS L. GETTER
DEWEY BALLANTINE LLP
1301 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
(212) 259-8000
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after this Registration Statement becomes
effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
- -------
(1) The following domestic direct or indirect wholly owned subsidiaries of MTL
Inc. are Guarantors of the Notes and are Co-Registrants, each of which is
incorporated in the jurisdiction and has the I.R.S. Employer Identification
Number indicated: Montgomery Tank Lines, Inc., an Illinois corporation (36-
2590063); Quality Carriers, Inc., a Virginia corporation (54-0643157);
Lakeshore Leasing, Inc., an Indiana corporation (36-2950680); Mexico
Investments, Inc., a Florida corporation (59-3433851); MTL of Nevada, a Nevada
corporation (88-0350589); Chemical Leaman Corporation, a Pennsylvania
corporation (23-2021808); Chemical Properties, Inc., a Pennsylvania
corporation (23-1470735); Capacity Management Systems, Inc., a Pennsylvania
corporation (23-1423460); Core Logistics Management, Inc., a Delaware
corporation (23-2021808); EnviroPower, Inc., a Delaware corporation
(23-2735584); Pickering Way Funding Corp., a Delaware corporation
(23-2723269); Power Purchasing, Inc., a Delaware corporation (23-2611487);
American Transinsurance Group, Inc., a Delaware corporation (23-2613934);
Chemical Leaman Tank Lines, Inc., a Delaware corporation (23-1316982); Fleet
Transport Company, Inc., a Delaware corporation (23-2848147); Quala Systems,
Inc., a Delaware corporation (23-2343087); CLT Services, Inc., a Delaware
corporation (51-0338487); Leaman Logistics, Inc., a Delaware corporation (23-
2905374); Transplastics, Inc., a Delaware corporation (23-2932792); and QSI
Services, Inc., a Delaware corporation (51-0349728).
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER NOTE OFFERING PRICE(1) REGISTRATION FEE
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10% Series B Senior
Subordinated Notes due
2006.................. $100,000,000 100% $100,000,000 $27,800
- -------------------------------------------------------------------------------------------
Guarantee of 10% Series
B Senior Subordinated
Notes due 2006........ $100,000,000 (2) (2) (2)
- -------------------------------------------------------------------------------------------
Series B Floating
Interest Rate
Subordinated Term
Securities due 2006... $ 40,000,000 100% $ 40,000,000 $11,120
- -------------------------------------------------------------------------------------------
Guarantee of Series B
Floating Interest Rate
Subordinated Term
Securities due 2006... $ 40,000,000 (2) (2) (2)
- -------------------------------------------------------------------------------------------
Total.................. $140,000,000 100% $140,000,000 $38,920
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(f)(2).
(2) No additional consideration for the Guarantees of the 10% Series B Senior
Subordinated Notes and the Series B Floating Interest Rate Terms
Securities will be furnished. Pursuant to Rule 457(n), no separate fee is
payable with respect to such Guarantees.
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE TIME UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED NOVEMBER 3, 1998
PROSPECTUS
[LOGO]
MTL INC
OFFER TO EXCHANGE
10% SERIES B SENIOR SUBORDINATED NOTES DUE 2006
SERIES B FLOATING INTEREST RATE SUBORDINATED TERM SECURITIES DUE 2006
(FIRSTS SM*)
FOR ANY AND ALL OUTSTANDING
10% SENIOR SUBORDINATED NOTES DUE 2006
FLOATING INTEREST RATE SUBORDINATED TERM SECURITIES DUE 2006 (FIRSTS SM*)
($140,000,000 AGGREGATE PRINCIPAL AMOUNT OUTSTANDING)
Material Terms of the Exchange Offer
. Expires 5:00 p.m., . The exchange of notes
New York City time, should not be a
on , 1999, taxable exchange for
unless extended U.S. federal income
tax purposes
. All outstanding notes
that are validly . We will not receive
tendered and not any proceeds from the
validly withdrawn Exchange Offer
will be exchanged for
an equal principal . The terms of the
amount of a new notes to be issued
series of notes which are substantially
are registered under identical to the
the Securities Act of outstanding notes,
1933 except for certain
transfer restrictions
and registration
rights relating to
the outstanding notes
. Not subject to any
condition other than
that the Exchange
Offer not violate
applicable law or any . Outstanding notes may
applicable be tendered only in
interpretation of the denominations of
Staff of the $1,000 and multiples
Securities and of $1,000
Exchange Commission
and certain other . Affiliates of our
customary conditions company may not
participate in the
. Tenders of Exchange Offer
outstanding notes may
be withdrawn at any
time prior to the
expiration of the
Exchange Offer
PLEASE REFER TO "RISK FACTORS" BEGINNING ON PAGE 23
OF THIS DOCUMENT
FOR CERTAIN IMPORTANT INFORMATION.
THE COMPANY IS NOT MAKING THIS EXCHANGE OFFER IN ANY STATE WHERE THIS EXCHANGE
OFFER IS NOT PERMITTED.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THE NOTES TO BE ISSUED IN THE EXCHANGE OFFER, NOR HAVE
ANY OF THESE ORGANIZATIONS DETERMINED THAT THE PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- -----
* FIRSTS SM is a service mark of BT Alex. Brown Incorporated.
-----------
The date of this Prospectus is , 1998.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Where You Can Get More Information....................................... ii
Forward-Looking Statements............................................... ii
Prospectus Summary....................................................... 1
Summary Historical Consolidated Financial Information.................... 19
Risk Factors............................................................. 23
The CLC Merger........................................................... 30
Use of Proceeds.......................................................... 31
Pro Forma Capitalization................................................. 31
Unaudited Pro Forma Condensed Consolidated Financial Information......... 32
Selected Historical Consolidated Financial Information................... 41
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 43
Business................................................................. 52
Management............................................................... 67
Principal Stockholders................................................... 71
Certain Relationships and Related Transactions........................... 72
Description of Capital Stock............................................. 73
Description of the New Credit Agreement.................................. 79
The Exchange Offer....................................................... 81
Description of Notes..................................................... 90
Book-Entry; Delivery and Form............................................ 120
Certain Federal Income Tax Considerations................................ 122
Plan of Distribution..................................................... 126
Legal Matters............................................................ 126
Experts.................................................................. 126
Index to Financial Statements............................................ F-1
</TABLE>
i
<PAGE>
WHERE YOU CAN GET MORE INFORMATION
We have filed with the Securities and Exchange Commission (the "Commission")
a Registration Statement under the Securities Act of 1933, as amended (the
"Securities Act"), covering the notes to be issued in the Exchange Offer. As
permitted by the Commission rules, this Prospectus omits certain information
included in the Registration Statement. For further information pertaining to
the notes, reference is made to the Registration Statement, including its
exhibits. Any statement made in this Prospectus concerning the contents of any
contract, agreement or other document is not necessarily complete. If we have
filed any such contract, agreement or other document as an exhibit to the
Registration Statement, you should read the exhibit for a more complete
understanding of the document or matter involved. Each statement regarding a
contract, agreement or other document is qualified in its entirety by
reference to the actual document. You may read and copy any of the information
we file with the Commission at the Commission's public reference rooms at Room
1024, 450 Fifth Street, N.W., Washington, D.C., at 7 World Trade Center, 13th
Floor, New York, New York 10048 and at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of filed documents
can also be obtained by mail from the Public Reference Section of the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. You may call the Commission at 1-800-SEC-0330 for further
information on the operation of the public reference rooms. Filed documents
are also available to the public at the Commission's web site at
http://www.sec.gov.
Following the Exchange Offer, we will be required to file annual, quarterly
and special reports, proxy statements and other information with the
Commission under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Our obligation to file periodic reports with the Commission
will be suspended if the notes issued in the Exchange Offer are held of record
by fewer than 300 holders as of the beginning of any year. However, to the
extent permitted, the indenture governing the notes requires us to file with
the Commission financial and other information for public availability. In
addition, the indenture governing the notes requires us to deliver to you
copies of all reports that we file with the Commission without any cost to
you. We will also furnish such other reports as we may determine or as the law
requires.
FORWARD-LOOKING STATEMENTS
Some of the statements contained in this Prospectus discuss future
expectations, contain projections or results of operation or financial
condition or state other "forward-looking" information. Those statements are
subject to known and unknown risks, uncertainties and other factors that could
cause the actual results to differ materially from those contemplated by the
statements. The forward-looking information is based on various factors and
was derived using numerous assumptions. Important factors that could cause our
actual results to be materially different from the forward-looking statements
are disclosed under the heading "Risk Factors" and throughout this Prospectus.
ii
<PAGE>
PROSPECTUS SUMMARY
The following summary highlights selected information from this Prospectus
and may not contain all of the information that is important to you. This
Prospectus includes the specific terms of the notes we are offering, as well as
information regarding our business, certain recent transactions entered into by
us and detailed financial data. We encourage you to read this Prospectus in its
entirety. All tank truck industry data included in this Prospectus has been
obtained with permission from Mercer Management Consulting, Inc.
THE EXCHANGE OFFER
On June 9, 1998, MTL Inc. completed the private offering of $100,000,000
principal amount of 10% Senior Subordinated Notes due 2006 and $40,000,000
principal amount of Floating Interest Rate Subordinated Term Securities due
2006. These notes were sold to certain initial purchasers identified in this
Prospectus. The notes are guaranteed by substantially all of the subsidiaries
of MTL Inc.
MTL Inc. and the guarantors of the notes entered into a Registration Rights
Agreement with the initial purchasers in the private offering in which we
agreed, among other things, to deliver to you this Prospectus and to complete
the Exchange Offer on or prior to February 4, 1999. As a holder of such
outstanding notes, you are entitled to exchange in the Exchange Offer your
notes for a new series of notes which have been registered under the Securities
Act of 1933, as amended (the "Securities Act") with substantially identical
terms. If the Exchange Offer is not completed on or prior to February 4, 1999,
the interest rate on the notes will be increased by .25% per year for the first
90 days immediately following such date, and increasing by an additional .25%
per year at the beginning of each subsequent 90-day period up to a maximum of
1.0% per year. You should read the discussion under the heading "Summary of
Terms of the Exchange Notes" and "Description of Notes" for further information
regarding the registered notes.
We believe that the notes issued in the Exchange Offer may be resold by you
without compliance with the registration and prospectus delivery provisions of
the Securities Act, subject to certain conditions. Following the Exchange
Offer, any notes held by you that are not exchanged in the Exchange Offer will
continue to be subject to the existing restrictions on transfer on the notes
and, except in certain circumstances, we will have no further obligation to you
to provide for registration under the Securities Act of transfers of
outstanding notes held by you. You should read the discussion under the
headings "Summary of the Exchange Offer" and "The Exchange Offer" for further
information regarding the Exchange Offer and the resale of notes.
ABOUT THE COMPANY
We are the largest bulk tank truck carrier in the United States based on
revenues and fleet size. Through a network of 189 terminals located across the
United States and Canada, we transport a broad range of chemical products and
provide our customers with supplementary
<PAGE>
transportation services such as dry bulk hauling, transloading, tank cleaning,
third-party logistics, intermodal services and leasing. Many of the chemical
and chemical-related consumer products that we transport require specialized
trailers and experienced personnel for safe, reliable and efficient handling.
We are a core carrier for many of the Fortune 500 companies who are engaged in
chemical processing, including The Procter & Gamble Company, Union Carbide
Corporation, Dow Chemical North America, Allied Signal, Inc., DuPont de Nemours
Co. and PPG Industries.
In addition to our own fleet operations, we use affiliates (i.e., independent
companies which, through comprehensive contracts with us, operate their
terminals exclusively for us) and owner-operators (i.e., independent
contractors who, through contracts with us, supply one or more tractors and
drivers for our or our affiliates' use). We believe that the use of affiliates
and owner-operators results in a more flexible cost structure, increases our
asset utilization and increases our return on invested capital.
On June 9, 1998, we were merged with a company controlled by Apollo
Management, L.P. and certain related companies. On August 28, 1998, we acquired
Chemical Leaman Corporation ("CLC"). Founded in 1913, CLC was, prior to its
acquisition by us, the largest bulk tank truck carrier in the United States
based on revenues. The combination of CLC and our company has united two of the
leading bulk transportation service providers under one holding company and has
enabled us, among other things, to expand the variety of transportation-related
services that we provide, increase our terminal network, expand our geographic
coverage and increase our customer base. All of these benefits create the
potential for additional revenue growth and cost saving opportunities. Our
revenue growth is expected to be generated through (1) our fleet of
approximately 7,900 tank trailers, which we believe is the largest fleet of
tank trailers in North America, (2) our network of 189 terminals located across
the United States and Canada and (3) the provision of a wide variety of
transportation-related services.
Our pro forma revenues were $621.8 million for the fiscal year ended December
31, 1997 and $331.7 million for the six months ended June 30, 1998. Our pro
forma financial information gives effect to both of the transactions described
above as if they both had occurred on January 1, 1997.
THE INDUSTRY
The tank truck carrier market, which involves the provision of transportation
services for a wide variety of manufacturing and industrial companies, is
estimated to be approximately $9.0 billion. We compete in the $6.0 billion for-
hire tank truck segment, which excludes shipper-owned private fleets.
Substantially all of the for-hire tank truck segment involves the
transportation of liquid and dry bulk chemicals including resins, latex, acids,
alcohol, solvents, corrosives as well as petroleum and petroleum-related
products. We believe that the specialized nature of these products and the high
service levels required for their transportation
2
<PAGE>
makes the tank truck carrier market less sensitive to pricing pressures than
the dry van segment of the trucking industry, which is considered more of a
commodity-type service.
The for-hire tank truck industry is expected to continue to grow primarily as
a result of continued growth of chemical shipments as well as increased
outsourcing of transportation services by chemical companies. We believe that
the increasing desire of chemical companies to focus their financial resources
on product development and marketing has made it increasingly difficult for
them to justify operating a private transportation fleet and has resulted in an
increasing reliance on third-party carriers, such as our company. In addition,
we believe that chemical companies are seeking a limited number of large
national core carriers as a result of their increasing focus on safety and
quality, the need for sophisticated information systems and the significant
capital requirements for the acquisition and maintenance of a fleet of trailers
and tractors. For these reasons, we believe that large carriers, such as our
company, will continue to grow at a faster rate than smaller carriers.
The for-hire tank truck industry is highly fragmented and consists of in
excess of 200 tank truck carriers, with the top five carriers representing $1.4
billion or approximately 23.8% of 1997 for-hire tank truck industry revenues.
Recently, however, the industry has begun to undergo consolidation. We believe
that such consolidation is primarily the result of economies of scale in the
provision of services to a larger customer base, cost-effective purchasing of
equipment, supplies and services by larger companies and the decision by many
smaller, capital constrained operators to sell their trucking businesses rather
than make substantial investments to modernize their fleets. As a result of our
leading market position and decentralized operating structure, we believe that
we are well-positioned to benefit from these current industry trends.
OUR COMPETITIVE STRENGTHS
We believe that our market leadership, strong historical financial
performance, and significant opportunities for continued growth and increased
profitability are primarily attributable to the following strengths:
EXPANSIVE GEOGRAPHIC COVERAGE AND TERMINAL NETWORK
As of September 30, 1998 we operated 189 terminals in 31 states and Canada.
We believe that this network represents the largest network of tank truck
terminals in North America and will provide our company with benefits of scale.
In addition, due to the strategic location of such terminals we expect to
benefit from significant operating efficiencies. Our expanded terminal coverage
facilitates the matching of inbound and outbound shipments, thus maximizing
utilization of driver and equipment resources. We believe that greater lane
density and geographic presence will provide opportunities for us to penetrate
additional routes, increasing loaded miles in addition to increased backhaul
loads.
3
<PAGE>
VALUE ADDED RELATED SERVICE CAPABILITIES AND SUPERIOR CUSTOMER SERVICE
We believe that we have established our company as a comprehensive provider
of tank truck transportation and logistics services catering primarily to the
chemical industry, and we compete on the basis of our ability to provide value-
added transportation and related services in addition to price. Our acquisition
of CLC, a leading provider of value added services, has strengthened our
ability to provide comprehensive transportation services, to our customers.
Additional services provided include brokerage, logistics and tank cleaning and
are conducted through wholly-owned operating subsidiaries of CLC. As our
customers continue to focus on their core competencies, we believe the
opportunity will arise for the outsourcing of their transportation and shipping
functions to us. We believe that we provide superior customer services,
including timely delivery, reliability of service, quality and availability of
equipment and responsiveness to customer requirements. As a result, we have
developed many long-standing relationships with a wide variety of industrial
and manufacturing companies, including many of the Fortune 500 companies who
are engaged in chemical or food processing. During 1997, on a pro forma basis,
our company served over 3,000 companies, with no single customer accounting for
more than 7.9% of our revenues.
OPPORTUNITIES FOR INCREASED MARKET AND CUSTOMER PENETRATION
We believe that the acquisition of CLC increases our ability to capture a
larger share of lineal revenues from chemical manufacturers with which we
currently do business. The combination also creates additional opportunities
for us to achieve core carrier status with new customers by providing
comprehensive transportation and distribution related services to chemical
manufactures which were not served by either our company or CLC prior to our
acquisition of CLC. As more companies focus on their core businesses, the
outsourcing of the distribution and logistics function has become an
increasingly cost-effective and efficient option. We believe that our full
service capabilities should help establish us as a partner of choice for these
firms. Our ability to take advantage of these opportunities is enhanced by the
minimal overlap in the core customer base of our company and CLC. Moreover,
transactions with shared customers largely involve contracts for different
facilities, the transport of different chemicals or transportation on different
routes.
STRONG AND EXPERIENCED MANAGEMENT TEAM WITH SIGNIFICANT EQUITY STAKE
We believe that our management team, which is complemented by senior
management and operating staff of CLC, operates one of the most efficient tank
trailer fleets in the industry. Both our and CLC's management team, prior to
our acquisition of CLC, employed similar management approaches and each
fostered a performance oriented culture to develop each of their businesses
into leading comprehensive transportation logistics service companies.
Our senior management has an average of 21 years of industry experience and
6.5 years of experience with our company or CLC. After giving effect to our
option plans, management owns approximately 17.4% of our capital stock on a
diluted basis.
4
<PAGE>
LOW FIXED COST OPERATING STRUCTURE.
Unlike many of our competitors, we implement a decentralized operating
strategy, the key components of which are our unique affiliate program and
significant use of owner-operators.
As of September 30, 1998, 61 of our 189 terminals were operated by 35
independently owned and managed affiliates. In fiscal 1997, on a pro forma
basis, affiliates generated approximately 25.7% of our total revenues.
Affiliates are independent corporations that operate terminals exclusively for
us and are dependent upon our infrastructure and customer relationships. Our
affiliate program is dependent on strict adherence to stringent service
delivery guidelines which makes an affiliate terminal virtually
indistinguishable to customers from a company operated terminal. We typically
retain approximately 15% of affiliate revenues and are responsible for sales
and marketing, insurance, accounts receivable collection, management
information systems, and establishment of driver qualifications and training.
We also receive additional fees, in the form of equipment usage charges, from
most of our affiliates. The affiliate is responsible for driver management and
dispatching, local customer service, terminal upkeep and equipment utilization.
In addition, affiliates are responsible for their own operating expenses, which
allows us to reduce fixed costs associated with operating multiple terminals
and a large fleet of tractors. As such, the affiliate program allows us to
profitably expand our base business with reduced levels of capital investment.
We believe that the implementation of our affiliate program has:
. resulted in a low fixed cost operating structure and highly efficient
terminals that absorb a significant amount of operating expenses, thereby
enhancing our return on investment and profitability; and
. enabled us to retain the entrepreneurial spirit and strong customer
service culture of a small, local trucking company while achieving the
benefits of a national operator.
The second major component of our decentralized operating strategy is the
extensive use of owner-operators by our company and our affiliates. Owner-
operators are independent contractors who, through a contract with us, supply
one or more tractors and drivers for our or our affiliates' use. Owner-
operators are generally compensated on the basis of a fixed percentage of the
revenue generated from shipments they haul. The owner-operators must pay
substantially all of their costs, including insurance, maintenance, fuel and
highway use taxes. We realize many of the same benefits through the use of
owner-operators as we do from our affiliate program, including reduced levels
of capital investment and a highly variable cost structure. As of September 30,
1998, we and our affiliates had contracts with approximately 2,356 owner-
operators.
5
<PAGE>
LARGE TRAILER FLEET.
We operate approximately 7,900 tank trailers (of which 6,966 are owned or
leased by us) which have a useful economic life of approximately 20 years.
Included in our fleet of 7,900 trailers is what we believe to be the largest
stainless steel trailer fleet in North America. As part of our dedication to
superior customer service, we use customized tank trailers to meet the
specialized needs of our customers. We have invested significant capital in our
fleet, expending on a combined basis with CLC approximately $64.3 million in
the past three years on trailers to facilitate future growth and provide
required maintenance. During the same period our company and CLC purchased on a
combined basis approximately 1,277 trailers.
OUR BUSINESS STRATEGY
Our management team has developed and implemented a business strategy
designed to profitably increase our market share while increasing revenues and
cash flow. The primary components of our business strategy are the following:
CONTINUE GROWTH OF THE CORE BUSINESS.
We expect to continue our internal growth primarily through (1) continued
market share penetration as companies moved towards establishing relationships
with low cost providers of transportation services and a limited number of core
carriers, and (2) providing comprehensive transportation services to chemical
companies seeking to outsource their transportation services.
We expect to grow our core bulk transportation business through terminal and
fleet expansion and a continued emphasis on our affiliate program. From 1993
through September 1998, on a combined basis with CLC, we added 82 terminals,
including 20 affiliate terminals, and 2,501 trailers to our operational fleet.
During the same period, our revenues grew at a significantly faster rate than
the overall tank truck market. We believe that we will continue to grow at a
faster rate than the industry as a result of our:
. continued provision of high quality, specialized services and the ability
to capture an increased share of existing customers' bulk transportation
and related service requirements;
. increased market share penetration as customers continue to depend on
core carriers capable of providing national coverage for a greater
portion of their transportation services;
. ability to provide a full range of transportation-related services; and
. opportunities to expand our geographic market coverage due to the
increased size of our terminal network.
6
<PAGE>
MAXIMIZE RETURN ON INVESTED CAPITAL.
Our affiliate program has greatly reduced the amount of capital needed for us
to maintain and grow our terminal network. In addition, our extensive use of
owner-operators reduces the amount of capital we need to build our fleet of
tractors which have shorter economic lives than trailers. These factors have
allowed us to concentrate our capital spending on our trailer fleet where we
can achieve superior returns on invested capital through our transportation
operations as well as leasing to third parties and affiliates. We expect to
continue to expand our affiliate program and our use of owner operators in
order to improve our cost structure and improve operating leverage. We have
also identified opportunities to integrate existing terminals into select
markets, which we believe will enable us to maintain our route and service
capability at a reduced level of invested capital. We expect that this
consolidation will effectively reduce the capital required to maintain our
terminal network and further improve our return on invested capital.
EXPANDED SCOPE OF SERVICE CAPABILITIES.
We plan to continue to expand our geographic coverage as well as the scope of
our service capabilities in order to serve the growing needs of our customer
base, by offering complementary transportation services including inventory
management, supply chain management, transportation brokerage services,
intermodal services and international transportation services. In addition to
our core transportation services, we intend to continue to focus on our leasing
business which we believe is currently among the largest in the industry and
provides a stable source of revenue and profitability. CLC is the leading
provider of value added services, and we believe that our acquisition of CLC
has strengthened our ability to provide comprehensive transportation services
to our customers. CLC is one of only three national networks of tank cleaning
operations, with significant bulk logistics capability and a leading freight
brokerage operation. In addition, through its subsidiary Transplastics, Inc.,
CLC operates one of the largest providers of services to the plastics industry.
We believe that we can increase revenues and enhance our profitability by
marketing these value-added transportation related services to our existing
customer base as well as to new customers.
AGGRESSIVELY SEEK CONTINUED COST REDUCTIONS.
We believe that our company has been a leader in providing low cost
transportation services. We intend to pursue additional operating efficiencies
and service quality initiatives by leveraging off the experience and the best
practices of both our company and CLC. We also intend to continue to emphasize
driver training and development aimed at reducing labor costs and equipping our
drivers with the skills necessary to handle specialty loads safely and
efficiently. We believe that the increased size of our company enables us to
take full advantage of the benefits of scale through bulk purchasing programs
particularly for tires, fuel and spare parts which will benefit the entire
network.
7
<PAGE>
PURSUE STRATEGIC ACQUISITIONS.
The tank truck industry is highly fragmented with the majority of the
industry consisting of small, local operators. Our acquisition of CLC
capitalizes on the growing trend within the chemical industry of establishing
"partnership" relations with a few core carriers which have an extensive
national network and offer a wide array of transportation-related services. We
intend to pursue an acquisition strategy which will enable us to further
capitalize on the consolidation occurring in the industry. We seek potential
acquisitions in which we can:
. realize significant synergies, operating expense reductions and overhead
cost savings;
. utilize our fleet management expertise;
. increase backhaul opportunities; and
. provide or further strengthen complementary transportation capabilities.
PRINCIPAL EXECUTIVE OFFICE
Our principal executive offices are located at 3108 Central Drive, Plant
City, Florida 33567, and the telephone number is (813) 754-4725.
OUR RECENT TRANSACTIONS
Recently our company has completed two significant transactions, which are
briefly described below. To understand each of these transactions fully and for
a more complete description of the terms of these transactions, you should read
the more detailed descriptions of these transactions included elsewhere in this
Prospectus, as well as those additional documents we have referred you to.
MTL Transactions:
On June 9, 1998, we were recapitalized through a merger with a company
controlled by Apollo Management L.P. and certain of its affiliates ("Apollo
Management" and together with its affiliates, "Apollo"). This merger was
financed by:
.the private offering of the notes;
.borrowings under a credit agreement (the "MTL Credit Agreement"); and
. equity investments of approximately $68.0 million by Apollo, certain
members of our management and affiliates of two of the initial purchasers
of the notes.
Following the merger, the MTL Credit Agreement was amended and restated to
provide for additional borrowings to finance our acquisition of CLC, and, as so
amended, the MTL Credit Agreement is called the "New Credit Agreement." The
merger, the private offering of notes, the equity investments and the related
borrowings under the MTL Credit Agreement are collectively referred to as the
"MTL Transactions."
8
<PAGE>
CLC Transactions:
On August 28, 1998, we completed our acquisition of CLC (the "CLC Merger").
The consideration paid in the CLC Merger included:
.cash and preferred equity to the shareholders of CLC;
. the conversion of a portion of the shares held by certain shareholders of
CLC who are officers of CLC into shares of our common stock (the "CLC
Management Roll"); and
. loans to certain of our employees and employees of CLC and its
subsidiaries.
A complete description of the consideration received by the shareholders of CLC
and certain other related transactions is set forth in this Prospectus under
the heading "The CLC Merger."
In connection with the CLC Merger, we completed a tender offer and consent
solicitation (the "Tender Offer") for $100 million principal amount of
outstanding 10 3/8% Senior Notes due 2005 of CLC. We also refinanced certain
other indebtedness of CLC, including a $33 million receivables securitization
program.
The CLC Merger, the Tender Offer and the refinancing were financed by:
.borrowings under the New Credit Agreement; and
. preferred and common equity investments by certain of our shareholders,
including Apollo.
See "Description of Capital Stock" and "The CLC Merger." We also refer you to
the merger agreements governing each of the merger transactions described above
and to the New Credit Agreement. Copies of each of these documents have been
filed as exhibits to the Registration Statement of which this Prospectus forms
a part.
All of our domestic, direct and indirect wholly-owned subsidiaries (including
CLC and its subsidiaries) are guarantors of our borrowings under the New Credit
Agreement and, following the CLC Merger, CLC and its subsidiaries also became
guarantors of the notes.
The CLC Merger, the Tender Offer, the refinancing of the MTL Credit
Agreement, the preferred and common equity investments made in connection with
the CLC Merger and the related borrowings under the New Credit Agreement are
collectively referred to as the "CLC Transactions."
The following table is intended to show you our sources and uses of funds for
both the MTL Transactions and the CLC Transactions (together, the
"Transactions") described above (dollars in millions):
9
<PAGE>
MTL Transactions:
<TABLE>
<S> <C>
SOURCES OF FUNDS:
Revolving Credit Facility (Sublimit)(1)............................... $ 10.0
Term Loan Facility.................................................... 50.0
Notes................................................................. $140.0
Equity Investment(2).................................................. 68.0
------
Total Sources......................................................... $268.0
======
USES OF FUNDS:
Payment of consideration in the merger(3)............................. $195.0
Repayment of long term debt, net(4)................................... 54.3
Fees and expenses..................................................... 18.7
------
Total Uses............................................................ $268.0
======
</TABLE>
- --------
(1) The Revolving Credit Facility provides for borrowings of up to $75.0
million. See "Description of the New Credit Agreement."
(2) Includes (i) a $58.1 million cash equity investment by Apollo, (ii) an
approximately $3.0 million cash equity investment by affiliates of
BT Alex. Brown Incorporated and Credit Suisse First Boston Corporation,
two of the initial purchasers of the notes, (iii) a $1.2 million cash
equity investment by an officer and employee of our company and (iv) an
implied value of $5.7 million for 141,672 shares to be retained by
management of our company based on the cash merger price of $40.00 per
share.
(3) Includes (i) payments to stockholders of $176.4 million for 4,410,546
shares of MTL Common Stock at the cash merger price of $40.00 per share,
(ii) the implied value of $5.7 million for 141,672 shares to be retained
by management of the Company, (iii) payments of $12.5 million to holders
of options to purchase approximately 506,683 shares of MTL Common Stock
at the cash merger price of $40.00 per share, net of the option exercise
proceeds and (iv) payment in the form of a stockholder loan in the amount
of $0.4 million which amount was used by an officer of our company to
finance a portion of a $1.2 million cash equity investment.
(4) Represents repayment of long term debt consisting of $55.8 million, net
of available cash of $1.5 million.
CLC Transactions:
<TABLE>
<S> <C>
SOURCES OF FUNDS:
Incremental Term Loans................................................ $235.0
Preferred Equity(1)................................................... 19.9
Common Equity(2)...................................................... 12.0
------
Total Sources......................................................... $266.9
======
USES OF FUNDS:
Payment of consideration in CLC Transactions(3)....................... $ 69.8
Transaction Bonuses/Payments.......................................... 1.9
Management Loans...................................................... 1.1
MTL Preferred Stock to CLC Shareholders............................... 5.0
CLC Preferred Stock Retained.......................................... 4.4
CLC debt refinancing (including Tender Offer)......................... 170.7
Fees and expenses..................................................... 14.0
------
Total Uses............................................................ $266.9
======
</TABLE>
- --------
(1) Includes $4.4 million of preferred stock of CLC which remained
outstanding after the CLC Transactions, $5.0 million of MTL Preferred
Stock issued to former CLC shareholders and $10.5 million of MTL
Preferred Stock issued to Apollo and an affiliate of BT Alex. Brown
Incorporated.
(2) Includes a $10.1 million investment from Apollo, $1.1 million
attributable to the conversion of shares pursuant to CLC Management Roll,
and $.8 million of new management investments.
(3) Includes $60.1 million in cash consideration to CLC shareholders, $10.8
million of temporary replacement deposits of letter of credit and
$1.1 million attributable to the CLC Management Roll, less the repayment
of $2.2 million in outstanding indebtedness.
10
<PAGE>
SUMMARY OF THE EXCHANGE OFFER
SECURITIES OFFERED...... $100,000,000 aggregate principal amount of 10% Se-
ries B Senior Subordinated Notes due 2006 which
have been registered under the Securities Act (the
"Fixed Rate Notes").
$40,000,000 aggregate principal amount of Series B
Floating Interest Rate Subordinated Term Securities
due 2006 (FIRSTS SM) which have been registered
under the Securities Act (the "Floating Rate Notes"
and together with the Fixed Rate Notes, the
"Exchange Notes").
ISSUER.................. MTL Inc.
REGISTRATION RIGHTS
AGREEMENT...............
You are entitled to exchange your notes for
registered notes with substantially identical
terms. The Exchange Offer is intended to satisfy
this right. After the Exchange Offer is complete,
you will no longer be entitled to any exchange or
registration rights with respect to your notes.
Under certain circumstances, certain holders of
outstanding notes may require us to file a shelf
registration statement under the Securities Act.
THE EXCHANGE OFFER...... We are offering to exchange $1,000 principal amount
of Exchange Notes of MTL Inc. for each $1,000
principal amount of outstanding 10% Senior
Subordinated Notes due 2006 and Floating Interest
Rate Subordinated Term Securities due 2006 which
were issued by us in June 1998 in a private
offering. In order to be exchanged, an outstanding
note must be properly tendered and accepted. All
outstanding notes that are validly tendered and not
validly withdrawn will be exchanged.
As of this date, there is $140,000,000 principal
amount of notes outstanding.
We will issue the Exchange Notes on or promptly
after the expiration of the Exchange Offer.
RESALE..................
We believe that the Exchange Notes issued in the
Exchange Offer may be offered for resale, resold
and otherwise transferred by you without compliance
with the
11
<PAGE>
registration and prospectus delivery provisions of
the Securities Act provided that:
. the Exchange Notes issued in the Exchange Offer
are being acquired in the ordinary course of your
business;
. you are not participating, do not intend to
participate and have no arrangement or
understanding with any person to participate, in
the distribution of the notes issued to you in the
Exchange Offer; and
. you are not an "affiliate" of our company.
If our belief is inaccurate and you transfer any
note issued to you in the Exchange Offer without
delivering a prospectus meeting the requirements of
the Securities Act or without an exemption from
registration of your notes from such requirements,
you may incur liability under the Securities Act.
We do not assume, or indemnify you against, such
liability.
Each broker-dealer that is issued Exchange Notes in
the Exchange Offer for its own account in exchange
for notes which were acquired by such broker-dealer
as a result of market-making or other trading ac-
tivities, must acknowledge that it will deliver a
prospectus meeting the requirements of the Securi-
ties Act in connection with any resale of the Ex-
change Notes issued in the Exchange Offer. A bro-
ker-dealer may use this Prospectus for an offer to
resell, resale or other retransfer of the Exchange
Notes issued to it in the Exchange Offer.
The Exchange Offer is not being made to, nor will
we accept surrenders for exchange from, the follow-
ing:
. holders of notes in any jurisdiction in which
this Exchange Offer or the acceptance thereof
would not be in compliance with the applicable
securities or "blue sky" laws of such
jurisdiction; and
. holders of notes who are affiliates of our
company.
EXPIRATION DATE.........
The Exchange Offer will expire at 5:00 p.m., New
York City time, on , 1999, unless extended, in
which case the term "Expiration Date" shall mean
the latest date and time to which we extend the Ex-
change Offer.
12
<PAGE>
CONDITIONS TO THE
EXCHANGE OFFER..........
The Exchange Offer is subject to certain customary
conditions, which may be waived by us. The Exchange
Offer is not conditioned upon any minimum principal
amount of notes being tendered.
PROCEDURES FOR
TENDERING OLD NOTES.....
If you wish to tender your notes for exchange pur-
suant to the Exchange Offer you must transmit to
the United States Trust Company of New York, as Ex-
change Agent, on or before the Expiration Date:
either
. a properly completed and duly executed Letter of
Transmittal, which accompanies this Prospectus, or
a facsimile of the Letter of Transmittal, together
with your notes and any other required documenta-
tion, to the Exchange Agent at the address set
forth in this Prospectus under the heading "The
Exchange Offer--Exchange Agent," and on the front
cover of the Letter of Transmittal; or
. a computer generated message transmitted by means
of The Depository Trust Company's Automated Tender
Offer Program system and received by the Exchange
Agent and forming a part of a confirmation of book
entry transfer in which you acknowledge and agree
to be bound by the terms of the Letter of Trans-
mittal.
If either of these procedures cannot be satisfied
on a timely basis, then you should comply with the
guaranteed delivery procedures described below.
By executing the Letter of Transmittal, each holder
of notes will make certain representations to us
described under "The Exchange Offer--Procedures for
Tendering."
SPECIAL PROCEDURES FOR
BENEFICIAL OWNERS.......
If you are a beneficial owner whose notes are reg-
istered in the name of a broker, dealer, commercial
bank, trust company or other nominee and who wishes
to tender your notes in the Exchange Offer, you
should contact such registered holder promptly and
instruct such regis-
13
<PAGE>
tered holder to tender on your behalf. If you wish
to tender on your own behalf, you must, prior to
completing and executing the Letter of Transmittal
and delivering your notes, either make appropriate
arrangements to register ownership of the notes in
your name or obtain a properly completed bond power
from the registered holder.
The transfer of registered ownership may take con-
siderable time and may not be able to be completed
prior to the Expiration Date.
GUARANTEED DELIVERY
PROCEDURES..............
If you wish to tender your notes and time will not
permit the documents required by the Letter of
Transmittal to reach the Exchange Agent prior to
the Expiration Date, or the procedure for book-en-
try transfer cannot be completed on a timely basis,
you must tender your notes according to the guaran-
teed delivery procedures described in this Prospec-
tus under the heading "The Exchange Offer--Guaran-
teed Delivery Procedures."
ACCEPTANCE OF NOTES AND
DELIVERY OF EXCHANGE
NOTES...................
Subject to certain conditions (as described more
fully in "The Exchange Offer--Conditions to the Ex-
change Offer"), we will accept for exchange any and
all notes which are validly tendered in the Ex-
change Offer and not withdrawn, prior to 5:00 p.m.,
New York City time, on the Expiration Date.
WITHDRAWAL RIGHTS....... You may withdraw the tender of your notes at any
time prior to 5:00 p.m., New York City time, on the
Expiration Date, subject to compliance with the
procedures for withdrawal described in this Pro-
spectus under the heading "The Exchange Offer--
Withdrawal of Tenders."
CERTAIN FEDERAL INCOME
TAX CONSIDERATIONS......
For a discussion of certain federal income tax con-
siderations relating to the exchange of notes for
Exchange Notes, see "Certain Federal Income Tax
Considerations."
EXCHANGE AGENT.......... United States Trust Company of New York, the
Trustee under the indenture governing the notes, is
serving as the
14
<PAGE>
Exchange Agent. The address, telephone number and
facsimile number of the Exchange Agent are set
forth in this Prospectus under the heading "The Ex-
change Offer--Exchange Agent."
CONSEQUENCES OF FAILURE
TO EXCHANGE OLD NOTES...
If you do not exchange your notes for Exchange
Notes pursuant to the Exchange Offer, you will con-
tinue to be subject to the restrictions on transfer
provided in the notes and in the indenture gov-
erning the notes. In general, the notes may not be
offered or sold, unless registered under the Secu-
rities Act, except pursuant to an exemption from,
or in a transaction not subject to, the Securities
Act and applicable state securities laws. We do not
currently plan to register the notes under the Se-
curities Act.
See "The Exchange Offer" for more detailed information concerning the Exchange
Offer.
15
<PAGE>
SUMMARY OF TERMS OF THE EXCHANGE NOTES
The Exchange Offer relates to the exchange of up to $140,000,000 aggregate
principal amount of Exchange Notes for up to an equal principal amount of
outstanding notes. The form and terms of the Exchange Notes are the same as the
form and terms of the outstanding notes, except that the Exchange Notes will be
registered under the Securities Act, and, therefore, the Exchange Notes will
not be subject to certain transfer restrictions, registration rights and
certain provisions providing for an increase in the interest rate of the
outstanding notes under certain circumstances relating to the registration of
the Exchange Notes. The Exchange Notes issued in the Exchange Offer will
evidence the same debt as the outstanding notes (which they replace) and both
the outstanding notes and the Exchange Notes are governed by the same
indenture.
MATURITY DATE........... June 15, 2006.
INTEREST PAYMENT Interest on the Exchange Notes will accrue from the
DATES................... last interest payment date on which interest was
paid on the notes surrendered in exchange for Ex-
change Notes or, if no interest has been paid on
the notes, from June 9, 1998, the date of original
issuance of the Old Notes (the "Issue Date"). In-
terest on the Exchange Notes will be payable semi-
annually on each June 15 and December 15. Interest
on the outstanding notes will be payable on Decem-
ber 15, 1998. The Fixed Rate Notes will bear inter-
est at a rate of 10% per annum. The Floating Rate
Notes will bear interest at a rate per annum equal
to LIBOR plus 4.81%. Interest on the Floating Rate
Notes will be reset every three months.
OPTIONAL REDEMPTION..... The Fixed Rate Notes will be redeemable, in whole
or in part, at our option on or after June 15,
2002, and the Floating Rate Notes will be redeem-
able, in whole or in part, at our option, at any
time, in each case at the redemption prices set
forth in this Prospectus under the heading "De-
scription of Notes--Redemption", plus accrued and
unpaid interest to the date of redemption. In addi-
tion, at any time on or prior to June 15, 2001, we
may, at our option, redeem up to 35% of the aggre-
gate principal amount of the Fixed Rate Notes orig-
inally issued with the net cash proceeds of one or
more public or private offerings of equity of our
company, at the redemption price set forth herein,
plus accrued and unpaid interest to the date of re-
demption; provided that at least
16
<PAGE>
65% of the aggregate principal amount of Fixed Rate
Notes originally issued remains outstanding immedi-
ately following such redemption and; provided, fur-
ther, that such redemption shall occur within 120
days of the closing of any such public or private
equity offering.
In addition, prior to June 15, 2002, upon the
occurrence of a change of control of our company,
we may redeem the notes, in whole but not in part,
at a redemption price equal to the principal amount
thereof plus a premium on the notes, together with
accrued and unpaid interest, if any, to the date of
redemption.
GUARANTEES.............. The Exchange notes will be unconditionally
guaranteed on a senior subordinated basis by
substantially all of our subsidiaries (the
"Guarantors").
RANKING................. The Exchange Notes:
. are general unsecured obligations of our company
and are subordinated in right of payment to all of
our existing and future senior debt, including
indebtedness under the New Credit Agreement; and
. rank equal in right of payment with any future
senior subordinated obligations of our company and
rank senior in right of payment to all other sub-
ordinated obligations of our company.
The guarantees are general unsecured obligations of
the Guarantors and are subordinated in right of
payment to all existing and future senior debt of
the Guarantors.
As of September 30, 1998, we had approximately
$294.4 million of senior debt outstanding (exclud-
ing unused commitments of $61.1 million under the
New Credit Agreement) and the Guarantors had ap-
proximately $285.0 million of Guarantor senior debt
outstanding (consisting solely of guarantees under
the New Credit Agreement but excluding guarantees
of unused commitments under the New Credit Agree-
ment).
17
<PAGE>
CHANGE OF CONTROL....... Upon a change of control of our company, you will
have the right to require us to repurchase your
notes at a price equal to 101% of their principal
amount, plus accrued and unpaid interest to the
date of repurchase.
CERTAIN COVENANTS.......
The indenture governing the notes (the "Indenture")
contains certain covenants that, among other
things, limit our ability and the ability of our
subsidiaries to:
. incur additional indebtedness;
. make certain restricted payments;
. consummate certain asset sales;
. enter into certain transactions with affiliates;
. impose restrictions on the ability of a
subsidiary to make certain payments to us and to
our other subsidiaries; or
. merge or consolidate with any other person or
sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all our assets or
those of our subsidiaries.
FORM OF EXCHANGE The Exchange Notes issued in the Exchange Offer
NOTES................... will be represented by one or more permanent global
certificates, in fully registered form, deposited
with a custodian for, and registered in the name of
a nominee of, The Depository Trust Company ("DTC"),
as depositary. You will not receive notes in
certificated form unless one of the events set
forth under the heading "Book Entry; Delivery and
Form" occurs. Instead, beneficial interests in the
Exchange Notes issued in the Exchange Offer will be
shown on, and transfers of these will be effected
only through, records maintained in book-entry form
by DTC and its participants.
USE OF PROCEEDS......... We will not receive any proceeds from the Exchange
Offer.
For additional information regarding the notes, see "Description of Notes."
RISK FACTORS
See "Risk Factors" immediately following this summary for a discussion of
certain factors that you should consider in connection with your investment in
the Exchange Notes to be issued in the Exchange Offer.
18
<PAGE>
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
MTL
The following table sets forth summary consolidated financial information of
MTL Inc. It is important that you read this information along with the
Consolidated Financial Statements and the related notes of our company included
elsewhere in this Prospectus and "Management's Discussion and Analysis of
Financial Condition and Results of Operations." THE FISCAL YEAR HISTORICAL
INFORMATION AND THE UNAUDITED FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED
JUNE 30, 1997 SET FORTH IN THE FOLLOWING TABLE ARE FOR PERIODS BEFORE OUR
ACQUISITION OF CLC AND DO NOT REFLECT THE CLC TRANSACTIONS OR INCLUDE
HISTORICAL INFORMATION FOR CLC. However, related historical financial
information for CLC is presented following such information. The consolidated
financial information set forth below for and as of each of the years in the
five-year period ended December 31, 1997 has been derived from audited
consolidated financial statements of MTL Inc., which are included elsewhere in
this Prospectus. The consolidated financial information for the six months
ended June 30, 1998 and 1997 is unaudited, but in the opinion of management,
reflects all adjustments necessary for a fair presentation of such information.
Operating results for the six months ended June 30, 1998 are not necessarily
indicative of the results that may be expected for the fiscal year ending
December 31, 1998.
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------------------------ ------------------
1993 1994 1995 1996 1997 1997 1998
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating revenues...... $142,376 $168,290 $190,054 $235,599 $286,047 $139,189 $148,622
Operating expenses,
excluding depreciation
and amortization....... 122,188 145,108 163,396 203,487 247,619 120,935 140,760
Depreciation and
amortization........... 7,335 8,213 10,156 13,892 17,335 8,051 9,916
Operating income
(loss)................. 12,853 14,969 16,502 18,220 21,093 10,203 (2,054)
Interest expense, net... 5,722 4,172 3,468 3,494 3,175 1,555 3,305
Net income (loss) before
extraordinary item..... 4,384 6,239 7,802 8,837 10,483 5,089 (3,084)
OTHER DATA:
EBITDA (1)(2)........... $ 20,188 $ 23,182 $ 26,658 $ 32,112 $ 38,428 $ 18,254 $ 7,862
Net cash provided by
operating activities... 14,486 17,308 18,090 22,304 33,832 12,315 1,355
Net cash used in
investing activities... (2,735) (21,395) (30,089) (21,780) (31,690) (12,764) (12,212)
Net cash (used in)
provided by financing
activities............. (11,378) 4,366 11,597 (135) (1,503) 1,965 12,759
Capital expenditures.... 3,576 24,341 32,099 20,577 35,121 12,280 13,547
Number of terminals at
end of period.......... 53 59 66 70 80 74 83
Number of trailers
operated at end of
period................. 2,546 2,869 3,190 3,728 4,148 3,883 4,455
Number of tractors
operated at end of
period................. 907 1,196 1,305 1,649 1,915 1,832 1,932
Ratio of earnings to
fixed charges (3)...... 2.1x 3.2x 4.4x 4.1x 4.8x 4.7x --
CONSOLIDATED BALANCE
SHEET DATA
AT PERIOD END:
Total assets............ $105,787 $126,219 $145,740 $173,604 $194,036 $184,037 $208,420
Long-term obligations,
including current
maturities............. 53,613 40,538 48,844 57,329 55,098 59,038 204,779
Stockholders' equity
(deficit).............. 17,245 52,247 60,058 68,913 79,532 74,115 (52,074)
</TABLE>
- --------
(1) EBITDA represents earnings before extraordinary items, net interest
expense, income taxes, depreciation and amortization and other income
(expense). EBITDA is presented because it is a widely accepted financial
indicator used by certain investors and analysts to analyze and compare
companies on the basis of operating performance. EBITDA is not intended to
present cash flows for the period, nor has it been presented as an
alternative to operating income as an indicator of operating performance
and should not be considered in isolation or as a substitute for measures
of performance prepared in accordance with generally accepted accounting
principles. See the Consolidated Financial Statements and the related notes
of MTL Inc. appearing elsewhere in this Prospectus.
(2) During the six months ended June 30, 1998, the Company incurred a non-
recurring expense related to the exercise of options of MTL stock in
connection with the MTL Transactions. Excluding this expense, EBITDA would
have been $21.3 million for the six months ended June 30, 1998.
(3) For purposes of computing this ratio, earnings consist of income before
income taxes plus fixed charges. Fixed charges consist of interest expense
and one-third of the rent expense from operating leases, which management
believes is a reasonable approximation of an interest factor. For the six
months ended June 30, 1998 earnings were insufficient to cover fixed
charges by $5,343. Excluding the non-recurring expense related to the
exercise of MTL stock referred to in footnote (2) above, the ratio would
have been 3.36x.
19
<PAGE>
CLC
The following table sets forth summary historical consolidated financial
information of CLC. It is important that you read this information along with
the Consolidated Financial Statements and the related notes of CLC included
elsewhere in this Prospectus and "Management's Discussion and Analysis of
Financial Condition and Results of Operations." The selected consolidated
financial data as of and for the years ended December 31, 1993, 1994, 1995,
1996, 1997, and as of June 29, 1997 and for the six month period then ended
have been derived from the audited financial statements of CLC, which are
included elsewhere in this Prospectus. The consolidated financial information
for the six months ended July 5, 1998 is unaudited, but in the opinion of
management, reflects all adjustments necessary for a fair presentation of such
information. The information set forth in the following table is for periods
prior to the CLC Transactions, and therefore does not show the effects of the
CLC Transactions on CLC's business. Operating results for the six months ended
July 5, 1998 are not necessarily indicative of the results that may be expected
for the fiscal year ending December 31, 1998.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED
------------------------------------------------ ------------------
JUNE 29, JULY 5,
1993 1994 1995 1996 1997 1997 1998
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating revenues...... $231,190 $241,443 $245,706 $281,075 $329,977 $156,545 $183,082
Operating expenses,
excluding depreciation
and amortization....... 214,737 222,847 225,556 258,178 314,223 145,460 166,571
Depreciation and
amortization........... 11,320 11,783 13,731 16,255 19,817 9,336 10,867
Operating income
(loss)................. 5,133 6,813 6,419 6,642 (4,063) 1,749 5,644
Interest expense, net... 4,016 4,946 5,978 7,553 10,299 4,515 6,158
Net income (loss) before
extraordinary item and
cumulative effect of
accounting change ..... 683 1,065 331 (162) (9,217) (1,708) (831)
OTHER DATA:
EBITDA (1) ............. $ 16,453 $ 18,596 $ 20,150 $ 22,897 $ 15,754 $ 11,085 $ 16,511
Net cash provided by
(used in) operating
activities............. 11,197 16,567 17,444 4,677 (11,740) (3,519) 1,314
Net cash used in
investing activities... (9,892) (18,755) (10,490) (34,273) (23,156) (10,255) (13,225)
Net cash provided by
(used in) financing
activities............. 6,994 4,120 (9,444) 26,861 31,789 22,709 11,869
Capital expenditures.... 12,050 20,747 13,270 20,020 24,345 11,006 12,834
Number of terminals at
end of period.......... 65 61 66 105 107 105 109
Number of trailers
operated at end of
period................. 2,438 2,869 2,645 3,502 3,525 3,433 3,420
Number of tractors
operated at end of
period................. 1,390 1,545 1,368 1,755 2,032 1,813 2,046
BALANCE SHEET DATA AT
PERIOD END:
Total assets............ $127,176 $146,536 $136,405 $182,544 $177,514 $177,528 $178,621
Long-term obligations,
including current
maturities............. 53,386 69,223 67,821 109,024 112,301 102,202 120,820
Stockholders' equity.... 22,917 20,245 19,779 15,723 3,013 13,153 2,004
</TABLE>
- --------
(1) EBITDA represents earnings before extraordinary items, net interest
expense, income taxes, depreciation and amortization and other income
(expense). EBITDA is presented because it is a widely accepted financial
indicator used by certain investors and analysts to analyze and compare
companies on the basis of operating performance. EBITDA is not intended to
present cash flows for the period, nor has it been presented as an
alternative to operating income as an indicator of operating performance
and should not be considered in isolation or as a substitute for measures
of performance prepared in accordance with generally accepted accounting
principles. See the Consolidated Financial Statements and related notes of
CLC appearing elsewhere in this Prospectus.
20
<PAGE>
SUMMARY UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following table sets forth summary unaudited pro forma financial
information and other data of our company. The pro forma data below is intended
to give you a better picture of what our business might have looked like if the
Transactions previously described on pages 8 through 10 of this Prospectus had
each occurred on January 1, 1997. It is important that you read this
information along with the Unaudited Pro Forma Condensed Consolidated Financial
Information and the related notes included elsewhere in this Prospectus. In
addition, this summary unaudited pro forma financial information should be read
along with the Consolidated Financial Statements and the related notes included
elsewhere in this Prospectus of our company and CLC. We do not claim or
represent that the summary unaudited pro forma financial information set forth
below is indicative of the results that would have been reported had the
Transactions actually occurred on January 1, 1997, nor is it indicative of our
future results. There can be no assurance that the assumptions used in the
preparation of the summary unaudited pro forma financial information will prove
to be correct. Additionally, pro forma operating results for the six months
ended June 30, 1998 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1998.
<TABLE>
<CAPTION>
FISCAL YEAR SIX MONTHS
ENDED ENDED
DECEMBER 31, 1997 JUNE 30, 1998
----------------- -------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating revenues.................... $621.8 $331.7
Operating expenses, excluding
depreciation and amortization........ 552.9 287.8
Depreciation and amortization......... 38.0 21.0
Operating income...................... 30.9 22.9
Interest expense, net................. 39.1 19.7
Net loss before extraordinary item and
cumulative effect of accounting
change............................... (4.7) 1.9
OTHER DATA:
EBITDA (1)............................ $ 68.9 $ 43.9
Adjusted EBITDA (1)(2)................ 84.4 45.5
Net cash provided by operating
activities........................... 17.0 6.5
Cash interest expense (3)............. 38.0 19.0
Capital expenditures.................. 59.5 26.4
Ratio of earnings to fixed charges
(4).................................. -- 1.15x
Ratio of EBITDA to cash interest
expense, net (5)..................... 1.8x 2.1x
</TABLE>
<TABLE>
<CAPTION>
AT
JUNE 30, 1998
-------------
<S> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Total assets.............................................. $551.0
Long-term obligations, including current portion.......... 435.4
Stockholders' deficit..................................... (40.1)
</TABLE>
- --------
(1) Pro forma EBITDA represents pro forma earnings before net interest expense,
income taxes, depreciation and amortization and other income (expense). Pro
forma EBITDA and Adjusted EBITDA are presented because they are widely
accepted financial indicators used by certain investors and analysts to
analyze and compare companies on the basis of operating performance. Pro
forma EBITDA and Adjusted EBITDA are not intended to present cash flows for
the period, nor have they been presented as an alternative to operating
income as an indicator of operating performance and should not be
considered in isolation or as a substitute for measures of performance
prepared in accordance with generally accepted accounting principles. See
the Unaudited Pro Forma Condensed Consolidated Financial Information and
the related notes appearing elsewhere in this Prospectus.
(2) Adjusted EBITDA for the year ended December 31, 1997 and the six months
ended June 30, 1998 adjusts pro forma EBITDA for the following items:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS
DECEMBER ENDED
31, 1997 JUNE 30, 1998
---------- -------------
<S> <C> <C> <C>
Adjustments and non-recurring costs............. A 13.4 0.6
Estimated additional merger synergies........... B 2.1 1.0
---- ---
Total......................................... 15.5 1.6
==== ===
</TABLE>
A. Represents (i) settlement of certain past claims due principally to
insolvency of certain insurance carriers and changes in insurance
programs which are primarily reductions in insurance deductibles, (ii)
provision to increase the environmental liability for certain
21
<PAGE>
past claims, (iii) certain nonrecurring environmental expenses and (iv)
certain additional cost savings and non cash and non recurring items.
B.Estimated additional identified merger synergies resulting from the
anticipated conversion of certain terminals to affiliate terminals.
(3) Pro forma cash interest expense is defined as pro forma interest expense
(including fees on the unused portion of the Revolving Credit Facility)
excluding amortization of deferred financing fees. See the Unaudited Pro
Forma Condensed Consolidated Financial Information and related notes
included elsewhere in this Prospectus.
(4) For purposes of computing this ratio, earnings consist of income before
income taxes plus fixed charges. Fixed charges consist of interest expense
and one-third of the rent expense from operating leases, which management
believes is a reasonable approximation of an interest factor. For the year
ended December 31, 1997, pro forma earnings were insufficient to cover
fixed charges by $6.8 million. Adjusting earnings for adjustments and non-
recurring costs of $13.4 million and $0.6 million for the year end
December 31, 1997 and the six months end June 30, 1998 (as discussed in
footnote (2) above) would have resulted in a ratio of earnings to fixed
charges of 1.17x for the year ended December 31, 1997 and 1.18x for the
six months ended June 30, 1998.
(5) For purposes of computing this ratio, pro forma EBITDA is divided by pro
forma cash interest expense. See footnotes (1) and (3) above.
22
<PAGE>
RISK FACTORS
In evaluating the Company, you should consider carefully the following
factors in addition to other information and data included in this Prospectus.
Unless the context otherwise requires, the terms "MTL" and the "Company" refer
to MTL Inc. and its subsidiaries (including CLC). The term "Note" or "Notes"
includes the outstanding notes (the "Old Notes") and the Exchange Notes.
HIGH LEVEL OF DEBT--RISK OF DEFAULT, INTEREST RATE INCREASE
In order to accomplish the Transactions, the Company incurred a high level
of debt. As of June 30, 1998, the Company's pro forma long-term debt
(consisting principally of obligations under the New Credit Agreement and the
Notes) was $435.4 million, while the total pro forma capitalization of the
Company was only $416.4. See "Pro Forma Capitalization." The Company also has
the ability to incur additional debt, subject to limitations imposed by the
New Credit Agreement and the Indenture governing the Notes.
The Company would have used approximately 73% of its pro forma operating
cash flow for the six-month period ended June 30, 1998 to service the interest
payments on the Notes and the interest and principal payments due under the
New Credit Agreement for an equivalent six-month period. Interest payments
under the New Credit Agreement and the Floating Rate Notes may also increase.
In the event the Company's operating cash flow decreases and/or its interest
rates rise, the Company may be unable to service its debt without refinancing
or restructuring it, selling assets or operations or raising additional debt
or equity capital. If these alternatives are not available in a timely manner
or on satisfactory terms, or are not permitted under existing agreements of
the Company, the Company may default on its debt obligations. Such a default
would have serious adverse consequences for the holders of the Notes. See
"Description of the New Credit Agreement" and "Description of Notes."
In addition, the Company's high fixed debt service charges may also restrict
its ability to fund or obtain financing for working capital, capital
expenditures and general corporate purposes, making the Company more
vulnerable to economic downturns, competition and other market pressures.
NOTES ARE SUBORDINATED, UNSECURED
In the event of a bankruptcy, liquidation, dissolution, reorganization or
similar proceeding against the Company, the assets of the Company must be used
to pay senior debt in full before making any payments to holders of the Notes.
Because of this obligation to pay the senior debt first, there may not be
sufficient assets to pay all or any of the amounts due on the Notes. The Notes
are also unsecured and, therefore, are effectively subordinated to any secured
debt of the Company, whether or not such debt is senior by its terms.
23
<PAGE>
As of September 30, 1998, approximately $294.4 million in debt of the
Company was senior in priority to the Notes, including under the New Credit
Agreement, which is senior by its terms and secured by liens on substantially
all of the assets of the Company and its subsidiaries and the pledge of the
common stock of all existing and future material subsidiaries of the Company.
See "Description of the New Credit Agreement."
RESTRICTIONS IMPOSED BY THE NEW CREDIT AGREEMENT; CONFLICTING INTERESTS OF
THESENIOR DEBT LENDERS
The New Credit Agreement requires the Company to maintain a minimum interest
coverage ratio (a ratio of consolidated earnings to consolidated interest
expense) of 1.75 to 1.0 and a maximum total leverage ratio (a ratio of
consolidated debt to consolidated earnings) of 6.00 to 1.0. In addition, the
New Credit Agreement restricts, among other things, the Company's ability to
incur additional indebtedness and make acquisitions and capital expenditures
beyond a certain level. If the Company fails to comply with the restrictions
contained in the New Credit Agreement, the lenders can declare the entire
amount owed thereunder immediately due and payable, and prohibit the Company
from making payments of interest and principal on the Notes until the default
is cured or all senior debt is paid or otherwise satisfied in full. If the
Company were unable to repay such borrowings, such lenders could proceed
against the collateral. If the senior debt were accelerated, the assets of the
Company may not be sufficient to repay in full such indebtedness and the other
indebtedness of the Company, including the Notes, in which event the interests
of the senior debt lenders may conflict with the interests of the holders of
the Notes. See "Description of the New Credit Agreement."
INTEGRATION OF CLC MAY NOT SUCCEED
The integration of CLC into the Company will require substantial management,
financial and other resources which may otherwise be devoted to improving
sales, customer service and productivity. CLC is significantly larger than any
acquisition the Company has previously made and the Company may experience
difficulties with customers, personnel, or other factors. In addition, the
cost savings, revenue enhancements and margin improvements anticipated as a
result of the CLC acquisition may not be realized, and the combination of the
MTL and CLC may not be successful.
INFORMATION TECHNOLOGY; DEPENDENCE ON EFFECTIVE INFORMATION SYSTEMS
The Company is dependent upon computer technology to effectively carry out
its day-to-day operations. The Company believes that sophisticated information
systems are important to the Company's growth and its ability to reduce
administrative costs, enhance the utilization of tractors, trailers and
drivers and achieve operating efficiencies. The Company currently operates
separate management information systems for the Company and CLC. The Company
is in the process of integrating all
24
<PAGE>
of its operations under a single information system. The Company intends to
integrate and operate the information systems for all of its subsidiaries from
a central location. A failure of the Company's or CLC's current system, the
failure of the Company to implement or integrate a new system without
difficulty or at all, the failure of any new system or the failure to upgrade
systems as necessary could have a material adverse effect on the Company, its
financial condition and results of operations. In addition, the Company has
developed a plan to ensure its systems are compliant with the requirements to
process transactions in the year 2000. The Company believes it will be able to
achieve year 2000 compliance by the end of 1999, and does not anticipate any
material disruption in its operations as a result of any failure by the
Company to be in compliance, although no assurances to such effect can be
given. In the event any of the Company's significant suppliers or customers do
not successfully and timely achieve year 2000 compliance, the Company's
business or operations could be materially adversely affected. See
"Management's Discussion and Analysis--Year 2000" and "Business--Information
Technology--Year 2000."
CYCLICAL NATURE OF TRUCKING INDUSTRY
The trucking industry has historically been cyclical as a result of economic
recessions and downturns in customers' business cycles and shipping
requirements, excess capacity in the industry, the lack of qualified drivers,
changes in fuel prices and taxes, insurance costs, and fluctuations in the
resale value of tractors and trailers. The Company has little or no control
over these factors. Significant increases in fuel or other operating costs, to
the extent not offset by increases in freight rates, would reduce the
Company's profitability. Economic recessions or downturns in customers'
business cycles could also have a negative effect on the operating results of
the Company.
DEPENDENCE ON AFFILIATES AND OWNER-OPERATORS
A reduction in the number of affiliates or owner-operators, whether due to
capital requirements related to the expense of obtaining, operating and
maintaining equipment or for other reasons, could have a negative effect on
the Company's operations and profitability. Contracts with affiliates
generally have only one year terms, and contracts with owner-operators may be
terminated by either party on short notice. Although affiliates and owner-
operators are responsible for paying for their own equipment, fuel and other
operating costs, significant increases in these costs could cause them to seek
a higher percentage of revenue from the Company if the Company is unable to
increase its rates commensurately. See "Business--Affiliate Program--Owner-
Operators."
INCREASING REGULATIONS
The trucking industry is subject to possible regulatory and legislative
changes, such as increasingly stringent environmental regulations or limits on
vehicle weight and size, that may require changes in operating practices and
increase the cost of
25
<PAGE>
providing truckload services. In addition, rules proposed by the Federal
Highway Administration ("FHWA") governing registration to operate by
interstate motor carriers, such as the Company, if adopted, may require the
Company to reregister to conduct interstate motor carrier operations and
therefore, could negatively affect the Company's business and operating
results. See "Business--Regulation."
POTENTIAL FOR INCREASED UNIONIZATION
Approximately 13.2% of the Company's workforce is currently subject to union
collective bargaining agreements. In addition, the Company's non-union
employees have been subject to union organization efforts from time to time,
and the Company could be subject to future unionization efforts as its
operations expand and the Company integrates the operations of CLC. Increased
unionization of the Company's workforce could result in higher employee
compensation and working condition demands that could increase the Company's
operating costs or constrain its operating flexibility. See "Business--Drivers
and Other Personnel."
ENVIRONMENTAL RISKS
The Company's activities involve the handling, transportation, storage, and
disposal of bulk liquid chemicals, many of which are classified as hazardous
materials, hazardous substances, or hazardous wastes. The Company's tank wash
and terminal operations engage in the storage or discharge of wastewater and
stormwater that may contain hazardous substances, and the Company has from
time to time stored diesel fuel and other petroleum products at its terminals.
As such, the Company is subject to environmental, health and safety laws and
regulation by U.S. federal, state, local and Canadian government authorities.
Environmental laws and regulations are complex, change frequently and have
tended to become more stringent over time. Changes in such laws and
regulations could impose significant costs on the Company. See "Business--
Environmental Program."
As a handler of hazardous substances, the Company is potentially subject to
strict, joint and several liability for investigating and rectifying the
consequences of spills and other environmental releases of such substances
either under the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986 ("CERCLA") or comparable state laws. From time to
time, the Company has incurred remedial costs and regulatory penalties with
respect to chemical or wastewater spills and releases at its facilities. In
addition, the Company's relationship to its affiliates could, under certain
circumstances, result in the Company incurring liability for environmental
contamination attributable to an affiliate's operations, although the Company
has not incurred any such related liability in the past. See "Business--
Environmental Program."
26
<PAGE>
As the result of environmental studies conducted at its facilities in
conjunction with its environmental management program, the Company has
identified environmental contamination at certain of such sites which will
require remediation. The Company has also been named a "potentially
responsible party," or has otherwise been alleged to have some level of
responsibility, under CERCLA or similar state laws for cleanup of off-site
locations at which the Company's waste, or material transported by the
Company, has allegedly been disposed of. See "Business--Legal Proceedings."
The Company is currently remediating several properties at which it is the
only performing party. CLC is currently remediating two federal superfund
sites at which it is the only performing party. In addition, CLC is currently
investigating and remediating two state superfund sites at which it is the
only performing party. The Company is also investigating, remediating, or is
subject to potential financial obligations at a number of waste disposal sites
at which it is one of several performing parties. See "Business--Environmental
Matters." The Company has incurred in the past and expects to continue to
incur expenses for the foreseeable future on environmental matters. Actual
environmental expenditures may exceed the Company's expectations or reserves
and may have a material adverse effect on the Company's financial condition or
results of operations.
EXPOSURE TO UNINSURED CLAIMS; INSURANCE COST INCREASES
The Company currently maintains liability insurance for bodily injury and
property damage in the amount of $100.0 million per incident. The Company has
recently entered into a new insurance policy whereby it maintains first dollar
insurance coverage for bodily injury and property damage for three years. The
Company also currently maintains first dollar workers' compensation insurance
coverage and is self-insured for damage or loss to the equipment it owns or
leases, and for cargo losses. To the extent that the Company experiences a
significant increase in the frequency or severity of accidents or workers'
compensation claims or unfavorable developments on existing claims, the
Company's operating results and financial condition could be impaired. In
addition, significant increases in insurance costs, to the extent not offset
by increases in freight rates, would reduce the Company's future
profitability. See "Business--Risk Management and Insurance/Safety."
DEPENDENCE ON KEY PERSONNEL; AVAILABILITY OF QUALIFIED DRIVERS
The Company believes that its ability to successfully implement its business
strategy and to operate profitably depends on the continued employment of its
senior management team led by Charles J. O'Brien Jr., Marvin ("Buddy") Sexton,
Richard Brandewie and other members of senior management. If any of Messrs.
O'Brien, Sexton, Brandewie or the other members of senior management become
unable or unwilling to continue in their present positions, the Company's
business or financial
27
<PAGE>
results could be adversely affected. In addition, there is substantial
competition for qualified personnel, including drivers, in the trucking
industry. There is no assurance that the Company will be able to retain its
existing senior management or to attract additional qualified personnel.
Difficulty in attracting or retaining qualified drivers could require the
Company to limit its growth and could have a negative effect on the Company's
operations. See "Business--Drivers and Other Personnel."
RISKS ASSOCIATED WITH POTENTIAL ADDITIONAL ACQUISITIONS
As part of our growth strategy, we may buy, or make investments in, other
bulk trucking or truck servicing companies. If we buy a company, we could have
difficulty assimilating the personnel and operations of the acquired company.
This may cause a disruption of our ongoing business, distraction of management
and other resources, and difficulty in maintaining our uniform standards,
controls and procedures. There can be no assurance that we would succeed in
overcoming these risks or any other problems encountered in connection with
any acquisitions we may make. In addition, we may be required to incur debt or
issue equity to pay for any future acquisitions.
LIMITATION ON RIGHTS OF NOTE HOLDERS TO CHANGE OF CONTROL PAYMENT
In the event of a Change of Control, the Company is required to make an
offer for cash to repurchase the Notes at 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, thereof to the repurchase
date. However, the New Credit Agreement prohibits the purchase of outstanding
Notes prior to repayment of the borrowings under the New Credit Agreement and
any exercise by the holders of the Notes of their right to require the Company
to repurchase the Notes may cause an event of default under the New Credit
Agreement. In addition, the Company may not have the financial resources
necessary to repurchase the Notes upon a Change of Control. See "Description
of Notes--Change of Control."
CONTROL BY APOLLO
Apollo owns approximately 85.3% of the outstanding common stock of the
Company (approximately 76.8% on a diluted basis). Accordingly, Apollo controls
the Company and has the power to elect all of its directors, appoint new
management and approve any action requiring the approval of the holders of
shares of MTL Common Stock, including adopting amendments to the Company's
certificate of incorporation and approving mergers or sales of substantially
all of the Company's assets. The interests of Apollo may conflict with the
interests of the holders of the Notes. For example, if the Company encounters
financial difficulties, or is unable to pay its debts as they mature, the
Company's equity investors may have an interest in pursuing acquisitions,
divestitures, financings or other transactions that, in their judgment, could
enhance their equity investment, even though such transactions might involve
risk to
28
<PAGE>
the holders of the Notes. See "Management," "Principal Stockholders," and
"Certain Transactions."
ABSENCE OF LIQUID MARKET FOR THE EXCHANGE NOTES
There is no existing trading market for the Exchange Notes and no such
market may develop. The absence of such market adversely affects the liquidity
of an investment in the Notes. If a market for the Exchange Notes does
develop, future trading prices will depend on many factors, including among
other things, prevailing interests rates and the market for similar
securities, general economic conditions and the financial condition and
performance of, and prospects for, the Company. The Company does not intend to
apply for listing of the Exchange Notes on any securities exchange or for
quotation through any over-the-counter market.
29
<PAGE>
THE CLC MERGER
On August 28, the Company completed its merger with CLC (the "CLC Merger"),
pursuant to which CLC became a wholly-owned subsidiary of the Company. In
addition to providing short and long-haul transportation of liquid and dry
bulk chemicals, CLC offers a full range of specialized transportation services
including (i) intermodal services, material handling and third-party
logistics, principally to the chemical industry; (ii) tank cleaning services;
(iii) driver-related services such as bulk purchasing of insurance and
supplies to its own fleet, independent owner-operators and third-party
carriers; and (iv) brokering transportation services through over sixty bulk
carriers. Substantially all of CLC's revenues are derived from five wholly
owned subsidiaries--Chemical Leaman Tank Lines, Inc. ("CLTL"), Fleet
Transport, Inc. ("Fleet"), Quala Systems, Inc. ("QSI"), Transplastics, Inc.
and Leaman Logistics, Inc. ("Leaman Logistics"). In the CLC Merger, the
shareholders of CLC received an aggregate of $70.7 million in cash ($10.75
million of which was placed in an escrow account for CLC shareholders'
indemnification obligations) and $5.0 million stated value of redeemable
preferred stock. See "Description of Capital Stock." A portion of the shares
held by certain shareholders of CLC who are officers of CLC (having a value of
$1.1 million based on the per share consideration) were converted into shares
of Company common stock pursuant to the CLC Management Roll. Simultaneously
with the CLC Merger, certain employees of the Company and CLC acquired, for
$830,000 in cash, shares of the Company's common stock, which was financed in
part by loans from the Company. Additionally, certain employees of Leaman
Logistics acquired 5% of the equity of Leaman Logistics through a rollover of
CLC common stock held by certain CLC shareholders, and a small cash investment
financed by loans from the Company. The foregoing description of the CLC
Merger does not purport to be complete and is qualified in its entirety by
reference to the CLC merger agreement, which has been filed as an exhibit to
the Registration Statement, of which this Prospectus forms a part.
In connection with the CLC Merger, on July 28, 1998, the Company commenced
the Tender Offer for the $100 million principal amount of outstanding 10 3/8%
Senior Notes due 2005 of CLC (the "CLC Notes"). The Tender Offer was subject
to the consummation of the CLC Merger. On August 28, 1998, following
consummation of the CLC Merger, the Company accepted all validly tendered CLC
Notes (constituting 100% of the outstanding CLC Notes) for payment and paid to
the holders the tender offer consideration and a related consent payment. Also
on August 28, 1998, the Company refinanced certain indebtedness of CLC,
including a $33 million receivables securitization program.
The sources of funds used to consummate the CLC Transactions included
borrowings under the New Credit Agreement, $4.4 million of assumed CLC
preferred stock, and preferred and common equity investments in the Company by
certain of the Company's shareholders, including affiliates of Apollo,
consisting of the following: a $5.0 million redeemable preferred stock
investment, a $10.5 million senior exchangeable preferred stock investment and
an approximately $10.1 million common equity investment. See "Prospectus
Summary--Our Recent Transactions," "Description of Capital Stock--8%
Redeemable Preferred Stock" and "--13.75% Senior Exchangeable Preferred
Stock." The New Credit Agreement provides for the following: (i) an add-on
facility to the original term loan facility under the MTL Credit Agreement
providing for an increase of $40.0 million in the total term loan amount
currently outstanding to a total of $90.0 million (the "Tranche A Term Loan"),
(ii) an additional term loan facility (the "Tranche B Term Loan") in the
amount of $105.0 million, (iii) an additional term loan facility (the "Tranche
C Term Loan" and, together with the Tranche A Term Loan and Tranche B Term
Loan, the "Term Loans") in the amount of $90.0 million and (iv) a decrease in
the total amount of the Revolving Credit Facility from $110.0 million to $75.0
million. See "Description of the New Credit Agreement." All of the domestic,
direct and indirect, wholly-owned subsidiaries of MTL (including CLC and its
subsidiaries) have guaranteed MTL's borrowings under the New Credit Agreement
and CLC and its subsidiaries have executed a supplemental indenture to become
Guarantors of the Notes pursuant to the terms of the Indenture. For additional
information, see "Unaudited Pro Forma Condensed Consolidated Financial
Information."
30
<PAGE>
USE OF PROCEEDS
The Exchange Offer is intended to satisfy certain of the Company's
obligations under the Registration Rights Agreement. The Company will not
receive any cash proceeds from the Exchange Offer.
PRO FORMA CAPITALIZATION
The following table sets forth the capitalization of the Company assuming
the Transactions had occurred on June 30, 1998. This presentation should be
read in conjunction with the information contained in "Unaudited Pro Forma
Condensed Consolidated Financial Information" and the related notes and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" as well as the Consolidated Financial Statements and the related
notes appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PRO FORMA
AS OF JUNE, 1998
---------------------
(DOLLARS IN MILLIONS)
<S> <C>
LONG TERM DEBT, INCLUDING CURRENT MATURITIES:
Revolving Credit Facility(1)............................ $ 10.0
Term Loans.............................................. 285.0
Capital leases.......................................... 0.4
Notes................................................... 140.0
------
Total long term debt, including current maturities.... 435.4
8% Redeemable Preferred Stock............................. 5.0
13.75% Senior Exchangeable Preferred Stock................ 10.5
Redeemable preferred stock of subsidiary, CLC............. 4.4
Redeemable common stock................................... 1.2
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock $.01 par value and paid-in capital......... 104.8
Other stockholders' deficit............................. (144.9)
------
Total stockholders' deficit........................... (40.1)
------
Total Capitalization...................................... $416.4
======
</TABLE>
- --------
(1) The Revolving Credit Facility provides for borrowings of up to $75.0
million. See "Description of the New Credit Agreement."
31
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
The accompanying Unaudited Pro Forma Condensed Consolidated Balance Sheet as
of June 30, 1998 gives effect to the Transactions as if they had occurred as
of the balance sheet date. The Unaudited Pro Forma Condensed Consolidated
Statements of Operations for the year ended December 31, 1997 and the six
months ended June 30, 1998 give effect to the Transactions as if they had
occurred at the beginning of the periods presented.
All adjustments necessary to fairly present this pro forma information have
been made based on available information and in the opinion of management are
reasonable. The Unaudited Pro Forma Condensed Consolidated Financial
Information is based upon, and should be read in conjunction with, the
Consolidated Financial Statements and the related notes for the year ended
December 31, 1997 of MTL and CLC, the six months ended June 30, 1998 of MTL
and the six months ended July 5, 1998 of CLC included elsewhere in this
Prospectus. The pro forma information does not purport to be indicative of the
results that would have been reported had such events actually occurred on the
dates specified, nor is it indicative of the Company's future results.
32
<PAGE>
MTL INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
MTL CLC COMBINED PRO FORMA PRO
HISTORICAL HISTORICAL* HISTORICAL ADJUSTMENTS FORMA
---------- ----------- ---------- ----------- -------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash................... 3.2 2.6 5.8 (1.1)(A) 4.7
Accounts receivable,
net .................. 39.7 20.0 59.7 33.0 (C) 92.7
Inventories and pre-
paid tires............ 5.1 1.0 6.1 0.4 (D) 6.5
Prepaid and other cur-
rent assets........... 9.9 9.5 19.4 19.4
------- ------- ------- ------- -------
Total current as-
sets................ 57.9 33.1 91.0 32.3 123.3
Property, plant &
equipment, net........ 139.0 111.9 250.9 (1.5)(E) 249.4
Goodwill and intangi-
bles.................. 1.9 -- 1.9 127.8 (F) 129.7
Deferred financing
costs................. 8.2 3.7 11.9 (0.2)(G) 11.7
Notes receivable....... 1.5 3.5 5.0 (3.5)(H) 1.5
Deferred tax asset..... -- 10.2 (I) 10.2
Recoverable environ-
mental costs.......... 14.7 14.7 14.7
Other assets........... 11.7 11.7 (1.2)(H) 10.5
------- ------- ------- ------- -------
Total assets......... 208.5 178.6 387.1 163.9 551.0
======= ======= ======= ======= =======
LIABILITIES AND STOCK-
HOLDERS' EQUITY (DEFI-
CIT)
Accounts payable and
accrued expenses...... 21.9 28.2 50.1 (0.1)(J) 50.0
Current maturities of
indebtedness.......... 0.7 0.8 1.5 (1.1)(B) 0.4
Other current liabili-
ties.................. 5.1 2.0 7.1 19.6 (K) 26.7
------- ------- ------- ------- -------
Total current liabil-
ities............... 27.7 31.0 58.7 18.4 77.1
Revolving loan facili-
ty.................... 10.0 10.0 10.0
Term loan.............. 49.7 49.7 235.3 (B) 285.0
Notes.................. 140.0 140.0 140.0
Long term debt, less
current maturities ... 101.2 101.2 33.0 (C)
(33.0)(B)
(101.2)(B) --
Obligations under cap-
ital leases........... 0.2 18.9 19.1 (19.1)(B) --
Other long term obli-
gations............... 4.3 4.3 5.9 (L) 10.2
Other liabilities...... 27.5 20.2 47.7 47.7
Redeemable preferred
stock, CLC............ 5.3 5.3 (0.9)(M) 4.4
Mandatorily redeemable
preferred stock MTL,
seller................ 5.0 (N) 5.0
Mandatorily redeemable
preferred stock MTL,
buyer................. 10.5 (O) 10.5
Redeemable common
stock................. 1.2 1.2 1.2
Stockholders' equity
(deficit)
Common stock........... -- 2.7 2.7 (2.7)(P) --
Additional paid in
capital............... 92.8 92.8 12.0 (P) 104.8
Other stockholders'
equity................ 45.5 (0.7) 44.8 0.6 (P)
0.1 (J)(P) 45.5
Stock recapitaliza-
tion.................. (189.6) (189.6) (189.6)
Foreign currency
translation account... (0.4) (0.4) (0.4)
Note receivable........ (0.4) (0.4) (0.4)
------- ------- ------- ------- -------
Total stockholders'
equity (deficit).... (52.1) 2.0 (50.1) 10.0 (40.1)
------- ------- ------- ------- -------
Total liabilities and
stockholders' equity
(deficit)........... $ 208.5 $ 178.6 $ 387.1 $ 163.9 $ 551.0
======= ======= ======= ======= =======
</TABLE>
- --------
*Denotes amount as of July 5, 1998.
See notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet
33
<PAGE>
MTL INC.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF
JUNE 30, 1998
(UNAUDITED)
A. Pro forma adjustment to reflect net cash flow from:
<TABLE>
<S> <C> <C>
Incremental term loan, net of financing
costs of $3.5 million $ 231.8 (See Note B below)
Common equity investment 12.0 (See Note P below)
Redeemable preferred investment 10.5 (See Note O below)
Repayment of existing indebtedness (154.4) (See Note B below)
Cash payment to former shareholders
and management in connection with
CLC Transaction (72.8)
Expenses (including Tender Offer) (28.2)
-------
Pro forma adjustment to cash $ (1.1)
=======
</TABLE>
B. Represents term loan used to fund the CLC Merger of $235.3 million and
repayment of existing indebtedness of $154.4 (including the debt referred
to in Note D below).
C. Represents pro forma adjustment to record the repurchase of CLC's accounts
receivables and the assumption of related debt which were previously sold
in connection with the May 1993 Receivables Contribution and Purchase
Agreement and Pooling and Servicing Agreement as amended and restated as of
December, 1994.
D. Represents adjustment to record CLC tire inventory at its estimated fair
market value.
E. Represents the book value of the corporate jet, which will be distributed
to a previous owner of CLC pursuant to the terms of the Purchase and Sale
Agreement.
F. Reflects the excess of the purchase price paid for CLC over the estimated
fair value of the net assets acquired. The allocation of the purchase price
is preliminary and management is in the process of assessing certain areas,
including systems and environmental and expects to be substantially
complete by the end of 1998.
G. Represents deferral of financing fees of approximately $3.5 million paid to
banks in connection with the Term Loans used to finance the Transactions,
net of existing deferred financing costs of approximately $3.7 million.
H. Represents forgiveness of certain CLC shareholder loans in accordance with
the terms of the Merger Agreement.
I. Represents the tax benefit, as calculated at an assumed approximate 41%
effective income tax rate, on the additional liabilities assumed in
connection with the transactions as discussed in [L] below and the
severance liability as discussed in [K] below.
J. Represents accrued preferred stock dividends associated with the existing
Mandatorily Redeemable Preferred Stock which was converted as discussed in
[L] below.
K. Represents the liability recorded in accordance with EITF 95-3-Recognition
of Liabilities in Connection with a Purchase Business Combination. The
liability recorded relates primarily to the costs associated with
involuntarily terminating employees of the acquired company. As of the date
of the consummation of the acquisition, management had formulated a plan
for termination of specific redundant positions and management is currently
in the process of implementing such plan which is expected to be
substantially complete within one year.
34
<PAGE>
L. Represents other liabilities including (i) increase in insurance reserve of
approximately $3.0 million to record CLC's reserve at fair value based on
the actuarially determined method as utilized by MTL, and, (ii) additional
pension liability of approximately $1.6 million to record the liability at
fair market value and to conform CLC actuarial assumptions to MTL
assumptions. Adjustment additionally represents other liabilities of
approximately $1.3 million associated with earn-out consideration to be
paid for prior CLC acquisitions, the liabilities of which were incurred in
connection with the CLC Transactions.
M. Represents the conversion of the 151 Series B convertible preferred shares
of CLC at a $6,000 stated value per share into common stock in connection
with the CLC Merger.
N. Represents mandatorily redeemable 8% preferred equity investment of $5.0
million issued to the sellers of CLC in connection with the CLC
Transactions with a final maturity date no later than the ninth anniversary
from August 28, 1998, the date of issuance.
O. Represents mandatorily redeemable 13.75% preferred equity investment of
$10.5 million by Apollo and an affiliate of BT Alex. Brown Incorporated
with a maturity date no later than September 15, 2006.
P. Represents (i) $12.0 million common equity investments into MTL by Apollo,
MTL management and former CLC management (ii) pro forma adjustments to
equity of ($52.0) million and (iii) elimination of adjusted CLC equity of
$50.0 million, all of which are summarized below:
<TABLE>
<S> <C> <C>
Pro forma adjustments:
Fair value of tire inventory $ 0.4 (See D above)
Conversion of CLC preferred stock 0.9 (See M above)
Write-off of historical deferred financing fees (3.7) (See G above)
Liability for integration costs for CLC
Transaction (19.6) (See K above)
Increase in other liabilities (5.9) (See L above)
Forgiveness of certain CLC shareholder loans (4.7) (See H above)
Book value of corporate jet (1.5) (See E above)
Expenses (including Tender Offer) (28.2) (See A above)
Elimination of dividends on preferred stock 0.1 (See J above)
Deferred tax benefit 10.2 (See I above)
------
Total pro forma equity adjustments to CLC
equity (52.0)
Common equity investment in MTL 12.0
Elimination of adjusted CLC equity 50.0 (1)
------
Total pro forma adjustment $ 10.0
======
</TABLE>
(1) Adjusted CLC equity is computed as the sum of CLC historical
common stock of $2.7 million and CLC historical other
shareholders' equity of $(0.7) million as adjusted for pro forma
adjustments of $(52.0) million.
35
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
MTL CLC HISTORICAL PRO FORMA
HISTORICAL HISTORICAL COMBINED ADJUSTMENTS PRO FORMA
---------- ---------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Operating revenues...... $286.0 $330.0 $616.0 $ 5.8 [A] $621.8
Costs and expenses:
Operating expenses,
excluding
depreciation and
amortization......... 247.6 314.2 561.8 5.0 [A]
(15.7)[B]
1.8 [C] 552.9
Depreciation and
amortization......... 17.3 19.8 37.1 (3.4)[C]
4.3 [D] 38.0
------ ------ ------ ----- ------
Total operating ex-
penses............. 264.9 334.0 598.9 (8.0) 590.9
------ ------ ------ ----- ------
Operating income........ 21.1 (4.0) 17.1 13.8 30.9
Other expenses (in-
come).................. 0.2 0.2 (2.0)[E] (1.8)
Minority interest ex-
pense.................. 0.3 [F] 0.3
Interest expense, net... 3.2 10.3 13.5 25.6 [G] 39.1
------ ------ ------ ----- ------
Income before income
taxes.................. 17.9 (14.5) 3.4 (10.1) (6.7)
Provision for income
taxes.................. 7.4 (5.3) 2.1 (4.1)[H] (2.0)
------ ------ ------ ----- ------
Net income (loss) before
extraordinary item and
cumulative effect of
accounting change...... 10.5 (9.2) 1.3 $(6.0) $ (4.7)
====== ====== ====== ===== ======
Ratio of earnings to
fixed charges (I) --
</TABLE>
See notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations
for Year Ended December 31, 1997 and Six Months Ended June 30, 1998
36
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR
SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
MTL CLC HISTORICAL PRO FORMA
HISTORICAL HISTORICAL* COMBINED ADJUSTMENTS PRO FORMA
---------- ----------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Operating revenues...... $148.6 $183.1 $331.7 $ -- $331.7
Costs and expenses:
Operating expenses,
excluding deprecia-
tion and amortiza-
tion................. 140.8 166.5 307.3 (20.7)[B]
1.2 [C] 287.8
Depreciation and amor-
tization............. 9.9 10.9 20.8 (2.0)[C]
2.2 [D] 21.0
------ ------ ------ ------ ------
Total operating ex-
penses............. 150.7 177.4 328.1 (19.3) 308.8
Operating income........ (2.1) 5.7 3.6 (19.3) 22.9
Other expense........... -- 0.8 0.8 (1.0)[E] (0.2)
Minority Interest Ex-
pense.................. 0.2 [F] 0.2
Interest expense, net
(including bridge loan
financing fees)........ 3.3 6.2 9.5 10.2 [G] 19.7
------ ------ ------ ------ ------
Income before income
taxes.................. (5.4) (1.3) (6.7) 9.9 3.2
Provision for income
taxes.................. (2.3) (0.5) (2.8) (4.1)[H] 1.3
------ ------ ------ ------ ------
Net income, before ex-
traordinary items...... $ (3.1) $ (0.8) $ (3.9) $ 5.8 $ 1.9
====== ====== ====== ====== ======
</TABLE>
- --------
*Denotes amount as of July 5, 1998.
Ratio of earnings to fixed charges (I) 1.15x
See notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations
for Year Ended December 31, 1997 and Six Months Ended June 30, 1998
37
<PAGE>
MTL INC.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS FOR YEAR ENDED DECEMBER 31, 1997 AND SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED)
A. Represents the operating revenues and operating expenses associated with
the acquisition of two entities by CLC as if these acquisitions had
occurred at the beginning of the period presented. The two entities
acquired consist solely of operational and tank wash facilities.
B. Pro forma adjustment to reflect operating expenses is as follows:
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
1997 1998
------------ ----------
<S> <C> <C>
Adjustments related to the MTL Transactions
Compensation expense for Company's former chair-
man (1)......................................... $ (0.3) $ (0.1)
Shareholder relations and other expenses of oper-
ating as a public company (1)................... (0.2) (0.1)
Apollo management fee (2)........................ 0.5 0.2
Compensation--options (3)........................ -- (13.4)
------ ------
Total Adjustments related to the MTL Transac-
tions......................................... -- (13.4)
Adjustments related to the CLC Transactions
CLC ownership expenses (4)....................... (4.7) (1.9)
CLC corporate jet costs (5)...................... (0.5) (0.2)
Cost synergies / terminal consolidations (6)..... (10.5) (5.2)
------ ------
Total Adjustments related to the CLC Transac-
tions......................................... (15.7) (7.3)
------ ------
Net pro forma operating expense adjustment....... $(15.7) $(20.7)
====== ======
</TABLE>
--------
(1) As a result of the MTL Transactions these functions will no longer be
performed or will be performed by personnel of the combined Company or
by Apollo. See note (2) below.
(2) Under the terms of the Management Agreement, Apollo will receive an
annual management fee in consideration for financial and strategic
advisory services fees.
(3) Adjusts for payments to holders of options of MTL stock in connection
with the MTL Transactions. These options vested and were paid solely
in connection with the merger and recapitalization of MTL.
(4) Pursuant to the Purchase and Sale Agreement between CLC and MTL these
ownership and related costs represent primarily salaries, bonuses,
consulting fees, expense reimbursements and other payments to the
former owners of CLC that will not be incurred subsequent to the
Merger.
(5) In connection with the CLC Merger, pursuant to the Purchase and Sale
Agreement between CLC and MTL, CLC's corporate jet will be distributed
to a previous owner of CLC. This pro forma adjustment represents the
related net operating expenses for the corporate jet net of additional
costs expected to be incurred by the Company not having access to the
jet for business purposes which management does not anticipate to be
significant.
(6) Pro forma adjustment represents synergies that are estimated to be
achieved subsequent to the CLC Merger. Estimated synergies represent
specifically identified personnel cost savings related to the planned
integration of CLC's and MTL's operations primarily expected to occur
within one year from the Merger savings related to consolidation of
certain overlapping terminals and anticipated savings resulting from
the consolidation of MTL's and CLC's existing insurance policies for
which MTL has signed a new contract covering the combined companies.
38
<PAGE>
MTL INC.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS FOR YEAR ENDED DECEMBER 31, 1997 AND SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED)
C. Adjustment represents results of conforming CLC depreciation and
amortization policies to MTL policies including (i) decrease in
depreciation expense of $1.4 million and $0.7 million for the year ended
December 31, 1997 and the six months ended June 30, 1998 respectively (ii)
decrease in amortization expense related to tubes and tires of $0.2 million
and $0.1 million for the year ended December 31, 1997 and the six months
ended June 30, 1998 respectively and (iii) reclassification of leasing
costs of $1.8 million and $1.2 million for the year ended December 31, 1997
and the six months ended June 30, 1998 respectively.
D. Reflects estimated amortization expense of approximately $4.2 million and
$2.0 million for the year ended December 31, 1997 and the six months ended
June 30, 1998 respectively, related to intangible assets to be recorded in
connection with the CLC Merger. Intangible assets of approximately $129.8
million consist primarily of goodwill or customer list value. MTL
anticipated these intangible assets will be amortized over a composite life
of approximately 25 years. The period used for intangible amortization is
based on a preliminary estimate of the reasonable period for which such
costs are expected to be recovered and is based in part on the earnings and
history of CLC.
E. Reflects adjustment to decrease Other income (expense) for the amount of
historical interest expense recorded associated with the accounts
receivables which were repurchased in connection with the Merger.
F. Represents interest expense in the form of dividends payable on the
Minority Interest calculated as (i) 6% of the face value of the historical
Series A preferred stock and (ii) 8% of the face value of the historical
Series C preferred stock.
G. Pro forma adjustment to record interest expense and amortization of
financing fees related to the Revolving Credit Facility, Term Loan Facility
and the Notes, net of a decrease in interest expense from the assumed
repayment of existing long term debt, is as follows:
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
1997 1998
------------ ----------
<S> <C> <C>
Pro forma interest on new debt (a)................ $37.7 $18.9
Pro forma amortization of deferred financing
costs (b)........................................ 1.5 0.8
Fee for unused portion of Revolving Credit
Facility (c)..................................... 0.3 0.2
Bridge financing fees (d)......................... -- (0.6)
Decrease from repayment of actual interest expense
on existing
long term debt................................... (13.9) (9.1)
----- -----
Net pro forma interest expense adjustment......... $25.6 $10.2
===== =====
</TABLE>
39
<PAGE>
MTL INC.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS FOR YEAR ENDED DECEMBER 31, 1997 AND SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED)
(a) Pro forma adjustment to record interest expense on net debt is as
follows:
<TABLE>
<CAPTION>
PRO FORMA
INTEREST PRO FORMA
EXPENSE INTEREST
FOR YEAR EXPENSE
ASSUMED ENDED FOR SIX MONTHS
INTEREST OUTSTANDING DECEMBER ENDED JUNE 30,
RATE DEBT BALANCE 31, 1997 1998
-------- ------------ --------- --------------
<S> <C> <C> <C> <C>
Sublimit Revolving
Credit Facility........ 7.50% (i) 10.0 0.8 0.4
Term Loan Facility
Tranche A.............. 7.72% (ii) 90.0 6.9 3.5
Term Loan Facility
Tranche B.............. 7.97% (iii) 105.0 8.4 4.2
Term Loan Facility
Tranche C.............. 8.22% (iv) 90.0 7.4 3.7
Fixed Rate Notes........ 10.00% 100.0 10.0 5.0
Floating Rate Notes..... 10.53%(v) 40.0 4.2 2.1
----- -----
Total pro forma interest expense
on new debt.................................. $37.7 $18.9
</TABLE>
--------
(i) Interest on the Revolving Credit Facility is based on 1.50% in
excess of the Canadian Bankers Acceptance Rate.
(ii) Interest on Tranche A of the Term Loan Facility is based on
2.00% in excess of LIBOR.
(iii) Interest on Tranche B of the Term Loan Facility is based on
2.25% in excess of LIBOR.
(iv) Interest on Tranche C of the Term Loan Facility is based on
2.50% in excess of LIBOR.
(v) Interest of the Floating Rate Notes is based on 4.8% is excess
of LIBOR.
(b) Pro forma adjustment to reflect amortization of financing fees
related to the Revolving Credit Facility and Term Loan Facility and
the Notes is as follows:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS
FINANCING MATURITY DECEMBER 31, ENDED JUNE
FEES (IN YEARS) 1997 30, 1998
--------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
Revolving Credit
Facility............... $ 1.5 6 $0.3 $0.1
Term Loan............... 4.4 6 0.7 0.3
Notes................... 4.2 8 0.5 0.2
----- ---- ----
Total................... $10.1 $1.5 $0.6
</TABLE>
(c) Represents the commitment fee equal to 1/2 of 1.0% per annum on the
undrawn portion of the available commitment under the Revolving
Credit Facility (total line of credit is $75.0 million of which
$10.0 million is assumed drawn for purposes of this pro forma
analysis).
(d) Pro forma adjustment to decrease interest expense for the one-time
bridge financing fee incurred in connection with the MTL
Transactions.
H. Pro forma adjustment to reflect tax effect of the pro forma adjustments at
an assumed approximate 41% effective income tax rate.
I. For purposes of computing this ratio of earnings of income before income
taxes plus fixed charges, fixed charges consist of interest expense and
one-third of the rent expense from operating leases, which management
believes is a reasonable approximation of an interest factor. For the year
ended December 31, 1997 earnings were insufficient to cover fixed charges
by $6.8 million.
40
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
MTL
The selected historical consolidated financial information set forth below
is qualified in its entirety by reference to, and should be read in
conjunction with, the Consolidated Financial Statements and notes thereto of
MTL included elsewhere in this Prospectus and "Management's Discussion and
Analysis of Financial Condition and Results of Operations." THE FISCAL YEAR
HISTORICAL INFORMATION AND THE UNAUDITED FINANCIAL INFORMATION FOR THE SIX
MONTHS ENDED JUNE 30, 1997 DO NOT GIVE EFFECT TO THE CLC TRANSACTIONS OR
INCLUDE HISTORICAL INFORMATION FOR CLC. However, selected historical
information for CLC is presented following such information. The consolidated
financial information set forth below for and as of each of the years in the
five-year period ended December 31, 1997 has been derived from audited
consolidated financial statements of the Company which are included elsewhere
in this Prospectus. The consolidated financial information for the six months
ended June 30, 1997 and 1998 is unaudited, but in the opinion of management,
reflects all adjustments necessary for a fair presentation of such
information. Operating results for the six months ended June 30, 1998 are not
necessarily indicative of the results that may be expected for the fiscal year
ending December 31, 1998.
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------------------------ ------------------
1993 1994 1995 1996 1997 1997 1998
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating revenues...... $142,376 $168,290 $190,054 $235,599 $286,047 $139,189 $148,622
Costs and expenses:
Operating expenses,
excluding depreciation
and amortization...... 122,188 145,108 163,396 203,487 247,619 120,935 140,760
Depreciation and
amortization.......... 7,335 8,213 10,156 13,892 17,335 8,051 9,916
Interest expense, net.. 5,722 4,172 3,468 3,494 3,175 1,555 3,305
Other expenses
(income).............. 94 252 (176) (214) 39 (19) (16)
-------- -------- -------- -------- -------- -------- --------
Total costs and
expenses.............. 135,339 157,745 176,844 220,659 268,168 130,522 153,965
Income (loss) before
taxes.................. 7,037 10,545 13,210 14,940 17,879 8,667 (5,343)
Provision (benefit) for
income taxes........... 2,653 4,306 5,408 6,103 7,396 3,578 (2,259)
-------- -------- -------- -------- -------- -------- --------
Net income (loss) before
extraordinary item..... $ 4,384 $ 6,239 $ 7,802 $ 8,837 $ 10,483 $ 5,089 $ (3,084)
======== ======== ======== ======== ======== ======== ========
OTHER DATA:
EBITDA (1)(2)........... $ 20,188 $ 23,182 $ 26,658 $ 32,112 $ 38,428 $ 18,254 $ 7,862
Net cash provided by
operating activities... 14,486 17,308 18,090 22,304 33,832 12,315 1,355
Net cash used in
investing activities... (2,735) (21,395) (30,089) (21,780) (31,690) (12,764) (12,212)
Net cash (used in)
provided by financing
activities............. (11,378) 4,366 11,597 (135) (1,503) 1,965 12,759
Capital expenditures.... 3,576 24,341 32,099 20,577 35,121 12,280 13,547
Number of terminals at
end of period.......... 53 59 66 70 80 74 83
Number of trailers
operated at end of
period................. 2,546 2,869 3,190 3,728 4,148 3,883 4,455
Number of tractors
operated at end of
period................. 907 1,196 1,305 1,649 1,915 1,832 1,932
Ratio of earnings to
fixed charges (3)...... 2.1x 3.2x 4.4x 4.1x 4.8x 4.7x --
CONSOLIDATED BALANCE
SHEET DATA AT PERIOD
END:
Total assets............ $105,787 $126,219 $145,740 $173,604 $194,036 $184,037 $208,420
Long-term obligations,
including current
portion................ 53,613 40,538 48,844 57,329 55,098 59,038 204,779
Stockholders' equity
(deficit).............. 17,245 52,247 60,058 68,913 79,532 74,115 (52,074)
</TABLE>
- --------
(1) EBITDA represents earnings before extraordinary items, net interest
expense, income taxes, depreciation and amortization and other operating
income (expense). EBITDA is presented because it is a widely accepted
financial indicator used by certain investors and analysts to analyze and
compare companies on a basis of operating performance. EBITDA is not
intended to present cash flows for the period, nor has it been presented
as an alternative to operating income as an indicator of operating
performance and should not be considered in isolation or as a substitute
for measures of performance prepared in accordance with generally accepted
accounting principles. See the Consolidated Financial Statements and the
related notes of MTL appearing elsewhere in this Prospectus.
(2) During the six months ended June 30, 1998, the Company incurred a non-
recurring expense related to the exercise of options of MTL stock in
connection with the MTL Transactions. Excluding this expense, EBITDA would
have been $21.3 million for the six months ended June 30, 1998.
(3) For purposes of computing this ratio, earnings consist of income before
income taxes plus fixed charges. Fixed charges consist of interest expense
and one-third of the rent expense for operating leases, which management
believes is a reasonable approximation of an interest factor. For the six
months ended June 30, 1998 earnings were insufficient to cover fixed
charges by $5,343.
41
<PAGE>
CLC
The selected historical consolidated financial information set forth below
is qualified in its entirety by reference to, and should be read in
conjunction with, the Consolidated Financial Statements and the related notes
of CLC included elsewhere in this Prospectus and "Management's Discussion and
Analysis of Financial Condition and Results of Operations." The selected
consolidated financial data as of and for the years ended December 31, 1993,
1994, 1995, 1996, 1997, and as of June 29, 1997 and for the six month period
then ended have been derived from the audited financial statements of CLC,
which are included elsewhere in this Prospectus. The consolidated financial
information for the six months ended July 5, 1998 is unaudited, but in the
opinion of management, reflects all adjustments necessary for a fair
presentation of such information. The information set forth below is for
periods prior to the CLC Transactions, and therefore does not give effect
thereto. Operating results for the six months ended July 5, 1998 are not
necessarily indicative of the results that may be expected for the fiscal year
ending December 31, 1998.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED
------------------------------------------------ ------------------
JUNE 29, JULY 5,
1993 1994 1995 1996 1997 1997 1998
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating revenues...... $231,190 $241,443 $245,706 $281,075 $329,977 $156,545 $183,082
Costs and expenses:
Operating expenses,
excluding depreciation
and amortization...... 214,737 222,847 225,556 258,178 314,223 145,460 166,571
Depreciation and
amortization.......... 11,320 11,783 13,731 16,255 19,817 9,336 10,867
Interest expense, net.. 4,016 4,946 5,978 7,553 10,299 4,515 6,158
Other income
(expense)............. 207 92 (110) (795) 165 165 764
-------- -------- -------- -------- -------- -------- --------
Total costs and
expenses.............. 230,280 239,668 245,155 281,191 344,504 159,476 184,360
Income before taxes..... 910 1,775 551 (116) (14,527) (2,931) (1,278)
Provision for income
taxes.................. 227 710 220 46 (5,310) (1,223) (447)
-------- -------- -------- -------- -------- -------- --------
Net income (loss) before
extraordinary item and
cumulative effect of
accounting change...... $ 683 $ 1,065 $ 331 $ (162) $ (9,217) $ (1,708) $ (831)
======== ======== ======== ======== ======== ======== ========
OTHER DATA:
EBITDA (1) ............. $ 16,453 $ 18,596 $ 20,150 $ 22,897 $ 15,754 $ 11,085 $ 16,511
Net cash provided by
(used in) operating
activities............. 11,197 16,567 17,444 4,677 (11,740) (3,519) 1,314
Net cash used in
investing activities... (9,892) (18,755) (10,490) (34,273) (23,156) (10,255) (13,225)
Net cash provided by
(used in) financing
activities............. 6,994 4,120 (9,444) 26,861 31,789 22,709 11,869
Capital expenditures.... 12,050 20,747 13,270 20,020 24,345 11,006 12,834
Number of terminals at
end of period.......... 65 61 66 105 107 105 109
Number of trailers
operated at end of
period................. 2,438 2,869 2,645 3,502 3,525 3,433 3,420
Number of tractors
operated at end of
period................. 1,390 1,545 1,368 1,755 2,032 1,813 2,046
BALANCE SHEET DATA AT
PERIOD END:
Total assets............ $127,176 $146,536 $136,405 $182,544 $177,514 $177,528 $178,621
Long-term obligations,
including current
maturities............. 53,386 69,223 67,821 109,024 112,301 102,202 120,820
Stockholders' equity.... 22,917 20,245 19,779 15,723 3,013 13,153 2,004
</TABLE>
- --------
(1) EBITDA represents earnings before extraordinary items, net interest
expense, income taxes, depreciation and amortization and other income
(expense). EBITDA is presented because it is a widely accepted financial
indicator used by certain investors and analysts to analyze and compare
companies on the basis of operating performance. EBITDA is not intended to
present cash flows for the period, nor has it been presented as an
alternative to operating income as an indicator of operating performance
and should not be considered in isolation or as a substitute for measures
of performance prepared in accordance with generally accepted accounting
principles. See the Consolidated Financial Statement and related notes of
CLC appearing elsewhere in this Prospectus.
42
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MTL
The following discussion of the results of operations and financial
condition of MTL should be read in conjunction with MTL's consolidated
financial statements and the related notes included elsewhere in this
Prospectus. The information presented below does not include the results of
CLC, which became a wholly owned subsidiary of MTL on August 28, 1998.
OVERVIEW
The Company's revenue is principally a function of (i) the volume of
shipments for the bulk chemical industry, (ii) the Company's market share as
opposed to that of its competitors and (iii) the amount spent on tank truck
transportation as opposed to other modes of transportation such as rail. The
volume of shipments of chemical products are in turn affected by many other
industries, including consumer and industrial products, automotive, paint and
coatings, and paper, and tend to vary with changing economic conditions.
The principal components of the Company's operating costs include purchased
transportation, salaries, wages, benefits, annual tractor and trailer
maintenance costs, insurance and fuel costs. The Company's use of affiliates
and owner-operators provides a more flexible cost structure, increases the
Company's asset utilization and increases return on invested capital.
MTL has historically focused on maximizing cash flow and return on invested
capital. The Company's affiliate program has greatly reduced the amount of
capital needed for the Company to maintain and grow its terminal network. In
addition, the extensive use of owner-operators reduces the amount of capital
needed by the Company to build its fleet of tractors, which have shorter
economic lives than trailers. These factors have allowed the Company to
concentrate its capital spending on its trailer fleet where it can achieve
superior returns on invested capital through the Company's transportation
operations and leasing to third parties and affiliates. Over the past five
years, MTL estimates that its cash return on invested capital has exceeded
20.0%.
The Company also provides leasing, tank cleaning, logistics and intermodal
services. Revenues from these supplementary services accounted for less than
10.0% of the Company's revenues for the year ended December 31, 1997.
In 1996, the Company acquired all of the outstanding stock of Levy Transport
Ltd. ("Levy"), a Quebec-based tank truck carrier, for $5.1 million in cash
plus the assumption of debt. Levy services the chemical, petroleum and glass
industries with a fleet of over 400 tractors and trailers. The Company intends
to continue providing these services and expand upon existing customer
relationships by providing the Company's supplementary services as well as
increasing the fleet size in these markets.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997.
Revenues for the first six months of 1998 were $148.6 million, an increase
of $9.4 million or 6.8%, over the same period in 1997. In the first six months
of 1998, transportation revenues accounted for approximately 92.7% of revenues
while supplementary services including leasing, tank cleaning, logistics and
intermodal services accounted for approximately 7.3%, consistent with the
first six months of 1997. The Company attributes its increased revenue to
sustained strength in chemical industry shipment volumes nationwide and
continued implementation of both its affiliate and core carrier strategies.
43
<PAGE>
The Company operated 83 terminals at June 30, 1998 compared to 74 terminals
at June 30, 1997. The Company also expanded the size of its fleet during this
time period, increasing operated trailers from 3,883 to 4,455, or 14.7%, and
increasing operated tractors from 1,832 to 1,932, or 5.4%.
Operating expenses, excluding depreciation and amortization totaled $140.8
million in the first six months of 1998, an increase of $11.8 million, or
9.1%, from the first six months of 1997. Operating expenses as a percentage of
operating revenues increased from 92.7% for the first six months of 1997, to
101.4% for the first six months of 1998. This increase in operating expenses
as a percentage of operating revenues was primarily attributable to the $13.4
million pre-tax cost of payouts to the holders of stock options made in
connection with the MTL Transactions. Adjusted for the nonrecurring
compensation paid to optionees, total operating expense was $137.2 million or
92.3% in the first six months of 1998.
Depreciation and amortization expense increased $1.9 million, or 23%, in the
first six months of 1998 from the same time period in 1997 principally due to
a higher amount of depreciable assets associated with increases in the number
of terminals and Company operated trailers and tractors.
Operating income decreased $12.3 million, or 120%, to $(2.1) million in the
first six months of 1998 as compared to $10.2 million during the same time
period in 1997. Operating income as a percentage of revenues decreased from
7.3% in the first six months of 1997 to (1.4)% in the first six months of
1998. The decrease in operating income and operating income as a percentage of
revenues during the first six months of 1998 is attributable to the payout to
the holders of stock options discussed above. Adjusted for the nonrecurring
compensation paid to optionees, operating income was $11.3 million or 7.7% in
the first six months of 1998.
Interest expense increased $1.8 million or, 212.5%, in the first six months
of 1998 as a result of higher average outstanding debt balances during the
first half of 1998 as compared with the same period in 1997.
An income tax benefit of $2.3 million was recorded in the first half of
1998, compared to income tax expense of $3.6 million recorded in the same
period in 1997. This resulted from the pre-tax loss of $5.3 million.
The Company's net loss was $3.7 million in the first six months of 1998
compared to net income of $5.1 million in the first six months of 1997. This
decrease of $8.8 million was attributable to the payout to the holders of
stock options discussed above. Adjusted for all nonrecurring charges related
to the MTL Transactions, net income was $5.7 million in the first six months
of 1998.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996.
Revenues for 1997 were $286.0 million, an increase of $50.4 million, or
21.4%, over 1996 revenues. Transportation revenues increased $48.6 million, or
22.3%, due to strong internal growth and the impact of a full year of Levy's
operating results. In 1997, transportation revenues accounted for
approximately 93.1% of revenues while supplementary services including
leasing, tank cleaning, logistics and intermodal accounted for approximately
6.9% of total revenues. Revenues from these supplementary services increased
$1.9 million, or 10.6%, compared to 1996, primarily as a result of increased
equipment rental income from both affiliates and the Company's customers.
The Company operated 80 terminals at December 31, 1997 compared to 70
terminals at December 31, 1996. The Company also expanded the size of its
fleet during this time period, increasing operated trailers from 3,728 to
4,148, or 11.3%, and increasing operated tractors from 1,649 to 1,915, or
16.1%.
Operating expenses, excluding depreciation and amortization, totaled $247.6
million in 1997, an increase of $44.1 million, or 21.7%, from 1996. Operating
expenses as a percentage of operating revenues increased from 86.4% in 1996 to
86.6% in 1997. This increase in operating expenses as a percentage of
operating revenues was primarily attributable to increases in purchased
transportation expenses, selling and administrative expenses and
44
<PAGE>
insurance and claims expenses, offset by decreases in compensation expense and
fuel supplies and maintenance expenses. This is partially a result of a full
year's impact of the acquisition of Levy, which had higher operating expenses
as a percentage of operating revenues than the Company.
Depreciation and amortization expense increased $3.4 million, or 24.8%,
principally due to a higher amount of depreciable assets associated with
increases in the number of terminals and Company operated trailers and
tractors.
Operating income increased $2.9 million, or 15.8%, to $21.1 million in 1997
as compared to $18.2 million in 1996. Operating income as a percentage of
revenues decreased from 7.7% in 1996 to 7.4% in 1997.
Interest expense decreased $0.3 million, or 9.1%, in 1997 as a result of
lower average outstanding debt balances during 1997 as compared with 1996.
An income tax provision of $7.4 million was recorded in 1997, which was
higher than the income tax provision recorded in 1996 by $1.3 million, or
21.2%. The increase resulted from the increase in income before taxes.
The Company's net income was $10.5 million in 1997 compared to net income of
$8.8 million in 1996. This increase of $1.7 million, or 18.6%, was primarily
attributable to the increase in revenues achieved without a proportionate
increase in costs and administrative expenses.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995.
Revenues for 1996 were $235.6 million, an increase of $45.5 million, or
24.0%, over 1995 revenues. Transportation revenues increased $44.8 million, or
25.9%, partially impacted by strong internal growth as well as the acquisition
of Levy. In 1996, transportation revenues accounted for approximately 92.0% of
revenues while supplementary services including leasing, tank cleaning,
logistics and intermodal services accounted for approximately 8.0% of total
revenues. Revenues from these supplementary services increased $0.8 million,
or 4.7%, compared to 1995, primarily as a result of increased equipment rental
income from both affiliates and the Company's customers.
The Company operated 70 terminals at December 31, 1996 compared to 66
terminals at December 31, 1995. The Company also expanded the size of its
fleet during this time period, increasing operated trailers from 3,190 to
3,728, or 16.9%, and increasing operated tractors from 1,305 to 1,649, or
26.4%.
Operating expenses, excluding depreciation and amortization, totaled $203.5
million in 1996, an increase of $40.1 million, or 24.5%, from 1995. Operating
expenses as a percentage of operating revenue increased from 86.0% in 1995 to
86.4% in 1996. This increase in operating expenses as a percentage of
operating revenues was primarily attributable to increases in compensation
expense, insurance and claims expenses and fuel, supplies and maintenance
expenses, offset by decreases in purchased transportation expenses and selling
and administrative expenses. This is partially a result of the impact of the
Levy acquisition which had higher operating expenses as a percentage of
operating revenues than the Company.
Depreciation and amortization expense increased $3.7 million, or 36.8%,
principally due to a higher amount of depreciable assets associated with
increases in the number of terminals and Company operated trailers and
tractors.
Operating income increased $1.7 million, or 10.4%, to $18.2 million in 1996
as compared to $16.5 million in 1995. Operating income as a percentage of
revenues decreased from 8.7% in 1995 to 7.7% in 1996.
Interest expense increased slightly in 1996 as a result of modestly higher
average outstanding debt balances during 1996 as compared with 1995.
45
<PAGE>
An income tax provision of $6.1 million was recorded in 1996, which was
higher than the tax provision recorded in 1995 by $0.7 million, or 12.9%. The
increase resulted from the increase in income before taxes.
The Company's net income was $8.8 million in 1996 compared to net income of
$7.8 million in 1995. This increase of $1.0 million, or 13.3%, was primarily
attributable to the increase in revenues achieved without a proportionate
increase in costs and administrative expenses.
CLC
The following discussion of the results of operations and financial
condition of CLC should be read in conjunction with CLC's consolidated
financial statements and the related notes included elsewhere in this
Prospectus. The information presented below is for periods prior to, and does
not include, the CLC Transactions.
OVERVIEW
CLC offers a full range of specialized transportation services, including
short and long-haul transportation, intermodal services, materials handling
and third-party logistics, principally to the chemical industry. As a result,
CLC's operating results are affected by the level of overall chemical output
and, in particular, the level of shipments in the liquid chemical and dry bulk
commodity industries. CLC's customer base includes many of the major chemical
producers in the U.S., such as Dow Chemical North America ("Dow Chemical"),
E.I. DuPont de Nemours Co. ("DuPont"), Air Products and Chemicals, Inc. ("Air
Products"), AlliedSignal, Inc. ("Allied Signal") and Union Carbide Corporation
("Union Carbide").
In 1997, approximately 89% of CLC's revenues were derived from short and
long-haul transportation and materials handling, while approximately 9% were
derived from tank cleaning and intermodal services. CLC operates 31 tank
cleaning facilities throughout the U.S., which not only support CLC's trucking
operations, but also provide tank cleaning services for other tank truck
carriers. In 1997, CLC generated $20 million in revenues from tank cleaning
services provided to non-affiliated companies. CLC is marketing its tank
cleaning capabilities to third-party carriers with the objective of increasing
tank cleaning revenues, which result in higher operating margins than CLC's
tank truck operations.
Over the last three years, CLC has continued to focus on shifting its driver
force from Company-employed drivers to owner-operator drivers. At December 31,
1997, the number of owner-operators was 1,505 as compared to 844 at December
31, 1993. Because owner-operators are required to provide their own tractors
and pay all expenses associated with their tractors, this shift has resulted
in a steady decline in the level of certain operating expenses as a percentage
of revenues, including salaries, wages, benefits, maintenance, fuel and
insurance. At the same time, purchased transportation and rents have
correspondingly increased as a percentage of revenues. In addition to reducing
CLC's fixed cost structure, the shift from Company-employed drivers to owner-
operators provides CLC with added operating and financial flexibility.
CLC's exposure to fuel price increases is minimal as most contracts include
fuel price escalation clauses. In addition, CLC's extensive use of owner-
operators further minimizes fuel cost risk as the cost of fuel is borne by
each individual owner-operator. Accordingly, CLC does not participate in any
fuel hedging activities.
CLC acquired the assets of Fleet in June 1996, adding 30 terminal locations,
762 trailers and 440 tractors (including 264 owner-operator tractors). The
purchase price of $22.9 million consisted of $15.5 million in cash and the
assumption of $7.4 million of capital lease obligations. The Fleet acquisition
provides CLC with a strong presence in the southeastern U.S. and adds
customers with little or no overlap with CLC's existing customer base. During
the last six months of 1996 and the for the year ended December 31, 1997,
Fleet generated $27.5 million and $61.3 million, respectively, in revenues.
The Fleet acquisition provides the opportunity for cost savings associated
with Fleet's operations by taking advantage of CLC's vertically integrated
capabilities such as tank cleaning and independent contractor services and by
consolidating certain Fleet and CLTL terminals which are located in close
proximity to one another. Additionally, CLC has realized significant insurance
savings as a result of adding Fleet to its existing insurance programs.
46
<PAGE>
CLC's new information technology system will provide CLC with a new order
entry system, enhanced order tracking and continuous communication with
drivers via satellite. The new system is expected to be completed during 1998
and is anticipated to provide productivity and cost benefits to CLC. CLC has
capitalized $11.6 million of costs as of December 31, 1997 in connection with
this system. These costs will be depreciated over seven years upon completion
of certain of the phases of the project. See "Year 2000" and Note 2 of "Notes
to Consolidated Financial Statements."
CLC faces significant potential liability associated with environmental
contamination of property it owns. It is likely that CLC's liability at the
most costly of these sites will be covered by insurance. However, CLC's
litigation with its insurance carriers, in which CLC has largely prevailed to
date, is ongoing.
RESULTS OF OPERATIONS
CLC employs an accounting calendar consisting of four thirteen week
quarters. Because of differences in the week ending dates of the three and six
month periods ended July 5, 1998 and June 29, 1997, there were three
additional billing days in the six month period ended July 5, 1998 versus the
six month period ended June 29, 1997 and there were two less billing days in
the three month period ended July 5, 1998 versus the three month period ended
June 29, 1997. As such, the analysis of the results of operations between
comparative periods will be impacted by the difference in revenue days in 1998
versus 1997.
SIX MONTH PERIOD ENDED JULY 5, 1998 COMPARED TO THE SIX MONTH PERIOD ENDED
JUNE 29, 1997
Operating Revenues
Operating revenues increased $26.6 million from $156.5 million for the six
month period ended June 29, 1997 to $183.1 million for the six month period
ended July 5, 1998. Of this increase, approximately $3.8 million is
attributable to three additional billing days in the 1998 period versus the
1997 period. An additional $3.5 million is attributable to acquisitions in
CLC's dry bulk and tank cleaning subsidiaries. The remaining increase of $19.3
million results from an increase in existing operations of which $6.3 million
is from CLC's logistics subsidiary.
Operating Expenses
Operating expenses increased $22.6 million from $154.8 million for the six
month period ended June 29, 1997 to $177.4 million for the six month period
ended July 5, 1998. Of this increase, approximately $3.6 million is
attributable to the increased number of billing days in the 1998 period versus
the 1997 period. An additional $3.0 million is attributable to acquisitions in
CLC's dry bulk and tank cleaning subsidiaries. The remaining increase of $16.0
results from an increase in existing operations of which $6.2 million is
related to growth in CLC's logistics subsidiary.
Interest Expense
Interest expense increased from $4.5 million for the six month period ended
June 29, 1997, or 2.9% of revenue, to $6.2 million for the six month period
July 5, 1998, or 3.4% of revenue. The increase in interest expense is
attributable to additional debt incurred in support of new business and
increased business from existing operations as well as higher interest rates
and increased debt as a result of the issuance of the CLC Notes completed on
June 16, 1997.
Net Loss
The net loss for the six month period ended July 5, 1998 decreased $1.1
million from $1.9 million for the six month period ended July 5, 1998 to $.8
million. The increase was due primarily to the after-tax effect of higher
operating profit attributable to increased revenue described above offset by
higher interest and other expense.
47
<PAGE>
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
Results of Operations
Operating Revenues. Operating revenues increased by $48.9 million, or 17.4%,
from $281.1 million in 1996 to $330 million in 1997. Of this increase, $33.8
million resulted from a full year of operations for Fleet in 1997. The
remainder of the increase was due primarily to revenue growth in CLC's
trucking operations and tank cleaning businesses Average revenue per mile
remained constant at $1.78 in 1996 and 1997, while average length of haul was
450 miles for 1997 as compared to 455 miles for 1996. In 1997, short and long-
haul transportation accounted for 89% of revenues while tank cleaning and
intermodal services accounted for 9%, consistent with the 1996.
Operating Expenses. Operating expenses totaled $334.0 million in 1997 as
compared to $274.4 million in 1996, an increase of $59.6 million, or 21.7%.
The majority of the increase was due to the increase in CLC's operating
revenues of 17.4%. The remaining increase was due primarily to the settlement
of a lawsuit, and the related loss incurred by CLC due to the insolvency of
certain of its insurers, in the amount of $4.8 million, charges of $2.7
million for two large insurance claims for personal injuries arising from
trucking accidents, and a fourth quarter charge of $3.2 million recorded to
increase CLC's reserves for environmental liabilities due to developments at
certain sites. See Notes 9 and 11 of "Notes to Consolidated Financial
Statements." Operating expenses as a percentage of revenue increased from
97.6% for 1996 to 101.2% for 1997. The increase was primarily attributable to
increased purchased transportation and rents and operations and maintenance
expense as a percentage of revenues, offset by decreases in salaries, wages
and benefits expense and communications and utilities expense as a percentage
of revenue.
Interest Expense. Interest expense increased from $7.6 million, or 2.7% of
revenues, in 1996 to $10.3 million, or 3.1% of revenues, in 1997. The increase
in net interest expense is attributable to the additional debt incurred in
connection with implementation of CLC's information technology system, the
lawsuit settlement and related loss discussed above, and additional interest
expense with respect to CLC's outstanding CLC Notes.
Extraordinary Loss on Early Extinguishment of Debt. In connection with the
repayment of indebtedness with the proceeds of the Senior Note Offering, CLC
incurred approximately $199,000 of prepayment penalties net of tax benefit,
which was recorded as an extraordinary item in the quarter ended June 29,
1997.
Cumulative Effect of Accounting Change. In November 1997, the Emerging
Issues Task Force (EITF) of the FASB reached a consensus on Issue No. 97-13
"Accounting for Costs Incurred in Connection with a Consulting Contract or an
Internal Project That Combines Business Process Reengineering and Information
Technology Transformation." The Task Force determined that the cost of
business process reengineering activities, whether done internally or by third
parties, is to be expensed as incurred. The consensus also applies when the
business process reengineering activities are part of a project to acquire,
develop, or implement internal-use software. The consensus requires companies
to expense any previously capitalized reengineering costs (for both current
and previous projects) as a cumulative change in accounting principle. Based
upon the detailed guidance of EITF 97-13, CLC recorded a charge of $2.0
million, net of tax benefit, in the fourth quarter of fiscal 1997. This charge
is classified as a cumulative effect of an accounting change in CLC's
consolidated statement of operations.
Net Loss. CLC had a net loss of $11.4 million in 1997 as compared to a net
loss of $162,000 in 1996. The net loss in 1997 is primarily attributable to
the expenses recorded in connection with the lawsuit settlement and related
loss discussed above, two large insurance claims and developments at certain
environmental sites, and reflects the increased depreciation, operating lease
expense and interest expense resulting from the Fleet acquisition and the
cumulative effect of the accounting change.
48
<PAGE>
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
Operating Revenues. Operating revenues increased by $35.4 million or 14.4%
to $281.1 million in 1996 from $245.7 million in 1995. Of this increase, $27.5
million primarily resulted from the inclusion of six months of revenues of
Fleet, which was acquired in June 1996. The balance of the increase of
revenues in 1996 of $7.9 million came from internal growth. Average revenue
per mile decreased from $1.81 per mile in 1995, to $1.78 per mile in 1996, as
a result of downward pricing pressure from CLC's chemical producing customers.
Average length of haul decreased from 463 miles in 1995 to 455 miles in 1996
largely due to the acquisition of Fleet, which typically has a shorter length
of haul given its regional focus. Despite the decrease in average revenue per
mile and average length of haul, total miles traveled increased 16.6 million
in 1996 to 126.8 million from 110.2 miles in 1995. In addition, tank cleaning
revenues increased approximately $3.2 million in 1996 to $17.7 million from
$14.5 million. In 1996, short and long-haul transportation accounted for 91.4%
of revenues while tank cleaning and intermodal services accounted for 8.6%. In
1995, 92.8% of revenues were derived from transportation services and 7.2%
were derived from tank cleaning and intermodal services.
Operating Expenses. Operating expenses increased by $35.1 million, from
$239.3 million in 1995 to $274.4 million in 1996. This increase is
attributable to the inclusion of the operating expenses of Fleet for the last
half of 1996 as well as increased fuel costs. Fleet's operating expenses as a
percentage of revenues are higher than CLC's taken as a whole as Fleet
utilizes operating leases to finance a portion of its revenue equipment. The
Fleet depreciation and operating lease expense together with company-wide
increased fuel costs caused total operating expenses as a percentage of
revenue to increase to 97.6% in 1996 as compared to 97.4% in 1995. Salaries,
wages and benefits declined as a percentage of revenue, while purchased
transportation and rents increased, reflecting an increase in the number of
owner-operator drivers relative to employee drivers. Depreciation expense
increased from $13.7 million in 1995 to $16.2 million in 1996. Of this
increase, $1.8 million is attributable to the Fleet acquisition and the
balance results from a higher level of revenue equipment
in 1996 as compared to 1995 levels. Depreciation expense as a percentage of
revenue remained relatively constant at 5.8% in 1996 and 5.6% in 1995.
Insurance and claims expense was $4.8 million in 1996, representing an
increase of $1.3 million as compared to 1995 levels. Insurance and claims as a
percentage of revenue increased from 1.4% in 1995 to 1.7% in 1996. These
increases are attributable to the Fleet acquisition as well as additional
expense associated with an insurance claim.
Interest Expense. Interest expense increased from $6.0 million in 1995 to
$7.6 million in 1996, increasing from 2.4% of revenues in 1995 to 2.7% of
revenues in 1996. CLC received insurance settlement proceeds of $11.5 million
in late 1995, which were applied to reduce outstanding revolving credit debt.
The increase in 1996 is the result of new borrowings and debt incurred in
connection with the Fleet acquisition.
Net Income (Loss). CLC had a net loss of $162,000 in 1996 as compared to net
income of $331,000 in 1995. The net loss in 1996 reflects the increased
depreciation, operating lease expense and interest expense resulting from the
Fleet acquisition, increased fuel costs and a slight reduction of revenue per
mile. In 1996, CLC recorded tax expense of $46,000 despite a pre-tax loss due
to state taxes and certain non-deductible expenses. This compares to a 40%
effective tax rate for 1995.
LIQUIDITY AND CAPITAL RESOURCES OF THE COMPANY
Through its subsidiaries, the Company's primary source of liquidity is cash
flow from operations and availability under the New Credit Agreement. MTL
generated $18.1 million, $22.3 million and $33.8 million from operating
activities in 1995, 1996 and 1997, respectively, and $12.3 million and $1.4
million in the first six months of 1997 and 1998, respectively. The decrease
in cash provided by operating activities reflects the additional cash charges
in 1998 relating to the MTL Transactions. Capital expenditures totaled $32.1
million, $20.6 million and $35.1 million in 1995, 1996 and 1997, respectively.
In the last three years, MTL has spent in excess of $52.0 million to purchase
1,040 trailers for both replacement and to facilitate future growth. In
addition, the Company has spent $35.0 million on tractors and other assets.
49
<PAGE>
In June 1998, MTL underwent a recapitalization which provided the necessary
capital resources to support future growth opportunities. In August 1998, MTL
completed the acquisition of CLC. After giving effect to the Transactions, the
Company is capitalized with $140.0 million principal amount of Notes, a $360.0
million New Credit Agreement, $68.0 million in equity investments by Apollo
and affiliates of two of the Initial Purchasers (as defined) and members of
management of the Company, and $31.9 million in preferred and common equity
investments by certain of MTL's and CLC's shareholders, including Apollo. The
Notes are unsecured senior subordinated obligations of MTL, ranking
subordinate in right of payment to all existing and future senior debt of the
Company. Upon consummation of the CLC Merger, CLC and its subsidiaries became
guarantors of the Notes and guarantors under the New Credit Agreement. The New
Credit Agreement provides for a term loan facility consisting of a $90.0
million Tranche A Term Loan maturing on June 9, 2004, a seven-year $105.0
million Tranche B Term Loan, an eight-year $90.0 million Tranche C Term Loan
and a $75.0 million Revolving Credit Facility available until June 9, 2004. As
of June 30, 1998, the Company's pro forma long-term debt (including current
maturities) was $435.4 million.
In 1997, CLC's net cash used by operating activities totaled $11.7 million,
as compared to cash generated by operating activities of $4.7 million in 1996.
The $11.7 million of cash used by operating activities in 1997 is due
primarily to the net loss incurred in 1997, an increase in accounts receivable
of $14.0 million, and increases in other assets levels as a result of
approximately $4.2 million of bond issuance costs. CLC was also required in
October 1997 to fund approximately $7.4 million of a lawsuit and the related
losses incurred by CLC due to the insolvency of certain of its insurers, which
resulted in an after-tax charge to earnings of approximately $2.9 million in
the quarter ended September 30, 1997. During the six month period ended July
5, 1998, cash provided by operating activities of CLC was $1.3 million versus
cash used in operating activities of $3.5 million in the six month period
ended June 29, 1997. Cash used in investing activities was $13.2 million and
$10.2 million for the six month periods in 1998 and 1997, respectively.
The Company's primary cash needs consist of capital expenditures and debt
service. The Company incurs capital expenditures for the purpose of (i)
maintaining its fleet of owned tractors and trailers; (ii) replacing older
tractors and trailers; (iii) purchasing new tractors and trailers; and (iv)
maintaining and improving infrastructure, including the integration of the
information technology system.
The Company and CLC have historically sought to acquire smaller local
operators as part of their programs of strategic growth. Following the CLC
Merger, both companies continue to evaluate potential acquisitions in order to
capitalize on the consolidation occurring in the industry and expect to fund
such acquisitions from available sources of liquidity, including borrowings
under the Revolving Credit Facility.
The Company believes that after giving effect to the Transactions and the
incurrence of indebtedness related thereto, based on current levels of
operations and anticipated growth, on a combined basis, the Company's cash
flow from operations, together with available sources of liquidity, including
borrowings under the Revolving Credit Facility, will be sufficient over the
next several years to fund anticipated capital expenditures and make required
payments of principal and interest on its debt, including payments due on the
Notes and obligations under the New Credit Agreement.
YEAR 2000
Some of the Company's older computer programs and systems were written using
two digits rather than four to define the applicable year. As a result, those
computer programs have time sensitive software that recognizes a date using
"00" as the year 1900 rather than the year 2000. This could cause a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices or
engage in similar normal business activities.
The Company has developed a plan to ensure that its systems are compliant
with the requirements to process transactions in the year 2000. Most of the
Company's combined systems implementation effort is now directed
50
<PAGE>
toward the migration of the CLC billing, settlement and financial reporting
systems from mainframe based systems which are not Year 2000 compliant. The
target completion date for this implementation effort is June 30, 1999. The
estimated cost of the Company's completed and remaining replacement and
modification for the Year 2000 issue is not expected to be material to the
Company's earnings or financial position.
The Company has developed a contingency plan should it be unable to compete
its implementation effort by the June 30, 1999 target date. At that time the
Company would be able to convert to a new mainframe system which would be Year
2000 compliant. This new system would enable the Company's to become Year 2000
compliant without rewriting the application to its system. The Company
estimates that the cost of this new system would not be material to the
Company.
In addition to assessing its own Year 2000 compliance, the Company has had
discussions with many of its major vendors and suppliers regarding their Year
2000 compliance. The Company has already received letters of compliance from
many of its material partners and is in the process of collecting such letters
from others.
There can be no assurance, that the Company's timetable will be met, that the
programming changes required to accommodate current CLC billing and driver
settlement requirements will be completed in this time frame, or that such
changes will not negatively impact CLC's ability to meet its customers or its
drivers requirements. See "Risk Factors--Information Technology; Dependence on
Effective Information Systems" and "Business--Information Technology--Year
2000."
51
<PAGE>
BUSINESS
GENERAL
With the completion of the CLC Merger, the Company has become the largest
bulk tank truck carrier in the United States based on revenues and fleet size.
Through a network of 189 terminals located across the United States and
Canada, MTL transports a broad range of chemical products and provides its
customers with supplementary transportation services such as dry bulk hauling,
transloading, tank cleaning, third-party logistics, intermodal services and
leasing. Many of the chemical and chemical-related consumer products
transported by the Company require specialized trailers and experienced
personnel for safe, reliable and efficient handling. MTL is a core carrier for
many of the Fortune 500 companies who are engaged in chemical processing,
including The Procter & Gamble Company ("Procter & Gamble"), Union Carbide,
Dow Chemical, Allied Signal, DuPont and PPG Industries.
In addition to the Company's own fleet operations, it uses affiliates (i.e.,
independent companies which, through comprehensive contracts with MTL, operate
their terminals exclusively for MTL) and owner-operators (i.e., independent
contractors who, through contracts with MTL, supply one or more tractors and
drivers for MTL or its affiliate's use). Management believes that the use of
affiliates and owner-operators results in a more flexible cost structure,
increases the Company's asset utilization and increases return on invested
capital. Through its principal transportation subsidiaries, Montgomery Tank
Lines, Inc. ("Montgomery"), Fleet, Quality Carriers, Inc. ("Quality") and
CLTL, as of September 30, 1998, the Company operated approximately 7,900
trailers, of which 6,966 were owned or leased by the Company, and 3,883
tractors, of which 912 were owned or held directly under lease by the Company.
On June 9, 1998, MTL was recapitalized through a merger with a corporation
controlled by Apollo Management, L.P. ("Apollo Management," and together with
its affiliates, "Apollo") and certain related companies. On August 28, 1998,
MTL completed its acquisition of CLC. Founded in 1913, CLC was, prior to the
CLC Merger, the largest bulk tank truck carrier in the United States based on
revenues. The combination of CLC and MTL has united two of the leading bulk
transportation service providers under one holding company. On a pro forma
basis for the fiscal year ended December 31, 1997 and for the six months ended
June 30, 1998, after giving effect to the Transactions, the Company generated
revenues and EBITDA of approximately $621.8 million and $68.9 million, and
$331.7 million and $40.0 million, respectively. The pro forma financial
information gives effect to both of MTL's recent transactions as described
above as if they had occurred on January 1, 1997 or 1998, as appropriate. See
"Prospectus Summary--Our Recent Transactions" and "The CLC Merger."
INDUSTRY OVERVIEW
The tank truck carrier market, which involves the provision of
transportation services for a wide variety of manufacturing and industrial
companies, is estimated to be approximately $9.0 billion. The Company competes
in the $6.0 billion for-hire tank truck segment, which excludes shipper-owned
private fleets. Substantially all of the for-hire tank truck segment involves
the transportation of liquid and dry bulk chemicals including resins, latex,
acids, alcohol, solvents, corrosives as well as petroleum and petroleum-
related products. We believe that the specialized nature of these products and
the high service levels required for their transportation makes the tank truck
carrier market less sensitive to pricing pressures than the dry van segment of
the trucking industry, which is considered more of a commodity-type service.
The for-hire tank truck industry is expected to continue to grow primarily
as a result of continued growth of chemical shipments as well as increased
outsourcing of transportation services by chemical companies. The Company
believes that the increasing desire of chemical companies to focus their
financial resources on product development and marketing has made it
increasingly difficult for them to justify operating a private transportation
fleet and has resulted in an increasing reliance on third-party carriers, such
as the Company. In addition, the Company believes that chemical companies are
seeking a limited number of large national core carriers as a result of their
increasing focus on safety and quality, the need for sophisticated information
systems and the
52
<PAGE>
significant capital requirements for the acquisition and maintenance of a
fleet of trailers and tractors. For these reasons, the Company believes that
large carriers, such as MTL, will continue to grow at a faster rate than
smaller carriers.
The for-hire tank truck industry is highly fragmented and consists of in
excess of 200 tank truck carriers, with the top five carriers representing
$1.4 billion or approximately 23.8% of 1997 for-hire tank truck industry
revenues. Recently, however, the industry has begun to undergo consolidation.
The Company believes such consolidation is primarily the result of economies
of scale in the provision of services to a larger customer base, cost-
effective purchasing of equipment, supplies and services by larger companies
and the decision by many smaller, capital constrained operators to sell their
trucking businesses rather than make substantial investments to modernize
their fleets. As a result of its leading market position and decentralized
operating structure, the Company believes it is well-positioned to benefit
from these current industry trends.
COMPETITIVE STRENGTHS
The Company believes that its market leadership, strong historical financial
performance, and significant opportunities for continued growth and increased
profitability are primarily attributable to the following strengths:
EXPANSIVE GEOGRAPHIC COVERAGE AND TERMINAL NETWORK. As of September 30, 1998
the Company operated 189 terminals in 31 states and Canada. The Company
believes that this network represents the largest network of tank truck
terminals in North America and will provide it with benefits of scale. In
addition, due to the strategic location of such terminals the Company expects
to benefit from significant operating efficiencies. The Company's expanded
terminal coverage facilitates the matching of inbound and outbound shipments,
thus maximizing utilization of driver and equipment resources. The Company
also believes that greater lane density and geographic presence will provide
opportunities for the Company to penetrate additional routes, increasing
loaded miles in addition to increased backhaul loads.
VALUE ADDED RELATED SERVICE CAPABILITIES AND SUPERIOR CUSTOMER SERVICE. The
Company believes that it has established itself as a comprehensive provider of
tank truck transportation and logistics services catering primarily to the
chemical industry, and competes on the basis of its ability to provide value-
added transportation and related services, in addition to price. The
acquisition of CLC, a leading provider of value added services, has
strengthened the Company's ability to provide comprehensive transportation
services to its customers. Additional services provided include brokerage,
logistics and tank cleaning and are conducted through wholly-owned operating
subsidiaries of CLC. As the Company's customers continue to focus on their
core competencies, the Company believes that the opportunity will arise for
the outsourcing of their entire transportation and shipping functions to the
Company. The Company believes that it provides superior customer services,
including timely delivery, reliability of service, quality and availability of
equipment and responsiveness to customer requirements. As a result, MTL has
developed many long-standing relationships with a wide variety of industrial
and manufacturing companies, including many of the Fortune 500 companies who
are engaged in chemical or food processing. During 1997, on a pro forma basis,
MTL served over 3,000 companies, with no single customer accounting for more
than 7.9% of the Company's revenues.
OPPORTUNITIES FOR INCREASED MARKET AND CUSTOMER PENETRATION. The Company
believes that the acquisition of CLC increases its ability to capture a larger
share of lineal revenues from chemical manufacturers with which it currently
does business. The combination also creates additional opportunities for the
Company to achieve core carrier status with new customers by providing
comprehensive transportation and distribution related services to chemical
manufacturers which were not served by either the Company or CLC prior to the
acquisition of CLC. As more companies focus on their core businesses, the
outsourcing of the distribution and logistics function has become an
increasingly cost-effective and efficient option. Management believes that the
Company's full service capabilities should help establish it as a partner of
choice for these firms. The Company's ability to take advantage of these
opportunities is enhanced by the minimal overlap in the core customer base of
53
<PAGE>
the Company and CLC. Moreover, transactions with shared customers largely
involve contracts for different facilities, the transport of different
chemicals or transportation on different routes.
STRONG AND EXPERIENCED MANAGEMENT TEAM WITH SIGNIFICANT EQUITY STAKE. MTL
believes that its management team, which is complemented by senior management
and operating staff of CLC, operates one of the most efficient tank trailer
fleets in the industry. Both MTL's and CLC's management team, prior to the CLC
Merger, employed similar management approaches and each fostered a performance
oriented culture to develop their respective businesses into leading
comprehensive transportation logistics service companies.
The Company's senior management has an average of 21 years of industry
experience and 6.5 years of experience with the Company or CLC. After giving
effect to the Company's option plans, management owns approximately 17.4% of
the capital stock of the Company on a diluted basis.
LOW FIXED COST OPERATING STRUCTURE. Unlike many of its competitors, MTL
implements a decentralized operating strategy, the key components of which are
its unique affiliate program and significant use of owner-operators. As of
September 30, 1998, 61 of the Company's 189 terminals were operated by 35
independently owned and managed affiliates. In fiscal 1997 after giving pro
forma effect to the Transactions, affiliates generated approximately 25.7% of
the Company's total revenues. Affiliates are independent corporations that
operate terminals exclusively for MTL and are dependent upon the Company's
infrastructure and customer relationships. MTL's affiliate program is
dependent on strict adherence to stringent service delivery guidelines which
makes the affiliate terminal virtually indistinguishable to customers from a
company operated terminal. The Company typically retains approximately 15% of
affiliate revenues and is responsible for sales and marketing, insurance,
accounts receivable collection, management information systems, and
establishment of driver qualifications and training. The Company also receives
additional fees, in the form of equipment usage charges, from most of the
affiliates. The affiliate is responsible for driver management and
dispatching, local customer service, terminal upkeep and equipment
utilization. In addition, affiliates are responsible for their own operating
expenses, which allows MTL to reduce fixed costs associated with operating
multiple terminals and a large fleet of tractors. As such, the affiliate
program allows MTL to profitably expand its base business with reduced levels
of capital investment. The Company believes that the implementation of its
affiliate program has: (i) resulted in a low fixed cost operating structure
and highly efficient terminals that absorb a significant amount of operating
expenses, thereby enhancing the Company's return on investment and
profitability; and (ii) enabled the Company to retain the entrepreneurial
spirit and strong customer service culture of a small, local trucking company
while achieving the benefits of a national operator.
The second major component of MTL's decentralized operating strategy is the
extensive use of owner-operators by the Company and its affiliates. Owner-
operators are independent contractors who, through a contract with the
Company, supply one or more tractors and drivers for Company or affiliate use.
Owner-operators are generally compensated on the basis of a fixed percentage
of the revenue generated from shipments they haul. The owner-operators must
pay substantially all of their costs, including insurance, maintenance, fuel
and highway use taxes. The Company realizes many of the same benefits through
its use of owner-operators as it does from its affiliate program, including
reduced levels of capital investment and a highly variable cost structure. As
of September 30, 1998, the Company and its affiliates had contracts with
approximately 2,356 owner-operators.
LARGE TRAILER FLEET. The Company operates approximately 7,900 tank trailers
(of which 6,966 are owned or leased by the Company) which have a useful
economic life of approximately 20 years. Included in the Company's fleet of
7,900 trailers is what it believes to be the largest stainless steel trailer
fleet in North America. As part of its dedication to superior customer
service, the Company uses customized tank trailers to meet the specialized
needs of its customers. MTL and CLC have invested significant capital in each
of their trailer fleets, expending approximately $64.3 million in the past
three years on trailers to facilitate future growth and provide required
capital maintenance. During the same period the Company and CLC purchased on a
combined basis approximately 1,277 trailers.
54
<PAGE>
BUSINESS STRATEGY
The Company's management team has developed and implemented a business
strategy designed to profitably increase the Company's market share while
increasing revenues and cash flow. The primary components of the Company's
business strategy are the following:
CONTINUE GROWTH OF THE CORE BUSINESS. MTL expects to continue its internal
growth primarily through (i) continued market share penetration as companies
moved towards establishing relationships with low cost providers of
transportation services and a limited number of core carriers, and (ii)
providing comprehensive transportation services to chemical companies seeking
to outsource their transportation services. The Company expects to grow its
core bulk transportation business through terminal and fleet expansion and a
continued emphasis on its affiliate program. From 1993 through September 1998,
on a combined basis with CLC, the Company added 82 terminals, including 20
affiliate terminals, and 2,501 trailers to its operational fleet. During the
same period, the Company's revenues grew at a significantly faster rate than
the overall tank truck market. Management believes the Company will continue
to grow at a faster rate than the industry as a result of its (i) continued
provision of high quality, specialized services and the ability to capture an
increased share of existing customers' bulk transportation and related service
requirements; (ii) increased market share penetration as customers continue to
depend on core carriers capable of providing national coverage for a greater
portion of their transportation services; (iii) ability to provide a full
range of transportation-related services; and (iv) opportunities to expand the
Company's geographic market coverage due to the increased size of our terminal
network.
MAXIMIZE RETURN ON INVESTED CAPITAL. The Company's affiliate program has
greatly reduced the amount of capital needed for the Company to maintain and
grow its terminal network. In addition, its extensive use of owner-operators
reduces the amount of capital needed by the Company to build its fleet of
tractors which have shorter economic lives than trailers. These factors have
allowed the Company to concentrate its capital spending on its trailer fleet
where it can achieve superior returns on invested capital through the
Company's transportation operations as well as leasing to third parties and
affiliates. The Company expects to continue to expand its affiliate program
and its use of owner operators in order to improve its cost structure and
improve operating leverage. The Company has also identified opportunities to
integrate existing terminals into select markets, which it believes will
enable it to maintain its route and service capability at a reduced level of
invested capital. The Company expects that this consolidation will effectively
reduce the capital required to maintain the Company's terminal network and
further improve the Company's return on invested capital.
EXPANDED SCOPE OF SERVICE CAPABILITIES. The Company plans to continue to
expand its geographic coverage as well as the scope of its service
capabilities in order to serve the growing needs of its customer base, by
offering complementary transportation services including inventory management,
supply chain management, transportation brokerage services, intermodal
services and international transportation services. In addition to its core
transportation services, management intends to continue to focus on its
leasing business which the Company believes is currently among the largest in
the industry and provides a stable source of revenue and profitability. CLC is
the leading provider of value added services, and the Company believes that
its acquisition of CLC has strengthened its ability to provide comprehensive
transportation services to its customers. CLC is one of only three national
networks of tank cleaning operations, with significant bulk logistics
capability and a leading freight brokerage operation. In addition, through its
subsidiary, Transplastics, Inc., CLC operates one of the largest providers of
services to the plastics industry. The Company believes it can increase
revenues and enhance its profitability by marketing these value-added
transportation related services to its existing customer base as well as to
new customers.
AGGRESSIVELY SEEK CONTINUED COST REDUCTIONS. The Company believes that it
has been a leader in providing low cost transportation services. The Company
intends to pursue additional operating efficiencies and service quality
initiatives, leveraging off the experience and the best practices of both MTL
and CLC. The Company also intends to continue to emphasize driver training and
development aimed at reducing labor costs and equipping its drivers with the
skills necessary to handle specialty loads safely and efficiently. The Company
55
<PAGE>
believes that the increased size of the Company enables it to take full
advantage of the benefits of scale through bulk purchasing programs
particularly for tires, fuel and spare parts which will benefit the entire
network.
PURSUE STRATEGIC ACQUISITIONS. The tank truck industry is highly fragmented
with the majority of the industry consisting of small, local operators. The
Company's acquisition of CLC capitalizes on the growing trend within the
chemical industry of establishing "partnership" relations with a few core
carriers which have an extensive national network and offer a wide array of
transportation-related services. The Company intends to pursue an acquisition
strategy which will enable it to further capitalize on the consolidation
occurring in the industry. Management is seeking potential acquisitions in
which the Company can (i) realize significant synergies, operating expense
reductions and overhead cost savings, (ii) utilize the Company's fleet
management expertise, (iii) increase backhaul opportunities, and (iv) provide
or further strengthen complementary transportation service capabilities.
SERVICES PROVIDED
BULK TRANSPORTATION SERVICES
The primary service the Company provides its customers is the transportation
of bulk liquid and dry bulk chemical products. The Company provides its
services through both Company owned terminals and through affiliates. As of
September 30, 1998, 61 of the Company's 189 terminals were operated by
affiliates, and in 1997, on a pro forma basis, affiliate terminals were
responsible for approximately 25.7% of the Company's total revenues. MTL, both
at its Company owned terminals and its affiliates, relies heavily on the use
of owner-operators for its tractor needs. The Company believes that the
combination of its affiliate program and its emphasis on the use of owner-
operators results in a flexible, low fixed cost operating structure which
provides the Company's customers with superior service levels and allows the
Company to generate an above average return on invested capital.
AFFILIATE PROGRAM
Affiliates are established and maintained as independent corporations in
order to preserve the entrepreneurial motivation common to small businesses.
Each affiliate enters into a comprehensive contract with the Company pursuant
to which it is required to operate its terminal exclusively for MTL. Each
affiliate is supervised by MTL's corporate staff and is linked via computer to
the Company's central management information system located at its Plant City,
Florida headquarters. Affiliate facilities are frequently staffed and managed
by former Company employees who the Company believes have the operating
experience and management capability to be an effective affiliate.
Affiliates obtain various benefits from their relationship with the Company,
such as greater equipment utilization through participation in the Company's
backhaul program, access to and enhancement of customer relationships, driver
recruitment, safety training, expanded marketing resources and access to
sophisticated management information systems. Affiliates also benefit from the
Company's purchasing leverage for insurance coverage, tractors and trailors,
fuel, tires, and other significant operating requirements.
Affiliates predominantly operate under the marketing identity of Montgomery
and Quality and typically receive approximately 85% of gross revenues from
each shipment they transport. Affiliates are responsible for their own
operating expenses. The Company pays its affiliates weekly on the basis of
completed billings to customers. The Company collects all accounts receivable
and deducts any amounts advanced for fuel, insurance, or other miscellaneous
expenses, including charges (as applicable) for the Company's tank trailers,
from these weekly billing settlements.
Contracts with affiliates typically carry a one-year term, renewable on a
yearly basis unless terminated by either party. Contracts between the Company
and its affiliates also contain restrictive covenants which prohibit
56
<PAGE>
affiliates from competing directly with the Company in a specific geographic
area for a period of one year following termination of a contract. In
addition, the Company requires its affiliates to meet certain operating and
financial standards.
Affiliates engage their own drivers and personnel as well as utilize the
services of owner-operators who must meet the Company's operating and
financial standards. The affiliate assumes all operating expenses such as
fuel, licenses, fuel taxes and tank cleaning. However, the Company reimburses
affiliates for certain expenses passed through to its customers, such as tolls
and scaling charges.
Affiliates are required to pay for their own workers' compensation coverage,
which must meet both Company and statutory coverage levels. Affiliates retain
responsibility for liabilities up to $10,000 per incident arising from
accidents, spills or contamination incurred while transporting a load.
Liability beyond the obligations of the affiliate is the responsibility of the
Company or its insurer. The Company makes additional insurance coverage
available to its affiliates for physical damage, bobtail (tractor only),
health and life, and garage-keepers insurance for additional fees.
OWNER-OPERATORS
The Company and its affiliates extensively utilize owner-operators. Owner-
operators are independent contractors who, through a contract with the
Company, supply one or more tractors and drivers for Company or affiliate use.
Owner-operators are compensated on the basis of a fixed percentage of the
revenue generated from the shipments they haul. The owner-operator must pay
all insurance, maintenance, highway use taxes. All owner-operators utilized by
either the Company or an affiliate must meet specified guidelines relating to
driving experience, safety records, tank truck experience, and physical
examinations in accordance with Department of Transportation ("DOT")
regulations. The Company emphasizes safety to its independent contractors and
their drivers and maintains driver safety inspection programs, safety awards,
terminal safety meetings and stringent driver qualifications.
The Company and its affiliates dedicate significant resources to recruiting
and retaining owner-operators. The Company attempts to enhance the
profitability of its owner-operators through purchasing programs which take
advantage of the Company's significant purchasing power. Programs cover such
operating expense items as fuel, tires and insurance. As of September 30, 1998
the Company had contracts with 2,356 owner-operators.
LEASING
In conjunction with its provision of bulk transportation services the
Company provides dedicated tractors and trailers to affiliates and other third
parties, including shippers. The Company believes its leasing business is
among the largest in the industry and provides a stable source of revenue and
profitability. Trailer lease terms range from one to 84 months and do not
include a purchase option. Tractor lease terms range from 12 to 60 months and
may include a purchase option.
TANK WASH OPERATIONS
To maximize equipment utilization, the Company relies on approximately 50
Company and affiliate tank wash facilities, as well as the services of other
commercial tank wash facilities located throughout its operating network.
Company and affiliate facilities allow MTL to generate additional tank washing
fees from non-affiliated carriers and shippers. Management believes that the
availability of these facilities enables the Company to provide an integrated
service package to its customers.
INTERMODAL AND BULK RAIL OPERATIONS
The Company offers a wide range of intermodal services by transporting
liquid bulk containers on specialized chassis to and from a primary mode of
transportation such as rail, barge or vessel. The Company also provides rail
transloading services which enable products to be transloaded directly from
rail car to trailer. This allows shippers to combine the economy of long-haul
rail transportation with the flexibility of local truck delivery.
57
<PAGE>
Through the CLC Merger, the Company has expanded the range of
transportation-related services it provides to include the following:
THIRD-PARTY LOGISTICS
An increasing number of chemical producers are seeking to outsource their
transportation logistics functions in order to focus on their core
competencies. In order to capitalize on this trend, CLC has established third-
party logistics capabilities. As a result of CLC's size and reputation in the
industry, as well as a strategic focus on the provision of logistics services
as a value added service, a number of opportunities have arisen allowing CLC
the opportunity to provide a broader range of logistics management services to
selected chemical producers. Among these services are mode and carrier
selection for truck, rail, ocean and air transportation as well as rate
negotiation, carrier performance evaluation, cost analysis and, in some cases,
on site management of the shipper's captive transportation function.
OWNER-OPERATOR SERVICES
CLC, through its subsidiary, Power Purchasing, Inc., offers products and
services to both its internal and external fleet and to its owner-operators at
favorable prices. By offering purchasing programs which take advantage of
CLC's significant purchasing power for products and services such as tractors,
fuel and tires as well as automobile, general liability and workers'
compensation insurance, CLC believes it strengthens its relationships with its
owner-operators and results in improved driver recruitment.
CAPACITY MANAGEMENT SYSTEMS
CLC has developed load brokerage capabilities in order to enhance its
ability to handle its customers' trucking requirements. To the extent that CLC
does not have the equipment necessary to service a particular shipment, CLC
will broker the load to another carrier, thereby meeting the customer's
shipping needs and generating additional revenues for CLC, in the form of
commissions, at attractive margins. Through its relationship with over sixty
bulk carriers, CLC can assure timely response to customer needs.
TRACTORS AND TRAILERS
As of September 30, 1998, the Company operated 7,900 trailers, of which
approximately 6,966 were owned or leased by the Company, 836 were owned by
affiliates and 98 were owned by shippers. A typical trailer measures 42.5 feet
in length, eight feet in width and 10.5 feet in height. The volume of the
trailer ranges from 5,000 to 7,000 gallons with a payload capacity of up to
55,000 pounds. The cost of a new standard stainless steel trailer ranges from
$47,000 to $64,000, depending on specifications. The combined companies'
capital expenditures for new and used trailers in 1997 were $23.9 million for
the purchase of approximately 500 trailers, the majority of which represented
additions to the Company's fleet in connection with the Company's continuing
expansion.
As of September 30, 1998, the Company operated approximately 3,913 tractors,
of which approximately 862 were operated by Company drivers, 2,383 were
operated by owner-operators and 668 were operated by affiliates. Of the
approximately 1,087 tractors owned by the Company, 225 were leased to
affiliates and owner-operators. The Company primarily purchases high-end
tractors manufactured by Mack Trucks, Inc., Freightliner Corporation and/or
Peterbilt Company. In 1997, the Company purchased 164 new tractors at costs
ranging from $63,000 to $80,000 per tractor. The Company attempts to
standardize its equipment purchases which reduces training and parts inventory
costs and allows for a more standardized preventive maintenance program.
The majority of Company and affiliate terminals provide preventive
maintenance and service and receive computer generated reports which indicate
when inspection and/or servicing of units is required. Major repairs are
performed by unaffiliated third parties. The Company complies with DOT
periodic inspection requirements by performing inspections on its tractors
every 60 days as part of its company-wide service/inspection program.
MTL's maintenance facilities are registered with DOT and are qualified to
perform trailer inspections and repairs for the Company's fleet and equipment
owned by third parties.
58
<PAGE>
DRIVERS AND OTHER PERSONNEL
At September 30, 1998 the Company employed approximately 789 drivers and
also utilized the services of approximately 2,356 owner-operators.
Additionally, the affiliates employed directly 675 drivers. The Company also
employed 1,685 persons, of whom 189 were mechanics, 236 were tank washers and
the balance were support personnel, including clerical and administrative
personnel and dispatchers.
Each terminal manager has direct responsibility for hiring drivers and
administrative personnel. Where appropriate, the terminal manager is also
responsible for hiring mechanics and customer service and tank wash personnel.
Company drivers and owner-operators are hired in accordance with specific
guidelines regarding safety records, driving experience and a personal
evaluation of the Company's staff. The Company employs only qualified tank
truck drivers with a minimum of two years of over-the-road, tractor trailer
experience. These drivers are then enrolled in a rigorous training program
conducted at one of the Company's five safety schools.
Owner-operators are retained by the Company under contracts generally
terminable by either party upon short notice. However, they may be terminated
immediately under certain circumstances. Owner-operators retain responsibility
for their own operating expenses. The Company provides its employees with
health, dental, vision, life, and certain other insurance coverages. These
same insurance programs are available to affiliates and owner-operators for a
fee.
As of September 30, 1998, 232 employees in Company terminals and
approximately 74 employees of three affiliate terminals were members of the
International Brotherhood of Teamsters.
MARKETING
The Company conducts its marketing activities at both the national and local
levels. The Company employs 32 geographically dispersed sales managers who
market the Company's services primarily to national accounts. These sales
managers have extensive experience in marketing specialized tank truck
transportation services. The corporate sales staff also concentrates on
developing dedicated logistics opportunities. The Company's senior management
is actively involved in the marketing process, especially in marketing to
national accounts. In addition, a significant portion of the Company's
marketing activities are conducted locally by the Company's terminal managers
and dispatchers who act as local customer service representatives. These
managers and dispatchers maintain regular contact with shippers and are well-
positioned to identify the changing transportation needs of customers in their
respective geographic areas.
CUSTOMERS
GENERAL
The Company's client base consists of customers located throughout North
America, including many Fortune 500 companies, such as Procter & Gamble, Union
Carbide, PPG Industries, Dow Chemical and DuPont. During 1997, no single
customer accounted for more than 7.9% of the combined companies' total
revenues. For the fiscal year ended December 31, 1997, on a combined basis,
the Companies' 10 largest customers accounted for 28.0%, of revenues.
CUSTOMER SERVICE AND QUALITY ASSURANCE
In order to achieve its goal of providing to its customers the highest
quality service and creating the highest level of customer and employee
satisfaction, MTL has implemented a quality assurance program at all levels of
the Company. MTL's Quality Assurance Program is designed to enable the
achievement of superior customer service through the development and
implementation of standardized operating procedures for each area within the
Company. This includes marketing and contracts, dispatch and terminal
operations, safety, driver hiring and training, trailer operations, tractor
operations, and procedures for administration functions, payroll and
settlement, insurance, sales, data processing, and fuel tax and permits.
59
<PAGE>
The Company has developed and implemented a statistical measurement tool
called the Terminal Safety Ranking Profile. This profile establishes a uniform
method of evaluating, measuring and comparing the safety performance of all
field operation facilities. Through utilization of this tool, individual
facilities and regions of the Company can be evaluated for performance trends
or areas of deficiency needing improvement.
The Company has also implemented a Quality Corrective Action procedure which
is intended to identify, document and correct safety and service non-
conformance. In addition, the Company has established cross-functional teams
known as Continuous Process Improvement teams which have been charged with the
responsibility of identifying ways in which to improve Company processes as
well as to manage the implementation of such improvements.
Most of CLC's tractor fleet, including both CLC-owned and owner-operator
tractors, are equipped with OmniTRACS(R) mobile satellite communications
systems which provide continuous monitoring and two-way communications with
tractors in transit. This information is used to track load status, optimized
the use of drivers and equipment and respond to emergency situations. CLC's
Internet Website enables customers to access the OmniTRACS(R) system to view
the exact status of their loads in transit at their convenience.
ADMINISTRATION
The Company operates through 189 trucking terminals located across the
United States and Canada. Each of the 128 Company and 61 affiliate terminals
operates as separate profit centers, and terminal managers retain
responsibility for most operational decisions in their given service area.
Effective supervision of a service area requires maximum personal contact with
both customers and drivers. Therefore, to achieve mutually defined operating
objectives, the functions of dispatch, customer service, and general
administration typically rest within each separate terminal. Cooperation and
coordination between the terminals is further encouraged by the Company's
backhaul policy. Any terminal which generates a backhaul shipment for another
terminal receives a commission on the revenue generated by the backhaul
shipment.
From its headquarters in Florida, management constantly monitors each
terminal's operating and financial performance, safety and training record,
and customer service effort. All terminals are required to adhere to Company
safety, maintenance, customer service and other operating procedures, and the
terminal manager is responsible for insuring compliance with these strict
guidelines. Senior corporate executives and safety department personnel
conduct unannounced visits to verify terminal compliance. The Company attempts
to achieve uniform service and safety at all Company and affiliate terminals,
while simultaneously providing terminal managers the freedom to focus on
generating business in their region.
60
<PAGE>
PROPERTIES
As of September 30, 1998, the Company's operating terminals were located in
the following cities:
<TABLE>
<CAPTION>
COMPANY OPERATED AFFILIATE OPERATED
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Albany, NY Freeport, TX Newark, NJ(1) Akron, OH Lake Charles, LA
Appleton, WI Friendly, WV North Haven, CT Atlanta, GA Lansing, IL
Ashland, KY Ft. Worth, TX Oakley, CA Augusta, GA Leeds, SC
Atlanta, GA(1) Geismar, LA Oshkosh, WI Austin, MN Mediapolis, IA
Augusta, GA(1) Greensboro, NC Parker, PA Barberton, OH Memphis, TN
Avenel, NJ Greenup, KY Pasadena, TX Baton Rouge, LA Mobile, AL
New Castle,
Bangor, ME Greer, SC Pedricktown, NJ Birmingham, AL DE(3)
Baton Rouge,
LA(1) Hagerstown, MD Philadelphia, PA Bradford, PA New Orleans, LA
Niagara Falls,
Bayonne, NJ Hayward, CA(1) Pittsburgh, PA Branford, CT NY
Beaumont, TX Hopewell, VA(1) Point Comfort, TX Bristol, WI Norfolk, VA
BenSalem, PA Houston, TX(1) Port Arthur, TX Buffalo, NY Owensboro, KY
Bergen, NY Jessup, MD Portland, OR Calvert City, KY Parker, PA
Branford, CT Joliet, IL Roseville, CA Carlisle, SC Pasadena, TX
Bridgeport, NJ Kalamazoo, MI Savannah, GA(1) Charleston, SC Pearisburg, VA
Chattanooga,
Bristol, PA Keasbey, NJ South Gate, CA TN(1) Pinson, AL
Brownsville, TX Kelso, WA South Pointe, OH Cincinnati, OH Pittsburgh, PA
Brunswick, GA Lafayette, IN St. Albans, WV Columbus, OH Port Hudson, LA
Lake Prairie Ville,
Buffalo, NY Charles, LA(1) St. Louis, MO(1) Detroit, MI LA
Calvert City, KY Lansing, MI Summit, IL Dumfries, VA Roanoke, VA
Carpentersville,
IL Laredo, TX Tucker, GA Elkridge, MD Salisbury, NC
Carteret, NJ Lexington, KY Washington, WV Fairfield, OH Savannah, GA
Charleston,
SC(1) Lima, OH Waterford, NY Freeport, TX St. Louis, MO
Charleston, WV Longview, TX Williamsport, PA Garden City, GA Tampa, FL
Chattanooga,
TN(1) Los Angeles, CA Wilmington, NC Gary, IN(1) Toledo, OH
Chesnee, SC Louisville, KY Winnie, TX Glenmoore, PA Triadelphia, PA
Chicago, IL(2) Luling, LA Houston, TX Tuscaloosa, AL
Mechanicsburg,
Columbus, OH(1) PA Inwood, WV Whistler, AL
Columbus, GA Memphis, TN Canadian Provinces: Jacksonville, FL Wilmington, DE
Concord, NH Middletown, OH Coteau-du-Lac, Quebec Kansas City, KS
Danville, KY Midland, MI Montreal, Quebec(1)
Decatur, AL Mobile, AL Oakville, Ontario
Detroit, MI Morrisville, PA Sarnia, Ontario
East Rutherford,
NJ Mt. Holly, NC Quebec City, Quebec
Ville
Fall River, MA Nazareth, PA Becancour, Quebec
Neville Island,
Follansbee, WV PA
</TABLE>
- --------
(1) Two terminals in this city.
(2) Four terminals in this city.
(3) Three terminals in this city.
In August 1996, the Company entered into a modified affiliate relationship
with Transportes Especializados Antonio de la Torre e Hijos, S.A. de C.V. and
operates from its two terminals in Guadalajara and Mexico City, Mexico.
In addition to the properties listed above, the Company also owns four
facilities in the U.S., including: a 149,000 square foot warehouse in Chicago,
Illinois; a 6-acre property in Macomb, Mississippi; an undeveloped, 3-acre lot
in Ruskin, Florida; and a tank wash facility in Philadelphia.
61
<PAGE>
The Company's executive and administrative offices are located in a 17,600
sq. ft. building in Plant City, Florida. The facility is owned by the Company
and is located on 5.2 acres of land.
COMPETITION
The tank truck business is extremely competitive and fragmented. The Company
competes primarily with other tank truck carriers and private carriers in
various states. With respect to certain aspects of its business, the Company
also competes with intermodal transportation, railroads and less-than-
truckload carriers. Intermodal transportation has increased in recent years as
reductions in train crew size and the development of new rail technology have
reduced costs of intermodal shipping.
Competition for the freight transported by the Company is based primarily on
rates and service. Management believes that the Company enjoys significant
competitive advantages over other tank truck carriers because of the Company's
low cost structure, overall fleet size and age, national terminal network and
tank wash facilities.
The Company's largest competitors are Matlack Systems, Inc., DSI Transports,
Inc. and Trimac Transportation Services, Ltd., an operation based in Canada.
There are approximately 195 other recognized tank truck carriers, most of whom
are primarily regional operators.
The Company also competes with other motor carriers for the services of
Company drivers and owner-operators. The Company's overall size and its
reputation for good relations with affiliates and owner-operators have enabled
it to attract a sufficient number of qualified professional drivers and owner-
operators. See "Risk Factors--Dependence on Key Personnel; Availability of
Drivers."
Competition from non-trucking modes of transportation and from intermodal
transportation would likely increase if state or federal fuel taxes were to
increase without a corresponding increase in taxes imposed upon other modes of
transportation.
RISK MANAGEMENT AND INSURANCE/SAFETY
The primary risks associated with the Company's business are bodily injury
and property damage, workers' compensation claims and cargo loss and damage.
The Company maintains insurance against these risks and is subject to
liability as a self-insurer to the extent of the deductible under each policy.
The Company currently maintains liability insurance for bodily injury and
property damage in the amount of $100.0 million per incident, which is first
dollar insurance coverage for a period of three years. The Company currently
maintains first dollar workers' compensation insurance coverage. The Company
is self-insured for damage or loss to the equipment it owns or leases, and for
cargo losses.
The Company employs a safety and insurance staff of in excess of 30
professionals. In addition, the Company employs specialists to perform
compliance checks and conduct safety tests throughout the Company's
operations. The Company conducts a number of safety programs designed to
promote compliance with rules and regulations and to reduce accidents and
cargo claims. These programs include training programs, driver recognition
programs, an ongoing Substance Abuse Prevention Program, driver safety
meetings, distribution of safety bulletins to drivers, and participation in
national safety associations.
ENVIRONMENTAL MATTERS
The Company's activities involve the handling, transportation, storage, and
disposal of bulk liquid chemicals, many of which are classified as hazardous
materials, hazardous substances, or hazardous wastes. The combined companies'
tank wash and terminal operations engage in the storage or discharge of
wastewater and stormwater that may contain hazardous substances, and from time
to time MTL and CLC store diesel fuel and other petroleum products at their
terminals. As such, the Company is subject to environmental, health and safety
62
<PAGE>
laws and regulation by U.S. federal, state, local and Canadian government
authorities. Environmental laws and regulations are complex, change frequently
and have tended to become more stringent over time. There can be no assurance
that violations of such laws or regulations will not be identified or occur in
the future, or that such laws and regulations will not change in a manner that
could impose material costs on the Company.
The Company has environmental management programs that it carries out in
conjunction with its safety program. Facility managers are responsible for
environmental compliance, and for preparing semi-annual self-audit forms which
are submitted to the Vice President, Safety, Health & Environmental
Administration as well as to a regional environmental manager. The self-audits
are required to address operations, safety training and procedures, equipment
and grounds maintenance, emergency response capabilities, and wastewater
management. The Company also contracts with an independent environmental
consulting firm that conducts periodic, unscheduled, compliance assessments,
which focus on conditions with the potential to result in releases of
hazardous substances or petroleum, and which also include screening for
evidence of past spills or releases. The Company's relationship to its
affiliates could, under certain circumstances, result in the Company incurring
liability for environmental contamination attributable to an affiliate's
operations, although the Company has not incurred any such derivative
liability in the past. The Company's environmental management program has
recently been extended to the Company's affiliates. CLC's wholly-owned
subsidiary, EnviroPower, Inc. ("EnviroPower"), is staffed with environmental
experts who manage CLC's environmental exposure relating to historical
operations and develop policies and procedures, including periodic audits of
CLC's terminals and tank cleaning facilities, in order to minimize the
existence of circumstances that could lead to future environmental exposure.
EnviroPower is also CLC's principal interface with the U.S. Environmental
Protection Agency ("EPA") and various state environmental agencies.
As a handler of hazardous substances, the Company is potentially subject to
strict, joint and several liability for investigating and rectifying the
consequences of spills and other environmental releases of such substances
either under CERCLA or comparable state laws. From time to time, the Company
has incurred remedial cost and regulatory penalties with respect to chemical
or wastewater spills and releases at its facilities and, notwithstanding the
existence of its environmental management program, the Company cannot assure
that such obligations will not be incurred in the future, nor that such
liabilities will not result in a material adverse effect on the Company's
financial condition or results of operations or its business reputation. As
the result of environmental studies conducted at its facilities in conjunction
with its environmental management program, the Company has identified
environmental contamination at certain of such sites which will require
remediation. While the Company does not expect associated costs to be
material, it cannot guarantee that to be the case.
The Company has also been named a "potentially responsible party," or has
otherwise been alleged to have some level of responsibility, under CERCLA or
similar state laws for cleanup of off-site locations at which the Company's
waste, or material transported by the Company, has allegedly been disposed of.
See "--Legal Proceedings." The Company has asserted defenses to such actions
and has not incurred significant liability in the CERCLA cases settled to
date. While the Company believes that it will not bear any material liability
in any current or future CERCLA matters, there can be no assurance that the
Company will not in the future incur material liability under CERCLA or
similar laws. See "Risk Factors--Environmental Risk Factors."
CLC is currently solely responsible for remediation of the following two
federal Superfund sites:
Bridgeport, New Jersey. During 1991, CLC entered into a Consent Decree with
the EPA filed in the U.S District Court for the District of New Jersey, U.S.
v. Chemical Leaman Tank Lines, Inc., Civil Action No. 91-2637 (JFG) (D.N.J.),
with respect to its site located in Bridgeport, New Jersey, requiring CLC to
remediate groundwater contamination. The Consent Decree required CLC to
undertake Remedial Design and Remedial Action ("RD/RA") related to the
groundwater operable unit of the cleanup. Costs associated with performing the
RD/RA were $443,000 in 1997.
In August 1994, the EPA issued a Record of Decision, ("ROD") selecting a
remedy for the wetlands operable unit at the Bridgeport site at a cost
estimated by the EPA to be approximately $7 million. In October
63
<PAGE>
1998, the EPA issued an administrative order that requires CLC to implement
the EPA's wetlands remedy. In April 1998, the federal and state natural
resource damages trustees indicated their intention to bring claims against
CLC for natural resource damages at the Bridgeport site. The trustees' have
indicated that their demand for natural resources damages is due to
groundwater loss, land use loss and oversight cost reimbursement. CLC is
currently negotiating with the state and federal trustees to enter a consent
decree that will resolve the natural resource damages claims. CLC has also
entered an agreement in principle to pay the EPA $3.6 million over a three
year period for reimbursement of the EPA's past costs in investigating and
overseeing activities at the Site. In addition, the EPA has investigated
contamination in site soils. No decision has been made as to the extent of
soil remediation to be required, if any.
CLC is in litigation with its insurers to recover its costs in connection
with the environmental cleanup at the Bridgeport site. Chemical Leaman Tank
Lines, Inc. v. Aetna Casualty & Surety Co., et at., Civil Action No. 89-1543
(SSB) (D.N.J.). On April 7, 1993, the U.S. District Court for the District of
New Jersey entered a judgment requiring the insurers to reimburse CLC for
substantially all past and future environmental cleanup costs at the
Bridgeport site. The insurers appealed the judgment to the U.S. Court of
Appeals for the Third Circuit, but before the appeal was decided CLC and its
primary insurer settled all of CLC's claims, including claims asserted or to
be asserted at other sites, for $11.5 million. This insurer dismissed its
appeal, but the excess carriers did not. On June 20, 1996, the U.S. Court of
Appeals affirmed the judgment against the excess insurance carriers, except
for the allocation of liability among applicable policies, and remanded the
case for an allocation of damage liability among the insurers and applicable
policies on a several basis. In September 1997, the District Court issued an
order allocating liability among applicable policies. An appeal from the
allocation is currently pending before the Third Circuit. Since some of the
CLC's insurance carriers are insolvent, allocation of the costs among the
insurers will affect the amount of recovery CLC can expect to receive. CLC
anticipates that it will recover the majority of the costs associated with
remediation of the Bridgeport site, including attorneys fees and expenses,
from its insurance carriers.
West Caln Township, PA. The EPA has alleged that CLC disposed of Hazardous
Materials at the William Dick Lagoons Superfund Site in West Caln,
Pennsylvania. On October 10, 1995, CLC entered a Consent Decree with the EPA
which required CLC to (1) pay the EPA for installation of an alternate water
line to provide water to area residents; (2) perform an interim groundwater
remedy at the site; and (3) conduct soil remediation. U.S. v. Chemical Leaman
Tank Lines, Inc., Civil Action No. 95-CV-4264 (RJB) (E.D. Pa.). CLC has paid
all costs associated with installation of the waterline. CLC is currently
performing a hydrogeologic study, and upon completion of the study will
construct a groundwater treatment plant to pump and treat groundwater. The EPA
anticipates that CLC will operate the plant for about five years, at which
time the EPA will evaluate groundwater conditions and determine whether a
final groundwater remedy is necessary. Soil remediation has not yet commenced
because CLC is awaiting the EPA's approval for certain items required for the
soil remedy. The Consent Decree does not cover the final groundwater remedy or
other site remedies or claims, if any, for natural resource damages.
Other Environmental Matters. In April 1997, CLC received a request from the
New York State Department of Environmental Conservation to perform a Remedial
Investigation and Feasibility Study relating to certain former surface
impoundments previously closed by CLC at its Tonawanda, New York Terminal. CLC
has indicated its willingness to perform a mutually acceptable Remedial
Investigation and Feasibility Study. In 1994, CLC entered into an
Administrative Consent Order ("ACO") with the West Virginia Division of
Environmental Protection ("DEP") to undertake the investigation and
remediation of a former lagoon at its former facility in Putnam County, West
Virginia. In accordance with the ACO, CLC has submitted a workplan to DEP to
address potential sludge and soil contamination. The extent of groundwater
remediation to be required, if any, has not been determined. CLC has recorded
total charges to income of $4.7 million, $2.3 million and $2.4 million in
1997, 1996 and 1995, respectively, with regard to the foregoing environmental
matters and expects to continue to incur costs for environmental matters
generally for the foreseeable future.
64
<PAGE>
CLC has also undertaken the removal of all underground storage tanks at its
owned and operated facilities. This project is being managed by EnviroPower
staff and will be completed by the end of 1998 at an estimated cost of $2
million, of which $1.65 million has been expended to date.
REGULATION
As a motor carrier, the Company is subject to regulation. There are
additional regulations specifically relating to the tank truck industry
including testing and specifications of equipment and product handling
requirements. The Company may transport most types of freight to and from any
point in the United States over any route selected by the Company. The
trucking industry is subject to possible regulatory and legislative changes
(such as increasingly stringent environmental regulations or limits on vehicle
weight and size) that may affect the economics of the industry by requiring
changes in operating practices or by changing the demand for common or
contract carrier services or the cost of providing truckload services. In
addition, the Company's tank wash facilities are subject to stringent local,
state and federal environmental regulations.
The Federal Motor Carrier Act of 1980 (the "Federal Motor Carrier Act")
served to increase competition among motor carriers and limit the level of
regulation in the industry. The Federal Motor Carrier Act also enabled
applicants to obtain Interstate Commerce Commission ("ICC") operating
authority more readily and allowed interstate motor carriers such as the
Company greater freedom to change their rates each year without ICC approval.
The law also removed many route and commodity restrictions on the
transportation of freight. A series of federal acts, including the Negotiated
Rates Act of 1993, the Trucking Industry Regulatory Reform Act of 1994 and the
ICC Termination Act of 1995, further reduced regulation applicable to
interstate operations of motor carriers such as the Company, and resulted in
transfer of interstate motor carrier registration responsibility to the FHWA
of DOT. On February 13, 1998, FHWA published proposed new rules governing
registration to operate by interstate motor carriers. That proposal may lead
to revised procedures for motor carriers like the Company to register to
conduct interstate motor carrier operations. The form of such revised
procedures presently cannot be predicted by the Company. See "Risk Factors--
Regulation."
Interstate motor carrier operations are subject to safety requirements
prescribed by the DOT. To a large degree, intrastate motor carrier operations
are subject to safety and hazardous material transportation regulations that
mirror federal regulations. Such matters as weight and dimension of equipment
are also subject to federal and state regulations. DOT regulations mandate
drug testing of drivers. To date, the DOT's national commercial driver's
license and drug testing requirements have not adversely affected the
availability to the Company of qualified drivers. Alcohol testing rules were
adopted by the DOT in February 1994 and became effective in January 1995 for
employers with 50 or more drivers. These rules require certain tests for
alcohol levels in drivers and other safety personnel. The Company does not
believe the rules will adversely affect the availability of qualified drivers.
Title VI of The Federal Aviation Administration Authorization Act of 1994,
which became effective on January 1, 1995, largely deregulated intrastate
transportation by motor carriers. This Act generally prohibits individual
states, political subdivisions thereof and combinations of states from
regulating price, entry, routes or service levels of most motor carriers.
However, the states retained the right to continue to require certification of
carriers, based upon two primary fitness criteria--safety and insurance--and
retained certain other limited regulatory rights. Prior to January 1, 1995,
the Company held intra-state authority in several states. Since that date, the
Company has either been "grandfathered in" or has obtained the necessary
certification to continue to operate in those states. In states in which the
Company was not previously authorized to operate, it has obtained certificates
(or permits) allowing it to operate or is in the process of obtaining said
certificates in order of importance to the Company.
From time to time, various legislative proposals are introduced including
proposals to increase federal, state, or local taxes, including taxes on motor
fuels. The Company cannot predict whether, or in what form, any increase in
such taxes applicable to the Company will be enacted.
65
<PAGE>
SEASONALITY
The business of the Company is subject to limited seasonality, with revenues
generally declining slightly during winter months (namely the first and fourth
fiscal quarters) and over holidays. Highway transportation can be adversely
affected depending upon the severity of the weather in various sections of the
country during the winter months. The Company's operating expenses also have
been somewhat higher in the winter months, due primarily to decreased fuel
efficiency and increased maintenance costs of revenue equipment in colder
months.
INFORMATION TECHNOLOGY--YEAR 2000
The Company is currently working to integrate the computer systems of MTL
and CLC and to address issues relating to Year 2000 compliance. Prior to the
CLC Merger, both companies were developing proprietary software through
independent development efforts designed to streamline and automate order-
taking, load scheduling, customer service and load optimization (especially
for system freight). Such software is not available from commercial sources
due to the unique requirements of the tank truck industry. Goals of these
development efforts are to improve driver and equipment utilization, to lower
administrative costs, to ensure regulatory compliance, and to provide real-
time customer load tracking including integration of in-cab communications
systems. These development efforts have now been combined and will result in
one integrated system for order-taking, load scheduling, and customer service.
The Company has also developed a plan to ensure that its systems are
compliant with the requirements to process transactions in the year 2000. Most
of the Company's combined systems implementation effort is now directed toward
the migration of the CLC billing, settlement and financial reporting systems
from mainframe based systems which are not Year 2000 compliant. The target
completion date for this implementation effort is June 30, 1999. There can be
no assurance, however, that this timetable will be met, that the programming
changes required to accommodate current CLC billing and driver settlement
requirements will be completed in this time frame, or that such changes will
not negatively impact CLC's ability to meet its customers or its drivers
requirements. See "Risk Factors--Information Technology; Dependence on
Effective Information Systems."
LEGAL PROCEEDINGS
In addition to those items disclosed under "Environmental Matters," the
Company from time to time is involved in routine litigation incidental to the
conduct of its business. The Company believes that no litigation pending
against it, if adversely determined, would have a material adverse effect on
its consolidated financial position or results of operations.
On August 28, 1998, BMI Transportation, Inc., RBM Transport, Inc. RBM-Va.
Transport, Inc. and Bulk Storage, Inc. (collectively, the "Plaintiffs") filed
suit against CLC in the United States Bankruptcy Court for the Southern
District of New York. The Plaintiffs allege that CLC owes them $1,104,671.00,
plus interest, which represents the remainder of the $1,500,000.00 hold back
of the purchase price CLC paid in connection with its acquisition of the
majority of the assets of Fleet from the Plaintiffs on June 28, 1996. In
addition to the alleged damages, the Plaintiffs are also seeking punitive
damages, attorneys fees and costs. CLC has filed an answer denying these
claims, and fully intends to defend itself in the litigation.
66
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information regarding the directors and
executive officers of the Company following the Offering:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- ---- --- ----------------------------------------------------------------------
<S> <C> <C>
Charles J. O'Brien...... 60 Director, Chairman of the Board, President and Chief Executive Officer
Richard J. Brandewie.... 43 Director, Senior Vice President, Treasurer and Chief Financial Officer
Marvin E. Sexton........ 54 Director, President of Montgomery Tank Lines
Joshua J. Harris........ 33 Director
Michael D. Weiner....... 45 Director
Robert A. Katz.......... 31 Director
Marc J. Rowan........... 35 Director
John H. Kissick......... 56 Director
</TABLE>
The directors hold office until the next annual meeting of shareholders or
until their successors have been elected and qualified. Officers serve at the
discretion of the Board of Directors.
CHARLES J. O'BRIEN, JR. joined the Company in 1989 in connection with the
acquisition of Quality-O'Boyle, Inc., at which time he was appointed as the
Company's Chief Operating Officer and elected to the Board of Directors. Since
1991, he has served as the Company's President and Chief Executive Officer. On
September 30, 1998, he was appointed as the Company's Chairman of the Board.
Prior to joining the Company, he was a controlling shareholder of Quality-
O'Boyle, Inc. from January 1977 to February 1989. Prior to his association
with Quality-O'Boyle, Inc., he held various positions with Matlack Systems,
Inc. from April 1962 through December 1976. He served as Matlack's Chief
Executive Officer from 1969 to 1976 and served as a director of Rollins
International, Inc., Matlack's parent company.
RICHARD J. BRANDEWIE has been employed by the Company since June 1992 as
Chief Financial Officer and in 1996 he was appointed Senior Vice President of
Finance. He served as a director of the Company from 1988 to 1992. Prior to
joining the Company, he served as a General Partner of South Atlantic Venture
Fund I & II, Limited Partnerships where he was employed from November 1985
through June 1992. From June 1980 through November 1985, he served
concurrently as Vice President of Doan Resources Venture Fund and as General
Partner of Michigan Investment Fund and MBW Venture Partners. Prior to his
venture capital experience, he served as an accountant and financial analyst
for the Ford Motor Company from 1977 to 1979.
MARVIN E. SEXTON joined the Company in September 1996 as President of
Montgomery Tank Lines, the Company's principal operating subsidiary. Mr.
Sexton joined MTL from BET plc., the former parent company of United Transport
America, where he served as the Sector Director/Distribution North America.
Mr. Sexton was formerly President of United Transport America. The United
Transport group of companies includes: DSI Transport, Redwing Carriers and
Ward Transport. He joined DSI Transport in 1974 and subsequently became its
President and Chief Executive Officer in 1985. He currently serves as the
Chairman of the Board of Directors of the National Tank Truck Carriers, Inc.
and is a member of the Association of the Chemical Industry of Texas and the
National Council of Physical Distribution.
JOSHUA J. HARRIS is a principal of Apollo and has served as an officer of
certain affiliates of Apollo since 1990. Mr. Harris is also a director of
Converse Inc., Florsheim Group Inc., NRT, Incorporated, SMT Health Services
Inc., Breuners Home Furnishings Corporation and Alliance Imaging, Inc.
MICHAEL D. WEINER is a principal of Apollo and has served as an officer of
certain affiliates of Apollo since 1992. Prior to 1992, Mr. Weiner was a
partner in the law firm of Morgan, Lewis & Bockius LLP. Mr. Weiner is also a
director of Converse Inc., Alliance Imaging, Inc., NRT Incorporated,
Continental Graphics Holdings, Inc. and Florsheim Group Inc.
67
<PAGE>
ROBERT A. KATZ is a principal of Apollo and has served as an officer of
certain affiliates of Apollo since 1990. Mr. Katz is also a director of Vail
Resorts, Inc., Salant Corporation, Aris Industries, Inc. and Alliance Imaging,
Inc.
MARC J. ROWAN is a principal of Apollo and has served as an officer of
certain affiliates of Apollo since 1990. Mr. Rowan is also a director of Vail
Resorts, Inc., Samsonite Corporation and NRT Incorporated.
JOHN H. KISSICK is a principal of Apollo and has served as an officer of
certain affiliates of Apollo since 1991. Mr. Kissick is also a director of
Mariner Post Acute Network, Continental Graphics Holdings Inc., Converse Inc.
and Florsheim Group, Inc.
EXECUTIVE COMPENSATION
The following table sets forth the total compensation paid or accrued by the
Company for services rendered during the year ended December 31, 1997, by the
President and Chief Executive Officer, the Chairman of the Board and the Chief
Financial Officer of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------
NAME AND PRINCIPAL POSITION SALARY BONUS OTHER COMPENSATION
- --------------------------- ---------- --------- ------------------
<S> <C> <C> <C>
Charles J. O'Brien, Jr.
President and Chief Executive Offi-
cer................................... $ 193,937 $ 74,446 $8,696
Elton E. Babbitt (1)
Chairman of the Board................. $ 188,353 $ 71,335 $3,946
Richard J. Brandewie
Senior Vice President, Treasurer and
Chief
Financial Officer..................... $ 145,402 $ 55,332 $8,696
</TABLE>
- --------
(1) Elton E. Babbitt retired as Chairman of the Board of the Company on
September 30, 1998.
The Company maintains various employee benefit and compensation plans,
including an incentive bonus plan and 401(k) savings plan.
NEW STOCK OPTION PLAN
The Company adopted an employee stock option plan (the "New Stock Option
Plan") pursuant to which a total of 222,222 shares of MTL Common Stock will be
available for grant. Fifty percent of each option granted (each, a "New
Option") on June 9, 1998 (the "Effective Time") will vest in equal increments
over four years. The remaining fifty percent of each New Option will vest in
nine years or sooner as determined by a committee of the Company's Board of
Directors (the "Committee"), subject to acceleration if certain per-share
equity value targets are achieved or, in the event of a sale of the Company,
if certain per share consideration targets are achieved. Vesting of the New
Options occurs only during an employee's term of employment. The New Options
will become fully vested in the event of a termination of employment without
"cause" or for "good reason" within six months following a sale of the
Company. The exercise price for the New Options is $40.00 per share and the
New Options will expire ten years from the date of grant. See "--Employment
and Related Agreements." Options granted after the Effective Time shall vest
as determined by the Committee.
EMPLOYMENT AND RELATED AGREEMENTS
Employment Agreements. Montgomery Tank Lines entered into employment
agreements with the following executive officers: Charles J. O'Brien, Jr.,
Richard J. Brandewie and Marvin Sexton (each an "Employment Agreement" and
collectively, the "Employment Agreements"). Each Employment Agreement provides
for a two-year term of service, with an automatic one-year extension on each
June 9th, unless
68
<PAGE>
Montgomery Tank Lines or the executive officer gives notice that the term will
not be so extended. The Employment Agreements provide to each of the executive
officers an annual base salary of not less than $192,238.80 and permit each
executive to earn an annual bonus of up to 42.0% of his annual base salary if
certain performance standards are achieved, and an additional bonus of up to
18.0% of his annual base salary relating to extraordinary performance by
Montgomery Tank Lines and such executive. Such bonus plan will be administered
by Montgomery Tank Lines' compensation committee. The Employment Agreements
also provide for certain severance payments to be made if the employment of
any of such executives is terminated without "cause" (as defined in the
Employment Agreements) or if such executive resigns after the occurrence of
one of a number of specified changes in such executive's employment, including
a material diminution by Montgomery Tank Lines of the executive's duties and
responsibilities, a material breach by Montgomery Tank Lines of its
compensation and benefit obligations or an involuntary relocation by more than
50 miles from Plant City, Florida (each a termination for "good reason").
Under such circumstances, such executive would be entitled to receive his base
salary for the remainder of the term of his employment, a pro rated bonus and
continued medical and other benefits. In addition, each of the Employment
Agreements grants to each such executive options to purchase 22,000 shares of
MTL under the New Stock Option Plan. See "Management--New Stock Option Plan."
Consulting Agreement. Elton E. Babbit (the "Consultant") entered into a
Consulting Agreement (the "Consulting Agreement") with Montgomery Tank Lines
pursuant to which the Consultant has agreed to serve as an advisor and
consultant to the Company in connection with the Company's business
operations. The Consulting Agreement provides for a term of service commencing
on June 9, 1998 and continuing through December 31, 1999, unless earlier
terminated as provided therein. Pursuant to the Consulting Agreement,
Montgomery Tank Lines paid the Consultant for his services a base consulting
fee at the rate of $20,000 per month until September 30, 1998. Thereafter,
until the expiration of the Consulting Agreement, Montgomery Tank Lines shall
pay the Consultant a base consulting fee at the rate of $5,000 per month.
Montgomery Tank Lines will also reimburse the Consultant for all of the
Consultant's reasonable out-of-pocket business expenses incurred by him in
connection with the performance of his services thereunder.
Shareholders' Agreement. Elton E. Babbitt, Charles J. O'Brien, Jr., Richard
J. Brandewie and Marvin E. Sexton have entered into a Shareholders' Agreement
with Apollo (the "Shareholders' Agreement") governing certain aspects of the
relationship among such shareholders and MTL. The Shareholders' Agreement
contains, among other matters, (i) a provision restricting the rights of Elton
E. Babbitt to transfer his shares of MTL Common Stock (subject to certain
permitted or required transfers and a right of first refusal in favor of
Apollo), (ii) certain registration rights in the event MTL effects a
registration of its securities; (iii) certain preemptive rights with respect
to the sale of MTL Common Stock and equity securities convertible into MTL
Common Stock; and (iv) certain rights of Charles J. O'Brien, Jr., if he is
employed by MTL at the fourth anniversary of the Effective Time, to cause MTL
to purchase from him such number of shares with a value equal to the implied
value of his investment in MTL Common Stock at the Effective Time.
The Shareholders' Agreement became effective on June 9, 1998 and will
terminate upon the earlier of (a) the tenth anniversary thereof and (b) at
such time as the Company is a public company with equity securities listed on
a national securities exchange or publicly traded in the over-the-counter
market; provided, however, that certain transfer restrictions and registration
rights will survive notwithstanding the Company being a public company.
Pursuant to the Shareholders' Agreement, Apollo is entitled to a transaction
fee of up to 1.0% of the value of each transaction entered into by the
Company, as determined in the sole discretion of Apollo Management. Such fee
is in addition to the management fees payable to Apollo Management as set
forth in the Management Agreement between Apollo Management and the Company
described below.
Non-Competition Agreements. Each of Elton E. Babbitt and Gordon Babbitt, a
shareholder holding an 8.25% interest in the Company, has entered into a Non-
Competition Agreement with the Company that contains, among other things, a
covenant not to compete with MTL. Pursuant to such covenant, Elton E. Babbitt
has agreed that he will not, for a period of five years from the Effective
Time, engage in the bulk transportation services
69
<PAGE>
business or in any related business (the "BTS Business") within any geographic
area in which any member of the Company Group (as defined in the Non-
Competition Agreement) conducts its business. Ownership of up to 2.0% of a
publicly traded enterprise engaged in a BTS Business, without otherwise
participating in such enterprise, would not be a violation of such covenant
not to compete. Gordon Babbitt has agreed that he will not, for a period of
three years from June 9, 1998, engage in the for-hire, common carrier tank
truck transportation business (the "Business") within the United States and
Canada. Ownership of up to 2.0% of a publicly traded enterprise engaged in a
Business, without otherwise participating in such enterprise, would not be a
violation of such covenant not to compete.
In addition, Elton E. Babbitt and Gordon Babbitt have each agreed (for a
period of five years from the Effective Time with respect to Elton E. Babbitt,
and for a period of three years from the Effective Time with respect to Gordon
Babbitt) not to request, induce, attempt to influence or have any other
business contact with (i) any distributor or supplier of goods or services to
any member of the Company Group to curtail or cancel any business they may
transact with any member of the Company Group, (ii) any customers of any
member of the Company Group that have done business with or potential
customers which have been in contact with any member of the Company Group to
curtail or cancel any business they may transact with any member of the
Company Group, (iii) any employee of any member of the Company Group to
terminate his employment with such member of the Company Group or (iv) any
governmental entity or regulatory authority to terminate, revoke or materially
and adversely alter or impair any license, authority or permit held, owned,
used or reserved for the Company Group.
Management Agreement between Apollo and MTL. MTL and Apollo Management have
entered into a Management Agreement whereby MTL appointed Apollo Management
following the consummation of the Merger to provide financial and strategic
advice to MTL. Pursuant to the terms of the Management Agreement, Apollo
Management has agreed at such time to provide financial and strategic services
to MTL as reasonably requested by MTL's Board of Directors. As consideration
for services to be rendered under the Management Agreement, Apollo received an
initial fee of $2.0 million on June 9, 1998 and thereafter will receive an
annual fee of $500,000 until termination of the Management Agreement. The
Management Agreement may be terminated upon 30 days' written notice by Apollo
Management or MTL to the other party thereto. See "Certain Relationships and
Related Transactions."
Marvin Sexton Limited Recourse Secured Promissory Note and Pledge
Agreement. In connection with the completion of the MTL Transactions, MTL made
a limited recourse secured loan to Marvin Sexton in the amount of $400,000.
The loan is secured by a pledge by Mr. Sexton of all of his MTL Common Stock
and options to purchase MTL Common Stock. The principal amount of the loan is
due on June 9, 2006, with mandatory pre-payments due upon, and to the extent
of, the receipt of after-tax proceeds from the sale of Mr. Sexton's pledged
securities.
The foregoing discussion of employment and related agreements does not
purport to be complete and is qualified in its entirety by reference to each
of the agreements referenced above, which have been filed as exhibits to the
Registration Statement, of which this Prospectus forms a part.
70
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the MTL Common Stock as of September 30, 1998, by (i) each person
known by MTL to be a beneficial owner of more than 5.0% of the outstanding MTL
Common Stock, (ii) beneficial ownership of MTL Common Stock by each director
and named executive officer and (iii) all directors and executive officers as
a group:
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE
NAME OF BENEFICIAL OWNER COMMON STOCK OF CLASS
- ------------------------ ------------ ----------
<S> <C> <C>
Elton E. Babbitt(/1/)................................. 66,892 3.3%
Richard J. Brandewie(/1/)............................. 40,541 2.0%
Charles J. O'Brien, Jr.(/1/).......................... 30,239 1.5%
Marvin Sexton(/1/).................................... 35,135 1.8%
Joshua J. Harris(/2/)(/3/)............................ -- --
Michael D. Weiner(/2/)(/3/)........................... -- --
Robert A. Katz(/2/)(/3/).............................. -- --
Marc J. Rowan(/2/)(/3/)............................... -- --
John H. Kissick(/2/)(/3/)............................. -- --
All executive officers and directors as a group (9 172,807 8.6%
persons).............................................
Apollo Investment Fund III, L.P.(/4/)................. 1,714,470 85.7%
c/o Apollo Advisors II, L.P.
Two Manhattanville Road
Purchase, New York 10577
</TABLE>
- --------
(/1/The)business address for Messrs. Babbitt, Brandewie, O'Brien and Sexton is
MTL Inc., 3108 Central Drive, Plant City, FL 33567.
(/2/The)business address for Messrs. Harris, Weiner, Katz, Rowan and Kissick
is Apollo Management, L.P., 1301 Avenue of the Americas, New York, NY
10019.
(/3/Messrs.)Harris, Weiner, Katz, Rowan and Kissick are each principals and
officers of certain affiliates of Apollo. Although each of Messrs. Harris,
Weiner, Katz, Rowan and Kissick may be deemed to beneficially own shares
owned by Apollo, each such person disclaims beneficial ownership of any
such shares in which he does not have a pecuniary interest.
(/4/Includes)shares owned by Apollo Overseas Partners III, L.P., a Delaware
limited partnership, and Apollo (U.K.) Partners III, L.P., a limited
partnership organized under the laws of the United Kingdom.
71
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
A company owned by the children of Elton Babbitt, the Company's former
Chairman of the Board (the "Related Corporation") entered into a service
agreement with the Company, pursuant to which the Related Corporation agreed
to supply design, engineering, transloading, intermodal and other services to
the Company for a monthly fee of $11,670 per month. Because of their
specialized nature, these are services the Company would be unable to provide
to its customers on its own. The agreement is automatically renewable for one
year terms unless canceled upon prescribed notice. Management believes that
the terms of this service agreement are no less favorable than could be
obtained from unaffiliated parties.
During 1997, the Company purchased $6.6 million worth of trailer equipment
from the Related Corporation. The Related Corporation performed repair and
maintenance services for the Company totaling $347,000 during 1997. Management
believes that the purchase price for the trailers and cost of the repair
services are no greater than those charged by the Related Corporation to non-
affiliated purchasers and users.
In addition to the purchase of trailers and repair work, the Company and the
Related Corporation have engaged in various transactions involving (1) tire
purchases and (2) facility rentals. Because of its ability to buy tires in
volume, the Company included in its purchase orders tires on behalf of the
Related Corporation. The Related Corporation leases a manufacturing and repair
facility from the Company for a monthly rental of $5,000. The lease expires
April 1, 1999. As a result of these transactions, during the year ended
December 31, 1997, the amount owed to the Company by the Related Corporation
ranged from a high of $82,540 in February to a low of $0 in December. At
December 31, 1997, there were no amounts owed to the Company by the Related
Corporation. Upon consummation of the MTL Transactions, the Company became
subject to limitations under the Indenture with respect to these transactions.
See "Description of Notes--Limitations on Transactions with Affiliates."
In March 1994, the Company entered into a limited partnership (the "Limited
Partnership") with Gordon Babbitt, an unaffiliated corporation (each of the
Company, Gordon Babbitt and such corporation, a "limited partner") and another
corporation (the "general partner") owned by an individual employed by the
Related Corporation. The Limited Partnership provides transportation services
for bulk liquid commodities between Florida and Puerto Rico. Each limited
partner has contributed $4,950 to the Limited Partnership for a 33.0%
partnership interest and the general partner holds the remaining 1%
partnership interest. The three limited partners financed, on a loan basis,
$1.7 million of the initial operations of the Limited Partnership. The Company
financed approximately $700,000 of the $1.7 million with cash or equipment.
Such amount financed by the Company, in excess of the amounts financed by the
other limited partners, was secured by the equipment owned by the Limited
Partnership and guaranteed by the other limited partners. Distributions to the
partners are made in accordance with their ownership interest in the Limited
Partnership once all loans have been repaid to the limited partners. As of
December 31, 1997, all debt was repaid to the Company by the Limited
Partnership.
A corporation owned by Mr. Charles J. O'Brien, III, son of Charles J.
O'Brien, Jr., the Chairman of the Board, President and Chief Executive Officer
of the Company, is an affiliate of the Company which operates two terminals of
the Company. The terms of the agreement with this corporation are the same as
those entered into with other affiliates. Additionally, Mr. O'Brien, III, owns
a company which provided administrative services to the Company. The total
paid for such administrative services in 1997 was $113,820. As of September
30, 1997 such administrative services were no longer provided to the Company
by such corporation.
For a description of certain management and other agreements in connection
with the Transactions, see "Management--Employment and Related Agreements."
72
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The Company has authorized a total of 20,000,000 shares of capital stock of
which 15,000,000 shares, par value $.01 per share are of a class designated as
"Common Stock" and 5,000,000 shares, par value $.01 per share, are of a class
designated as "Preferred Stock."
Each share of Common Stock shall entitle the holder thereof to one vote at
every annual or special meeting of the stockholders of the Company, and there
shall be no cumulative voting.
Shares of Preferred Stock may be issued from time to time, in one or more
series, with such designation, assigned values, preferences and relative,
participating, optional or other rights, qualifications, limitations or
restrictions thereof as shall be stated and expressed in the resolution or
resolutions providing for the issue of such series adopted by the Board of
Directors of the Company (the "Board of Directors") from time to time, a copy
of which resolution or resolutions shall have been set forth in a certificate
made, executed, acknowledged, filed and recorded in the manner required by the
laws of the State of Florida in order to make the same effective. Each series
shall consist of such number of shares as shall be stated and expressed in
such resolution or resolutions providing for the issuance of the stock of such
series. All shares of any one series of Preferred Stock shall be alike in
every particular.
No holder of shares of the Company shall have any preferential or preemptive
right to subscribe for, purchase or receive any share of stock of the Company,
any options or warrants for such shares, any rights to subscribe to or
purchase such shares or any securities which may at any time or from time to
time be issued, sold or offered for sale by the Company.
Pursuant to the authority granted in the Company's Articles of
Incorporation, the Board of Directors authorized the issuance of two series of
Preferred Stock with such designation, assigned values, preferences and
relative, participating, optional or other rights, qualifications, limitations
or restrictions set forth in their respective Articles of Amendment. The
following description of the two series of Preferred Stock does not purport to
be complete and is subject to, and is qualified in its entirety by reference
to, all of the provisions of the Articles of Amendment governing each series
of Preferred Stock, including the definitions of certain terms therein, and
the Company's Articles of Incorporation, copies of which are attached as
exhibits to the Registration Statement, of which this Prospectus forms a part.
COMMON STOCK
2,000,000 shares of the Company's 15,000,000 authorized shares of Common
Stock have been issued pursuant to the Transactions and are outstanding.
8% REDEEMABLE PREFERRED STOCK
100,000 of the Company's 5,000,000 authorized shares of Preferred Stock are
designated "8% Redeemable Preferred Stock" (the "Redeemable Preferred Stock").
50,000 of such shares of Redeemable Preferred Stock were issued on August 28,
1998 to certain former shareholders of CLC in connection with the CLC
Transactions, and the remainder have been reserved for future issuance by the
Company as payment-in-kind dividends. Except as otherwise required by law, or
as stated below, shares of Redeemable Preferred Stock are not entitled to
voting rights.
Dividends. Each holder of shares of outstanding Redeemable Preferred Stock
is entitled to receive when and as declared by the Board of Directors, out of
funds legally available therefor, dividends on the shares of the Redeemable
Preferred Stock held by such holder, at the rate of 8.0% per annum on the
stated value of $100.00 per share (the "Stated Value") of the shares of
Redeemable Preferred Stock held by such holder of the applicable dividend
payment date (including all shares issued at the closing of the CLC Merger and
all shares issued as payment-in-kind dividends). Dividends shall be payable
annually in arrears on December 31 of each year. Dividends on the Redeemable
Preferred Stock shall be payable, at the option of the Company, in kind from
the
73
<PAGE>
date of issuance of the Redeemable Preferred Stock until the third anniversary
of such date, and thereafter in cash. Dividends on the Redeemable Preferred
Stock shall be payable in preference to and in priority over dividends on any
class of preferred stock of the Company established by the Board of Directors,
the terms of which do not expressly provide that it ranks senior or on a
parity with the Redeemable Preferred Stock as to dividend rights and rights
upon liquidation, winding-up and dissolution of the Company (collectively
referred to, together with all classes of common stock of the Company, as
"Junior Stock"). Dividends shall be cumulative.
Restrictions in Respect of Junior Stock. Except as set forth below, or to
the extent approval is provided in writing by the holders of a majority of the
outstanding shares of Redeemable Preferred Stock (voting as a separate class),
unless the Company has paid or simultaneously pays all accrued dividends that
are due and payable in respect of the Redeemable Preferred Stock, the Company
will not declare or pay any dividends on its Junior Stock, except that the
Company may: (i) effect a stock split of, or declare or pay any dividend on,
the
Junior Stock consisting solely of additional shares of Junior Stock; (ii)
comply with any specific provision of the terms of any subsequently designated
series of Preferred Stock approved by the holders of the Redeemable Preferred
Stock as provided for herein; or (iii) redeem or repurchase any stock of any
director, officer, employee, consultant or other person or entity, pursuant to
a stock repurchase agreement or stock restriction agreement approved by the
board of directors under which the Company has the right or obligation to
repurchase (in the event of death, termination of employment or of the
consulting arrangement, or other similar discontinuation of a business
relationship) vested shares at no more than their fair market value and
unvested shares at no more than their initial issuance price.
Liquidation, Dissolution or Winding Up. In the event of any liquidation,
dissolution or winding up of the Company, whether voluntary or involuntary,
before any distribution or payment is made to any holders of Junior Stock,
after the holders of Senior Stock have been paid all amounts payable to them
under the terms of such Senior Stock on a liquidation, dissolution or winding
up of the Company, the holders of each share of Redeemable Preferred Stock
shall be entitled to be paid first out of the assets of the Company available
for distribution to holders of the Redeemable Preferred Stock and the stock
ranking on parity with the Redeemable Preferred Stock (the "Pari Passu
Stock"), whether such assets are capital, surplus or earnings ("Available
Assets"), an amount in respect of each share of Redeemable Preferred Stock
equal to the Redemption Price.
If, upon liquidation, dissolution or winding up of the Company, the
Available Assets shall be insufficient to pay the holders of Redeemable
Preferred Stock and Pari Passu Stock the full amounts to which they otherwise
would be entitled, the holders of Redeemable Preferred Stock and the Pari
Passu Stock shall share ratably in any distribution of Available Assets pro
rata in proportion to the respective liquidation preference amounts which
would otherwise be payable upon liquidation with respect to the outstanding
shares of the Redeemable Preferred Stock and such Pari Passu Stock if all
liquidation preference dollar amounts with respect to such shares were paid in
full.
Optional Redemption. Shares of Redeemable Preferred Stock will be
redeemable, in whole or in part, at the option of the Company, for a
redemption price (the "Redemption Price") equal to (i) the Stated Value
multiplied by the amount set forth below under the applicable column entitled
"Premium to Stated Value" determined based on the actual redemption date as
set forth below under the column entitled "Day Following Closing Date", plus
(ii) accrued and unpaid dividends:
<TABLE>
<CAPTION>
PREMIUM TO
DAY FOLLOWING CLOSING DATE STATED VALUE
-------------------------- ------------
<S> <C>
From first day to last day of 42nd month..................... 100%
From first day of 43rd month to last day of 54th month....... 105%
From first day of 54th month to last day of 66th month....... 110%
From first day of 66th month to last day of 78th month....... 115%
Thereafter................................................... 120%
</TABLE>
Mandatory Redemption; Sale Event; IPO. Subject to the Company having funds
legally available for such purpose, the Company shall redeem all of the shares
of Redeemable Preferred Stock on the ninth anniversary of the date of issuance
of the Redeemable Preferred Stock. The price payable for any redemption shall
be the
74
<PAGE>
Redemption Price for all shares being redeemed, plus accrued and unpaid
dividends thereon. Subject to the Company having funds legally available for
such purpose, upon the consummation of certain sales of capital stock, the
Company shall redeem all of the shares of Redeemable Preferred Stock. The
price payable for any redemption shall be the Redemption Price for all shares
being redeemed. Subject to the Company having funds legally available for such
purpose, upon the consummation of certain initial public offerings, the
Company shall use 50% of the initial public offering proceeds to redeem shares
of Redeemable Preferred Stock. Such redemption shall take place within 30 days
following the consummation of an initial public offering.
Exchange; Exchange Indenture. The outstanding shares of Redeemable Preferred
Stock are exchangeable, in whole but not in part, at the option of the
Company, at any time for the Company's Exchange Debentures, ("Exchange
Debentures") containing an interest rate and maturity comparable to the
dividend and maturity provisions of the Redeemable Preferred Stock; provided,
that any such exchange may only be made if there is no legal impediment to
such exchange. The exchange rate is $1.00 principal amount of Exchange
Debentures for each $1.00 of Stated Value of Redeemable Preferred Stock. The
Exchange Debentures will be issued in principal amounts of $100 and integral
multiples thereof to the extent possible. The Company's Exchange Debentures
are governed by an indenture, which will be in a form customary for an
indenture of its type and reasonably acceptable to the holders of a majority
of the outstanding shares of Redeemable Preferred Stock.
No Exchange in Certain Cases. Notwithstanding the foregoing, the Company
will not be entitled or required to exchange the Redeemable Preferred Stock
for Exchange Debentures if (i) such exchange, any term or provision of the
indenture governing the Exchange Debentures (the "Exchange Indenture") or the
Exchange Debentures, or the performance of the Company's obligations under the
Exchange Indenture or the Exchange Debentures, will materially violate or
conflict with any applicable law or agreement or instrument then binding on
the Company, including agreements with the holders of indebtedness of the
Company or its subsidiaries, or if, at the time of such exchange or (ii) the
Company is insolvent or would be rendered insolvent by such exchange.
Forfeiture/Reduction of Stated Value. The Stated Value of outstanding shares
issued as payment-in-kind dividends held by each holder will be reduced from
time to time as provided in the Articles of Amendment.
Restrictions on Transfer. Shares of Redeemable Preferred Stock may not be
sold or otherwise transferred without the prior written consent of the
Company, other than to family members of the holder thereof and to trusts for
the purpose of estate planning (provided that any such transfer shall not, in
any way, limit the Company's rights thereunder). Any sale or transfer made in
violation of this paragraph shall be void and the Company and its agents shall
have no obligation to record any such transfer on its books.
13.75% SENIOR EXCHANGEABLE PREFERRED STOCK
250,000 of the Company's 5,000,000 shares of Preferred Stock are designated
"13.75% Senior Exchangeable Preferred Stock" ("Exchangeable Preferred Stock").
105,000 shares of the Exchangeable Preferred Stock were issued to Apollo and
an affiliate of BT Alex. Brown Incorporated in connection with the CLC
Transactions, with an aggregate of 145,000 additional shares reserved for
affiliates issuance. The liquidation preference of the Exchangeable Preferred
Stock will be $100.00 per share.
Rank. The Exchangeable Preferred Stock, with respect to dividend rights and
rights upon liquidation, winding-up and dissolution of the Company, ranks (i)
senior to all classes of Common Stock of the Company and to each other class
of preferred stock of the Company established by the Board of Directors, the
terms of which do not expressly provide that it ranks senior or on a parity
with the Exchangeable Preferred Stock as to dividend rights and rights upon
liquidation, winding-up and dissolution of the Company (collectively referred
to, together with all classes of common stock of the Company, as "Junior
Stock"); and (ii) subject to certain conditions, on a parity with each other
class of preferred stock of the Company established hereafter by the Board of
Directors, the terms of which expressly provide that such class or series will
rank on a parity with the Exchangeable Preferred Stock as to dividend rights
and rights upon liquidation, winding-up and dissolution (collectively referred
to as "Parity Stock");
75
<PAGE>
Dividends. The holders of the outstanding shares of Exchangeable Preferred
Stock will be entitled to receive, when, as and if declared by the Board of
Directors, out of funds legally available therefor, distributions in the form
of cash dividends on each share of Exchangeable Preferred Stock, at a rate per
annum equal to 13.75% of the liquidation preference per share of the
Exchangeable Preferred Stock, payable quarterly. All dividends shall be
cumulative, whether or not earned or declared, on a daily basis from the date
of issuance of Exchangeable Preferred Stock and will be payable quarterly in
arrears on each date on which dividends shall be payable (a "Dividend Payment
Date"), commencing on December 15, 1998, to holders of record on each Dividend
Record Date immediately preceding the relevant Dividend Payment Date, provided
that if any dividend payable on any Dividend Payment Date on or before
September 15, 2001 is not paid in full in cash on such Dividend Payment Date,
the amount payable as dividends on such Dividend Payment Date that is not paid
in cash on such Dividend Payment Date shall be paid in additional shares of
Exchangeable Preferred Stock (including fractional shares) (calculated by
dividing (x) the amount of the cash dividend payable to each holder of record
of the Exchangeable Preferred Stock on the basis of all shares held of record
by such holder, whether evidenced by one or more certificates, by (y)
$100.00), on such Dividend Payment Date and will be deemed paid in full and
shall not accumulate. After September 15, 2001, all dividends will be paid in
cash. Nothing shall in any way or under any circumstances be construed or
deemed to require the Board of Directors
to declare, or the Company to pay or set apart for payment, any dividends on
shares of the Exchangeable Preferred Stock at any time.
Liquidation Preference. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Company, the
holders of shares of Exchangeable Preferred Stock then outstanding will be
entitled to be paid, out of the assets of the Company available for
distribution to its shareholders, an amount in cash equal to the liquidation
preference for each share outstanding, plus, without duplication, an amount in
cash equal to accumulated and unpaid dividends thereon to the date fixed for
liquidation, dissolution or winding up (including an amount equal to a
prorated dividend for the period from the last Dividend Payment Date to the
date fixed for liquidation, dissolution or winding up) before any payment will
be made or any assets distributed to the holders of any of the Junior Stock,
including, without limitation, Common Stock of the Company. If, upon any
voluntary or involuntary liquidation, dissolution or winding up of the
Company, the assets of the Company are not sufficient to pay in full the
liquidation payments payable to the holders of outstanding shares of the
Exchangeable Preferred Stock and all other Parity Stock, then the holders of
all such shares shall share equally and ratably in any such distribution of
assets in proportion to the full liquidation preference and amounts of
accumulated but unpaid dividends to which each is entitled until such
liquidation preferences and dividends are paid in full. The holders of
outstanding shares of Exchangeable Preferred Stock and all other Parity Stock
will not be entitled to any further participation in any distribution of
assets of the Company after payment of the full amount of the liquidation
preferences and accumulated and unpaid dividends to which such holders are
entitled. For the purposes of this paragraph (d), neither the sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all of the property or assets of
the Company nor the consolidation or merger of the Company with or into one or
more entities will be deemed to be a liquidation, dissolution or winding-up of
the affairs of the Company.
Optional Redemption. The Company may, at the option of the Board of
Directors, redeem at any time on or after September 15, 2003, subject to
contractual and other restrictions with respect thereto and to the legal
availability of funds therefor, in whole or in part any or all of the shares
of the Exchangeable Preferred Stock, at the redemption prices (expressed as a
percentage of the liquidation preference) set forth below, plus, without
duplication, an amount in cash equal to all accumulated and unpaid dividends
per share to the date of redemption (the "Redemption Date") (including an
amount in cash equal to a prorated dividend for the period from the Dividend
Payment Date immediately prior to the Redemption Date to the Redemption Date)
(the "Optional Redemption Price"), if redeemed during the twelve-month period
commencing on September 15 of each of the years set forth below:
<TABLE>
<S> <C>
2003...................................... 106.88%
2004 and thereafter....................... 103.44%
2005 and thereafter....................... 100.00%
</TABLE>
76
<PAGE>
In addition to the foregoing, prior to September 15, 2003, the Company may,
at its option, use the net cash proceeds of one or more Public Equity
Offerings to redeem in whole, or in part, from any source of funds legally
available therefor, in the manner provided for in paragraph (e)(iii) hereof,
the Exchangeable Preferred Stock, at a redemption price of 113.75% of the
liquidation preference thereof, plus, without duplication, an amount in cash
equal to all accumulated and unpaid dividends to the Redemption Date including
an amount in cash equal to a prorated dividend for the period from the
Dividend Payment Date immediately prior to the Redemption Date to the
Redemption Date (the "Cash Proceeds Redemption Price"). In order to effect the
foregoing redemption with the proceeds of any Public Equity Offering, the
Company shall make such redemption not more than 120 days after the
consummation of any such Public Equity Offering.
Mandatory Redemption. On September 15, 2006, the Company shall redeem
(subject to the legal availability of funds therefor) all of the shares of the
Exchangeable Preferred Stock then outstanding at a redemption price equal to
100% of the liquidation preference per share, plus, without duplication, an
amount in cash equal to all accumulated and unpaid dividends per share to the
Redemption Date (including an amount equal to a prorated dividend for the
period from the Dividend Payment Date immediately prior to the Redemption Date
to the Redemption Date) (the "Mandatory Redemption Price").
Voting Rights. The holders of Exchangeable Preferred Stock, except as
otherwise required under Florida law, shall not be entitled or permitted to
vote on any matter required or permitted to be voted upon by the shareholders
of the Company, except that so long as any shares of the Exchangeable
Preferred Stock are outstanding, the Company will not: (A) authorize any class
of Parity Stock without the affirmative vote or consent of holders of at least
a majority of the then outstanding shares of Exchangeable Preferred Stock,
voting or consenting, as the case may be, as one class, given in person or by
proxy, either in writing or by resolution adopted at an annual or special
meeting; provided, however, that no such vote or consent shall be necessary in
connection with the authorization of the issuance of Exchangeable Preferred
Stock to satisfy dividend payments in lieu of cash on outstanding shares of
Exchangeable Preferred Stock; or (B) amend this Amendment so as to affect
materially and adversely the specified rights, preferences, privileges or
voting rights of the then outstanding shares of Exchangeable Preferred Stock
or to authorize the issuance of any additional shares of Exchangeable
Preferred Stock without the affirmative vote or consent of holders of at least
a majority of the issued and outstanding shares of Exchangeable Preferred
Stock, voting or consenting, as the case may be, as one class, given in Person
or by proxy, either in writing or by resolution adopted at an annual or
special meeting.
If (1) after September 15, 2003, cash dividends on the Exchangeable
Preferred Stock are in arrears and unpaid for six or more Dividend Periods
(whether or not consecutive) (a "Dividend Default") or (2) the Company fails
to redeem all of the then outstanding shares of Exchangeable Preferred Stock
on September 15, 2006, then in the case of any of clauses (1) or (2) the
number of directors constituting the Board of Directors shall be adjusted by
the number, if any, necessary to permit the holders of Exchangeable Preferred
Stock, voting separately and as one class (together with the holders of any
Parity Stock having similar voting rights), to elect the lesser of two
directors or that number of directors constituting 25% of the members of the
Board of Directors. At any time after voting power to elect directors shall
have become vested and be continuing in the holders of Exchangeable Preferred
Stock, or if vacancies shall exist in the offices of directors elected by the
holders of Exchangeable Preferred Stock, a proper officer of the Company may,
and upon the written request of the holders of record of at least twenty
percent (20%) of the shares of Exchangeable Preferred Stock then outstanding
addressed to the secretary of the Company shall, call a special meeting of the
holders of Exchangeable Preferred Stock, for the purpose of electing the
directors which such holders are entitled to elect.
Exchange. The outstanding shares of Exchangeable Preferred Stock are
exchangeable in whole but not in part, at the option of the Company at any
time on any Dividend Payment Date for the Company's 13.75% Subordinated
Exchange Debentures due 2006 (the "Exchange Debentures") which have an
interest rate and maturity substantially similar to the dividend and maturity
provisions of the Exchangeable Preferred Stock, provided that any such
exchange may only be made if on or prior thereto (i) the Company has paid (or
is deemed to have paid) all accumulated dividends on the Exchangeable
Preferred Stock (including the dividends payable
77
<PAGE>
on the date of exchange) and there shall be no contractual impediment to such
exchange; (ii) there shall be funds legally available sufficient therefor;
(iii) immediately after giving effect to such exchange, no Default or Event of
Default (each as defined in the indenture governing the Exchange Debentures
(the "Exchange Indenture") would exist under the Exchange Indenture, no
Default or Event of Default (each as defined in the Indenture) would exist
under the Indenture, no default or event of default (each as defined in the
New Credit Facility) would exist under the New Credit Facility and no default
or event of default under any other material instrument governing Indebtedness
outstanding at the time would be caused thereby; and (iv) the Exchange
Indenture has been qualified under the TIA (as defined), if such qualification
is required at the time of exchange. The exchange rate shall be $1.00
principal amount of Exchange Debentures for each $1.00 of liquidation
preference of Exchangeable Preferred Stock. The Exchange Indenture will
contain customary covenants consistent with the Company's existing
obligations. A more complete description of the terms and conditions of the
Exchange Indenture is contained in the Exchange Indenture which has been
attached as an exhibit to the Registration Statement, of which this Prospectus
forms a part.
78
<PAGE>
DESCRIPTION OF THE NEW CREDIT AGREEMENT
In connection with the MTL Merger, the Company entered into the MTL Credit
Agreement with a syndicate of financial institutions (including the arrangers
each, a "Bank Lender") for which Bankers Trust Company, Credit Suisse First
Boston Corporation and Salomon Brothers Holding Company Inc acted as
arrangers. In order to finance the CLC Transactions, the MTL Credit Agreement
was amended and restated to provide for additional borrowings and was replaced
by the New Credit Agreement. Pursuant to the New Credit Agreement, the Bank
Lenders provided to the Company (i) a $90.0 million Tranche A Term Loan with a
final maturity date of June 9, 2004, (ii) a seven-year $105.0 million Tranche
B Term Loan, (iii) an eight-year $90.0 million Tranche C Term Loan, and (iv) a
$75.0 million Revolving Credit Facility (which may include letters of credit)
available until June 9, 2004 to be used for the purposes noted below,
including for working capital and general corporate purposes of the Company
and its subsidiaries (including, without limitation, effecting certain
permitted acquisitions) (the "Senior Bank Financing"). The Senior Bank
Financing further provides for a $15,000,000 sublimit (the "Sublimit") under
the Revolving Credit Facility to be made available to Levy, an indirect
wholly-owned subsidiary of the Company. Amounts drawn under the Sublimit will
be drawn in Canadian dollars. See "Risk Factors--Notes are Subordinated,
Unsecured."
Use of Proceeds. The original term loan facility under the MTL Credit
Agreement and $10.0 million of the Sublimit were utilized by the Company to
finance in part the MTL Transactions and certain related costs and expenses,
and to refinance certain existing indebtedness of the Company. The proceeds of
the term loans incurred under the New Credit Agreement were utilized by the
Company to finance the CLC Merger and the other CLC Transactions and to pay
the fees and expenses incurred in connection with the CLC Transactions and the
New Credit Agreement. The Revolving Credit Facility shall be utilized for
general corporate and working capital purposes of the Company and its
subsidiaries, including certain permitted acquisitions and the prepayment of
the Notes and certain other indebtedness of the Company.
Prepayments. The Term Loans are required to be prepaid with, and after the
repayment in full of such loans, permanent reductions to the Revolving Credit
Facility are required in an amount equal to, (a) 100.0% (or 75.0%, if the
Leverage Ratio (as defined in the New Credit Agreement) is less than 4.0:1.0)
of the net cash proceeds of all asset sales and dispositions by the Company
and its subsidiaries, subject to certain exceptions, (b) 100.0% (or 75.0%, if
the Leverage Ratio is less than 4.0:1.0) of the net cash proceeds of issuances
of certain debt obligations and certain preferred stock by the Company and its
subsidiaries, subject to certain exceptions, (c) 50.0% (or 0.0%, if the
Leverage Ratio is less than 4.0:1.0) of the net proceeds from common equity
and certain preferred stock issuances by the Company and its subsidiaries,
subject to certain exceptions, including in connection with permitted
acquisitions (d) 75.0% (or 50.0%, if the Leverage Ratio is less than 4.0:1.0)
of annual Excess Cash Flow (as defined in the New Credit Agreement) and (e)
100.0% of certain insurance proceeds, subject to certain exceptions. Such
mandatory prepayments and permanent reductions will be allocated first, to the
Term Loans and second, to the Revolving Credit Facility.
Voluntary prepayments and commitment reductions will be permitted in whole
or in part, subject to minimum prepayment or reduction requirements, without
premium or penalty; provided that voluntary prepayments of Eurodollar Loans
(as defined in the New Credit Agreement) on a date other than the last day of
the relevant interest period will be subject to payment of customary breakage
costs, if any.
Interest and Fees. The interest rates under the Senior Bank Financing will
be as follows:
(a) Tranche A Term Loans: At the option of the Company, (i) 1.00% in
excess of the base rate equal to the higher of (x) 1/2 of 1.0% in excess of
the federal funds rate or (y) the rate that CSFB as the administrative
agent announces from time to time as its prime lending rate, as in effect
from time to time (the "Base Rate"), and (ii) 2.00% in excess of the
Eurodollar rate for Eurodollar Loans, in each case, subject to adjustment
based upon the achievement of certain financial ratios;
(b) Tranche B Term Loans: At the option of the Company, (i) 1.25% in
excess of the Base Rate and (ii) 2.25% in excess of the Eurodollar rate for
Eurodollar Loans, in each case, subject to adjustment based upon the
achievement of certain financial ratios; and
79
<PAGE>
(c) Tranche C Term Loans: At the option of the Company, (i) 1.50% in
excess of the Base Rate and (ii) 2.50% in excess of the Eurodollar rate for
Eurodollar Loans, in each case, subject to adjustment based upon the
achievement of certain financial ratios.
(d) Revolving Credit Facility: At the option of the Company, (i) 1.00% in
excess of the Base Rate and (ii) 2.00% in excess of the Eurodollar rate for
Eurodollar Loans, in each case, subject to adjustments based upon the
achievement of certain financial ratios. The interest rate on the Sublimit
will be based on Canadian dollar bankers' acceptances and the Canadian
prime rate.
The Company may elect interest periods of 1, 2, 3 or 6 months or, to the
extent available to each Bank Lender with loans and/or commitments under the
applicable Term Loan or the Revolving Credit Facility, 9 or 12 months in the
case of Eurodollar Loans. With respect to Eurodollar Loans, interest will be
payable at the end of each interest period and, in any event, at least every 3
months. With respect to Base Rate Loans (as defined in the New Credit
Agreement), interest will be payable quarterly on the last business day of
each fiscal quarter. In each case, calculations of interest will be based on a
360-day year and actual days elapsed.
The New Credit Agreement provides for payment by the Company in respect of
outstanding letters of credit of (i) an annual fee equal to the spread over
the Eurodollar rate for Eurodollar Loans under the Revolving Credit Facility
from time to time in effect on the aggregate outstanding stated amounts of
such letters of credit, (ii) a fronting fee equal to 1/4 of 1.0% on the
aggregate outstanding stated amounts of such letters of credit and (iii)
customary administrative charges.
Levy will pay an acceptance fee equal to the Applicable Margin (as defined
in the New Credit Agreement) that would be payable on Eurodollar Loans under
the Revolving Credit Facility on the drawing date of each loan drawn under the
Sublimit.
The Company will pay a commitment fee equal to a percentage equal to 1/2 of
1.0% per annum on the undrawn portion of the available commitment under the
Revolving Credit Facility, subject to decreases based on the achievement of
certain financial ratios.
Collateral and Guarantees. The loans and letters of credit under the Senior
Bank Financing will be guaranteed by all of the Company's existing and future
direct and indirect wholly-owned domestic subsidiaries (collectively, the
"Bank Guarantors"). The obligations of the Company and the Bank Guarantors
will be secured by a first priority perfected lien on substantially all of the
properties and assets of the Company and the Bank Guarantors, now owned or
subsequently acquired, including a pledge of all capital stock and notes owned
by the Company and the Bank Guarantors, subject to certain exceptions;
provided that, in certain cases, no more than 65.0% of the stock of foreign
subsidiaries of the Company will be required to be pledged.
Representations and Warranties and Covenants. The New Credit Agreement and
related documentation contain certain customary representations and warranties
by the Company and Levy. In addition, the New Credit Agreement is expected to
contain customary covenants restricting the ability of the Company and Levy
and certain of their subsidiaries to, among others (i) declare dividends; (ii)
prepay debt; (iii) incur liens; (iv) make investments; (v) incur additional
indebtedness; (vi) amend certain organizational, corporate and other
documents; (vii) make capital expenditures; (viii) engage in mergers,
acquisitions and asset sales; (ix) engage in certain transactions with
affiliates and formation of subsidiaries and (x) issue redeemable common stock
and preferred stock, subject to certain exceptions. In addition, the Company
is required to comply with specified financial covenants and customary
affirmative covenants.
Events of Default. Events of default under the New Credit Agreement include
(i) the Company's or Levy's failure to pay principal or interest when due or
pay a reimbursement obligation on a letter of credit; (ii) material breach of
any representation or warranty; (iii) covenant defaults; (iv) events of
bankruptcy; (v) a change of control of the Company; and (vi) other customary
events of default.
The summary herein of certain provisions of the New Credit Agreement does
not purport to be complete and is subject to, and is qualified in its entirety
by, all of the provisions of the New Credit Agreement, a copy of which has
been filed as an exhibit to the Registration Statement of which this
Prospectus is a part.
80
<PAGE>
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Old Notes were originally sold by the Company on June 9, 1998 (the
"Issue Date"), to BT Alex. Brown Incorporated, Credit Suisse First Boston
Corporation and Salomon Brothers Inc. (collectively, the "Initial Purchasers")
pursuant to a Purchase Agreement, dated June 4, 1998, between the Company, the
subsidiaries of the Company listed therein as guarantors (the "Guarantors")
and the Initial Purchasers (the "Purchase Agreement"). The Initial Purchasers
subsequently resold the Old Notes to qualified institutional buyers in
reliance on, and subject to the restrictions imposed pursuant to Rule 144A
under the Securities Act ("Rule 144A") and outside the United States in
accordance with the provisions of Regulation S under the Securities Act
("Regulation S."). The Company, the Guarantors and the Initial Purchasers also
entered into the registration rights agreement with the Initial Purchasers
(the "Registration Rights Agreement"), which requires, among other things,
that following the issuance and sale of the Old Notes, the Company and the
Guarantors (i) file with the Commission within 150 days after the Issue Date,
a Registration Statement with respect to the Exchange Notes, (ii) use their
commercially reasonable efforts to cause the Registration Statement to become
effective under the Securities Act within 210 days after the Issue Date and,
(iii) upon the effectiveness of the Registration Statement, offer to the
holders of the Old Notes the opportunity to exchange their Old Notes for a
like principal amount of Exchange Notes, which will be issued without a
restrictive legend and may be reoffered and resold by the holder without
restrictions or limitations under the Securities Act subject to certain
exceptions described below and to keep such Exchange Offer open for 20
business days (or longer if required by applicable law) after the date that
notice of the Exchange Offer is mailed to holders. For each Old Note
surrendered to the Company pursuant to the Exchange Offer, the holder of such
Old Note will receive an Exchange Note having a principal amount equal to that
of the surrendered Old Note. The Exchange Offer being made hereby is intended
to satisfy the Company's exchange offer obligations under the Registration
Rights Agreement. The term "holder" with respect to the Exchange Offer means
any person in whose name Old Notes are registered on the Company's books or
any other person who has obtained a properly completed bond power from the
registered holder or any person whose Old Notes are held of record by DTC who
desires to deliver such Old Notes by book-entry transfer of DTC.
Under existing interpretations of the staff of the Commission contained in
several no action letters to third parties, the Exchange Notes (and the
related guarantees) would in general be freely transferable by holders thereof
after the Exchange Offer without further registration under the Securities
Act. However, any purchaser of Old Notes who is an "affiliate" of the Company
or who intends to participate in the Exchange Offer for the purpose of
distributing the Exchange Notes (i) will not be able to tender its Old Notes
in the Exchange Offer (ii) will not be able to rely on the interpretation of
the staff of the Commission, and (iii) must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
sale or transfer of the Old Notes, unless such sale or transfer is made
pursuant to an exemption from such requirements.
Each holder that wishes to exchange the Old Notes for Exchange Notes will be
required to represent in the Letter of Transmittal that (i) any Exchange Notes
to be received by it will be acquired in the ordinary course of its business,
(ii) it has no arrangement or understanding with any person to participate in
the distribution (within the meaning of the Securities Act) of the Exchange
Notes in violation of the Securities Act, (iii) it is not an "affiliate" (as
defined in Rule 405 promulgated under the Securities Act) of the Company, (iv)
if such holder is not a broker-dealer, that it is not engaged in, and does not
intend to engage in, the distribution of Exchange Notes and (v) if such holder
is a broker-dealer (a "Participating Broker-Dealer") that will receive
Exchange Notes for its own account in exchange for Old Notes that are acquired
as a result of market-making or other trading activities, that it will deliver
a prospectus in connection with any resale of such Exchange Notes. The
Commission has taken the position that Participating Broker-Dealers may
fulfill their prospectus delivery requirements with respect to the Exchange
Notes received with the prospectus contained in the Registration Statement.
Each of the Company and the Guarantors has agreed that it will make available,
during the period required by the Securities Act, a prospectus meeting the
requirements of the Securities Act for use by Participating Broker-Dealers and
other persons, if any, with similar prospectus delivery requirements for use
in connection with any resale of Exchange Notes.
81
<PAGE>
If, (i) because of any change in law or in currently prevailing
interpretations of the staff of the Commission, the Company and the Guarantors
are not permitted to effect the Exchange Offer, (ii) the Exchange Offer is not
consummated within 240 days of the Issue Date, (iii) in certain circumstances,
certain holders of unregistered Exchange Notes so request or (iv) in the case
of any holder that participates in the Exchange Offer, such holder does not
receive Exchange Notes on the date of the exchange that may be sold without
restriction under state and federal securities laws (other than due solely to
the status of such holder as an affiliate of the Company within the meaning of
the Securities Act), then in each case, the Company will (x) promptly upon
becoming aware of any of the matters contemplated by clauses (i)-(iv) above,
deliver to the holders and the Trustee written notice thereof and (y) at their
sole expense, the Company and the Guarantors will (a) as promptly as
practicable, file a shelf registration statement covering resales of the Old
Notes (the "Shelf Registration Statement"), (b) use their commercially
reasonable efforts to cause the Shelf Registration Statement to be declared
effective under the Securities Act and (c) use their commercially reasonable
efforts to keep effective the Shelf Registration Statement until the earlier
of two years after the Issue Date or such time as all of the applicable Old
Notes have been sold thereunder. The Company will, in the event that a Shelf
Registration Statement is filed, provide to each holder copies of the
prospectus that is a part of the Shelf Registration Statement, notify each
such holder when the Shelf Registration Statement for the Old Notes has become
effective and take certain other actions as are required to permit
unrestricted resales of the Old Notes. A holder that sells Old Notes pursuant
to the Shelf Registration Statement will be required to be named as a selling
security holder in the related prospectus and to deliver a prospectus to
purchasers, will be subject to certain of the civil liability provisions under
the Securities Act in connection with such sales and will be bound by the
provisions of the Registration Rights Agreement that are applicable to such a
holder (including certain indemnification rights and obligations).
The Old Notes provide, among other things, that if (i) the Exchange Offer
has not been consummated on or prior to 240 days after the Issue Date or (ii)
if applicable, a Shelf Registration Statement has been declared effective, but
ceases to be effective at any time prior to the second anniversary of the
Issue Date, then from the 241st day or the date the Shelf Registration
Statement ceases to be effective, through but excluding the date the Exchange
Offer is consummated or the Shelf Registration Statement becomes effective,
the interest rate on the Old Notes will increase by .25% per annum for the
first 90 days immediately following such date, and thereafter, will increase
by an additional .25% per annum at the beginning of each subsequent 90-day
period. The additional interest on any affected Old Notes may not exceed 1.0%
in the aggregate.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and qualified in
its entirety by, all of the provisions of the Registration Rights Agreement, a
copy of which has been filed as an exhibit to the Registration Statement of
which this Prospectus forms a part.
Following the consummation of the Exchange Offer, holders of Old Notes who
were eligible to participate in the Exchange Offer but who did not tender
their Old Notes will not have any further registration rights, and the Old
Notes will continue to be subject to certain restrictions on transfer.
Accordingly, the liquidity of the market for the Old Notes could be adversely
affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal, the Company will accept all Old
Notes validly tendered and not withdrawn prior to 5:00 p.m. New York City
time, on the Expiration Date. After authentication of the Exchange Notes by
the Trustee or an authenticating agent, the Company will issue and deliver
$1,000 principal amount of Exchange Notes in exchange for each $1,000
principal amount of outstanding Old Notes accepted in the Exchange Offer.
Holders may tender some or all of their Old Notes pursuant to the Exchange
Offer in denominations of $1,000 and integral multiples thereof.
By tendering Old Notes in exchange for Exchange Notes and by executing the
Letter of Transmittal, each holder of Old Notes will be required to represent
that (i) it is not an affiliate of the Company, (ii) any Exchange
82
<PAGE>
Notes to be received by it were acquired in the ordinary course of its
business and (iii) it has no arrangement or understanding with any person to
participate in the distribution (within the meaning of the Securities Act) of
the Exchange Notes.
Each Participating Broker-Dealer that receives Exchange Notes for its own
account in exchange for Old Notes, where such Old Notes were acquired by such
Participating Broker-Dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. See "Plan of Distribution."
The form and terms of the Exchange Notes are identical in all material
respects to the form and terms of the Old Notes, except that (i) the offering
of the Exchange Notes has been registered under the Securities Act, (ii) the
Exchange Notes will not be subject to transfer restrictions and (iii) certain
provisions relating to an increase in the stated interest rate on the Old
Notes provided for under certain circumstances will be eliminated. The
Exchange Notes will evidence the same debt as the Old Notes. The Exchange
Notes will be issued under and entitled to the benefits of the Indenture.
As of the date of this Prospectus, $140,000,000 aggregate principal amount
of the Old Notes is outstanding. In connection with the issuance of the Old
Notes, the Company arranged for the Old Notes to be issued and transferable in
book-entry form through the facilities of DTC, acting as a depositary. The
Exchange Notes will also be issuable and transferable in book-entry form
through DTC.
This Prospectus, together with the accompanying Letter of Transmittal, is
initially being sent to all registered holders of the Old Notes as of the
close of business on , 1999. The Exchange Offer is not conditioned upon
any minimum aggregate principal amount of Old Notes being tendered. However,
the Exchange Offer is subject to certain customary conditions which may be
waived by the Company, and to the terms and provisions of the Registration
Rights Agreement. See "--Conditions to the Exchange Offer."
The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. See "--Exchange Agent." The Exchange Agent will act as agent
for the tendering holders for the purpose of receiving Exchange Notes from the
Company and delivering Exchange Notes to such holders.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender or the occurrence of certain other events set forth herein,
certificates for any such unaccepted Old Notes will be returned, at the
Company's cost, to the tendering holder thereof as promptly as practicable
after the Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Old
Notes pursuant to the Exchange Offer. The Company will pay all charges and
expenses, other than certain applicable taxes, in connection with the Exchange
Offer. See "--Solicitation of Tenders, Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1999, unless the Company, in its sole discretion, extends the Exchange
Offer, in which case the term "Expiration Date" shall mean the latest date to
which the Exchange Offer is extended. The Company may extend the Exchange
Offer at any time and from time to time by giving oral or written notice to
the Exchange Agent and by timely public announcement.
The Company expressly reserves the right, in its sole discretion (i) to
delay acceptance of any Old Notes, to extend the Exchange Offer or to
terminate the Exchange Offer and to refuse to accept Old Notes not previously
accepted, if any of the conditions set forth herein under "--Termination"
shall have occurred and shall not have been waived by the Company (if
permitted to be waived by the Company), by giving oral or written notice of
83
<PAGE>
such delay, extension or termination to the Exchange Agent and (ii) to amend
the terms of the Exchange Offer in any manner. Any such delay in acceptance,
extension, termination or amendment will be followed as promptly as
practicable by oral or written notice thereof by the Company to the registered
holders of the Old Notes. If the Exchange Offer is amended in a manner
determined by the Company to constitute a material change, the Company will
promptly disclose such amendment in a manner reasonably calculated to inform
the holders of such amendment and the Company will extend the Exchange Offer
to the extent required by law.
Without limiting the manner in which the Company may choose to make public
announcements of any delay in acceptance, extension, termination or amendment
of the Exchange Offer, the Company shall have no obligation to publish,
advise, or otherwise communicate any such public announcement, other than by
making a timely release thereof to the Dow Jones News Service.
INTEREST ON THE EXCHANGE NOTES
Interest on the Exchange Notes will accrue from the last interest payment
date on which interest was paid on the Old Notes surrendered in exchange
therefor or, if no interest has been paid on the Old Notes, from the Issue
Date. The Fixed Rate Notes will bear interest at a rate of 10% per annum and
the Floating Rate Notes will bear interest at a rate per annum, reset every
three months, equal to LIBOR plus 4.81%, from the date of issuance of the Old
Notes. Interest on the Exchange Notes will be payable semi-annually on June 15
and December 15 of each year. Interest on the Old Notes will be payable on
December 15, 1998.
PROCEDURES FOR TENDERING
Each holder of Old Notes wishing to accept the Exchange Offer must complete,
sign and date the Letter of Transmittal, or a facsimile thereof, in accordance
with the instructions contained herein and therein, and mail or otherwise
deliver such Letter of Transmittal, or such facsimile, together with the Old
Notes to be exchanged and any other required documentation, to United States
Trust Company of New York, as Exchange Agent, at the address set forth herein
and therein or effect a tender of Old Notes pursuant to the procedures for
book-entry transfer as provided for herein and therein. By executing the
Letter of Transmittal, each holder will represent to the Company that, among
other things, the Exchange Notes acquired pursuant to the Exchange Offer are
being acquired in the ordinary course of business of the person receiving such
Exchange Notes, whether or not such person is the holder, that neither the
holder nor any such other person has any arrangement or understanding
with any person to participate in the distribution of such Exchange Notes and
that neither the holder nor any such other person is an "affiliate," as
defined in Rule 405 under the Securities Act, of the Company.
Any financial institution that is a participant in DTC's Book-Entry Transfer
Facility system may make book-entry delivery of the Old Notes by causing DTC
to transfer such Old Notes into the Exchange Agent's account in accordance
with DTC's procedure for such transfer. Although delivery of Old Notes may be
effected through book-entry transfer into the Exchange Agent's account at DTC,
the Letter of Transmittal (or facsimile thereof), with any required signature
guarantees and any other required documents, must, in any case, be transmitted
to and received by the Exchange Agent at its address set forth herein under
"--Exchange Agent" prior to 5:00 p.m., New York City time, on the Expiration
Date. DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH ITS PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
Only a holder may tender its Old Notes in the Exchange Offer. To tender in
the Exchange Offer, a holder must complete, sign and date the Letter of
Transmittal or a facsimile thereof, have the signatures thereof guaranteed if
required by the Letter of Transmittal, and mail or otherwise deliver such
Letter of Transmittal or such facsimile, together with the Old Notes (unless
such tender is being effected pursuant to the procedure for book-entry
transfer) and other required documents, to the Exchange Agent, prior to 5:00
p.m., New York City time, on the Expiration Date.
The tender by a holder will constitute an agreement between such holder, the
Company and the Exchange Agent in accordance with the terms and subject to the
conditions set forth herein and in the Letter of Transmittal.
84
<PAGE>
If less than all of the Old Notes are tendered, a tendering holder should fill
in the amount of Old Notes being tendered in the appropriate box on the Letter
of Transmittal. The entire amount of Old Notes delivered to the Exchange Agent
will be deemed to have been tendered unless otherwise indicated.
THE LETTER OF TRANSMITTAL WILL INCLUDE REPRESENTATIONS TO THE COMPANY THAT,
AMONG OTHER THINGS, (1) THE EXCHANGE NOTES ACQUIRED PURSUANT TO THE EXCHANGE
OFFER ARE BEING ACQUIRED IN THE ORDINARY COURSE OF BUSINESS OF THE PERSON
RECEIVING SUCH EXCHANGE NOTES (WHETHER OR NOT SUCH PERSON IS THE HOLDER), (2)
NEITHER THE HOLDER NOR ANY SUCH OTHER PERSON IS ENGAGED IN, INTENDS TO ENGAGE
IN OR HAS ANY ARRANGEMENT OR UNDERSTANDING WITH ANY PERSON TO PARTICIPATE IN
THE DISTRIBUTION OF SUCH EXCHANGE NOTES, (3) NEITHER THE HOLDER NOR ANY SUCH
OTHER PERSON IS AN "AFFILIATE," AS DEFINED IN RULE 405 UNDER THE SECURITIES
ACT, OF THE COMPANY AND (4) IF THE TENDERING HOLDER IS A BROKER OR DEALER (AS
DEFINED IN THE EXCHANGE ACT) (A) IT ACQUIRED THE OLD NOTES FOR ITS OWN ACCOUNT
AS A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES AND (B) IT
HAS NOT ENTERED INTO ANY ARRANGEMENT OR UNDERSTANDING WITH THE COMPANY OR ANY
"AFFILIATE" THEREOF (WITHIN THE MEANING OF RULE 405 UNDER THE SECURITIES ACT)
TO DISTRIBUTE THE EXCHANGE NOTES TO BE RECEIVED IN THE EXCHANGE OFFER. IN THE
CASE OF A BROKER-DEALER THAT RECEIVES EXCHANGE NOTES FOR ITS OWN ACCOUNT IN
EXCHANGE FOR OLD NOTES WHICH WERE ACQUIRED BY IT AS A RESULT OF MARKET-MAKING
OR OTHER TRADING ACTIVITIES, THE LETTER OF TRANSMITTAL WILL ALSO INCLUDE AN
ACKNOWLEDGEMENT THAT THE BROKER-DEALER WILL DELIVER A COPY OF THIS PROSPECTUS
IN CONNECTION WITH THE RESALE BY IT OF EXCHANGE NOTES RECEIVED PURSUANT TO THE
EXCHANGE OFFER; HOWEVER, BY SO ACKNOWLEDGING AND BY DELIVERING A PROSPECTUS,
SUCH HOLDER WILL NOT BE DEEMED TO ADMIT THAT IT IS AN "UNDERWRITER" WITHIN THE
MEANING OF THE SECURITIES ACT. SEE "PLAN OF DISTRIBUTION."
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDERS. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE
AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE DELIVERY TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS
MAY ALSO REQUEST THAT THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS,
TRUST COMPANIES OR NOMINEES EFFECT SUCH TENDER FOR HOLDERS, IN EACH CASE AS
SET FORTH HEREIN AND IN THE LETTER OF TRANSMITTAL.
Any beneficial owner whose Old Notes are registered in the name of his
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder promptly and instruct such
registered holder to tender on his behalf. If such beneficial owner wishes to
tender on his own behalf, such beneficial owner must, prior to completing and
executing the Letter of Transmittal and delivering his Old Notes, either make
appropriate arrangements to register ownership of the Old Notes in such
owner's name or obtain a properly completed bond power from the registered
holder. The transfer of record ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by a member firm of a registered national
securities exchange or of the National Association of Securities Dealers,
Inc., a commercial bank or trust company having an office or correspondent in
the United States or an "eligible guarantor institution" within the meaning of
Rule 17Ad-15 under the Exchange Act (each an "Eligible Institution"), unless
the Old Notes tendered pursuant thereto are tendered (i) by a registered
holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instruction" of the Letter of Transmittal
or (ii) for the account of an Eligible Institution. If the Letter of
Transmittal is signed by a person other than the registered holder listed
therein, such Old Notes must be endorsed or accompanied by appropriate bond
powers which authorize such person to tender the Old Notes on behalf of the
registered holder, in either case signed as the name of the registered holder
or holders appears on the Old Notes. If the Letter of Transmittal
85
<PAGE>
or any Old Notes or bond powers are signed or endorsed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, such persons should
so indicate when signing, and unless waived by the Company, evidence
satisfactory to the Company of their authority to so act must be submitted
with such Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of the tendered Old Notes will be
determined by the Company in its sole discretion, which determination will be
final and binding. The Company reserves the absolute right to reject any and
all Old Notes not properly tendered or any Old Notes the Company's acceptance
of which would, in the opinion of counsel for the Company, be unlawful. The
Company also reserves the absolute right to waive any irregularities or
conditions of tender as to particular Old Notes. The Company's interpretation
of the terms and conditions of the Exchange Offer (including the instructions
in the Letter of Transmittal) will be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of Old Notes
must be cured within such time as the Company shall determine. Although the
Company intends to notify holders of defects or irregularities with respect to
tender of Old Notes, neither the Company, the Exchange Agent no any other
person shall be under any duty to give notification of defects or
irregularities with respect to tenders of Old Notes, nor shall any of them
incur any liability for failure to give such notification. Tenders of Old
Notes will not be deemed to have been made until such irregularities have been
cured or waived. Any Old Notes received by the Exchange Agent that the Company
determines are not properly tendered or the tender of which is otherwise
rejected by the Company and as to which the defects or irregularities have not
been cured or waived by the Company will be returned by the Exchange Agent to
the tendering holder unless otherwise provided in the Letter of Transmittal,
as soon as practicable following the Expiration Date.
In addition, the Company reserves the right in its sole discretion (a) to
purchase or make offers for any Old Notes that remain outstanding subsequent
to the Expiration Date, or, as set forth under "--Termination," terminate the
Exchange Offer and (b) to the extent permitted by applicable law, to purchase
Old Notes in the open market, in privately negotiated transactions or
otherwise. The terms of any such purchases or offers may differ from the terms
of the Exchange Offer.
BOOK-ENTRY TRANSFER
The Company understands that the Exchange Agent will make a request promptly
after the date of this Prospectus to establish accounts with respect to the
Old Notes at the DTC (the "Book-Entry Transfer Facility")
for the purpose of facilitating the Exchange Offer, and subject to the
establishment thereof, any financial institution that is a participant in the
Book-Entry Transfer Facility's system may make book-entry delivery of Old
Notes by causing such Book-Entry Transfer Facility to transfer such Old Notes
into the Exchange Agent's account with respect to the Old Notes in accordance
with the Book-Entry Transfer Facility's Automated Tender Offer Program
procedures for such transfer. However, the exchange for the Old Notes so
tendered will only be made after a timely confirmation of a book-entry
transfer of such Old Notes into the Exchange Agent's account, and timely
receipt by the Exchange Agent of an Agent's Message and any other documents
required by the Letter of Transmittal. The term "Agent's Message" means a
message, transmitted by the Book Entry Transfer Facility and received by the
Exchange Agent and forming part of the confirmation of a book-entry transfer,
which states that the Book-Entry Transfer Facility has received an express
acknowledgment from a participant tendering Old Notes and that such
participant has received the Letter of Transmittal and agrees to be bound by
the terms of the Letter of Transmittal, and the Company may enforce such
agreement against the participant. ALTHOUGH DELIVERY OF OLD NOTES MAY BE
EFFECTED THROUGH BOOK-ENTRY TRANSFER INTO THE EXCHANGE AGENT'S ACCOUNT AT THE
BOOK-ENTRY TRANSFER FACILITY, AN APPROPRIATE LETTER OF TRANSMITTAL PROPERLY
COMPLETED AND DULY EXECUTED WITH ANY REQUIRED SIGNATURE GUARANTEE AND ALL
OTHER REQUIRED DOCUMENTS MUST IN EACH CASE BE TRANSMITTED TO AND RECEIVED OR
CONFIRMED BY THE EXCHANGE AGENT AT ITS ADDRESS SET FORTH BELOW ON OR PRIOR TO
THE EXPIRATION DATE, OR, IF THE GUARANTEED DELIVERY PROCEDURES DESCRIBED BELOW
ARE COMPLIED WITH WITHIN THE TIME PERIOD PROVIDED UNDER SUCH PROCEDURES.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE
DELIVERY TO THE EXCHANGE AGENT.
86
<PAGE>
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, or (ii) who cannot deliver their Old Notes, the Letter
of Transmittal or any other required documents to the Exchange Agent prior to
the Expiration Date, or who cannot complete the procedure for book-entry
transfer on a timely basis, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmittal, mail or hand delivery)
setting forth the name and address of the holder, the certificate number or
numbers of such holder's Old Notes and the principal amount of such Old
Notes tendered, stating that the tender is being made thereby, and
guaranteeing that, within three New York Stock Exchange ("NYSE") trading
days after the Expiration Date, the Letter of Transmittal (or facsimile
thereof), together with the certificate(s) representing the Old Notes to be
tendered in proper form for transfer (or confirmation of a book-entry
transfer into the Exchange Agent's account at DTC of Old Notes delivered
electronically) and any other documents required by the Letter of
Transmittal, will be deposited by the Eligible Institution with the
Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), together with the certificate(s) representing all
tendered Old Notes in proper form for transfer (or confirmation of a book-
entry transfer into the Exchange Agent's account at DTC of Old Notes
delivered electronically and all other documents required by the Letter of
Transmittal are received by the Exchange Agent within three NYSE trading
days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m. New York City time, on the Expiration Date.
For a withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be received by the Exchange Agent at its address set forth
herein prior to 5:00 p.m., New York City time, on the Expiration Date. Any
such notice of withdrawal must (i) specify the name of the person having
deposited the Old Notes to be withdrawn (the "Depositor"), (ii) identify the
Old Notes to be withdrawn (including the certificate number or number and
principal amount of such Old Notes or, in the case of Old Notes transferred by
book-entry transfer, the name and number of the account at DTC to be
credited), (iii) be signed by the Depositor in the same manner as the original
signature on the Letter of Transmittal by which such Old Notes were tendered
(including any required signature guarantee) or be accompanied by documents of
transfer sufficient to permit the Trustee with respect to the Old Notes to
register the transfer of such Old Notes into the name of the Depositor
withdrawing the tender and (iv) specify the name in which any such Old Notes
are to be registered, if different from that of the Depositor. All questions
as to the validity, form and eligibility (including time of receipt) of such
withdrawal notices will be determined by the Company, whose determination
shall be final and binding on all parties. Any Old Notes so withdrawn will be
deemed not to have been validly tendered for purposes of the Exchange Offer,
and no Exchange Notes will be issued with respect thereto unless the Old Notes
so withdrawn are validly retendered. Any Old Notes that have been tendered but
are not accepted for exchange will be returned to the holder thereof without
cost to such holder as soon as practicable after withdrawal, rejection of
tender or termination of the Exchange Offer. Properly withdrawn Old Notes may
be retendered by following one of the procedures described above under "--
Procedures for Tendering" at any time prior to the Expiration Date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other term of the Exchange Offer, the Company will not
be required to accept for exchange, or to exchange Exchange Notes for, any Old
Notes, and may terminate or amend the Exchange Offer
87
<PAGE>
as provided herein before the acceptance of such Old Notes if, in the
Company's judgment, any of the following conditions has occurred or exists or
has not been satisfied: (i) that the Exchange Offer, or the making of any
exchange by a holder, violates applicable interpretation of the staff of the
Commission, (ii) that any action or proceeding shall have been instituted or
threatened in any court or by or before any governmental agency or body with
respect to the Exchange Offer, or (iii) that there has been adopted or enacted
any law, statute, rule or regulation that can reasonably be expected to impair
the ability of the Company to proceed with the Exchange Offer.
If the Company determines that it may terminate the Exchange Offer for any
of the reasons set forth above, the Company may (i) refuse to accept any Old
Notes and return any Old Notes that have been tendered to the holders thereof,
(ii) extend the Exchange Offer and retain all Old Notes tendered prior to the
Expiration Date of the Exchange Offer, subject to the rights of such holders
of tendered Old Notes to withdraw their tendered Old Notes or (iii) waive such
termination event with respect to the Exchange Offer and accept all properly
tendered Old Notes that have not been withdrawn. If such waiver constitutes a
material change in the Exchange Offer, the Company will disclose such change
by means of a supplement to this Prospectus that will be distributed to each
registered holder, and the Company will extend the Exchange Offer for a period
of five to ten business days, depending upon the significance of the waiver
and the manner of disclosure to the registered holders, if the Exchange Offer
would otherwise expire during such period.
EXCHANGE AGENT
United States Trust Company of New York, the Trustee under the Indenture,
has been appointed as Exchange Agent for the Exchange Offer. In such capacity,
the Exchange Agent has no fiduciary duties and will be acting solely on the
basis of directions of the Company. Requests for assistance and requests for
additional copies of this Prospectus or of the Letter of Transmittal should be
directed to the Exchange Agent addressed as follows:
By Mail or Overnight Delivery: United States Trust Company of New York
P.O. Box 843, Cooper Station
New York, New York 10276
Attention: Corporate Trust Services
By Hand Delivery: United States Trust Company of New York
111 Broadway
New York, New York 10006
Attention: Lower Level Corporate Trust
Window
Facsimile Transmission: (212) 780-0592
Attention: Customer Service
Information or Confirmation by (800) 548-6565
Telephone:
Delivery to an address or facsimile number other than those listed above
will not constitute a valid delivery.
SOLICITATION OF TENDERS; FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by the Company. The principal solicitation pursuant to the Exchange
Offer is being made by mail. Additional solicitations may be made by officers
and regular employees of the Company and its affiliates in person, by
telegraph, telephone or telecopier.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to broker, dealers or other
persons soliciting acceptances of the Exchange Offer. The Company will,
however, pay the Exchange Agent reasonable and customary fees for its services
and will reimburse the Exchange Agent for its reasonable out-of-pocket costs
and expenses in connection therewith and will indemnify the Exchange Agent for
all losses and claims incurred by it as a result of the Exchange Offer.
88
<PAGE>
The Company may also pay brokerage houses and other custodians, nominees and
fiduciaries the reasonable out-of-pocket expenses incurred by them in
forwarding copies of this Prospectus, Letters of Transmittal and related
documents to the beneficial owners of the Old Notes and in handling or
forwarding tenders for exchange.
The expenses to be incurred in connection with the Exchange Offer, including
fees and expenses of the Exchange Agent and Trustee and accounting and legal
fees and printing costs, will be paid by the Company.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Old Notes pursuant to the Exchange Offer. If, however, certificates
representing Exchange Notes or Old Notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be registered or
issued in the name of, any person other than the registered holder of the Old
Notes tendered, or if tendered Old Notes are registered in the name of any
person other than the person signing the Letter of Transmittal, or if the
transfer tax is imposed for any reason other than the exchange of Old Notes
pursuant to the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered holder or any other persons) will be
payable by the tendering holder. If satisfactory evidence of payment of such
taxes or exemption therefrom is not submitted with the Letter of Transmittal,
the amount of such transfer taxes will be billed by the Company directly to
such tendering holder.
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the Old
Notes, as reflected in the Company's accounting records on the date of the
exchange. Accordingly, no gain or loss for accounting purposes will be
recognized by the Company as a result of the consummation of the Exchange
Offer. The expenses of the Exchange Offer will be amortized by the Company
over the term of the Exchange Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
As a result of the making of, and upon acceptance for exchange of all
validly tendered Old Notes pursuant to the terms of, this Exchange Offer, the
Company will have fulfilled a covenant contained in the Registration Rights
Agreement. Holders of the Old Notes who do not tender their Old Notes in the
Exchange Offer will continue to hold such Old Notes and will be entitled to
all the rights, and subject to the limitations applicable thereto, under the
Indenture and the Registration Rights Agreement, except for any such rights
under the Registration Rights Agreement that by their terms terminate or cease
to have further effect as a result of making of this Exchange Offer. All
untendered Old Notes will continue to be subject to the restrictions on
transfer set forth in the Indenture. Accordingly, such Old Notes may be resold
only (i) to the Company, (ii) pursuant to a registration statement which has
been declared effective under the Securities Act, (iii) in the United States
to qualified institutional buyers ("QIBs") within the meaning of Rule 144A in
reliance upon the exemption from the registration requirements of the
Securities Act provided by Rule 144A, (iv) in the United States to
Institutional Accredited Investors (as defined in Rule 501(a)(1), (2), (3) or
(7) promulgated under the Securities Act) in transactions exempt from the
registration requirements of the Securities Act, (v) outside the United States
to foreign persons in transactions complying with the provisions of Regulation
S under the Securities Act or (vi) pursuant to any available exemption from
the registration requirements under the Securities Act, in each case in
accordance with any applicable securities laws of any state of the United
States. To the extent that Old Notes are tendered and accepted in the Exchange
Offer, the liquidity of the trading market for untendered Old Notes could be
adversely affected.
89
<PAGE>
DESCRIPTION OF NOTES
The Fixed Rate Notes and the Floating Rate Notes to be issued in connection
with the Exchange Offer will be treated as a single class of securities and
will be issued under a single indenture (the "Indenture"), dated as of June 9,
1998 by and among MTL Inc., the Guarantors and United States Trust Company of
New York, as Trustee (the "Trustee"), a copy of which Indenture has been filed
as an exhibit to the Registration Statement, of which this Prospectus forms a
part. All references to the "Notes" in the following summary and elsewhere
herein shall mean the collective reference to both the Exchange Notes and the
Old Notes. The following summary of certain provisions of the Indenture does
not purport to be complete and is subject to, and is qualified in its entirety
by reference to, the Trust Indenture Act of 1939, as amended (the "TIA"), and
to all of the provisions of the Indenture, including the definitions of
certain terms therein and those terms made a part of the Indenture by
reference to the TIA as in effect on the date of the Indenture. The
definitions of certain capitalized terms used in the following summary are set
forth below under "--Certain Definitions." For purposes of this section,
references to the "Company" include only MTL Inc. and not its Subsidiaries.
The Exchange Notes will evidence the same indebtedness as the Old Notes
(which they replace) and will be entitled to the benefits of the Indenture.
The form and terms of the Exchange Notes are identical in all material respect
to the form and terms of the Old Notes except that the Exchange Notes have
been registered under the Securities Act and, therefore, will not be subject
to transfer restrictions, registration rights and certain provisions relating
to an increase in the stated interest rate on the Old Notes under certain
circumstances relating to the registration of the Exchange Notes.
The Notes will be general unsecured obligations of the Company, ranking
subordinate in right of payment to all existing and future Senior Debt of the
Company.
The Notes will be issued in fully registered form only, without coupons, in
denominations of $1,000 and integral multiples thereof. Initially, the Trustee
will act as Paying Agent and Registrar for the Notes. The Notes may be
presented for registration or transfer and exchange at the offices of the
Registrar, which initially will be the Trustee's corporate trust office. The
Company may change any Paying Agent and Registrar without notice to holders of
the Notes (the "Holders"). The Company will pay principal (and premium, if
any) on the Notes at the Trustee's corporate office in New York, New York. At
the Company's option, interest may be paid at the Trustee's corporate trust
office or by check mailed to the registered address of Holders. Any Old Notes
that remain outstanding after completion of the Exchange Offer, together with
the Exchange Notes issued in connection with the Exchange Offer, will be
treated as a single class of securities under the Indenture.
PRINCIPAL, MATURITY AND INTEREST
The Notes are limited in aggregate principal amount to $275.0 million, of
which $140.0 million of Old Notes was issued in the Offering ($100.0 million
of which are Fixed Rate Notes and $40.0 million of which are Floating Rate
Notes), which will mature on June 15, 2006. Interest on the Notes will be
payable semi-annually in cash on each June 15 and December 15 commencing on
December 15, 1998, to the persons who are registered Holders at the close of
business on the June 1 and December 1 immediately preceding the applicable
interest payment date. Interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from
and including the date of issuance and will be computed on the basis of a 360-
day year of twelve 30-day months.
The Notes will not be entitled to the benefit of any mandatory sinking fund.
Fixed Rate Notes. Interest on the Fixed Rate Notes will accrue at the rate
of 10% per annum.
Floating Rate Notes. The Floating Rate Notes will bear interest at a rate
per annum, reset every three months, equal to LIBOR plus 4.81%, as determined
by the Calculation Agent (the "Calculation Agent"), which shall initially be
the Trustee.
90
<PAGE>
"LIBOR," with respect to an Interest Period, will be the rate (expressed as
a percentage per annum) for deposits in United States dollars for a three-
month period beginning on the second London Banking Day (as defined) after the
Determination Date (as defined) that appears on Telerate Page 3750 (as
defined) as of 11:00 a.m., London time, on the Determination Date. If Telerate
Page 3750 does not include such a rate or is unavailable on a Determination
Date, LIBOR for the Interest Period shall be the arithmetic mean of the rates
(expressed as a percentage per annum) for deposits in a Representative Amount
(as defined) in United States dollars for a three-month period beginning on
the second London Banking Day after the Determination Date that appears on
Reuters Screen LIBO Page (as defined) as of 11:00 a.m., London time, on the
Determination Date. If Reuters Screen LIBO Page does not include two or more
rates or is unavailable on a Determination Date, the Calculation Agent will
request the principal London office of each of four major banks in the London
interbank market, as selected by the Calculation Agent, to provide such bank's
offered quotation (expressed as a percentage per annum), as of approximately
11:00 a.m., London time, on such Determination Date, to prime banks in the
London interbank market for deposits in a Representative Amount in United
States dollars for a three-month period beginning on the second London Banking
Day after the Determination Date. If at least two such offered quotations are
so provided, LIBOR for the Interest Period will be the arithmetic mean of such
quotations. If fewer than two such quotations are so provided, the Calculation
Agent will request each of three major banks in New York City, as selected by
the Calculation Agent, to provide such bank's rate (expressed as a percentage
per annum), as of approximately 11:00 a.m., New York City time, on such
Determination Date, for loans in a Representative Amount in United States
dollars to leading European banks for a three-month period beginning on the
second London Banking Day after the Determination Date. If at least two such
rates are so provided, LIBOR for the Interest Period will be the arithmetic
mean of such rates. If fewer than two such rates are so provided, then LIBOR
for the Interest Period will be LIBOR in effect with respect to the
immediately preceding Interest Period.
"Interest Period" means the period commencing on and including an interest
payment date and ending on and including the day immediately preceding the
next succeeding interest payment date, with the exception that the first
Interest Period shall commence on and include June 9, 1998 and end on and
include December 14, 1998.
"Determination Date," with respect to an Interest Period, will be the second
London Banking Day preceding the first day of the Interest Period.
"London Banking Day" is any day in which dealings in United States dollars
are transacted or, with respect to any future date, are expected to be
transacted in the London interbank market.
"Representative Amount" means a principal amount of not less than U.S. $1.0
million for a single transaction in the relevant market at the relevant time.
"Telerate Page 3750" means the display designated as "Page 3750" on the Dow
Jones Telerate Service (or such other page as may replace Page 3750 on that
service).
"Reuters Screen LIBO Page" means the display designated as page "LIBO" on
The Reuters Monitor Money Rates Service (or such other page as may replace the
LIBO page on that service).
The amount of interest for each day that the Floating Rate Notes are
outstanding (the "Daily Interest Amount") will be calculated by dividing the
interest rate in effect for such day by 360 and multiplying the result by the
principal amount of the Floating Rate Notes. The amount of interest to be paid
on the Floating Rate Notes for each Interest Period will be calculated by
adding the Daily Interest Amounts for each day in the Interest Period.
All percentages resulting from any of the above calculations will be
rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point rounded upwards (e.g.,
9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)) and all
dollar amounts used in or resulting from such calculations will be rounded to
the nearest cent (with one-half cent being rounded upwards).
91
<PAGE>
The interest rate on the Floating Rate Notes will in no event be higher than
the maximum rate permitted by New York law as the same may be modified by
United States law of general application. Under current New York law, the
maximum rate of interest is 25.0% per annum on a simple interest basis. This
limit may not apply to Floating Rate Notes in which $2.5 million or more has
been invested.
The Calculation Agent will, upon the request of the holder of any Floating
Rate Note, provide the interest rate then in effect with respect to the
Floating Rate Notes. All calculations made by the Calculation Agent in the
absence of manifest error will be conclusive for all purposes and binding on
the Company and the Holders of the Floating Rate Notes.
REDEMPTION
Optional Redemption. The Fixed Rate Notes will be redeemable, at the
Company's option, in whole at any time or in part from time to time, on and
after June 15, 2002, upon not less than 30 nor more than 60 days' notice, at
the following redemption prices (expressed as percentages of the principal
amount thereof) if redeemed during the twelve-month period commencing on June
15 of the year set forth below, plus, in each case, accrued and unpaid
interest thereon, if any, to the date of redemption:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2002.......................................................... 105.000%
2003.......................................................... 102.500%
2004 and thereafter........................................... 100.000%
</TABLE>
The Floating Rate Notes will be redeemable, at the Company's option, in
whole or in part from time to time, upon not less than 30 nor more than 60
days' notice at the following redemption prices (expressed as percentages of
the principal amount thereof) if redeemed during the twelve-month period
commencing on June 15 of the year set forth below, plus, in each case, accrued
and unpaid interest thereon, if any, to the date of redemption:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
1998.......................................................... 105.000%
1999.......................................................... 104.000%
2000.......................................................... 103.000%
2001.......................................................... 102.000%
2002.......................................................... 101.000%
2003 and thereafter .......................................... 100.000%
</TABLE>
Optional Redemption upon Equity Offerings. At any time, or from time to
time, on or prior to June 15, 2001, the Company may, at its option, use the
net cash proceeds of one or more Equity Offerings (as defined below) to redeem
up to 35% in aggregate principal amount of the Fixed Rate Notes originally
issued at a redemption price equal to 110% of the principal amount thereof
plus accrued and unpaid interest thereon, if any, to the date of redemption;
provided, however, that after any such redemption the aggregate principal
amount of the Fixed Rate Notes outstanding must equal at least 65% of the
aggregate amount of the Fixed Rate Notes originally issued in the Offering. In
order to effect the foregoing redemption with the net cash proceeds of any
Equity Offering, the Company shall make such redemption not more than 120 days
after the consummation of any such Equity Offering.
As used in the preceding paragraph, "Equity Offering" means a public or
private offering of Qualified Capital Stock (other than public offerings with
respect to the Company's Common Stock on Form S-8) of the Company for
aggregate net cash proceeds to the Company of at least $20.0 million.
In addition, at any time prior to June 15, 2002, upon the occurrence of a
Change of Control, the Company may redeem the Notes, in whole but not in part,
at a redemption price equal to the principal amount thereof plus
92
<PAGE>
the Applicable Premium plus accrued and unpaid interest, if any, to the date
of redemption. Notice of redemption of the Notes pursuant to this paragraph
shall be mailed to holders of the Notes not less than 30 days nor more than 60
days prior to the date of redemption (which shall in no event be more than 180
days following the occurrence of a Change of Control). The Company may not
redeem Notes pursuant to this paragraph if it has made an offer to repurchase
Notes with respect to such Change of Control.
SELECTION AND NOTICE OF REDEMPTION
In the event that less than all of the Notes are to be redeemed at any time,
selection of such Notes for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities
exchange, if any, on which such Notes are listed or, if such Notes are not
then listed on a national securities exchange, on a pro rata basis, by lot or
by such method as the Trustee shall deem fair and appropriate; provided,
however, that no Notes of a principal amount of $1,000 or less shall be
redeemed in part; provided, further, that if a partial redemption is made with
the net cash proceeds of an Equity Offering, selection of the Fixed Rate Notes
or portions thereof for redemption shall be made by the Trustee only on a pro
rata basis or on as nearly a pro rata basis as is practicable (subject to DTC
procedures), unless such method is otherwise prohibited. Notice of redemption
shall be mailed by first-class mail at least 30 but not more than 60 days
before the redemption date to each Holder of Notes to be redeemed at its
registered address. If any Note is to be redeemed in part only, the notice of
redemption that relates to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in a principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof
upon cancellation of the original Note. On and after the redemption date,
interest will cease to accrue on Notes or portions thereof called for
redemption as long as the Company has deposited with the Paying Agent funds in
satisfaction of the applicable redemption price pursuant to the Indenture.
SUBORDINATION
The payment of all Obligations on the Notes is subordinated in right of
payment to the prior payment in full in cash or Cash Equivalents of all
Obligations on Senior Debt. Upon any payment or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any liquidation, dissolution, winding up, reorganization,
assignment for the benefit of creditors or marshaling of assets of the Company
or in a bankruptcy, reorganization, insolvency, receivership or other similar
proceeding relating to the Company or its property, whether voluntary or
involuntary, all Obligations due or to become due upon all Senior Debt shall
first be paid in full in cash or Cash Equivalents, or such payment duly
provided for to the satisfaction of the holders of Senior Debt, before any
payment or distribution of any kind or character is made on account of any
Obligations on the Notes, or for the acquisition of any of the Notes for cash
or property or otherwise. If any default occurs and is continuing in the
payment when due, whether at maturity, upon any redemption, by declaration or
otherwise, of any principal of, interest on, unpaid drawings for letters of
credit issued in respect of, or regularly accruing fees with respect to, any
Senior Debt, no payment of any kind or character shall be made by or on behalf
of the Company or any other Person on its or their behalf with respect to any
Obligations on the Notes or to acquire any of the Notes for cash or property
or otherwise.
In addition, if any other event of default occurs and is continuing with
respect to any Designated Senior Debt, as such event of default is defined in
the instrument creating or evidencing such Designated Senior Debt, permitting
the holders of such Designated Senior Debt then outstanding to accelerate the
maturity thereof and if the Representative for the respective issue of
Designated Senior Debt gives written notice of the event of default to the
Trustee (a "Default Notice"), then, unless and until all events of default
have been cured or waived or have ceased to exist or the Trustee receives
notice from the Representative for the respective issue of Designated Senior
Debt terminating the Blockage Period (as defined below), during the 180 days
after the delivery of such Default Notice (the "Blockage Period"), neither the
Company nor any other Person on its behalf shall (x) make any payment of any
kind or character with respect to any Obligations on the Notes or (y) acquire
any of the Notes for cash or property or otherwise. Notwithstanding anything
herein to the contrary, in no event will a
93
<PAGE>
Blockage Period extend beyond 180 days from the date the payment on the Notes
was due and only one such Blockage Period may be commenced within any 360
consecutive days. No event of default which existed or was continuing on the
date of the commencement of any Blockage Period with respect to the Designated
Senior Debt shall be, or be made, the basis for commencement of a second
Blockage Period by the Representative of such Designated Senior Debt whether
or not within a period of 360 consecutive days, unless such event of default
shall have been cured or waived for a period of not less than 90 consecutive
days (it being acknowledged that any subsequent action, or any breach of any
financial covenants for a period commencing after the date of commencement of
such Blockage Period that, in either case, would give rise to an event of
default pursuant to any provisions under which an event of default previously
existed or was continuing shall constitute a new event of default for this
purpose).
By reason of such subordination, in the event of the insolvency of the
Company, creditors of the Company who are not holders of Senior Debt,
including the Holders of the Notes, may recover less, ratably, than holders of
Senior Debt.
At September 30, 1998, the Company had approximately $294.4 million of
Senior Debt outstanding (exclusive of $61.1 million of unused commitments
under the New Credit Agreement).
GUARANTEES
Each Guarantor unconditionally guarantees, on a senior subordinated basis,
jointly and severally, to each Holder and the Trustee, the full and prompt
performance of the Company's obligations under the Indenture and the Notes,
including the payment of principal of and interest on the Notes. The
Guarantees will be subordinated to Guarantor Senior Debt on the same basis as
the Notes are subordinated to Senior Debt. The obligations of each Guarantor
are limited to the maximum amount which, after giving effect to all other
contingent and fixed liabilities of such Guarantor and after giving effect to
any collections from or payments made by or on behalf of any other Guarantor
in respect of the obligations of such other Guarantor under its Guarantee or
pursuant to its contribution obligations under the Indenture, will result in
the obligations of such Guarantor under the Guarantee not constituting a
fraudulent conveyance or fraudulent transfer under federal or state law. Each
Guarantor that makes a payment or distribution under a Guarantee shall be
entitled to a contribution from each other Guarantor in an amount pro rata,
based on the net assets of each Guarantor, determined in accordance with GAAP.
Each Guarantor may consolidate with or merge into or sell its assets to the
Company or another Guarantor without limitation, or with other Persons upon
the terms and conditions set forth in the Indenture. See "Certain Covenants--
Merger, Consolidation and Sale of Assets." In the event all of the Capital
Stock of a Guarantor is disposed of by the Company, whether by merger,
consolidation, sale or otherwise, and the disposition complies with the
provisions set forth in "Certain Covenants--Limitation on Asset Sales," the
Guarantor's Guarantee will be released.
Separate financial statements of the Guarantors are not included herein
because such Guarantors are jointly and severally liable with respect to the
Company's obligations pursuant to the Notes, and the aggregate net assets,
earnings and equity of the Guarantors and the Company are substantially
equivalent to the net assets, earnings and equity of the Company on a
consolidated basis.
CHANGE OF CONTROL
The Indenture will provide that upon the occurrence of a Change of Control,
each Holder will have the right to require that the Company purchase all or a
portion of such Holder's Notes pursuant to the offer described below (the
"Change of Control Offer"), at a purchase price equal to 101.0% of the
principal amount thereof plus accrued interest to the date of purchase.
94
<PAGE>
The Indenture will provide that, prior to the mailing of the notice referred
to below, but in any event within 30 days following any Change of Control, the
Company covenants to (i) repay in full and terminate all commitments under
Indebtedness under the New Credit Agreement and all other Senior Debt the
terms of which require repayment upon a Change of Control or offer to repay in
full and terminate all commitments under all Indebtedness under the New Credit
Agreement and all other such Senior Debt and to repay the Indebtedness owed to
each lender which has accepted such offer or (ii) obtain the requisite
consents under the New Credit Agreement and all other Senior Debt to permit
the repurchase of the Notes as provided below. The Company shall first comply
with the covenant in the immediately preceding sentence before it shall be
required to repurchase Notes pursuant to the provisions described below. The
Company's failure to comply with the covenant described in the immediately
preceding sentence shall constitute an Event of Default described in clause
(iii) and not in clause (ii) under "Events of Default" below.
Within 30 days following the date upon which the Change of Control occurred,
the Company shall send, by first class mail, a notice to each Holder, with a
copy to the Trustee, which notice shall govern the terms of the Change of
Control Offer. Such notice shall state, among other things, the purchase date,
which must be no earlier than 30 days nor later than 60 days from the date
such notice is mailed, other than as may be required by law (the "Change of
Control Payment Date"). Holders electing to have a Note purchased pursuant to
a Change of Control Offer will be required to surrender the Note, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, to the Paying Agent at the address specified in the notice prior to
the close of business on the third business day prior to the Change of Control
Payment Date.
If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient to pay the Change of Control
purchase price for all the Notes that might be delivered by Holders seeking to
accept the Change of Control Offer. In the event the Company is required to
purchase outstanding Notes pursuant to a Change of Control Offer, the Company
expects that it would seek third party financing to the extent it does not
have available funds to meet its purchase obligations. However, there can be
no assurance that the Company would be able to obtain such financing.
Neither the Board of Directors of the Company nor the Trustee may waive the
covenant relating to a Holder's right to redemption upon a Change of Control.
Restrictions in the Indenture described herein on the ability of the Company
and its Restricted Subsidiaries to incur additional Indebtedness, to grant
liens on its property, to make Restricted Payments and to make Asset Sales may
also make more difficult or discourage a takeover of the Company, whether
favored or opposed by the management of the Company. Consummation of any such
transaction in certain circumstances may require redemption or repurchase of
the Notes, and there can be no assurance that the Company or the acquiring
party will have sufficient financial resources to effect such redemption or
repurchase. Such restrictions and the restrictions on transactions with
Affiliates may, in certain circumstances, make more difficult or discourage
any leveraged buyout of the Company or any of its Restricted Subsidiaries by
the management of the Company. While such restrictions cover a wide variety of
arrangements which have traditionally been used to effect highly leveraged
transactions, the Indenture may not afford the Holders of Notes protection in
all circumstances from the adverse aspects of a highly leveraged transaction,
reorganization, restructuring, merger or similar transaction.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Change of Control Offer. To the extent that
the provisions of any securities laws or regulations conflict with the "Change
of Control" provisions of the Indenture, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under the "Change of Control" provisions of the
Indenture by virtue thereof.
The definition of "Change of Control" includes, among other transactions, a
disposition of "all or substantially all" of the property and assets of the
Company. With respect to the disposition of property or assets, the phase "all
or substantially all" as used in the Indenture varies according to the facts
and circumstances of
95
<PAGE>
the subject transaction, has no clearly established meaning under relevant law
and is subject to judicial interpretation. Accordingly, in certain
circumstances, there may be a degree of uncertainty in ascertaining whether a
particular transaction would involve a disposition of "all or substantially
all" of the property or assets of a Person, and therefore it may be unclear
whether a Change of Control has occurred and whether the Company is required
to make a Change of Control Offer.
CERTAIN COVENANTS
The Indenture will contain, among others, the following covenants:
Limitation on Incurrence of Additional Indebtedness. The Company will not,
and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, create, incur, assume, guarantee, acquire, become liable,
contingently or otherwise, with respect to, or otherwise become responsible
for payment of (collectively, "incur") any Indebtedness (other than Permitted
Indebtedness); provided, however, that if no Default or Event of Default shall
have occurred and be continuing at the time of or as a consequence of the
incurrence of any such Indebtedness, the Company or any of the Guarantors may
incur Indebtedness (including, without limitation, Acquired Indebtedness) and
Restricted Subsidiaries of the Company may incur Acquired Indebtedness, in
each case if on the date of the incurrence of such Indebtedness, after giving
effect to the incurrence thereof, the Consolidated Fixed Charge Coverage Ratio
of the Company is greater than 1.90 to 1.0 if such incurrence is on or prior
to December 31, 1999, 2.0 to 1.0 if such incurrence is after December 31, 1999
and on or prior to December 31, 2001, and 2.25 to 1.0 if such incurrence is
thereafter.
Limitation on Restricted Payments. The Company will not, and will not cause
or permit any of its Restricted Subsidiaries to, directly or indirectly, (a)
declare or pay any dividend or make any distribution (other than dividends or
distributions payable in Qualified Capital Stock of the Company) on or in
respect of shares of the Company's Capital Stock to holders of such Capital
Stock, (b) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of the Company or any warrants, rights or options to purchase or
acquire shares of any class of such Capital Stock, (c) make any principal
payment on, purchase, defease, redeem, prepay, decrease or otherwise acquire
or retire for value, prior to any scheduled final maturity, scheduled
repayment or scheduled sinking fund payment, any Indebtedness of the Company
(other than the Notes) that is subordinate or junior in right of payment to
the Notes or (d) make any Investment (other than Permitted Investments) (each
of the foregoing actions set forth in clauses (a), (b), (c) and (d) being
referred to as a "Restricted Payment"), if at the time of such Restricted
Payment or immediately after giving effect thereto, (i) a Default or an Event
of Default shall have occurred and be continuing or (ii) the Company is not
able to incur at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) in compliance with the "Limitation on Incurrence of Additional
Indebtedness" covenant or (iii) the aggregate amount of Restricted Payments
(including such proposed Restricted Payment) made subsequent to the Issue Date
(the amount expended for such purposes, if other than in cash, being the fair
market value of such property as determined reasonably and in good faith by
the Board of Directors of the Company) shall exceed the sum of: (w) 50% of the
cumulative Consolidated Net Income (or if cumulative Consolidated Net Income
shall be a loss, minus 100% of such loss) of the Company earned subsequent to
the Issue Date and on or prior to the date the Restricted Payment occurs (the
"Reference Date") (treating such period as a single accounting period); plus
(x) 100% of the aggregate net cash proceeds and the fair market value, as
determined in good faith by the Board of Directors, of property other than
cash received by the Company from any Person (other than a Subsidiary of the
Company) from the issuance and sale subsequent to the Issue Date and on or
prior to the Reference Date of Qualified Capital Stock of the Company; plus
(y) without duplication of any amounts included in clause (iii)(x) above, 100%
of the aggregate net cash proceeds of any equity contribution received by the
Company from a holder of the Company's Capital Stock; plus (z) without
duplication, the sum of (1) the aggregate amount returned in cash on or with
respect to Investments (other than Permitted Investments) made subsequent to
the Issue Date whether through interest payments, principal payments,
dividends or other distributions or payments, (2) the net cash proceeds
received by the Company or any Restricted Subsidiary of the Company from the
disposition of all or any portion of such Investments (other than to a
Subsidiary of the Company) and (3) upon redesignation of an Unrestricted
96
<PAGE>
Subsidiary as a Restricted Subsidiary, the fair market value of such
Subsidiary (valued in each case as provided in the definition of
"Investment"); provided, however, that the sum of clauses (1), (2) and (3)
above shall not exceed the aggregate amount of all such Investments made
subsequent to the Issue Date.
Notwithstanding the foregoing, the provisions set forth in the immediately
preceding paragraph do not prohibit: (1) the payment of any dividend within 60
days after the date of declaration of such dividend if the dividend would have
been permitted on the date of declaration; (2) if no Default or Event of
Default shall have occurred and be continuing, the acquisition of any shares
of Capital Stock of the Company, either (i) solely in exchange for shares of
Qualified Capital Stock of the Company or (ii) through the application of net
proceeds of a substantially concurrent sale for cash (other than to a
Subsidiary of the Company) of shares of Qualified Capital Stock of the
Company; (3) if no Default or Event of Default shall have occurred and be
continuing, the acquisition of any Indebtedness of the Company that is
subordinate or junior in right of payment to the Notes either (i) solely in
exchange for shares of Qualified Capital Stock of the Company, or (ii) through
the application of net proceeds of a substantially concurrent sale for cash
(other than to a Subsidiary of the Company) of (A) shares of Qualified Capital
Stock of the Company or (B) Refinancing Indebtedness; (4) so long as no
Default or Event of Default shall have occurred and be continuing, repurchases
by the Company of Capital Stock of the Company from (i) employees of or
consultants to the Company or any of its Subsidiaries or their authorized
representatives (A) upon the death, disability or termination of employment of
such employees or consultants or to the extent required pursuant to employee
benefit plans, employment agreements or consulting agreements, (B) pursuant to
any other agreements with such employees of or consultants to the Company or
any of its Subsidiaries, in an aggregate amount not to exceed $2.5 million in
any calendar year (with unused amounts in any calendar year being carried over
to succeeding years subject to a maximum of $5.0 million in any calendar year)
or (C) to the extent required pursuant to the Shareholder Agreement or the
Option Plan or (ii) Elton Babbitt; (5) the declaration and payment of
dividends to holders of any class or series of Preferred Stock (other than
Disqualified Capital Stock) issued after the Issue Date, provided that for the
most recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date of issuance of such
Preferred Stock, after giving effect to such issuance on a pro forma basis,
the Company would have had a Consolidated Fixed Charge Coverage Ratio of at
least 1.75 to 1.00; (6) the payment of dividends on the Company's Common
Stock, following the first public offering of the Company's Common Stock after
the Issue Date, of up to 6% per annum of the net proceeds received by the
Company in such public offering, other than public offerings with respect to
the Company's Common Stock registered on Form S-8; (7) the repurchase,
retirement or other acquisition or retirement for value of equity interests of
the Company in existence on the Issue Date and from the persons holding such
equity interests on the Issue Date and which are not held by Apollo or any of
its Affiliates or members of management of the Company and its Subsidiaries on
the Issue Date (including any equity interests issued in respect of such
equity interests as a result of a stock split, recapitalization, merger,
combination, consolidation or similar transaction), provided, however, that
the Company shall be permitted to make Restricted Payments under this clause
only if after giving effect thereto, the Company would be permitted to incur
at least $1.00 of additional Indebtedness (other than Permitted Indebtedness)
pursuant to the "Limitation on Incurrence of Additional Indebtedness" covenant
and (8) other Restricted Payments in an aggregate amount not to exceed $7.5
million. In determining the aggregate amount of Restricted Payments made
subsequent to the Issue Date in accordance with clause (iii) of the
immediately preceding paragraph, amounts expended pursuant to clauses (1),
(2)(ii), (4), (5), (6), (7) and (8) shall be included in such calculation.
Not later than the date of making any Restricted Payment, the Company shall
deliver to the Trustee an officers' certificate stating that such Restricted
Payment complies with the Indenture and setting forth in reasonable detail the
basis upon which the required calculations were computed, which calculations
may be based upon the Company's latest available internal quarterly financial
statements.
Limitation on Asset Sales. The Company will not, and will not permit any of
its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the
Company or the applicable Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value of the assets sold or otherwise disposed of (as determined in good faith
by the Company's Board of Directors), (ii) at least 75% of the consideration
received by the Company or the Restricted Subsidiary, as the case may be, from
such Asset
97
<PAGE>
Sale shall be in the form of cash or Cash Equivalents and is received at the
time of such disposition; provided that the amount of (a) any liabilities (as
shown on the Company's or such Restricted Subsidiary's most recent balance
sheet) of the Company or any Restricted Subsidiary (other than liabilities
that are by their terms subordinated to the Notes) that are assumed by the
transferee of any such assets, and (b) any notes or other obligations received
by the Company or any such Restricted Subsidiary from such transferee that are
converted by the Company or such Restricted Subsidiary into cash within 180
days after such Asset Sale (to the extent of the cash received) shall be
deemed to be cash for the purposes of this provision only; and (iii) upon the
consummation of an Asset Sale, the Company shall apply, or cause such
Restricted Subsidiary to apply, the Net Cash Proceeds relating to such Asset
Sale within 360 days of receipt thereof either (A) to prepay any Senior Debt
or Guarantor Senior Debt and, in the case of any Senior Debt or Guarantor
Senior Debt under any revolving credit facility, effect a permanent reduction
in the availability under such revolving credit facility, (B) to make an
Investment (x) in properties and assets that replace the properties and assets
that were the subject of such Asset Sale, (y) in properties and assets that
will be used in the business of the Company and its Restricted Subsidiaries as
existing on the Issue Date or in businesses the same, similar or reasonably
related thereto or (Z) permitted by clause (i) of the definition of Permitted
Investments ("Replacement Assets"), or (C) a combination of prepayment and
investment permitted by the foregoing clauses (iii)(A) and (iii)(B). On the
361st day after an Asset Sale or such earlier date, if any, as the Board of
Directors of the Company or of such Restricted Subsidiary determines not to
apply the Net Cash Proceeds relating to such Asset Sale as set forth in
clauses (iii)(A), (iii)(B) and (iii)(C) of the next preceding sentence (each,
a "Net Proceeds Offer Trigger Date"), such aggregate amount of Net Cash
Proceeds which have not been applied on or before such Net Proceeds Offer
Trigger Date as permitted in clauses (iii)(A), (iii)(B) and (iii)(C) of the
next preceding sentence (each a "Net Proceeds Offer Amount") shall be applied
by the Company or such Restricted Subsidiary to make an offer to purchase (the
"Net Proceeds Offer") on a date (the "Net Proceeds Offer Payment Date") not
less than 30 nor more than 60 days following the applicable Net Proceeds Offer
Trigger Date, from all Holders on a pro rata basis, that amount of Notes equal
to the Net Proceeds Offer Amount at a price equal to 100% of the principal
amount of the Notes to be purchased, plus accrued and unpaid interest thereon,
if any, to the date of purchase; provided, however, that if at any time any
non-cash consideration received by the Company or any Restricted Subsidiary of
the Company, as the case may be, in connection with any Asset Sale is
converted into or sold or otherwise disposed of for cash (other than interest
received with respect to any such non-cash consideration), then such
conversion or disposition shall be deemed to constitute an Asset Sale
hereunder as of the date of such conversion or disposition and the Net Cash
Proceeds thereof shall be applied in accordance with this covenant. The
Company may defer the Net Proceeds Offer until there is an aggregate
unutilized Net Proceeds Offer Amount equal to or in excess of $5.0 million
resulting from one or more Asset Sales (at which time, the entire unutilized
Net Proceeds Offer Amount, and not just the amount in excess of $5.0 million,
shall be applied as required pursuant to this paragraph).
In the event of the transfer of substantially all (but not all) of the
property and assets of the Company and its Restricted Subsidiaries as an
entirety to a Person in a transaction permitted under "--Merger, Consolidation
and Sale of Assets," the successor corporation shall be deemed to have sold
the properties and assets of the Company and its Restricted Subsidiaries not
so transferred for purposes of this covenant, and shall comply with the
provisions of this covenant with respect to such deemed sale as if it were an
Asset Sale. In addition, the fair market value of such properties and assets
of the Company or its Restricted Subsidiaries deemed to be sold shall be
deemed to be Net Cash Proceeds for purposes of this covenant.
Notice of each Net Proceeds Offer will be mailed to the record Holders as
shown on the register of Holders within 45 days following the Net Proceeds
Offer Trigger Date, with a copy to the Trustee, and shall comply with the
procedures set forth in the Indenture. Upon receiving notice of the Net
Proceeds Offer, Holders may elect to tender their Notes in whole or in part in
integral multiples of $1,000 in exchange for cash. To the extent Holders
properly tender Notes in an amount exceeding the Net Proceeds Offer Amount,
Notes of tendering Holders will be purchased on a pro rata basis (based on
amounts tendered). To the extent that the aggregate amount of the Notes
tendered pursuant to a Net Proceeds Offer is less than the Net Proceeds Offer
Amount, the Company may use such excess Net Proceeds Offer Amount for general
corporate purposes or for any other purposes not
98
<PAGE>
prohibited by the Indenture. Upon completion of any such Net Proceeds Offer,
the Net Proceeds Offer Amount shall be reset at zero. A Net Proceeds Offer
shall remain open for a period of 20 business days or such longer period as
may be required by law.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with the "Asset
Sale" provisions of the Indenture, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under the "Asset Sale" provisions of the Indenture by
virtue thereof.
Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries. The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause
or permit to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary of the Company to (a) pay dividends or
make any other distributions on or in respect of its Capital Stock; (b) make
loans or advances or to pay any Indebtedness or other obligation owed to the
Company or any other Restricted Subsidiary of the Company; or (c) transfer any
of its property or assets to the Company or any other Restricted Subsidiary of
the Company, except for such encumbrances or restrictions existing under or by
reason of: (1) applicable law; (2) the Indenture; (3) the New Credit Agreement
(as it may be assigned in accordance with its terms); (4) customary non-
assignment provisions of any contract or any lease governing a leasehold
interest of any Restricted Subsidiary of the Company; (5) any instrument
governing Acquired Indebtedness, which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other
than the Person or the properties or assets of the Person so acquired; (6)
agreements existing on the Issue Date to the extent and in the manner such
agreements are in effect on the Issue Date; (7) purchase money obligations for
property acquired in the ordinary course of business that impose restrictions
of the nature discussed in clause (c) above on the property so acquired; (8)
contracts for the sale of assets, including, without limitation, customary
restrictions with respect to a Restricted Subsidiary of the Company pursuant
to an agreement that has been entered into for the sale or disposition of all
or substantially all of the Capital Stock or assets of such Restricted
Subsidiary; (9) secured Indebtedness otherwise permitted to be incurred
pursuant to the covenants described under "Limitation on Incurrence of
Additional Indebtedness" and "Limitation on Liens" that limit the right of the
debtor to dispose of the assets securing such Indebtedness; (10) customary
provisions in joint venture agreements and other similar agreements entered
into in the ordinary course of business; (11) customary net worth provisions
contained in leases and other agreements entered into by the Company or any
Restricted Subsidiary; (12) an agreement governing Indebtedness incurred to
Refinance the Indebtedness issued, assumed or incurred pursuant to an
agreement referred to in clauses (1) through (11) above; provided, however,
that the provisions relating to such encumbrance or restriction contained in
any such Indebtedness are no less favorable to the Company in any material
respect as determined by the Board of Directors of the Company in their
reasonable and good faith judgment than the provisions relating to such
encumbrance or restriction contained in agreements referred to in such
clauses; or (13) an agreement governing Indebtedness permitted to be incurred
pursuant to the "Limitation on Incurrence on Additional Indebtedness"
covenant; provided that the provisions relating to such encumbrance or
restriction contained in such Indebtedness are no less favorable to the
Company in any material respect as determined by the Board of Directors of the
Company in their reasonable and good faith judgment than the provisions
contained in the New Credit Agreement as in effect on the Issue Date.
Limitation on Liens. The Company will not, and will not cause or permit any
of its Restricted Subsidiaries to, directly or indirectly, create, incur,
assume or permit or suffer to exist any Liens of any kind against or upon any
property or assets of the Company or any of its Restricted Subsidiaries
whether owned on the Issue Date or acquired after the Issue Date, or any
proceeds therefrom, or assign or otherwise convey any right to receive income
or profits therefrom unless (i) in the case of Liens securing Indebtedness
that is expressly subordinate or junior in right of payment to the Notes, the
Notes are secured by a Lien on such property, assets or proceeds that is
senior in priority to such Liens and (ii) in all other cases, the Notes are
equally and ratably secured, except for the following Liens which are
expressly permitted: (A) Liens existing as of the Issue Date to the extent and
in the manner such Liens are in effect on the Issue Date; (B) Liens securing
Senior Debt and Liens securing
99
<PAGE>
Guarantor Senior Debt; (C) Liens securing the Notes and the Guarantees; (D)
Liens of the Company or a Wholly Owned Restricted Subsidiary of the Company on
assets of any Restricted Subsidiary of the Company; (E) Liens securing
Refinancing Indebtedness which is incurred to Refinance any Indebtedness
(including, without limitation, Acquired Indebtedness) which has been secured
by a Lien permitted under the Indenture and which has been incurred in
accordance with the provisions of the Indenture; provided, however, that such
Liens (x) are no less favorable to the Holders and are not more favorable to
the lienholders with respect to such Liens than the Liens in respect of the
Indebtedness being Refinanced and (y) do not extend to or cover any property
or assets of the Company or any of its Restricted Subsidiaries not securing
the Indebtedness so Refinanced; and (F) Permitted Liens.
Prohibition on Incurrence of Senior Subordinated Debt. The Company and the
Guarantors will not incur or suffer to exist Indebtedness that is senior in
right of payment to the Notes or the Guarantees, as the case may be, and
subordinate in right of payment by its terms to any other Indebtedness of the
Company or such Guarantor, as the case may be.
Merger, Consolidation and Sale of Assets. The Company will not, in a single
transaction or series of related transactions, consolidate or merge with or
into any Person, or sell, assign, transfer, lease, convey or otherwise dispose
of (or cause or permit any Restricted Subsidiary of the Company to sell,
assign, transfer, lease, convey or otherwise dispose of) all or substantially
all of the Company's assets (determined on a consolidated basis for the
Company and the Company's Restricted Subsidiaries) whether as an entirety or
substantially as an entirety to any Person unless: (i) either (1) the Company
shall be the surviving or continuing corporation or (2) the Person (if other
than the Company) formed by such consolidation or into which the Company is
merged or the Person which acquires by sale, assignment, transfer, lease,
conveyance or other disposition the properties and assets of the Company and
of the Company's Restricted Subsidiaries substantially as an entirety (the
"Surviving Entity") (x) shall be a corporation organized and validly existing
under the laws of the United States or any State thereof or the District of
Columbia and (y) shall expressly assume, by supplemental indenture (in form
and substance satisfactory to the Trustee), executed and delivered to the
Trustee, the due and punctual payment of the principal of, and premium, if
any, and interest on all of the Notes and the performance of every covenant of
the Notes and the Indenture on the part of the Company to be performed or
observed; (ii) immediately after giving effect to such transaction on a pro
forma basis and the assumption contemplated by clause (i)(2)(y) above
(including giving effect to any Indebtedness and Acquired Indebtedness
incurred or anticipated to be incurred in connection with or in respect of
such transaction), the Company or such Surviving Entity, as the case may be,
shall be able to incur at least $1.00 of additional Indebtedness (other than
Permitted Indebtedness) pursuant to the "Limitation on Incurrence of
Additional Indebtedness" covenant; (iii) immediately before and immediately
after giving effect to such transaction on a pro forma basis and the
assumption contemplated by clause (i)(2)(y) above (including, without
limitation, giving effect to any Indebtedness and Acquired Indebtedness
incurred or anticipated to be incurred and any Lien granted in connection with
or in respect of the transaction), no Default or Event of Default shall have
occurred or be continuing; and (iv) the Company or the Surviving Entity, as
the case may be, shall have delivered to the Trustee an officers' certificate
and an opinion of counsel, each stating that such consolidation, merger, sale,
assignment, transfer, lease, conveyance or other disposition and, if a
supplemental indenture is required in connection with such transaction, such
supplemental indenture comply with the applicable provisions of the Indenture
and that all conditions precedent in the Indenture relating to such
transaction have been satisfied.
Notwithstanding the foregoing, the merger of the Company with an Affiliate
incorporated solely for the purpose of reincorporating the Company in another
jurisdiction shall be permitted.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Restricted
Subsidiaries of the Company the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Company.
100
<PAGE>
The Indenture will provide that upon any consolidation, combination or
merger or any transfer of all or substantially all of the assets of the
Company in accordance with the foregoing, in which the Company is not the
continuing corporation, the successor Person formed by such consolidation or
into which the Company is merged or to which such conveyance, lease or
transfer is made shall succeed to, and be substituted for, and may exercise
every right and power of, the Company under the Indenture and the Notes with
the same effect as if such Surviving Entity had been named as such.
Each Guarantor (other than any Guarantor whose Guarantee is to be released
in accordance with the terms of the Guarantee and the Indenture in connection
with any transaction complying with the provisions of "--Limitation on Asset
Sales") will not, and the Company will not cause or permit any Guarantor to,
consolidate with or merge with or into any Person other than the Company or
any other Guarantor unless: (i) the entity formed by or surviving any such
consolidation or merger (if other than the Guarantor) or to which such sale,
lease, conveyance or other disposition shall have been made is a corporation
organized and existing under the laws of the United States or any State
thereof or the District of Columbia; (ii) such entity assumes by supplemental
indenture all of the Obligations of the Guarantor under the Guarantee; (iii)
immediately after giving effect to such transaction on a pro forma basis, no
Default or Event of Default shall have occurred and be continuing; and (iv)
immediately after giving effect to such transaction and the use of any net
proceeds therefrom on a pro forma basis, the Company could satisfy the
provisions of clause (ii) of the first paragraph of this covenant. Any merger
or consolidation of a Guarantor with and into the Company (with the Company
being the surviving entity) or another Guarantor that is a Wholly Owned
Restricted Subsidiary of the Company need only comply with clause (iv) of the
first paragraph of this covenant.
Limitations on Transactions with Affiliates. (a) The Company will not, and
will not permit any of its Restricted Subsidiaries to, directly or indirectly,
enter into or permit to exist any transaction or series of related
transactions (including, without limitation, the purchase, sale, lease or
exchange of any property or the rendering of any service) with, or for the
benefit of, any of its Affiliates (each an "Affiliate Transaction"), other
than (x) Affiliate Transactions permitted under paragraph (b) below and (y)
Affiliate Transactions on terms that are no less favorable than those that
might reasonably have been obtained in a comparable transaction at such time
on an arm's-length basis from a Person that is not an Affiliate of the Company
or such Restricted Subsidiary. All Affiliate Transactions (and each series of
related Affiliate Transactions which are similar or part of a common plan)
involving aggregate payments or other property with a fair market value in
excess of $1.0 million shall be approved by the Board of Directors of the
Company or such Restricted Subsidiary, as the case may be, such approval to be
evidenced by a Board Resolution stating that such Board of Directors has
determined that such transaction complies with the foregoing provisions. If
the Company or any Restricted Subsidiary of the Company enters into an
Affiliate Transaction (or a series of related Affiliate Transactions related
to a common plan) that involves an aggregate fair market value of more than
$10.0 million, the Company or such Restricted Subsidiary, as the case may be,
shall, prior to the consummation thereof, obtain a favorable opinion as to the
fairness of such transaction or series of related transactions to the Company
or the relevant Restricted Subsidiary, as the case may be, from a financial
point of view, from an Independent Financial Advisor and file the same with
the Trustee.
(b) The restrictions set forth in clause (a) shall not apply to (i)
reasonable fees and compensation paid to and indemnity provided on behalf of,
officers, directors, employees or consultants of the Company or any Restricted
Subsidiary of the Company as determined in good faith by the Company's Board
of Directors; (ii) transactions exclusively between or among the Company and
any of its Wholly Owned Restricted Subsidiaries or exclusively between or
among such Wholly Owned Restricted Subsidiaries, provided such transactions
are not otherwise prohibited by the Indenture; (iii) any agreement as in
effect as of the Issue Date or any amendment thereto or any transaction
contemplated thereby (including pursuant to any amendment thereto) in any
replacement agreement thereto so long as any such amendment or replacement
agreement is not more disadvantageous to the Holders in any material respect
than the original agreement as in effect on the Issue Date; (iv) Restricted
Payments permitted by the Indenture; (v) transactions in which the Company or
any of its Restricted Subsidiaries, as the case may be, delivers to the
Trustee a letter from an Independent Financial Advisor
101
<PAGE>
stating that such transaction is fair to the Company or such Restricted
Subsidiary from a financial point of view or meets the requirements of the
first sentence of paragraph (a) above; (vi) the existence of, or the
performance by the Company or any of its Restricted Subsidiaries of its
obligations under the terms of, any stockholders agreement (including any
registration rights agreement or purchase agreement related thereto) to which
it is a party as of the Issue Date and any similar agreements which it may
enter into thereafter; provided, however, that the existence of, or the
performance by the Company or any of its Restricted Subsidiaries of
obligations under, any future amendment to any such existing agreement or
under any similar agreement entered into after that Issue Date shall only be
permitted by this clause to the extent that the terms of any such, amendment
or new agreement are not otherwise disadvantageous to the holders of the Notes
in any material respect; (vii) the issuance of securities or other payments,
awards or grants in cash securities or otherwise pursuant to or the funding
of, employment arrangements, stock options and stock ownership plans approved
by Board of Directors of the Company in good faith and loans to employees of
the Company and its Subsidiaries which are approved by the Board of Directors
of the Company in good faith; (viii) the payment of all fees and expenses
related to the Transactions; (ix) transactions with customers, clients,
suppliers, or purchasers or sellers of goods or services, in each case in the
ordinary course of business and otherwise in compliance with the terms of the
Indenture, which are fair to the Company or its Restricted Subsidiaries, in
the reasonable determination of the Board of Directors of the Company or the
senior management thereof, or are on terms at least as favorable as might
reasonably have been obtained at such time from an unaffiliated party; and (x)
fees payable to Apollo pursuant to the Management Agreement and the
Shareholders Agreement.
Additional Subsidiary Guarantees. If the Company or any of its Restricted
Subsidiaries transfers or causes to be transferred, in one transaction or a
series of related transactions, any property to any domestic Restricted
Subsidiary that is not a Guarantor, or if the Company or any of its Restricted
Subsidiaries shall organize, acquire or otherwise invest in another domestic
Restricted Subsidiary having total equity value in excess of $1.0 million,
then such transferee or acquired or other Restricted Subsidiary shall (i)
execute and deliver to the Trustee a supplemental indenture in form reasonably
satisfactory to the Trustee pursuant to which such Restricted Subsidiary shall
unconditionally guarantee all of the Company's obligations under the Notes and
the Indenture on the terms set forth in the Indenture; (ii) deliver to the
Trustee an opinion of counsel that such supplemental indenture has been duly
authorized, executed and delivered by such Restricted Subsidiary and
constitutes a legal, valid, binding and enforceable obligation of such
Restricted Subsidiary; and (iii) execute a Guarantee. Thereafter, such
Restricted Subsidiary shall be a Guarantor for all purposes of the Indenture.
Reports to Holders. The Indenture will provide that the Company will deliver
to the Trustee within 15 days after the filing of the same with the
Commission, copies of the quarterly and annual reports and of the information,
documents and other reports, if any, which the Company is required to file
with the Commission pursuant to Section 13 or 15(d) of the Exchange Act. The
Indenture further provides that, notwithstanding that the Company may not be
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Company will file with the Commission, to the extent permitted, and
provide the Trustee and Holders with such annual reports and such information,
documents and other reports specified in Sections 13 and 15(d) of the Exchange
Act. The Company will also comply with the other provisions of TIA (S) 314(a).
EVENTS OF DEFAULT
The following events are defined in the Indenture as "Events of Default":
(i) the failure to pay interest on any Notes when the same becomes due
and payable and the default continues for a period of 30 days (whether or
not such payment shall be prohibited by the subordination provisions of the
Indenture);
(ii) the failure to pay the principal on any Notes, when such principal
becomes due and payable, at maturity, upon redemption or otherwise
(including the failure to make a payment to purchase Notes tendered
pursuant to a Change of Control Offer or a Net Proceeds Offer) (whether or
not such payment shall be prohibited by the subordination provisions of the
Indenture);
102
<PAGE>
(iii) a default in the observance or performance of any other covenant or
agreement contained in the Indenture which default continues for a period
of 30 days after the Company receives written notice specifying the default
(and demanding that such default be remedied) from the Trustee or the
Holders of at least 25% of the outstanding principal amount of the Notes;
(iv) the failure to pay at final stated maturity (giving effect to any
applicable grace periods and any extensions thereof) the principal amount
of any Indebtedness of the Company or any Restricted Subsidiary of the
Company, or the acceleration of the final stated maturity of any such
Indebtedness if the aggregate principal amount of such Indebtedness,
together with the principal amount of any other such Indebtedness in
default for failure to pay principal at final stated maturity or which has
been accelerated, aggregates $7.5 million or more at any time;
(v) one or more judgments in an aggregate amount in excess of $7.5
million shall have been rendered against the Company or any of its
Restricted Subsidiaries and such judgments remain undischarged, unpaid or
unstayed for a period of 60 days after such judgment or judgments become
final and non-appealable;
(vi) certain events of bankruptcy affecting the Company or any of its
Significant Subsidiaries; or
(vii) any of the Guarantees ceases to be in full force and effect or any
of the Guarantees is declared to be null and void and unenforceable or any
of the Guarantees is found to be invalid or any of the Guarantors denies
its liability under its Guarantee (other than by reason of release of a
Guarantor in accordance with the terms of the Indenture).
If an Event of Default (other than an Event of Default specified in clause
(vi) above with respect to the Company) shall occur and be continuing, the
Trustee or the Holders of at least 25% in principal amount of outstanding
Notes may declare the principal of and accrued interest on all the Notes to be
due and payable by notice in writing to the Company and the Trustee specifying
the respective Event of Default and that it is a "notice of acceleration" (the
"Acceleration Notice"), and the same (i) shall become immediately due and
payable or (ii) if there are any amounts outstanding under the New Credit
Agreement, shall become immediately due and payable upon the first to occur of
an acceleration under the New Credit Agreement or five business days after
receipt by the Company and the Representative under the New Credit Agreement
of such Acceleration Notice. If an Event of Default specified in clause (vi)
above with respect to the Company occurs and is continuing, then all unpaid
principal of, and premium, if any, and accrued and unpaid interest on all of
the outstanding Notes shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder.
The Indenture will provide that, at any time after a declaration of
acceleration with respect to the Notes as described in the preceding
paragraph, the Holders of a majority in principal amount of the Notes may
rescind and cancel such declaration and its consequences (i) if the rescission
would not conflict with any judgment or decree, (ii) if all existing Events of
Default have been cured or waived except nonpayment of principal or interest
that has become due solely because of the acceleration, (iii) to the extent
the payment of such interest is lawful, interest on overdue installments of
interest and overdue principal, which has become due otherwise than by such
declaration of acceleration, has been paid, (iv) if the Company has paid the
Trustee its reasonable compensation and reimbursed the Trustee for its
expenses, disbursements and advances and (v) in the event of the cure or
waiver of an Event of Default of the type described in clause (vi) of the
description above of Events of Default, the Trustee shall have received an
officers' certificate and an opinion of counsel that such Event of Default has
been cured or waived. No such rescission shall affect any subsequent Default
or impair any right consequent thereto.
The Holders of a majority in principal amount of the Notes may waive any
existing Default or Event of Default under the Indenture, and its
consequences, except a default in the payment of the principal of or interest
on any Notes.
Holders of the Notes may not enforce the Indenture or the Notes except as
provided in the Indenture and under the TIA. Subject to the provisions of the
Indenture relating to the duties of the Trustee, the Trustee is
103
<PAGE>
under no obligation to exercise any of its rights or powers under the
Indenture at the request, order or direction of any of the Holders, unless
such Holders have offered to the Trustee reasonable indemnity. Subject to all
provisions of the Indenture and applicable law, the Holders of a majority in
aggregate principal amount of the then outstanding Notes have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee.
Under the Indenture, the Company is required to provide an officers'
certificate to the Trustee promptly upon any such officer obtaining knowledge
of any Default or Event of Default (provided that such officers shall provide
such certification at least annually whether or not they know of any Default
or Event of Default) that has occurred and, if applicable, describe such
Default or Event of Default and the status thereof.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee or stockholder of the Company or any
Subsidiary, as such, shall have any liability for any obligations of the
Company under the Notes or the Indenture or the Guarantees or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder of Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance
of the Notes.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have its
obligations and the obligations of the Guarantors discharged with respect to
the outstanding Notes ("Legal Defeasance"). Such Legal Defeasance means that
the Company shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding Notes, except for (i) the rights
of Holders to receive payments in respect of the principal of, premium, if
any, and interest on the Notes when such payments are due, (ii) the Company's
obligations with respect to the Notes concerning issuing temporary Notes,
registration of Notes, mutilated, destroyed, lost or stolen Notes and the
maintenance of an office or agency for payments, (iii) the rights, powers,
trust, duties and immunities of the Trustee and the Company's obligations in
connection therewith and (iv) the Legal Defeasance provisions of the
Indenture. In addition, the Company may, at its option and at any time, elect
to have the obligations of the Company released with respect to certain
covenants that are described in the Indenture ("Covenant Defeasance") and
thereafter any omission to comply with such obligations shall not constitute a
Default or Event of Default with respect to the Notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment, bankruptcy,
receivership, reorganization and insolvency events) described under "Events of
Default" will no longer constitute an Event of Default with respect to the
Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i) the
Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders cash in U.S. dollars, non-callable U.S. government obligations,
or a combination thereof, in such amounts as will be sufficient, in the
opinion of a nationally recognized firm of independent public accountants, to
pay the principal of, premium, if any, and interest on the Notes on the stated
date for payment thereof or on the applicable redemption date, as the case may
be; (ii) in the case of Legal Defeasance, the Company shall have delivered to
the Trustee an opinion of counsel in the United States reasonably acceptable
to the Trustee confirming that (A) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling or (B) since the date
of the execution of the Indenture, there has been a change in the applicable
federal income tax law, in either case to the effect that, and based thereon
such opinion of counsel shall confirm that, the Holders will not recognize
income, gain or loss for federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the same amounts, in
the same manner and at the same times as would have been the case if such
Legal Defeasance had not occurred; (iii) in the case of Covenant Defeasance,
the Company shall have delivered to the Trustee an opinion of counsel in the
United States reasonably acceptable to the Trustee confirming that the Holders
will not recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal income tax
on the same amounts, in the same manner and at the same times as would have
104
<PAGE>
been the case if such Covenant Defeasance had not occurred; (iv) no Default or
Event of Default shall have occurred and be continuing on the date of such
deposit or insofar as Events of Default from bankruptcy or insolvency events
are concerned, at any time in the period ending on the 91st day after the date
of deposit; (v) such Legal Defeasance or Covenant Defeasance shall not result
in a breach or violation of, or constitute a default under the Indenture or
any other material agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound; (vi) the Company shall have delivered to the Trustee an officers'
certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders over any other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company or others; (vii) the Company shall have delivered to
the Trustee an officers' certificate and an opinion of counsel, each stating
that all conditions precedent provided for or relating to the Legal Defeasance
or the Covenant Defeasance have been complied with; (viii) the Company shall
have delivered to the Trustee an opinion of counsel to the effect that (A) the
trust funds will not be subject to any rights of holders of Senior Debt,
including, without limitation, those arising under the Indenture and (B)
assuming no intervening bankruptcy of the Company between the date of deposit
and the 91st day following the date of the deposit and that no Holder is an
insider of the Company, after the 91st day following the date of the deposit,
the trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally; and (ix) certain other customary conditions precedent are
satisfied. Notwithstanding the foregoing, the opinion of counsel required by
clause (ii) above need not be delivered if all Notes not theretofore delivered
to the Trustee for cancellation (x) have become due and payable, (y) will
become due and payable on the maturity date within one year or (z) are to be
called for redemption within one year under arrangements satisfactory to the
Trustee for the giving of notice of redemption by the Trustee in the name, and
at the expense, of the Company.
SATISFACTION AND DISCHARGE
The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights of registration or transfer or exchange of the
Notes, as expressly provided for in the Indenture) as to all outstanding Notes
when (i) either (a) all the Notes theretofore authenticated and delivered
(except lost, stolen or destroyed Notes which have been replaced or paid and
Notes for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust) have been delivered to the Trustee for
cancellation or (b) all Notes not theretofore delivered to the Trustee for
cancellation have become due and payable and the Company has irrevocably
deposited or caused to be deposited with the Trustee funds in an amount
sufficient to pay and discharge the entire Indebtedness on the Notes not
theretofore delivered to the Trustee for cancellation, for principal of,
premium, if any, and interest on the Notes to the date of deposit together
with irrevocable instructions from the Company directing the Trustee to apply
such funds to the payment thereof at maturity or redemption, as the case may
be; (ii) the Company has paid all other sums payable under the Indenture by
the Company; and (iii) the Company has delivered to the Trustee an officers'
certificate and an opinion of counsel stating that all conditions precedent
under the Indenture relating to the satisfaction and discharge of the
Indenture have been complied with.
MODIFICATION OF THE INDENTURE
From time to time, the Company, the Guarantors and the Trustee, without the
consent of the Holders, may amend the Indenture for certain specified
purposes, including curing ambiguities, defects or inconsistencies, so long as
such change does not, in the opinion of the Trustee, adversely affect the
rights of any of the Holders in any material respect. In formulating its
opinion on such matters, the Trustee will be entitled to rely on such evidence
as it deems appropriate, including, without limitation, solely on an opinion
of counsel. Other modifications and amendments of the Indenture may be made
with the consent of the Holders of a majority in principal amount of the then
outstanding Notes issued under the Indenture, except that, without the consent
of each Holder affected thereby, no amendment may: (i) reduce the amount of
Notes whose Holders must consent to an amendment; (ii) reduce the rate of or
change or have the effect of changing the time for payment of interest,
including defaulted interest, on any Notes; (iii) reduce the principal of or
change or have the effect of changing
105
<PAGE>
the fixed maturity of any Notes, or change the date on which any Notes may be
subject to redemption or repurchase, or reduce the redemption or repurchase
price therefor; (iv) make any Notes payable in money other than that stated in
the Notes; (v) make any change in provisions of the Indenture protecting the
right of each Holder to receive payment of principal of and interest on such
Note on or after the due date thereof or to bring suit to enforce such
payment, or permitting Holders of a majority in principal amount of Notes to
waive Defaults or Events of Default; (vi) amend, change or modify in any
material respect the obligation of the Company to make and consummate a Change
of Control Offer in the event of a Change of Control which has occurred or
make and consummate a Net Proceeds Offer with respect to any Asset Sale that
has been consummated or modify any of the provisions or definitions with
respect thereto after a Change of Control has occurred or the subject Asset
Sale has been consummated; (vii) modify or change any provision of the
Indenture or the related definitions affecting the subordination or ranking of
the Notes or any Guarantee in a manner which adversely affects the Holders;
(viii) release any Guarantor from any of its obligations under its Guarantee
or the Indenture otherwise than in accordance with the terms of the Indenture;
or (ix) make any change in the foregoing amendment provisions which require
each Holder's consent or in the waiver provisions.
GOVERNING LAW
The Indenture will provide that it, the Notes and the Guarantees will be
governed by, and construed in accordance with, the laws of the State of New
York but without giving effect to applicable principles of conflicts of law to
the extent that the application of the law of another jurisdiction would be
required thereby.
THE TRUSTEE
The Indenture will provide that, except during the continuance of an Event
of Default, the Trustee will perform only such duties as are specifically set
forth in the Indenture. During the existence of an Event of Default, the
Trustee will exercise such rights and powers vested in it by the Indenture,
and use the same degree of care and skill in its exercise as a prudent man
would exercise or use under the circumstances in the conduct of his own
affairs.
The Indenture and the provisions of the TIA contain certain limitations on
the rights of the Trustee, should it become a creditor of the Company, to
obtain payments of claims in certain cases or to realize on certain property
received in respect of any such claim as security or otherwise. Subject to the
TIA, the Trustee will be permitted to engage in other transactions; provided
that if the Trustee acquires any conflicting interest as described in the TIA,
it must eliminate such conflict or resign.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary
of the Company or at the time it merges or consolidates with the Company or
any of its Restricted Subsidiaries or assumed in connection with the
acquisition of assets from such Person and in each case not incurred by such
Person in connection with, or in anticipation or contemplation of, such Person
becoming a Restricted Subsidiary of the Company or such acquisition, merger or
consolidation unless such Indebtedness is incurred in connection with a tax-
advantaged Asset Acquisition.
"Affiliate" means, with respect to any specified Person, any other Person
who directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. The
term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative of the
foregoing.
106
<PAGE>
"Applicable Premium" means, with respect to a Note, the greater of (i) 1.0%
of the then outstanding principal amount of such Note and (ii)(a) the present
value of all remaining required interest and principal payments due on such
Note and all premium payments relating thereto assuming a redemption date of
June 15, 2002, computed using a discount rate equal to the Treasury Rate plus
50 basis points minus (b) the then outstanding principal amount of such Note
minus (c) accrued interest paid on the date of redemption.
"Asset Acquisition" means (a) an Investment by the Company or any Restricted
Subsidiary of the Company in any other Person pursuant to which such Person
shall become a Restricted Subsidiary of the Company or any Restricted
Subsidiary of the Company, or shall be merged with or into the Company or any
Restricted Subsidiary of the Company, or (b) the acquisition by the Company or
any Restricted Subsidiary of the Company of the assets of any Person (other
than a Restricted Subsidiary of the Company) which constitute all or
substantially all of the assets of such Person or comprises any division or
line of business of such Person or any other properties or assets of such
Person other than in the ordinary course of business.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary
course of business), assignment or other transfer for value by the Company or
any of its Restricted Subsidiaries (including any Sale and Leaseback
Transaction) to any Person other than the Company or a Wholly Owned Restricted
Subsidiary of the Company of (a) any Capital Stock of any Restricted
Subsidiary of the Company; or (b) any other property or assets of the Company
or any Restricted Subsidiary of the Company other than in the ordinary course
of business; provided, however, that Asset Sales shall not include (i) a
transaction or series of related transactions for which the Company or its
Restricted Subsidiaries receive aggregate consideration of less than $1.5
million, (ii) the sale or exchange of equipment in connection with the
purchase or other acquisition of other equipment, in each case used in the
business of the Company and its Restricted Subsidiaries, (iii) the sale,
lease, conveyance, disposition or other transfer of all or substantially all
of the assets of the Company as permitted under "Merger, Consolidation and
Sale of Assets, (iv) disposals of tractors and trailers in connection with the
reinvestment in or the replacement of its fleet and disposals or replacements
of worn-out or obsolete equipment, in each case in the ordinary course of
business of the Company or its Restricted Subsidiaries and (v) the sale of
accounts receivable pursuant to a Qualified Receivables Transaction."
"Board of Directors" means, as to any Person, the board of directors of such
Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a resolution
certified by the Secretary or an Assistant Secretary of such Person to have
been duly adopted by the Board of Directors of such Person and to be in full
force and effect on the date of such certification, and delivered to the
Trustee.
"Capitalized Lease Obligation" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP and any refinancing thereof and, for
purposes of this definition, the amount of such obligations at any date shall
be the capitalized amount of such obligations at such date, determined in
accordance with GAAP.
"Capital Stock" means (i) with respect to any Person that is a corporation,
any and all shares, interests, participations or other equivalents (however
designated and whether or not voting) of corporate stock, including each class
of Common Stock and Preferred Stock of such Person or options to purchase the
same and (ii) with respect to any Person that is not a corporation, any and
all partnership or other equity interests of such Person.
"Cash Equivalents" means (i) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States,
in each case maturing within one year from the date of acquisition thereof;
(ii) marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Corporation
107
<PAGE>
("S&P") or Moody's Investors Service, Inc. ("Moody's"); (iii) commercial paper
maturing no more than one year from the date of creation thereof and, at the
time of acquisition, having a rating of at least A-1 from S&P or at least P-1
from Moody's; (iv) certificates of deposit or bankers' acceptances maturing
within one year from the date of acquisition thereof issued by any bank
organized under the laws of the United States of America or any state thereof
or the District of Columbia or any U.S. branch of a foreign bank having at the
date of acquisition thereof combined capital and surplus of not less than
$250.0 million; (v) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clause (i) above
entered into with any bank meeting the qualifications specified in clause (iv)
above; and (vi) investments in money market funds which invest substantially
all their assets in securities of the types described in clauses (i) through
(v) above.
"Change of Control" means the occurrence of one or more of the following
events: (i) any sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all or substantially all of the assets of
the Company to any Person or group of related Persons for purposes of Section
13(d) of the Exchange Act (a "Group"), together with any Affiliates thereof
(whether or not otherwise in compliance with the provisions of the Indenture)
other than Permitted Holders; (ii) the approval by the holders of Capital
Stock of the Company of any plan or proposal for the liquidation or
dissolution of the Company (whether or not otherwise in compliance with the
provisions of the Indenture); (iii) any Person or Group (other than the
Permitted Holders) shall become the owner, directly or indirectly,
beneficially or of record, of shares representing more than 50.0% of the
aggregate ordinary voting power represented by the issued and outstanding
Capital Stock of the Company; or (iv) the replacement of a majority of the
Board of Directors of the Company over a two-year period from the directors
who constituted the Board of Directors of the Company at the beginning of such
period, and such replacement shall not have been approved by the Permitted
Holders or a vote of at least a majority of the Board of Directors of the
Company then still in office who either were members of such Board of
Directors at the beginning of such period or whose election as a member of
such Board of Directors was previously so approved.
"Common Stock" of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated and whether
voting or non-voting) of such Person's common stock, whether outstanding on
the Issue Date or issued after the Issue Date, and includes, without
limitation, all series and classes of such common stock.
"Consolidated EBITDA" means, with respect to any Person, for any period, the
sum (without duplication) of (i) Consolidated Net Income and (ii) to the
extent Consolidated Net Income has been reduced thereby, (A) all income taxes
of such Person and its Restricted Subsidiaries paid or accrued in accordance
with GAAP for such period (other than income taxes attributable to
extraordinary, unusual or nonrecurring gains or losses), (B) Consolidated
Interest Expense and (C) Consolidated Non-cash Charges less any non-cash items
increasing Consolidated Net Income for such period, all as determined on a
consolidated basis for such Person and its Restricted Subsidiaries in
accordance with GAAP, as applicable.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any
Person, the ratio of Consolidated EBITDA of such Person during the four full
fiscal quarters (the "Four Quarter Period") ending on or prior to the date of
the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges
of such Person for the Four Quarter Period. In addition to and without
limitation of the foregoing, for purposes of this definition, "Consolidated
EBITDA" and "Consolidated Fixed Charges" shall be calculated after giving
effect on a pro forma basis (consistent with the provisions below) for the
period of such calculation to (i) the incurrence or repayment of any
Indebtedness of such Person or any of its Restricted Subsidiaries (and the
application of the proceeds thereof) giving rise to the need to make such
calculation and any incurrence or repayment of other Indebtedness (and the
application of the proceeds thereof), other than the incurrence or repayment
of Indebtedness in the ordinary course of business for working capital
purposes pursuant to working capital facilities, occurring during the Four
Quarter Period or at any time subsequent to the last day of the Four Quarter
Period and on or prior to the Transaction Date, as if such incurrence or
repayment, as the case may be (and the application of the proceeds thereof),
occurred on the first day of the Four Quarter Period and (ii) any Asset Sales
or Asset Acquisitions (including, without limitation, any Asset Acquisition
giving rise to the need to make such calculation as a result of such Person or
one of its
108
<PAGE>
Restricted Subsidiaries (including any Person who becomes a Restricted
Subsidiary as a result of the Asset Acquisition) incurring, assuming or
otherwise being liable for Acquired Indebtedness and also including any
Consolidated EBITDA (including any pro forma expense and cost reductions,
adjustments and other operating improvements or synergies both achieved by
such Person during such period and to be achieved by such Person and with
respect to the acquired assets, all as determined in good faith by a
responsible financial or accounting officer of the Company and as reported on
or otherwise confirmed, consistent with auditing standards, to the Company by
an independent public accounting firm) attributable to the assets which are
the subject of the Asset Acquisition or Asset Sale during the Four Quarter
Period) occurring during the Four Quarter Period or at any time subsequent to
the last day of the Four Quarter Period and on or prior to the Transaction
Date, as if such Asset Sale or Asset Acquisition (including the incurrence,
assumption or liability for any such Acquired Indebtedness) occurred on the
first day of the Four Quarter Period. If such Person or any of its Restricted
Subsidiaries directly or indirectly guarantees Indebtedness of a third Person,
the preceding sentence shall give effect to the incurrence of such guaranteed
Indebtedness as if such Person or any Restricted Subsidiary of such Person had
directly incurred or otherwise assumed such guaranteed Indebtedness.
Furthermore, in calculating "Consolidated Fixed Charges" for purposes of
determining the denominator (but not the numerator) of this "Consolidated
Fixed Charge Coverage Ratio," (1) interest on outstanding Indebtedness
determined on a fluctuating basis as of the Transaction Date and which will
continue to be so determined thereafter shall be deemed to have accrued at a
fixed rate per annum equal to the rate of interest on such Indebtedness in
effect on the Transaction Date; and (2) notwithstanding clause (1) above,
interest on Indebtedness determined on a fluctuating basis, to the extent such
interest is covered by agreements relating to Interest Swap Obligations, shall
be deemed to accrue at the rate per annum resulting after giving effect to the
operation of such agreements.
"Consolidated Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of (i) Consolidated Interest Expense
(excluding amortization or write-off of deferred financing costs), plus (ii)
the product of (x) the amount of all dividend payments on any series of
Preferred Stock of such Person (other than dividends paid in Qualified Capital
Stock) paid, accrued or scheduled to be paid or accrued during such period
times (y) a fraction, the numerator of which is one and the denominator of
which is one minus the then current effective consolidated federal, state and
local tax rate of such Person, expressed as a decimal.
"Consolidated Interest Expense" means, with respect to any Person for any
period, the sum of, without duplication: (i) the aggregate of the interest
expense of such Person and its Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, including without
limitation, (a) any amortization of debt discount and amortization or write-
off of deferred financing costs (including the amortization of costs relating
to interest rate caps or other similar agreements), (b) the net costs under
Interest Swap Obligations, (c) all capitalized interest and (d) the interest
portion of any deferred payment obligation; and (ii) the interest component of
Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or
accrued by such Person and its Restricted Subsidiaries during such period as
determined on a consolidated basis in accordance with GAAP, minus interest
income for such period.
"Consolidated Net Income" means, with respect to any Person, for any period,
the aggregate net income (or loss) of such Person and its Restricted
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP; provided that there shall be excluded therefrom (a) after-tax gains
or losses from Asset Sales (without regard to the $1.5 million limitation set
forth in the definition thereof) or abandonments or reserves relating thereto,
(b) after-tax nonrecurring gains or losses or after tax items classified as
extraordinary gains or losses or, (c) the net income of any Person acquired in
a "pooling of interests" transaction accrued prior to the date it becomes a
Restricted Subsidiary of the referent Person or is merged or consolidated with
the referent Person or any Restricted Subsidiary of the referent Person, (d)
the net income (but not loss) of any Restricted Subsidiary of the referent
Person to the extent that the declaration of dividends or similar
distributions by that Restricted Subsidiary of that income is restricted by
contract, operation of law or otherwise, (e) the net income of any Person,
other than a Restricted Subsidiary of the referent Person, except to the
extent of cash dividends or distributions paid to the referent Person or to a
Wholly Owned Restricted Subsidiary of the referent Person by such Person, (f)
income or loss attributable to discontinued operations (including, without
limitation,
109
<PAGE>
operations disposed of during such period whether or not such operations were
classified as discontinued), and (g) in the case of a successor to the
referent Person by consolidation or merger or as a transferee of the referent
Person's assets, any earnings of the successor corporation prior to such
consolidation, merger or transfer of assets.
"Consolidated Non-cash Charges" means, with respect to any Person, for any
period, the aggregate depreciation, amortization and other non-cash expenses
of such Person and its Restricted Subsidiaries reducing Consolidated Net
Income of such Person and its Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Company or any Restricted Subsidiary of the Company against fluctuations in
currency values.
"Default" means an event or condition the occurrence of which is, or with
the lapse of time or the giving of notice or both would be, an Event of
Default.
"Designated Senior Debt" means (i) Indebtedness under or in respect of the
New Credit Agreement and (ii) any other Indebtedness constituting Senior Debt
which, at the time of determination, has an aggregate principal amount of at
least $25.0 million and is specifically designated in the instrument
evidencing such Senior Debt as "Designated Senior Debt" by the Company.
"Disqualified Capital Stock" means that portion of any Capital Stock which,
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable), or upon the happening of any event, matures or
is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise,
or is redeemable at the sole option of the holder thereof on or prior to the
final maturity date of the Notes.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or any
successor statute or statutes thereto.
"fair market value" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction, for
cash, between a willing seller and a willing and able buyer, neither of whom
is under undue pressure or compulsion to complete the transaction. Fair market
value shall be determined by the Board of Directors of the Company acting
reasonably and in good faith and shall be evidenced by a Board Resolution of
the Board of Directors of the Company delivered to the Trustee.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, which are in effect as of the Issue Date.
"Guarantor" means (i) each of Montgomery Tank Lines, Inc., Quality Carriers,
Inc., Lakeshore Leasing, Inc., Mexico Investments, Inc., MTL of Nevada and
Chemical Leaman Corporation and its subsidiaries and (ii) each of the
Company's Restricted Subsidiaries that in the future executes a supplemental
indenture in which such Restricted Subsidiary agrees to be bound by the terms
of the Indenture as a Guarantor and executes a Guarantee pursuant to the
Indenture; provided that any Person constituting a Guarantor as described
above shall cease to constitute a Guarantor when its respective Guarantee is
released in accordance with the terms of the Indenture.
"Guarantor Senior Debt" means with respect to any Guarantor, (i) the
principal of, premium, if any, and interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for
in the documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law) on any Indebtedness of a Guarantor,
whether outstanding on the Issue Date or thereafter created, incurred
110
<PAGE>
or assumed, unless, in the case of any particular Indebtedness, the instrument
creating or evidencing the same or pursuant to which the same is outstanding
expressly provides that such Indebtedness shall not be senior in right of
payment to the Guarantee of such Guarantor. Without limiting the generality of
the foregoing, "Guarantor Senior Debt" shall also include the principal of,
premium, if any, interest (including any interest accruing subsequent to the
filing of a petition of bankruptcy at the rate provided for in the
documentation with respect thereto, whether or not such interest is an allowed
claim under applicable law) on, and all other amounts owing by any Guarantor
in respect of, (x) all monetary obligations of every nature of a Guarantor
under, or with respect to, the New Credit Agreement, including, without
limitation, obligations to pay principal and interest, reimbursement
obligations under letters of credit, fees, expenses and indemnities (including
guarantees thereof), (y) all Interest Swap Obligations (including guarantees
thereof) and (z) all obligations under Currency Agreements (including
guarantees thereof), in each case whether outstanding on the Issue Date or
thereafter incurred. Notwithstanding the foregoing, "Guarantor Senior Debt"
shall not include (i) any Indebtedness of such Guarantor to a Restricted
Subsidiary of such Guarantor, (ii) Indebtedness to, or guaranteed on behalf
of, any director, officer or employee of such Guarantor or any Restricted
Subsidiary of such Guarantor (including, without limitation, amounts owed for
compensation), (iii) Indebtedness to trade creditors and other amounts
incurred in connection with obtaining goods, materials or services, (iv)
Indebtedness represented by Disqualified Capital Stock, (v) any liability for
federal, state, local or other taxes owed or owing by such Guarantor, (vi)
Indebtedness incurred in violation of the Indenture provisions set forth under
"Limitation on Incurrence of Additional Indebtedness" (but, as to any such
obligation, no such violation shall be deemed to exist for purposes of this
clause (vi) if the holder(s) of such obligation or their representative and
the Trustee shall have received an officers' certificate of the Company to the
effect that the incurrence of such Indebtedness does not (or, in the case of
revolving credit Indebtedness, that the incurrence of the entire committed
amount thereof at the date on which the initial borrowing thereunder is made
would not) violate such provisions of the Indenture), (vii) that portion of
any Indebtedness which, when incurred and without respect to any election
under Section 1111(b) of Title 11, United States Code, is without recourse to
the Company or any Guarantor and (viii) any Indebtedness which is, by its
express terms, subordinated in right of payment to any other Indebtedness of
such Guarantor.
"Indebtedness" means with respect to any Person, without duplication, (i)
all Obligations of such Person for borrowed money, including, without
limitation, Senior Debt, (ii) all Obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all Capitalized
Lease Obligations of such Person, (iv) all Obligations of such Person issued
or assumed as the deferred purchase price of property, all conditional sale
obligations and all Obligations under any title retention agreement (but
excluding trade accounts payable and other accrued liabilities arising in the
ordinary course of business), (v) all Obligations for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction, (vi) guarantees and other contingent Obligations in respect of
Indebtedness referred to in clauses (i) through (v) above and clause (viii)
below, (vii) all Obligations of any other Person of the type referred to in
clauses (i) through (vi) which are secured by any Lien on any property or
asset of such Person, the amount of such Obligation being deemed to be the
lesser of the fair market value of such property or asset or the amount of the
Obligation so secured, (viii) all Obligations under currency agreements and
interest swap agreements of such Person and (ix) all Disqualified Capital
Stock issued by such Person with the amount of Indebtedness represented by
such Disqualified Capital Stock being equal to the greater of its voluntary or
involuntary liquidation preference and its maximum fixed repurchase price, but
excluding accrued dividends, if any. For purposes hereof, the "maximum fixed
repurchase price" of any Disqualified Capital Stock which does not have a
fixed repurchase price shall be calculated in accordance with the terms of
such Disqualified Capital Stock as if such Disqualified Capital Stock were
purchased on any date on which Indebtedness shall be required to be determined
pursuant to the Indenture, and if such price is based upon, or measured by,
the fair market value of such Disqualified Capital Stock, such fair market
value shall be determined reasonably and in good faith by the Board of
Directors of the issuer of such Disqualified Capital Stock. For purposes of
the covenant described above under the caption "Limitation on Incurrence of
Additional Indebtedness," in determining the principal amount of any
Indebtedness to be incurred by the Company or a Guarantor or which is
outstanding at any date, the principal amount of any Indebtedness which
provides that an amount less than the principal amount thereof shall be due
upon any declaration of acceleration thereof shall be the accreted value
thereof at the date of determination.
111
<PAGE>
"Independent Financial Advisor" means a firm (i) which does not, and whose
directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in the Company and (ii) which, in the judgment of
the Board of Directors of the Company, is otherwise independent and qualified
to perform the task for which it is to be engaged.
"Interest Swap Obligations" means the obligations of any Person pursuant to
any arrangement with any other Person, whereby, directly or indirectly, such
Person is entitled to receive from time to time periodic payments calculated
by applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such other Person calculated
by applying a fixed or a floating rate of interest on the same notional amount
and shall include, without limitation, interest rate swaps, caps, floors,
collars and similar agreements.
"Investment" means, with respect to any Person, any direct or indirect loan
or other extension of credit (including, without limitation, a guarantee) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness
issued by, any Person. "Investment" shall exclude extensions of trade credit
by the Company and its Restricted Subsidiaries on commercially reasonable
terms in accordance with normal trade practices of the Company or such
Restricted Subsidiary, as the case may be. For purposes of the "Limitation on
Restricted Payments" covenant, (i) "Investment" shall include and be valued at
the fair market value of the net assets of any Restricted Subsidiary of the
Company at the time that such Restricted Subsidiary is designated an
Unrestricted Subsidiary of the Company and shall exclude the fair market value
of the net assets of any Unrestricted Subsidiary of the Company at the time
that such Unrestricted Subsidiary is designated a Restricted Subsidiary of the
Company and (ii) the amount of any Investment shall be the original cost of
such Investment plus the cost of all additional Investments by the Company or
any of its Restricted Subsidiaries, without any adjustments for increases or
decreases in value, or write-ups, write-downs or write-offs with respect to
such Investment, reduced by the payment of dividends or distributions in
connection with such Investment or any other amounts received in respect of
such Investment; provided that no such payment of dividends or distributions
or receipt of any such other amounts shall reduce the amount of any Investment
if such payment of dividends or distributions or receipt of any such amounts
would be included in Consolidated Net Income. If the Company or any Restricted
Subsidiary of the Company sells or otherwise disposes of any Common Stock of
any direct or indirect Restricted Subsidiary of the Company such that, after
giving effect to any such sale or disposition, the Company no longer owns,
directly or indirectly, 100.0% of the outstanding Common Stock of such
Restricted Subsidiary, the Company shall be deemed to have made an Investment
on the date of any such sale or disposition equal to the fair market value of
the Common Stock of such Restricted Subsidiary not sold or disposed of.
"Issue Date" means the date of original issuance of the Notes.
"Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other
title retention agreement, any lease in the nature thereof and any agreement
to give any security interest).
"Management Agreement" means the Management Agreement dated February 10,
1998 between the Company and Apollo Management, L.P., as amended from time to
time in accordance with its terms.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in
the form of cash or Cash Equivalents including payments in respect of deferred
payment obligations when received in the form of cash or Cash Equivalents
(other than the portion of any such deferred payment constituting interest)
received by the Company or any of its Restricted Subsidiaries from such Asset
Sale net of (a) reasonable out-of-pocket expenses and fees relating to such
Asset Sale (including, without limitation, legal, accounting and investment
banking fees and sales commissions), (b) taxes paid or payable after taking
into account any reduction in consolidated tax liability due to available tax
credits or deductions and any tax sharing arrangements, (c) repayment of
112
<PAGE>
Indebtedness that is required to be repaid in connection with such Asset Sale
and (d) appropriate amounts to be provided by the Company or any Restricted
Subsidiary, as the case may be, as a reserve, in accordance with GAAP, against
any liabilities associated with such Asset Sale and retained by the Company or
any Restricted Subsidiary, as the case may be, after such Asset Sale,
including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities
under any indemnification obligations associated with such Asset Sale.
"New Credit Agreement" means the Credit Agreement dated as of the Issue Date
and amended and restated as of August 28, 1998, between the Company, Levy
Transport, Ltd., the lenders party thereto in their capacities as lenders
thereunder and Credit Suisse First Boston Corporation, as administrative
agent, together with the related documents thereto (including, without
limitation, any guarantee agreements and security documents), in each case as
such agreements may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including any
agreement extending the maturity of, refinancing, replacing or otherwise
restructuring (including increasing the amount of available borrowings
thereunder in connection with any of the foregoing (provided that such
increase in borrowings is permitted by the "Limitation on Incurrence of
Additional Indebtedness" covenant above) or adding Restricted Subsidiaries of
the Company as additional and/or replacement borrowers or guarantors
thereunder) all or any portion of the Indebtedness under such agreement or any
successor or replacement agreement and whether by the same or any other agent,
lender or group of lenders.
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Option Plan" means the Option Plan adopted by the Company on June 9, 1998
with respect to an aggregate of 222,222 shares of the Company's Common Stock.
"Permitted Holders" means Apollo Management, L.P. and its Affiliates.
"Permitted Indebtedness" means, without duplication, each of the following:
(i) Indebtedness under the Notes and the Guarantees issued in the
Offering;
(ii) Indebtedness incurred pursuant to the New Credit Agreement in an
aggregate principal amount at any time outstanding not to exceed $160.0
million less the amount of all repayments of term debt and permanent
commitment reductions under the New Credit Agreement with Net Cash Proceeds
of Asset Sales applied thereto as required by the "Limitation on Asset
Sales" covenant; provided, further, that the aggregate principal amount of
Indebtedness under this clause (ii) shall be reduced dollar for dollar for
any Indebtedness outstanding under clause (xii) below;
(iii) other Indebtedness of the Company and its Restricted Subsidiaries
outstanding on the Issue Date reduced by the amount of any scheduled
amortization payments or mandatory prepayments when actually paid or
permanent reductions thereon;
(iv) Interest Swap Obligations of the Company covering Indebtedness of
the Company or any of its Restricted Subsidiaries and Interest Swap
Obligations of any Restricted Subsidiary of the Company covering
Indebtedness of the Company or such Restricted Subsidiary; provided,
however, that such Interest Swap Obligations are entered into to protect
the Company and its Restricted Subsidiaries from fluctuations in interest
rates on Indebtedness incurred in accordance with the Indenture to the
extent the notional principal amount of such Interest Swap Obligation does
not exceed the principal amount of the Indebtedness to which such Interest
Swap Obligation relates;
(v) Indebtedness under Currency Agreements; provided that in the case of
Currency Agreements which relate to Indebtedness, such Currency Agreements
do not increase the Indebtedness of the Company and its Restricted
Subsidiaries outstanding other than as a result of fluctuations in foreign
currency exchange rates or by reason of fees, indemnities and compensation
payable thereunder;
113
<PAGE>
(vi) Indebtedness of a Restricted Subsidiary of the Company to the
Company or to a Wholly Owned Restricted Subsidiary of the Company for so
long as such Indebtedness is held by the Company, a Wholly Owned Restricted
Subsidiary of the Company or the lenders or collateral agent under the New
Credit Agreement, in each case subject to no Lien held by a Person other
than the Company, a Wholly Owned Restricted Subsidiary of the Company or
the lenders or collateral agent under the New Credit Agreement; provided
that if as of any date any Person other than the Company, a Wholly Owned
Restricted Subsidiary of the Company or the lenders or collateral agent
under the New Credit Agreement owns or holds any such Indebtedness or holds
a Lien in respect of such Indebtedness, such date shall be deemed the
incurrence of Indebtedness not constituting Permitted Indebtedness by the
issuer of such Indebtedness;
(vii) Indebtedness of the Company to a Wholly Owned Restricted Subsidiary
of the Company for so long as such Indebtedness is held by a Wholly Owned
Restricted Subsidiary of the Company or the lenders or collateral agent
under the New Credit Agreement and is subject to no Lien other than a Lien
in favor of the lenders or collateral agent under the New Credit Agreement;
provided that (a) any Indebtedness of the Company to any Wholly Owned
Restricted Subsidiary of the Company is unsecured and subordinated,
pursuant to a written agreement, to the Company's obligations under the
Indenture and the Notes and (b) if as of any date any Person other than a
Wholly Owned Restricted Subsidiary of the Company or the lenders or
collateral agent under the New Credit Agreement owns or holds any such
Indebtedness or any Person holds a Lien other than a Lien in favor of the
lenders or collateral agent under the New Credit Agreement in respect of
such Indebtedness, such date shall be deemed the incurrence of Indebtedness
not constituting Permitted Indebtedness by the Company;
(viii) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient
funds in the ordinary course of business; provided, however, that such
Indebtedness is extinguished within two business days of incurrence;
(ix) Indebtedness of the Company or any of its Restricted Subsidiaries in
respect of performance bonds, bankers' acceptances, workers' compensation
claims, surety or appeal bonds, payment obligations in connection with
self-insurance or similar obligations, and bank overdrafts (and letters of
credit in respect thereof);
(x) Indebtedness represented by Capitalized Lease Obligations, Purchase
Money Indebtedness or Acquired Indebtedness of the Company and its
Restricted Subsidiaries incurred in the ordinary course of business not to
exceed $25.0 million (as reduced dollar for dollar for any amounts incurred
pursuant to the proviso to this clause (x)) at any one time outstanding;
provided that all or a portion of the $25.0 million permitted to be
incurred under this clause (x) may, at the option of the Company, be
incurred under the New Credit Agreement or pursuant to clause (xiv) below
instead of pursuant to Capitalized Lease Obligations, Purchase Money
Indebtedness or Acquired Indebtedness;
(xi) Indebtedness arising from agreements of the Company or a Restricted
Subsidiary of the Company providing for indemnification, adjustment of
purchase price or similar obligations, in each case, incurred or assumed in
connection with the disposition of any business, assets or a Subsidiary,
other than guarantees of Indebtedness incurred by any Person acquiring all
or any portion of such business, assets or a Subsidiary for the purpose of
financing such acquisition; provided, however, that (a) such Indebtedness
is not reflected on the balance sheet of the Company or any Restricted
Subsidiary of the Company (contingent obligations referred to in a footnote
to financial statements and not otherwise reflected on the balance sheet
will not be deemed to be reflected on such balance sheet for purposes of
this clause (a)) and (b) the maximum assumable liability in respect of all
such Indebtedness shall at no time exceed the gross proceeds including
noncash proceeds (the fair market value of such noncash proceeds being
measured at the time it is received and without giving effect to any
subsequent changes in value) actually received by the Company and its
Restricted Subsidiaries in connection with such disposition;
(xii) the incurrence by a Receivables Subsidiary of Indebtedness in a
Qualified Receivables Transaction that is without recourse to the Company
or to any Restricted Subsidiary of the Company or
114
<PAGE>
their assets (other than such Receivables Subsidiary and its assets), and
is not guaranteed by any such Person; provided that any outstanding
Indebtedness incurred under this clause (xii) shall reduce the aggregate
amount permitted to be incurred under clause (ii) above to the extent set
forth therein;
(xiii) Refinancing Indebtedness; and
(xiv) additional Indebtedness of the Company and its Restricted
Subsidiaries in an aggregate principal amount not to exceed $25.0 million
at any one time outstanding (which amount may, but need not, be incurred in
whole or in part under the New Credit Agreement) plus any amounts incurred
in accordance with the proviso to clause (x) above; provided that any
Indebtedness incurred in excess of $25.0 million in accordance with the
proviso to clause (x) above shall reduce the aggregate amount permitted to
be incurred under clause (x) above to the extent set forth therein.
"Permitted Investments" means (i) Investments by the Company or any
Restricted Subsidiary of the Company in any Person that is or will become
immediately after such Investment a Wholly Owned Restricted Subsidiary of the
Company or that will merge or consolidate into the Company or a Wholly Owned
Restricted Subsidiary of the Company, provided that such Wholly Owned
Restricted Subsidiary of the Company is not restricted from making dividends
or similar distributions by contract, operation of law or otherwise;
(ii) Investments in the Company by any Restricted Subsidiary of the Company;
provided that any Indebtedness evidencing such Investment is unsecured and
subordinated, pursuant to a written agreement, to the Company's obligations
under the Notes and the Indenture; (iii) Investments in cash and Cash
Equivalents; (iv) loans and advances to employees and officers of the Company
and its Restricted Subsidiaries in the ordinary course of business for bona
fide business purposes not to exceed $4.0 million at any one time outstanding;
(v) Currency Agreements and Interest Swap Obligations entered into in the
ordinary course of the Company's or its Restricted Subsidiaries' businesses
and otherwise in compliance with the Indenture; (vi) additional Investments
(including joint ventures) not to exceed $20.0 million at any one time
outstanding; (vii) Investments in securities of trade creditors or customers
received (x) pursuant to any plan of reorganization or similar arrangement
upon the bankruptcy or insolvency of such trade creditors or customers or (y)
in settlement of delinquent obligations of, and other disputes with, customers
and suppliers, in each case arising in the ordinary course of business; (viii)
Investments made by the Company or its Restricted Subsidiaries as a result of
consideration received in connection with an Asset Sale made in compliance
with the "Limitation on Asset Sales" covenant; (ix) Investments of a Person or
any of its Subsidiaries existing at the time such Person becomes a Restricted
Subsidiary of the Company or at the time such Person merges or consolidates
with the Company or any of its Restricted Subsidiaries, in either case in
compliance with the Indenture; provided that such Investments were not made by
such Person in connection with, or in anticipation or contemplation of, such
Person becoming a Restricted Subsidiary of the Company or such merger or
consolidation; and (x) Investments in the Notes.
"Permitted Liens" means the following types of Liens:
(i) Liens for taxes, assessments or governmental charges or claims either
(a) not delinquent or (b) contested in good faith by appropriate
proceedings and as to which the Company or its Restricted Subsidiaries
shall have set aside on its books such reserves as may be required pursuant
to GAAP;
(ii) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for sums not yet delinquent or
being contested in good faith, if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made in
respect thereof;
(iii) Liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other
types of social security, including any Lien securing letters of credit
issued in the ordinary course of business in connection therewith, or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money);
115
<PAGE>
(iv) judgment Liens not giving rise to an Event of Default so long as
such Lien is adequately bonded and any appropriate legal proceedings which
may have been duly initiated for the review of such judgment shall not have
been finally terminated or the period within which such proceedings may be
initiated shall not have expired;
(v) easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of the Company
or any of its Restricted Subsidiaries;
(vi) any interest or title of a lessor under any Capitalized Lease
Obligation; provided that such Liens do not extend to any property or
assets which is not leased property subject to such Capitalized Lease
Obligation;
(vii) Liens securing Capitalized Lease Obligations and Purchase Money
Indebtedness permitted pursuant to clause (x) of the definition of
"Permitted Indebtedness"; provided, however, that in the case of Purchase
Money Indebtedness (A) the Indebtedness shall not exceed the cost of such
property or assets and shall not be secured by any property or assets of
the Company or any Restricted Subsidiary of the Company other than the
property and assets so acquired or constructed and (B) the Lien securing
such Indebtedness shall be created within 180 days of such acquisition or
construction or, in the case of a refinancing of any Purchase Money
Indebtedness, within 180 days of such refinancing;
(viii) Liens upon specific items of inventory or other goods and proceeds
of any Person securing such Person's obligations in respect of bankers'
acceptances issued or created for the account of such Person to facilitate
the purchase, shipment or storage of such inventory or other goods;
(ix) Liens securing reimbursement obligations with respect to commercial
letters of credit which encumber documents and other property relating to
such letters of credit and products and proceeds thereof;
(x) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual, or warranty requirements of the Company
or any of its Restricted Subsidiaries, including rights of offset and set-
off;
(xi) Liens securing Interest Swap Obligations which Interest Swap
Obligations relate to Indebtedness that is otherwise permitted under the
Indenture;
(xii) Liens in the ordinary course of business not exceeding $5.0 million
at any one time outstanding that (a) are not incurred in connection with
borrowing of money and (b) do not materially detract from the value of the
property or materially impair its use;
(xiii) Liens by reason of judgment or decree not otherwise resulting in
an Event of Default;
(xiv) Liens securing Indebtedness permitted to be incurred pursuant to
clauses (xii) and (xiv) of the definition of "Permitted Indebtedness";
(xv) Liens securing Indebtedness under Currency Agreements permitted
under the Indenture; and
(xvi) Liens securing Acquired Indebtedness incurred in accordance with
the "Limitation on Incurrence of Additional Indebtedness" covenant and
clause (x) of the definition of "Permitted Indebtedness"; provided that (A)
such Liens secured such Acquired Indebtedness at the time of and prior to
the incurrence of such Acquired Indebtedness by the Company or a Restricted
Subsidiary of the Company and were not granted in connection with, or in
anticipation of, the incurrence of such Acquired Indebtedness by the
Company or a Restricted Subsidiary of the Company unless the related
Indebtedness is incurred in connection with a tax-advantaged Asset
Acquisition and (B) such Liens do not extend to or cover any property or
assets of the Company or of any of its Restricted Subsidiaries other than
the property or assets that secured the Acquired Indebtedness prior to the
time such Indebtedness became Acquired Indebtedness of the Company or a
Restricted Subsidiary of the Company and are no more favorable to the
lienholders than those securing the Acquired Indebtedness prior to the
incurrence of such Acquired Indebtedness by the Company or a Restricted
Subsidiary of the Company.
116
<PAGE>
"Person" means an individual, partnership, limited liability company,
corporation, unincorporated organization, trust or joint venture, or a
governmental agency or political subdivision thereof.
"Preferred Stock" of any Person means any Capital Stock of such Person that
has preferential rights to any other Capital Stock of such Person with respect
to dividends or redemptions or upon liquidation.
"Purchase Money Indebtedness" means Indebtedness of the Company and its
Restricted Subsidiaries incurred in the normal course of business for the
purpose of financing all or any part of the purchase price, or the cost of
installation, construction or improvement, of property or equipment and any
refinancing thereof.
"Qualified Capital Stock" means any Capital Stock that is not Disqualified
Capital Stock.
"Qualified Receivables Transaction" means any transaction or series of
transactions that may be entered into by the Company or any of its Restricted
Subsidiaries pursuant to which the Company or any of its Restricted
Subsidiaries may sell, convey or otherwise transfer to (i) a Receivables
Subsidiary (in the case of a transfer by the Company or any of its Restricted
Subsidiaries) and (ii) any other person (in the case of a transfer by a
Receivables Subsidiary), or may grant a security interest in, any accounts
receivable (whether now existing or arising in the future) of the Company or
any of its Restricted Subsidiaries, and any assets related thereto including,
without limitation, all collateral securing such accounts receivable, all
contracts and all guarantees or other obligations in respect of such accounts
receivable, proceeds of such accounts receivable and other assets which are
customarily transferred or in respect of which security interests are
customarily granted in connection with asset securitization transactions
involving accounts receivable.
"Receivables Subsidiary" means a Wholly Owned Restricted Subsidiary of the
Company that engages in no activities other than in connection with the
financing of accounts receivable and that is designated by the Board of
Directors of the Company (as provided below) as a Receivables Subsidiary (a)
no portion of the Indebtedness or any other Obligations (contingent or
otherwise) of which (i) is guaranteed by the Company or any Restricted
Subsidiary of the Company (excluding guarantees of Obligations (other than the
principal of, and interest on, Indebtedness) pursuant to representations,
warranties, covenants and indemnities entered into in the ordinary course of
business in connection with a Qualified Receivables Transaction), (ii) is
recourse to or obligates the Company or any Restricted Subsidiary of the
Company in any way other than pursuant to representations, warranties,
covenants and indemnities entered into in the ordinary course of business in
connection with a Qualified Receivables Transaction or (iii) subjects any
property or asset of the Company or any Restricted Subsidiary of the Company,
directly or indirectly, contingently or otherwise, to the satisfaction
thereof, other than pursuant to representations, warranties, covenants and
indemnities entered into in the ordinary course of business in connection with
a Qualified Receivables Transaction, (b) with which neither the Company nor
any Restricted Subsidiary of the Company has any material contract, agreement,
arrangement or understanding other than on terms no less favorable to the
Company or such Restricted Subsidiary than those that might be obtained at the
time from Persons who are not Affiliates of the Company, other than fees
payable in the ordinary course of business in connection with servicing
accounts receivable and (c) with which neither the Company nor any Restricted
Subsidiary of the Company has any obligation to maintain or preserve such
Restricted Subsidiary's financial condition or cause such Restricted
Subsidiary to achieve certain levels of operating results. Any such
designation by the Board of Directors of the Company shall be evidenced to the
Trustee by filing with the Trustee a Board Resolution giving effect to such
designation and an officers' certificate certifying that such designation
complied with the foregoing conditions.
"Refinance" means, in respect of any security or Indebtedness, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue a
security or Indebtedness in exchange or replacement for, such security or
Indebtedness in whole or in part. "Refinanced" and "Refinancing" shall have
correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the Company or any
Restricted Subsidiary of the Company of (A) for purposes of clause (xiii) of
the definition of Permitted Indebtedness, Indebtedness incurred in accordance
with the "Limitation on Incurrence of Additional Indebtedness" covenant (other
than pursuant to clause (ii), (iv), (v), (vi), (vii), (viii), (ix), (x), (xi),
(xii) or (xiv) of the definition of Permitted Indebtedness) or
117
<PAGE>
(B) for any other purpose, Indebtedness incurred in accordance with the
"Limitation on Incurrence of Additional Indebtedness" covenant, in each case
that does not (1) result in an increase in the aggregate principal amount of
Indebtedness of such Person as of the date of such proposed Refinancing (plus
the amount of any premium required to be paid under the terms of the
instrument governing such Indebtedness and plus the amount of reasonable
expenses incurred by the Company in connection with such Refinancing) or (2)
create Indebtedness with (A) a Weighted Average Life to Maturity that is less
than the Weighted Average Life to Maturity of the Indebtedness being
Refinanced or (B) a final maturity earlier than the final maturity of the
Indebtedness being Refinanced; provided that (x) if such Indebtedness being
Refinanced is Indebtedness of the Company, then such Refinancing Indebtedness
shall be Indebtedness solely of the Company and (y) if such Indebtedness being
Refinanced is subordinate or junior to the Notes, then such Refinancing
Indebtedness shall be subordinate to the Notes at least to the same extent and
in the same manner as the Indebtedness being Refinanced.
"Representative" means the indenture trustee or other trustee, agent or
representative in respect of any Designated Senior Debt; provided that if, and
for so long as, any Designated Senior Debt lacks such a representative, then
the Representative for such Designated Senior Debt shall at all times
constitute the holders of a majority in outstanding principal amount of such
Designated Senior Debt in respect of any Designated Senior Debt.
"Restricted Subsidiary" of any Person means any Subsidiary of such Person
which at the time of determination is not an Unrestricted Subsidiary.
"Sale and Leaseback Transaction" means any direct or indirect arrangement
with any Person or to which any such Person is a party, providing for the
leasing to the Company or a Restricted Subsidiary of any property, whether
owned by the Company or any Restricted Subsidiary at the Issue Date or later
acquired, which has been or is to be sold or transferred by the Company or
such Restricted Subsidiary to such Person or to any other Person from whom
funds have been or are to be advanced by such Person on the security of such
Property.
"Senior Debt" means the principal of, premium, if any, and interest
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under applicable law) on any
Indebtedness of the Company, whether outstanding on the Issue Date or
thereafter created, incurred or assumed, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness shall
not be senior in right of payment to the Notes. Without limiting the
generality of the foregoing, "Senior Debt" shall also include the principal
of, premium, if any, interest (including any interest accruing subsequent to
the filing of a petition of bankruptcy at the rate provided for in the
documentation with respect thereto, whether or not such interest is an allowed
claim under applicable law) on, and all other amounts owing by the Company in
respect of, (x) all monetary obligations of every nature of the Company under
the New Credit Agreement, including, without limitation, obligations to pay
principal and interest, reimbursement obligations under letters of credit,
fees, expenses and indemnities, (y) all Interest Swap Obligations (including
guarantees thereof) and (z) all obligations under Currency Agreements
(including guarantees thereof), in each case whether outstanding on the Issue
Date or thereafter incurred. Notwithstanding the foregoing, "Senior Debt"
shall not include (i) any Indebtedness of the Company to a Subsidiary of the
Company, (ii) Indebtedness to, or guaranteed on behalf of, any director,
officer or employee of the Company or any Subsidiary of the Company
(including, without limitation, amounts owed for compensation), (iii)
Indebtedness to trade creditors and other amounts incurred in connection with
obtaining goods, materials or services, (iv) Indebtedness represented by
Disqualified Capital Stock, (v) any liability for federal, state, local or
other taxes owed or owing by the Company, (vi) that portion of any
Indebtedness incurred in violation of the Indenture provisions set forth under
"Limitation on Incurrence of Additional Indebtedness" (but, as to any such
obligation, no such violation shall be deemed to exist for purposes of this
clause (vi) if the holder(s) of such obligation or their representative and
the Trustee shall have received an officers' certificate of the Company to the
effect that the incurrence of such Indebtedness does not (or, in the case of
revolving credit Indebtedness, that the incurrence of the entire committed
amount thereof at the date on which the initial borrowing thereunder is made
would not) violate such provisions of the Indenture), (vii) Indebtedness
which, when incurred and without
118
<PAGE>
respect to any election under Section 1111(b) of Title 11, United States Code,
is without recourse to the Company and (viii) any Indebtedness which is, by
its express terms, subordinated in right of payment to any other Indebtedness
of the Company.
"Shareholders' Agreement" means the Shareholders' Agreement dated as of
February 10, 1998 among certain affiliates of Apollo Management, L.P. and
certain shareholders of the Company.
"Significant Subsidiary" shall have the meaning set forth in Rule 1.02(w) of
Regulation S-X under the Securities Act.
"Subsidiary", with respect to any Person, means (i) any corporation of which
the outstanding Capital Stock having at least a majority of the votes entitled
to be cast in the election of directors under ordinary circumstances shall at
the time be owned, directly or indirectly, by such Person or (ii) any other
Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"Treasury Rate" means the rate per annum equal to the yield to maturity at
the time of computation of United States Treasury securities with a constant
maturity selected by the Calculation Agent (which shall initially be the
Trustee) most nearly equal to the period from such date of redemption to June
15, 2002; provided, however, that if the period from such date of redemption
to June 15, 2002 is not equal to the constant maturity of the United States
Treasury security for which a weekly average yield is given, the Treasury Rate
shall be obtained by linear interpolation (calculated to the nearest one-
twelfth of a year) from the weekly average yields of United States Treasury
securities for which such yields are given, except that if the period from
such date of redemption to June 15, 2002 is less than one year, the weekly
average yield on actually traded United States Treasury securities adjusted to
a constant maturity of one year shall be used.
"Unrestricted Subsidiary" of any Person means (i) any Subsidiary of such
Person that at the time of determination shall be or continue to be designated
an Unrestricted Subsidiary by the Board of Directors of such Person in the
manner provided below and (ii) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors may designate any Subsidiary (including any newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless
such Subsidiary owns any Capital Stock of, or owns or holds any Lien on any
property of, the Company or any other Subsidiary of the Company that is not a
Subsidiary of the Subsidiary to be so designated; provided that (x) the
Company certifies to the Trustee in an officers' certificate that such
designation complies with the "Limitation on Restricted Payments" covenant and
(y) each Subsidiary to be so designated and each of its Subsidiaries has not
at the time of designation, and does not thereafter, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable with
respect to any Indebtedness pursuant to which the lender has recourse to any
of the assets of the Company or any of its Restricted Subsidiaries. The Board
of Directors may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary only if (x) immediately after giving effect to such designation,
the Company is able to incur at least $1.00 of additional Indebtedness (other
than Permitted Indebtedness) in compliance with the "Limitation on Incurrence
of Additional Indebtedness" covenant and (y) immediately before and
immediately after giving effect to such designation, no Default or Event of
Default shall have occurred and be continuing. Any such designation by the
Board of Directors shall be evidenced to the Trustee by promptly filing with
the Trustee a copy of the Board Resolution giving effect to such designation
and an officers' certificate certifying that such designation complied with
the foregoing provisions.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the then outstanding
aggregate principal amount of such Indebtedness into (b) the sum of the total
of the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly Owned Restricted Subsidiary" of any Person means any Restricted
Subsidiary of such Person of which all the outstanding voting securities
(other than in the case of a foreign Restricted Subsidiary, directors'
qualifying shares or an immaterial amount of shares required to be owned by
other Persons pursuant to applicable law) are owned by such Person or any
Wholly Owned Restricted Subsidiary of such Person.
119
<PAGE>
BOOK-ENTRY; DELIVERY AND FORM
Except as set forth below, the Exchange Notes will initially be issued in
the form of one or more fully registered notes in global form without coupons
(each a "Global Note"). Each Global Note shall be deposited with the Trustee,
as custodian (the "Custodian") for, and registered in the name of DTC or a
nominee thereof. The Old Notes to the extent validly tendered and accepted and
direct by their Holders in their Letters of Transmittal, will be exchanged
through book-entry electronic transfer for the Global Note.
THE GLOBAL NOTES
The Company expects that pursuant to procedures established by DTC (i) upon
the issuance of the Global Notes, DTC or its custodian will credit, on its
internal system, the principal amount of the individual beneficial interests
represented by such Global Notes to the respective accounts of persons who
have accounts with such depository and (ii) ownership of beneficial interests
in the Global Notes will be shown on, and the transfer of such ownership will
be effected only through, records maintained by DTC or its nominee (with
respect to interests of participants) and the records of participants (with
respect to interests of persons other than participants). Such accounts
initially will be designated by or on behalf of the Initial Purchasers and
ownership of beneficial interests in the Global Notes will be limited to
persons who have accounts with DTC ("participants") or persons who hold
interests through participants.
So long as DTC, or its nominee, is the registered owner or holder of the
Notes, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the Notes represented by such Global Notes for all purposes
under the Indenture. No beneficial owner of an interest in the Global Notes
will be able to transfer that interest except in accordance with DTC's
procedures, in addition to those provided for under the Indenture with respect
to the Notes.
Payments of the principal of, premium (if any), and interest on, the Global
Notes will be made to DTC or its nominee, as the case may be, as the
registered owner thereof. None of the Company, the Trustee or any Paying Agent
will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in
the Global Notes or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interest.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal, premium, if any, or interest in respect of on the Global Notes,
will credit participants' accounts with payments in amounts proportionate to
their respective beneficial interests in the principal amount of the Global
Notes as shown on the records of DTC or its nominee. The Company also expects
that payments by participants to owners of beneficial interests in the Global
Notes held through such participants will be governed by standing instructions
and customary practice, as is now the case with securities held for the
accounts of customers registered in the names of nominees for such customers.
Such payments will be the responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way
through DTC's same-day funds system in accordance with DTC rules and will be
settled in same day funds. If a holder requires physical delivery of a
Certificated Note ("Certificated Note") for any reason, including to sell
Notes to persons in jurisdictions which require physical delivery of the
Notes, or to pledge such securities, such holder must transfer its interest in
a Global Note, in accordance with the normal procedures of DTC and with the
procedures set forth in the Indenture. Consequently, the ability to transfer
notes or to pledge Notes as collateral will be limited to such extent.
Notes that are issued as described below under "Certificated Notes," will be
issued in registered definitive form without coupons (each, a "Certificated
Note"). Upon the transfer of Certificated Notes, such Certificated Notes may,
unless the Global Note has previously been exchanged for Certificated Notes,
be exchanged for an interest in the Global Note representing the principal
amount of Notes being transferred.
120
<PAGE>
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Notes (including the presentation of Notes for exchange
as described below) only at the direction of one or more participants to whose
account the DTC interest in the Global Notes are credited and only in respect
of such portion of the aggregate principal amount of Notes as to which such
participant or participants has or have given such direction. However, if
there is an Event of Default under the Indenture, DTC will exchange the Global
Notes for Certificated Notes, which it will distribute to its participants.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participants and facilitate the clearance and settlement of
securities transactions between participants through electronic book-entry
changes in accounts of its participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and certain other
organizations. Indirect access to the DTC system is available to others such
as banks, brokers, dealers and trust companies that clear through or maintain
a custodial relationship with a participant, either directly or indirectly
("indirect participants").
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Notes among participants of DTC, it is
under no obligation to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company nor the Trustee will have any
responsibility for the performances by DTC or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
CERTIFICATED NOTES
If DTC is at any time unwilling or unable to continue as a depositary for
the Global Notes and a successor depositary is not appointed by the Company
within 90 days, Certificated Notes will be issued in exchange for the Global
Notes.
121
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of the principal United States federal
income tax consequences of the acquisition, ownership and disposition of the
Exchange Notes to beneficial owners of the Exchange Notes who are U.S. Holders
(as defined below) and the principal U.S. federal income and estate tax
consequences of the acquisition, ownership and disposition of the Exchange
Notes to beneficial owners of the Exchange Notes who are Non-U.S. Holders (as
defined below). This discussion applies only to initial beneficial owners of
Exchange Notes that acquired the Exchange Notes in exchange for Old Notes that
they purchased upon original issuance at the initial offering price thereof.
This discussion is based on currently existing provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), Treasury Department regulations
promulgated thereunder, and administrative and judicial interpretations
thereof, all as in effect on the date hereof and all of which are subject to
change, possibly on a retroactive basis.
This discussion is limited to initial beneficial owners that hold the Old
Notes and Exchange Notes as capital assets within the meaning of Section 1221
of the Code. This discussion also does not address the tax consequences to
Non-U.S. Holders that are subject to U.S. federal income tax on a net basis on
income realized with respect to an Old Note or Exchange Note because such
income is effectively connected with the conduct of a U.S. trade or business.
Such holders are generally taxed in a similar manner to U.S. Holders; however,
certain special rules apply. In addition, this discussion does not include any
description of the tax laws of any state, local or foreign government that may
be applicable to a particular beneficial owner.
This discussion is for general information only and does not address all of
the U.S. federal income tax consequences that may be relevant to particular
beneficial owners in light of their personal circumstances, or to certain
types of beneficial owners (such as banks and other financial institutions,
insurance companies, tax-exempt entities, dealers in securities, certain
former citizens or former long-term residents of the United States, persons
holding the Old Notes or Exchange Notes as part of a hedging or conversion
transaction or a straddle or U.S. Holders that have a functional currency
other than the U.S. dollar).
As used herein, the term "U.S. Holder" means a beneficial owner of an Old
Note or Exchange Note that is, for U.S. federal income tax purposes, (i) a
citizen or resident of the United States, (ii) a corporation or partnership
created or organized in or under the laws of the United States or any State
thereof (including the District of Columbia), (iii) an estate or trust
described in Section 7701(a)(30) of the Code or (iv) a person otherwise
subject to U.S. federal income taxation on a net income basis in respect of
its worldwide taxable income, and the term "Non-U.S. Holder" means a
beneficial owner of an Old Note or Exchange Note that is not a U.S. Holder.
HOLDERS CONSIDERING THE EXCHANGE OF OLD NOTES FOR THE EXCHANGE NOTES
PURSUANT TO THE EXCHANGE OFFER ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS
TO THE PARTICULAR U.S. FEDERAL TAX CONSEQUENCES TO THEM OF THE ACQUISITION,
OWNERSHIP AND DISPOSITION OF THE EXCHANGE NOTES, AS WELL AS THE TAX
CONSEQUENCES UNDER STATE, LOCAL AND FOREIGN TAX LAWS, AND THE POSSIBLE EFFECTS
OF CHANGES IN TAX LAWS.
U.S. FEDERAL INCOME TAXATION OF U.S. HOLDERS
Payments of Interest.
In general, interest on an Exchange Note will be taxable to a U.S. Holder as
ordinary income at the time it accrues or is (actually or constructively)
received in accordance with the U.S. Holder's method of accounting for U.S.
federal income tax purposes.
122
<PAGE>
Exchange Offer.
The exchange of Old Notes for the Exchange Notes pursuant to the Exchange
Offer should not constitute a taxable exchange of the Notes for U.S. federal
income tax purposes. As a result, (i) a U.S. Holder should not recognize
taxable gain or loss as a result of exchanging Old Notes for Exchange Notes
pursuant to the Exchange Offer, (ii) the holding period of the Exchange Notes
should include the holding period of the Old Notes exchanged therefor and
(iii) the adjusted tax basis of the Exchange Notes should be the same as the
adjusted tax basis of the Old Notes exchanged therefor immediately before such
exchange.
The Company is obligated to pay additional interest to the beneficial owners
of Notes under certain circumstances described under "The Exchange Offer." The
Company intends to take the position that such payments, if required to be
made, should be taxable to U.S. Holders in the manner described above under
"--Payments of Interest," but should not otherwise impact the U.S. federal
income tax consequences to U.S. Holders of the Notes. The Internal Revenue
Service (the "IRS"), however, may take a different position, which could
affect the timing of a U.S. Holder's income.
Sale, Exchange or Retirement of the Exchange Notes.
Upon the sale, exchange, redemption, retirement at maturity or other taxable
disposition of an Exchange Note, a U.S. Holder generally will recognize
taxable gain or loss equal to the difference between (i) the sum of cash plus
the fair market value of all other property received on such disposition
(except to the extent such cash or property is attributable to accrued but
unpaid interest, which will be taxable as ordinary income) and (ii) such U.S.
Holder's adjusted tax basis in the Exchange Note. Gain or loss recognized on
the disposition of an Exchange Note generally will be capital gain or loss,
and will be long-term capital gain or loss if at the time of such disposition
the U.S. Holder's holding period for the Exchange Note is more than one year.
Backup Withholding and Information Reporting.
In general, a U.S. Holder will be subject to backup withholding at the rate
of 31.0% with respect to interest, principal and premium, if any, paid on an
Exchange Note, and the proceeds of a sale of an Exchange Note, unless the U.S.
Holder (i) is an entity that is exempt from withholding (including
corporations and tax-exempt organizations) and, when required, demonstrates
this fact or (ii) provides the payor with its taxpayer identification number
("TIN") (which for an individual would be the holder's social security
number), certifies that the TIN provided to the payor is correct and that the
holder has not been notified by the IRS that it is subject to backup
withholding due to underreporting of interest or dividends, and otherwise
complies with applicable requirements of the backup withholding rules. In
addition, such payments of principal, premium and interest to, and the
proceeds of a sale of an Exchange Note by, U.S. Holders that are not exempt
entities will generally be subject to information reporting requirements. The
amount of any backup withholding from a payment to a U.S. Holder will be
allowed as a credit against such U.S. Holder's U.S. federal income tax
liability and may entitle such holder to a refund, provided that the required
information is furnished to the IRS.
U.S. FEDERAL INCOME TAXATION OF NON-U.S. HOLDERS
Payments of Interest.
In general, payments of interest on the Exchange Notes by the Company or any
agent of the Company to a Non-U.S. Holder will not be subject to U.S. federal
income tax (or any withholding thereof, except as described below under "--
Backup Withholding and Information Reporting"), provided that (i) (a) the Non-
U.S. Holder does not actually or constructively own 10.0% or more of the total
combined voting power of all classes of stock of the Company entitled to vote,
(b) the Non-U.S. Holder is not a controlled foreign corporation that is
related to the Company, actually or constructively, through stock ownership,
(c) the Non-U.S. Holder is not a bank described in Section 881(c)(3)(A) of the
Code and (d) either (1) the Non-U.S. Holder certifies to the Company or its
agent on IRS Form W-8 (or a suitable substitute form), under penalties of
perjury, that it is not a "U.S.
123
<PAGE>
person" (as defined in the Code) and provides its name and address or (2) a
securities clearing organization, bank or other financial institution that
holds customers' securities in the ordinary course of its trade or business (a
"financial institution") and holds the Exchange Notes on behalf of the Non-
U.S. Holder certifies to the Company or its agent under penalties of perjury
that such statement has been received from the Non-U.S. Holder by it or by a
financial institution between it and the Non-U.S. Holder and furnishes the
Company or its agent with a copy thereof or (ii) the Non-U.S. Holder is
entitled to the benefits of an income tax treaty under which interest on the
Exchange Notes is exempt from U.S. federal withholding tax and provides a
properly executed IRS Form 1001 claiming the exemption.
On October 6, 1997, Treasury regulations (the "New Withholding Regulations")
were issued which alter the rules described above in certain respects. The New
Withholding Regulations generally will be effective with respect to payments
made after December 31, 1999, regardless of the issue date of the instrument
with respect to which such payments are made. The New Withholding Regulations
generally will not materially alter the certification rules described in
(i)(d) of the preceding paragraph, but will provide alternative methods for
satisfying such requirements. The New Withholding Regulations also generally
will require, in the case of Exchange Notes held by a foreign partnership,
that (i) the certification described in (i)(d) of the preceding paragraph be
provided by the partners rather than the foreign partnership and (ii) the
partnership provide certain information, including a United States taxpayer
identification number. A look-through rule will apply in the case of tiered
partnerships. In addition, the New Withholding Regulations may require that a
Non-U.S. Holder (including, in the case of a foreign partnership, the partners
thereof) obtain a United States taxpayer identification number and make
certain certifications if the Non-U.S. Holder wishes to claim exemption from
(or a reduced rate of) withholding under an income tax treaty. Each Non-U.S.
Holder should consult its own tax advisor regarding the application to such
holder of the New Withholding Regulations.
Exchange Offer.
The exchange of Old Notes for the Exchange Notes pursuant to the Exchange
Offer should not be treated as a taxable exchange of the Notes for U.S.
federal income tax purposes. As a result, there should be no U.S. federal
income tax consequences to Non-U.S. Holders exchanging the Old Notes for the
Exchange Notes pursuant to the Exchange Offer.
Sale, Exchange or Retirement of the Exchange Notes.
A Non-U.S. Holder generally will not be subject to U.S. federal income tax
(or any withholding thereof, except as described below under "--Backup
Withholding and Information Reporting") on gain realized on the sale,
exchange, redemption, retirement at maturity or other disposition of an
Exchange Note unless the Non-U.S. Holder is an individual who is present in
the United States for a period or periods aggregating 183 or more days in the
taxable year of the disposition and certain other conditions are met.
Backup Withholding and Information Reporting.
Under current Treasury regulations, backup withholding and information
reporting do not apply to payments made by the Company or a paying agent to
Non-U.S. Holders if the certification described in (i)(d) under "--Payments of
Interest" above is received, provided that the payor does not have actual
knowledge that the holder is a U.S. person.
In addition, backup withholding and information reporting generally will not
apply if payments on an Exchange Note are made to a Non-U.S. Holder by or
through the foreign office of a custodian, nominee or other agent of such Non-
U.S. Holder, or if the foreign office of a "broker" (as defined in applicable
Treasury regulations) pays the proceeds of the sale of an Exchange Note to the
seller thereof. Information reporting requirements (but, currently, not backup
withholding) will apply, however, to a payment by or through a foreign office
of a custodian, nominee, agent or broker that is, for U.S. federal income tax
purposes, a U.S. person, a controlled foreign corporation or a foreign person
that derives 50.0% or more of its gross income for certain
124
<PAGE>
periods from the conduct of a trade or business in the United States, unless
such custodian, nominee, agent or broker has documentary evidence in its
records that the holder is a non-U.S. person and certain other conditions are
met, or the holder otherwise establishes an exemption. Payment by a U.S.
office of a custodian, nominee, agent or broker is subject to both backup
withholding at a rate of 31.0% and information reporting unless the holder
certifies, under penalties of perjury, that it is not a U.S. person and the
payor does not have actual knowledge to the contrary, or the holder otherwise
establishes an exemption. A Non-U.S. Holder may obtain a refund or a credit
against such Non-U.S. Holder's U.S. federal income tax liability of any
amounts withheld under the backup withholding rules, provided the required
information is furnished to the IRS.
The New Withholding Regulations revise (substantially in certain respects)
the procedures that withholding agents and payees must follow to comply with,
or to establish an exemption from, the information reporting and backup
withholding provisions for payments after December 31, 1999. Each Non-U.S.
Holder should consult its own tax advisor regarding the application to such
holder of the New Withholding Regulations.
Estate Tax.
Exchange Notes held at the time of death (or theretofore transferred subject
to certain retained rights or powers) by an individual who at the time of
death is a Non-U.S. Holder will not be included in such holder's gross estate
for U.S. federal estate tax purposes, provided that (i) the individual does
not actually or constructively own 10.0% or more of the total combined voting
power of all classes of stock of the Company entitled to vote and (ii) the
income on the Exchange Notes is not effectively connected with the conduct of
a U.S. trade or business by the individual.
125
<PAGE>
PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives Exchange Notes for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be
used by a Participating Broker-Dealer in connection with resales of Exchange
Notes received in exchange for Notes where such Notes were acquired as a
result of market-making activities or other trading activities. The Company
has agreed that, for a period of 150 days after the Expiration Date, it will
make this Prospectus, as amended or supplemented, available to any
Participating Broker-Dealer for use in connection with any such resale.
The Company will not receive any proceeds from any sale of Exchange Notes by
Participating Broker-Dealers. Exchange Notes received by Participating Broker-
Dealers for their own account pursuant to the Exchange Offer may be sold from
time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange Notes
or a combination of such methods of resale, at market prices prevailing at the
time of resale, at prices related to such prevailing market prices or at
negotiated prices. Any such resale may be made directly to purchasers or to or
through brokers or dealers who may receive compensation in the form of
commissions or concessions from any such Participating Broker-Dealer or the
purchasers of any such Exchange Notes. Any Participating Broker-Dealer that
resells Exchange Notes that were received by it for its own account pursuant
to the Exchange Offer and any broker or dealer that participates in a
distribution of such Exchange Notes may be deemed to be an "underwriter"
within the meaning of the Securities Act and any profit on any such resale of
Exchange Notes and any commission or concessions received by any such persons
may be deemed to be underwriting compensation under the Securities Act. The
Letter of Transmittal states that, by acknowledging that it will deliver and
by delivering a prospectus, a Participating Broker-Dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
For a period of 150 days after the Expiration Date the Company will promptly
send additional copies of this Prospectus and any amendment or supplement to
this Prospectus to any Participating Broker-Dealer that requests such
documents in the Letter of Transmittal. The Company has agreed to pay all
expenses incident to the Exchange Offer (including the expenses of one counsel
for the Holders of the Notes) other than commissions or concessions of any
Participating Broker-Dealers and will indemnify the Holders of the Notes
(including any Participating Broker-Dealers) against certain liabilities,
including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the Exchange Notes offered hereby will be passed upon for
the Company by Dewey Ballantine LLP, New York, New York.
EXPERTS
Following the Transactions, on September 24, 1998, the Board of Directors
unanimously approved the dismissal of Arthur Andersen LLP as the independent
auditors for MTL Inc. and its subsidiaries, and the appointment of
PricewaterhouseCoopers LLP as independent auditors for MTL Inc. and its
subsidiaries. The reports provided by Arthur Andersen LLP do not contain an
adverse opinion or disclaimer of opinion, and there are no disagreements on
any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure.
The consolidated financial statements of MTL Inc. and its subsidiaries at
December 31, 1997 and December 31, 1996 and for each of the three years in the
period ended December 31, 1997, included in this Prospectus, have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.
The consolidated financial statements of Chemical Leaman Corporation and its
subsidiaries as of December 31, 1996 and 1997 and for each of the three years
in the period ended December 31, 1997, included in this Prospectus, have been
audited by Arthur Andersen LLP, independent public accountants, as indicated
in their reports with respect thereto, and are included herein in reliance
upon the authority of said firm as experts in giving said reports.
126
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Certified Public Accountants....................... F-2
Consolidated Balance Sheets as of December 31, 1996 and 1997............. F-3
Consolidated Statements of Income for the years ended December 31, 1995,
1996 and 1997........................................................... F-4
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1994, 1995, 1996 and 1997.................................. F-5
Consolidated Statements of Cash Flows for the years ended December 31,
1995, 1996 and 1997..................................................... F-6
Notes to Consolidated Financial Statements............................... F-7
Condensed Consolidated Balance Sheets as of June 30, 1998 and December
31, 1997 (unaudited).................................................... F-17
Condensed Consolidated Statements of Income for the six months ended June
30, 1998 and 1997 (unaudited)........................................... F-18
Condensed Consolidated Statements of Cash Flows for the six months ended
June 30, 1998 and 1997 (unaudited)...................................... F-19
Notes to Condensed Consolidated Financial Statements (unaudited)......... F-20
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<CAPTION>
PAGE
----
<S> <C>
CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES
Report of Independent Public Accountants................................. F-22
Consolidated Balance Sheets December 31, 1996 And 1997................... F-23
Consolidated Statements Of Operations for the Years Ended December 31,
1995, 1996 and 1997..................................................... F-24
Consolidated Statements Of Stockholders' Equity for the Years Ended De-
cember 31, 1995, 1996 and 1997.......................................... F-25
Consolidated Statements of Cash Flows for the Years Ended December 31,
1995, 1996 and 1997..................................................... F-26
Notes to Consolidated Financial Statements............................... F-27
Condensed Consolidated Balance Sheets as of July 5, 1998 (unaudited) and
December 31, 1997....................................................... F-43
Condensed Consolidated Statement of Operations for the six months ended
July 5, 1998 and June 29, 1997 (unaudited).............................. F-44
Condensed Consolidated Statement of Cash Flows for the six months ended
July 5, 1998 and June 29, 1997 (unaudited).............................. F-45
Notes to Condensed Consolidated Financial Statements (unaudited)......... F-47
Schedule II--Valuation and Qualifying Accounts........................... F-50
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders ofMTL Inc.:
We have audited the accompanying consolidated balance sheets of MTL Inc. (a
Florida corporation) and subsidiaries as of December 31, 1996 and 1997, and
the related consolidated statements of income, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of MTL Inc. and subsidiaries
as of December 31, 1996 and 1997, and the results of their operations and
their cash flows for each of the three years in the period ended December 31,
1997, in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Tampa, Florida,
February 27, 1998
F-2
<PAGE>
MTL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1996 1997
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................ $ 694,851 $ 1,377,228
Accounts receivable, net......................... 32,495,711 38,171,957
Current maturities of other receivables.......... 1,061,941 1,163,357
Notes receivable................................. 500,646 547,213
Inventories...................................... 877,682 957,824
Prepaid expenses................................. 3,399,914 2,822,343
Prepaid tires.................................... 3,888,284 4,323,783
Deferred tax assets.............................. 2,748,163 2,685,597
Other............................................ 121,057 126,560
------------ ------------
Total current assets........................... 45,788,249 52,175,862
------------ ------------
Property and equipment:
Land and improvements............................ 4,734,133 4,808,938
Buildings and improvements....................... 12,284,784 12,457,662
Revenue equipment................................ 152,883,747 182,407,304
Terminal equipment............................... 5,992,691 5,874,647
Furniture and fixtures........................... 3,609,241 4,607,966
Other equipment.................................. 1,697,725 1,373,406
------------ ------------
181,202,321 211,529,923
Less--Accumulated depreciation and amortization.. (60,299,204) (75,019,546)
------------ ------------
Property and equipment, net.................... 120,903,117 136,510,377
Other receivables, less current maturities......... 3,284,918 1,986,908
Goodwill........................................... 2,433,751 2,003,473
Other assets....................................... 1,194,235 1,359,761
------------ ------------
$173,604,270 $194,036,381
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses............ $ 10,656,972 $ 15,201,239
Affiliates and independent owner-operators pay-
able............................................ 4,547,431 6,431,565
Current maturities of long-term debt............. 1,611,249 1,805,775
Current maturities of obligations under capital
leases.......................................... 2,612,793 501,086
Accrued loss and damage claims................... 3,798,808 4,906,049
Income taxes payable............................. 151,958 798,292
------------ ------------
Total current liabilities...................... 23,379,211 29,644,006
Long-Term Debt, less current maturities............ 51,700,591 52,433,465
Obligations under capital leases, less current
maturities........................................ 1,404,489 357,732
Accrued loss and damage claims..................... 4,528,354 5,064,843
Deferred income taxes.............................. 23,678,302 27,004,040
------------ ------------
Total liabilities.............................. 104,690,947 114,504,086
------------ ------------
Commitments and contingencies (Notes 5 and 6)
Stockholders' equity:
Preferred stock, $.01 par value; 5,000,000 shares
authorized, no shares issued or outstanding..... -- --
Common stock, $.01 par value; 15,000,000 shares
authorized, 4,523,739 and 4,549,824 shares is-
sued and outstanding in 1996 and 1997, respec-
tively.......................................... 45,237 45,498
Additional paid-in capital....................... 30,139,529 30,459,139
Retained earnings................................ 38,757,270 49,240,633
Cumulative translation adjustment................ (28,713) (212,975)
------------ ------------
Total stockholders' equity..................... 68,913,323 79,532,295
------------ ------------
$173,604,270 $194,036,381
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-3
<PAGE>
MTL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------
1995 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
Operating revenues:
Transportation..................... $173,059,635 $217,811,945 $266,369,170
Other.............................. 16,994,611 17,787,254 19,677,955
------------ ------------ ------------
Total operating revenues......... 190,054,246 235,599,199 286,047,125
------------ ------------ ------------
Operating expenses:
Purchased transportation........... 120,011,387 145,895,456 178,116,479
Compensation....................... 20,099,486 26,200,723 31,566,260
Fuel, supplies and maintenance..... 12,171,649 17,956,982 20,391,935
Depreciation and amortization...... 10,155,676 13,892,344 17,335,121
Selling and administrative......... 5,203,918 6,014,696 7,421,177
Insurance and claims............... 3,280,962 4,365,953 6,455,248
Taxes and licenses................. 1,629,642 1,655,274 1,899,734
Communication and utilities........ 1,149,114 1,378,103 1,805,324
(Gain) loss on sale of property and
equipment......................... (149,507) 19,703 (37,047)
------------ ------------ ------------
Total operating expenses......... 173,552,327 217,379,234 264,954,231
------------ ------------ ------------
Net operating income............. 16,501,919 18,219,965 21,092,894
Interest expense, net................ (3,467,594) (3,494,476) (3,174,826)
Other income (expense)............... 175,463 214,820 (38,482)
------------ ------------ ------------
Income before provision for
income taxes.................... 13,209,788 14,940,309 17,879,586
Provision for income taxes........... (5,408,130) (6,103,602) (7,396,223)
------------ ------------ ------------
Net income........................... $ 7,801,658 $ 8,836,707 $ 10,483,363
============ ============ ============
Per share data:
Net income--basic.................. $1.73 $1.95 $2.31
Net income--diluted................ 1.72 1.92 2.23
Weighted average number of common
shares--basic..................... 4,516,153 4,520,917 4,536,097
Weighted average number of common
and common equivalent shares--
diluted........................... 4,542,709 4,600,267 4,711,301
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-4
<PAGE>
MTL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON COMMON ADDITIONAL CUMULATIVE TOTAL
STOCK STOCK PAID-IN RETAINED TRANSLATION STOCKHOLDERS'
(SHARES) (AMOUNT) CAPITAL EARNINGS ADJUSTMENT EQUITY
--------- -------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31,
1994................... 4,515,733 $45,157 $30,082,520 $22,118,905 $ -- $52,246,582
Issuance of common
stock.................. 1,500 15 9,360 -- -- 9,375
Net income.............. -- -- -- 7,801,658 -- 7,801,658
--------- ------- ----------- ----------- --------- -----------
BALANCE, December 31,
1995................... 4,517,233 45,172 30,091,880 29,920,563 -- 60,057,615
Issuance of common
stock.................. 6,506 65 47,649 -- -- 47,714
Net income.............. -- -- -- 8,836,707 -- 8,836,707
Translation adjustment.. -- -- -- -- (28,713) (28,713)
--------- ------- ----------- ----------- --------- -----------
BALANCE, December 31,
1996................... 4,523,739 45,237 30,139,529 38,757,270 (28,713) 68,913,323
Issuance of common
stock.................. 26,085 261 319,610 -- -- 319,871
Net income.............. -- -- -- 10,483,363 -- 10,483,363
Translation adjustment.. -- -- -- -- (184,262) (184,262)
--------- ------- ----------- ----------- --------- -----------
BALANCE, December 31,
1997................... 4,549,824 $45,498 $30,459,139 $49,240,633 $(212,975) $79,532,295
========= ======= =========== =========== ========= ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-5
<PAGE>
MTL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income............................. $ 7,801,658 $ 8,836,707 $10,483,363
Adjustments to reconcile to net cash
and cash equivalents provided by
operating activities--
Deferred income taxes................ 2,889,448 3,322,268 3,388,304
Depreciation and amortization........ 10,155,676 13,892,344 17,335,121
Equity in income from investments.... (144,534) (138,355) (49,386)
(Gain) loss on sale of property and
equipment........................... (149,507) 19,703 (37,047)
Changes in assets and liabilities--
Increase in accounts and notes
receivable.......................... (3,096,169) (4,629,023) (6,037,660)
Increase in inventories.............. (61,907) (211,249) (92,562)
Decrease (increase) in prepaid
expenses............................ 985,552 (1,385,551) 550,293
Decrease (increase) in prepaid
tires............................... 15,766 (249,851) (376,581)
(Increase) decrease in other assets.. (238,572) (399,210) 310,581
Increase in accounts payable and
accrued expenses.................... 1,005,952 313,873 4,798,875
Increase in affiliates and
independent owner-operators
payable............................. 533,827 1,500,020 1,330,506
(Decrease) increase in accrued loss
and damage claims................. (815,797) 844,803 1,643,730
(Decrease) increase in current
income taxes...................... (791,148) 587,516 584,671
----------- ----------- -----------
Net cash and cash equivalents
provided by operating activities.. 18,090,245 22,303,995 33,832,208
----------- ----------- -----------
Cash flows from investing activities:
Capital expenditures................... (32,099,300) (20,576,543) (35,120,876)
Investment in Levy Transport, Ltd.,
net of cash received.................. -- (4,725,502) --
Payments received on other
receivables........................... -- 1,025,614 1,196,594
Repayment of loan to barge tank
operation............................. 209,240 262,930 93,263
Proceeds from sales of property and
equipment............................. 1,801,219 2,233,213 2,140,861
----------- ----------- -----------
Net cash and cash equivalents used
in investing activities........... (30,088,841) (21,780,288) (31,690,158)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from sale of lease
receivables........................... 3,282,030 1,181,245 --
Proceeds from issuance of long-term
debt, less prepayments................ 19,243,370 35,043,936 3,975,841
Principal payments on long-term debt,
less borrowings....................... (5,549,645) (30,722,218) (2,713,897)
Principal payments on obligations
under capital leases.................. (5,387,921) (5,685,264) (3,453,557)
Issuance of common stock............... 9,375 47,714 319,871
Borrowings under capital lease......... -- -- 368,793
----------- ----------- -----------
Net cash and cash equivalents
provided by (used in) financing
activities........................ 11,597,209 (134,587) (1,502,949)
----------- ----------- -----------
Net (decrease) increase in cash and cash
equivalents............................ (401,387) 389,120 639,101
Translation adjustment.................. -- (16,377) 43,390
Cash and cash equivalents, beginning of
year................................... 723,495 322,108 694,851
----------- ----------- -----------
Cash and cash equivalents, end of year.. $ 322,108 $ 694,851 $ 1,377,342
=========== =========== ===========
Supplemental disclosures of cash flow
information:
Cash paid during the year for--
Interest............................. $ 3,305,606 $ 3,912,421 $ 4,042,866
Income taxes......................... $ 3,309,830 $ 2,308,061 $ 3,248,839
Supplemental disclosures of noncash
investing and financing activities:
Note payable issued for purchase of
Levy Transport, Ltd................... $ -- $ 365,898 $ --
Receivable from tractors and trailors
leased under a capital lease.......... $ 6,482,752 $ 1,806,921 $ --
Tractors and trailors acquired by
capital lease......................... $ -- $ -- $ 368,793
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-6
<PAGE>
MTL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1997
1--BUSINESS ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES:
Nature of Operations
MTL Inc. and subsidiaries (the Company) is engaged primarily in truckload
transportation of bulk liquids in North America. The Company conducts a large
portion of its business through a network of affiliates and independent owner-
operators. Affiliates are independent corporations, which enter into renewable
one-year contracts with the Company. Affiliates are responsible for paying for
their own equipment (including debt service), fuel and other operating costs.
Independent owner-operators are independent contractors, which, through a
contract with the Company, supply one or more tractors and drivers for the
Company's use. Contracts with independent owner-operators may be terminated by
either party on short notice. The Company also charges affiliates and third
parties for the use of tractors and trailers as necessary. In exchange for the
services rendered, affiliates and independent owner-operators are generally
paid 85 percent and 63 percent, respectively, of the revenues generated for
each load hauled.
Purchase of Levy Transport, Ltd.
On June 11, 1996, the Company acquired all the outstanding stock of Levy
Transport, Ltd. (Levy), a Quebec-based tank truck carrier servicing the
chemical, petroleum and glass industries, from Les Placements Marlin, Ltd for
$5,148,745. The purchase price was determined based upon the fair market value
of the net assets acquired. The transaction was accounted for as a purchase
effective May 1, 1996, the date when control of Levy was transferred to the
Company. Goodwill in the amount of $1,616,000 was recorded as a result of the
acquisition. The Company is amortizing the goodwill over 15 years on a
straight-line basis.
Principles of Consolidation and Preparation
The consolidated financial statements include the accounts of MTL Inc. and
its wholly-owned subsidiaries, Montgomery, Quality Carriers, Inc., Lakeshore
Leasing, Inc., MTL de Mexico and, beginning May 1, 1996, Levy. All significant
intercompany accounts and transactions have been eliminated in consolidation.
Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of three
months or less to be cash equivalents.
Inventories
Inventories are stated at the lower of cost (first-in, first-out method) or
market and consist primarily of tires, parts, materials and supplies for
servicing the Company's revenue equipment.
Prepaid Tires
The cost of tires purchased with new equipment, as well as replacement
tires, are accounted for as prepaid tires and amortized on a straight-line
basis over their estimated useful lives, which approximate one year.
Property and Equipment
Property and equipment are stated at cost. Tractors and trailers under
capital leases is stated at the present value of the minimum lease payments at
the inception of the lease. Depreciation, including amortization of
F-7
<PAGE>
MTL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
tractors and trailors under capital leases, is computed on a straight-line
basis over the estimated useful lives of the assets or the lease terms,
whichever is shorter. The estimated useful lives are 10-25 years for buildings
and improvements, 5-15 years for tractors and trailers, 7 years for terminal
equipment, 3-5 years for furniture and fixtures, and 5-10 years for other
equipment. Maintenance and repairs are charged to operating expense when
incurred. Major improvements, which extend the lives of the assets, are
capitalized. When assets are disposed of, the cost and related accumulated
depreciation are removed from the accounts, and any gains or losses are
reflected in operating expenses.
Goodwill
Goodwill represents the excess of cost over the fair value of net assets
acquired and is being amortized on a straight-line basis over its estimated
useful life which ranges from 15 to 40 years. Accumulated amortization was
$313,949 and $419,589 at December 31, 1996 and 1997, respectively. At each
balance sheet date, the Company evaluates the realizability of goodwill based
upon expectations of non-discounted cash flows and operating income. Based on
the most recent analysis, the Company believes no material impairment exists
at December 31, 1997.
Other Assets
Other assets consist primarily of an investment in a barge tank operation
and deferred loan costs. The Company is a one-third partner in the barge tank
operation, and one of the other partners is a shareholder of the Company. The
partnership was organized to transport bulk liquids by barge tank from Florida
to Puerto Rico. The Company's investment in the partnership is accounted for
using the equity method. The Company's investment, including loans made (net
of loan repayments) to the partnership, was $447,198 and $475,323 as of
December 31, 1996 and 1997, respectively.
Deferred loan costs are being amortized over two to five years, the
estimated lives of the related long-term debt.
Accrued Loss and Damage Claims
The Company retains liability up to $75,000 per health claim and is self-
insured for cargo claims. For automotive liability, the Company has
deductibles ranging from $150,000 to $500,000 per occurrence. Prior to
September 1994, the Company retained liability for workers' compensation of up
to $250,000 per occurrence. Subsequent to this date, all workers' compensation
claims are fully insured. The Company has accrued for the estimated cost of
open claims based upon losses and claims reported and an estimate of losses
incurred but not reported.
The Company transports chemicals and hazardous materials and operates tank
wash facilities. As such, the Company's operations are subject to various
environmental laws and regulations. The Company has been involved in various
litigation and environmental matters arising from these operations. The
Company is currently designated a potentially responsible party (PRP) at six
Comprehensive Environmental Response, Compensation and Liability Act of 1980
(CERCLA) sites. The involved activities occurred in prior years and resulted
primarily from the transportation of waste or the cleaning of tank trailers at
third-party facilities. Although CERCLA liability is joint and several, in the
opinion of management, the Company has reviewed the financial stability of the
other PRPs and does not believe that its ultimate liability will be materially
affected by any financial uncertainties with respect thereto. In addition, at
five of the CERCLA sites, the Company is one of many (in most instances, one
of several hundred) PRP's named. Accordingly, based on the Company's
historical experience and available facts, in the opinion of management, a
material liability with respect to remediation of disposal sites to which the
Company may have delivered hazardous materials is not expected. Reserves have
F-8
<PAGE>
MTL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
been recognized for probable losses which can be estimated. There have been no
material changes in the recognized reserves, nor are material changes expected
in the future, based on the Company's activities at each of the locations. It
is the opinion of management that the ultimate disposition of these matters
will not have a material effect on the Company's financial position or results
of operations.
Fair Value of Financial Instruments
The book value of all financial instruments approximates their fair value.
The fair value of the Company based on the above is not a market valuation of
the Company as a whole.
Revenue Recognition
Transportation revenues and related costs are recognized on the date freight
is delivered. Other operating revenues, consisting primarily of lease revenues
from affiliates, independent owner-operators and third parties, are recognized
as earned.
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.
Foreign Currency Translation
The functional currency for Levy is Canadian dollars. The translation from
Canadian dollars to U.S. dollars is performed for balance sheet accounts using
current exchange rates in effect at the balance sheet date and for revenue and
expense accounts using a weighted average exchange rate in effect during the
period. The gains or losses, net of income taxes, resulting from such
translation are included in stockholders' equity. Gains or losses from foreign
currency transactions are included in other income (expense).
New Accounting Standards
In June 1997, the Financial Accounting Standards Board (FASB) released
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" (SFAS 130) and No. 131, "Disclosures about Segments of an Enterprise
and Related Information" (SFAS 131).
SFAS 130 requires that an enterprise (a) classify items of other
comprehensive income by their nature in the financial statements and (b)
display the accumulated balance of other comprehensive income separately from
retained earnings and additional paid-in-capital in the stockholders' equity
section of the consolidated balance sheets.
SFAS 131 requires that a public business enterprise report financial and
descriptive information about its reportable operating segments.
SFAS 130 and SFAS 131 are effective for financial statements for periods
beginning after December 15, 1997. The Company has not considered the effects
of SFAS 130 and SFAS 131 on the consolidated financial statements.
Earning Per Share
In February 1997, the FASB issued Statement of Financial Accounting
Standards No. 128, "Earning per Share" (SFAS 128). SFAS 128 establishes new
standards for computing and presenting earnings per share
F-9
<PAGE>
MTL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(EPS). Specifically, SFAS 128 replaces the presentation of primary EPS with a
presentation of basic EPS, requires dual presentation of basic and diluted EPS
on the face of the income statement and requires a reconciliation of the basic
EPS computation to the diluted EPS computation.
Basic EPS is calculated as net income divided by the weighted average number
of shares of common stock outstanding.
Diluted EPS is calculated using the treasury stock method under which net
income is divided by the weighted average number of common and common
equivalent shares outstanding during the year. Common stock equivalents
consist of options.
The reconciliation of basic EPS and diluted EPS is as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1995 1996 1997
---------- ---------- ----------
<S> <C> <C> <C>
Basic weighted average number of common
shares................................... 4,516,153 4,520,917 4,536,097
Diluted effect of options outstanding..... 26,556 79,350 175,204
---------- ---------- ----------
Diluted weighted average number of common
and common equivalent shares............. 4,542,709 4,600,267 4,711,301
========== ========== ==========
</TABLE>
2--ACCOUNTS RECEIVABLE:
Accounts receivable consisted of the following at December 31:
<TABLE>
<CAPTION>
1996 1997
----------- -----------
<S> <C> <C>
Trade accounts receivable........................ $29,807,861 $35,538,018
Affiliate and independent owner-operator
receivables..................................... 3,157,212 2,963,221
Employee receivables............................. 102,317 127,454
Other receivables................................ 825,586 1,523,185
----------- -----------
Total receivables.............................. 33,892,976 40,151,878
Less--Allowance for doubtful accounts............ (1,397,265) (1,979,921)
----------- -----------
Accounts receivable, net....................... $32,495,711 $38,171,957
=========== ===========
</TABLE>
The activity in the allowance for doubtful accounts for each of the three
years in the period ended December 31, 1997, is as follows:
<TABLE>
<CAPTION>
1995 1996 1997
---------- ---------- ----------
<S> <C> <C> <C>
Balance, beginning of period........... $ 923,055 $1,019,302 $1,397,265
Additions charged to operating
expenses.............................. 431,769 474,736 1,146,193
Write-off of bad debts................. (335,522) (96,773) (563,537)
---------- ---------- ----------
Balance, end of period................. $1,019,302 $1,397,265 $1,979,921
========== ========== ==========
</TABLE>
As of December 31, 1997, approximately 85 percent and 15 percent of trade
accounts receivable were due from companies in the chemical and bulk food
products industries, respectively. No single customer accounted for over 8
percent of the Company's operating revenues. Included in accounts and notes
receivable are $58,807 and $39,680 of receivables as of December 31, 1996 and
1997, respectively, which are due from other companies owned by related
parties.
F-10
<PAGE>
MTL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
3--OTHER RECEIVABLES:
Other receivables include the minimum lease payments due to the Company from
third parties for tractors and trailors leased under capital leases.
Future minimum lease payments are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, CAPITAL LEASES
------------------------ --------------
<S> <C>
1998........................................................ $ 1,419,453
1999........................................................ 1,419,453
2000........................................................ 741,134
-----------
Total minimum lease payments................................ 3,580,040
Less--Unearned financing income............................. (429,775)
-----------
Present value of minimum capital lease payments............. 3,150,265
Less--Current maturities of other receivables............... (1,163,357)
-----------
Other receivables, less current maturities.................. $ 1,986,908
===========
</TABLE>
4--LONG-TERM DEBT:
Long-term debt consisted of the following at December 31:
<TABLE>
<CAPTION>
1996 1997
----------- -----------
<S> <C> <C>
PRIVATE PLACEMENT OF NOTES PAYABLE..................
Unsecured private placement of notes payable with a
fixed interest rate of 6.97%. Interest is payable
semi-annually and seven equal principal payments
are to be made annually beginning January 2000..... $25,000,000 $25,000,000
LINES OF CREDIT
Unsecured notes payable under a $50,000,000
revolving line of credit with interest rates of
LIBOR plus an incremental percentage based on the
ratio of funded debt to earnings before interest,
income taxes, depreciation and amortization (6.56%
at December 31, 1997) and U.S. prime less .25%
(8.25% at December 31, 1997). Interest is payable
at varying dates, and all outstanding principal is
due May 31, 2000, subject to renewal. Letters of
credit of $325,224 were issued as of December 31,
1997, and reduce the borrowings available.
Additional advances of $33,694,106 were available
and unused at December 31, 1997.................... 17,076,535 15,980,670
Unsecured notes payable under a $16,428,971
revolving line of credit with interest rates based
on the ratio of funded debt to earnings before
interest, income taxes, depreciation and
amortization (4.75% at December 31, 1997) and
Canadian lender's prime (6% at December 31, 1997).
Interest is payable at varying dates, and all
outstanding principal is due May 31, 2000, subject
to renewal. Additional advances of $5,942,394 were
available and unused at December 31, 1997.......... 6,795,292 10,486,577
NOTES SECURED BY TRACTORS AND TRAILORS
6.5% to 11.65% fixed rate notes payable, due in
varying monthly installments with maturity dates
through 1999....................................... 4,075,183 2,492,351
OTHER NOTES
5% unsecured note payable to employee, due in annual
installments of $69,911 through 2001............... 364,830 279,642
----------- -----------
53,311,840 54,239,240
Less--Current maturities of long-term debt.......... (1,611,249) (1,805,775)
----------- -----------
Long-term debt, less current maturities............. $51,700,591 $52,433,465
=========== ===========
</TABLE>
F-11
<PAGE>
MTL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Under the terms of the Company's debt agreements, the Company is required to
maintain, among other restrictions, minimum net worth levels, debt to net
worth ratios and debt service coverage ratios. In addition, the agreements
contain restrictions on asset dispositions and the payment of dividends. At
December 31, 1997, the Company was in compliance with the terms and covenants
of its debt agreements.
Scheduled maturities of long-term debt for the next five years and
thereafter are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, AMOUNT
------------------------ -----------
<S> <C>
1998........................................................... $ 1,805,775
1999........................................................... 812,300
2000........................................................... 30,122,683
2001........................................................... 3,641,340
2002........................................................... 3,571,429
Thereafter..................................................... 14,285,713
-----------
$54,239,240
===========
</TABLE>
5--LEASE COMMITMENTS:
The Company leases revenue and other equipment under operating and capital
leases.
Future minimum lease payments under non-cancelable operating leases and
capital leases at December 31, 1997, are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, CAPITAL LEASES OPERATING LEASES
------------------------ -------------- ----------------
<S> <C> <C>
1998..................................... $539,502 $1,394,394
1999..................................... 157,456 185,142
2000..................................... 233,422 123,935
2001..................................... -- 49,560
-------- ----------
Total minimum lease payments............. 930,380 $1,753,031
==========
Less--Amount representing interest (at
rates ranging from 6.75% to 11.65%)....... (71,562)
--------
Present value of minimum capital lease pay-
ments..................................... 858,818
Less--Current maturities of obligations un-
der capital leases........................ (501,086)
--------
Obligations under capital leases, less cur-
rent maturities........................... $357,732
========
</TABLE>
The capitalized cost of equipment under capital leases, which is included in
tractors and trailors in the accompanying consolidated balance sheets, was as
follows at December 31:
<TABLE>
<CAPTION>
1996 1997
---------- ----------
<S> <C> <C>
Tractors and trailors................................ $6,499,900 $1,673,599
Less--Accumulated amortization....................... (2,317,947) (656,816)
---------- ----------
$4,181,953 $1,016,783
========== ==========
</TABLE>
Rent expense under operating leases was $958,162, $2,209,532 and $2,821,179
for the years ended December 31, 1995, 1996 and 1997, respectively.
6--GUARANTOR OF CERTAIN LEASE OBLIGATIONS:
In 1995 and 1996, the Company entered into capital leases for tractors and
trailers with certain affiliates and owner--operators. The Company then sold
to a third party the lease receivables for which it received $2,529,244 and
$979,104 in 1995 and 1996, respectively. There were no additional sales during
1997. The
F-12
<PAGE>
MTL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Company is contingently liable as the guarantor for the remaining balance of
the receivables sold of $2,769,801 at December 31, 1997. These leases are
collateralized by the equipment related to these leases. Management estimated
the fair value of this equipment to be $2,384,453 at December 31, 1997, which
was based upon an average dealer-estimated repurchase price.
Also, in 1995 and 1996, the Company entered into capital leases for tractors
and trailors with other affiliates. The Company then sold to a third party the
lease receivables for which it received $3,282,030 and $202,141 in 1995 and
1996, respectively. There were no additional sales during 1997. The Company is
contingently liable as the guarantor for the remaining balance of the
receivables sold of $2,321,552 at December 31, 1997. These leases are
collateralized by the equipment related to these leases. Management estimated
the fair value of this equipment to be $1,938,665 at December 31, 1997, which
was based upon an average dealer-estimated repurchase price.
Reserves have been recognized by the Company for its estimated exposure
under the above guarantees. There have been no material changes in the
recognized reserves, nor are material changes expected in the future. It is
possible that the estimates used in determining these reserves and the fair
value may change. However, it is the opinion of management that the ultimate
difference in the estimates will not have a material effect on the Company's
financial position or results of operations.
7--OTHER TRANSACTIONS WITH RELATED PARTIES:
Tank trailer manufacturing facilities are located on property leased to a
stockholder by the Company. The property is under a lease for $5,000 per month
expiring April 1, 1999. The Company purchased tank trailers for $11,675,000,
$5,138,000 and $6,587,000 in 1995, 1996 and 1997, respectively, from the
company and has commitments to purchase additional tank trailers costing
approximately $2,467,000 at of December 31, 1997. Also, the related company
provided repair, maintenance, design, engineering, transloading, intermodal
and other services to the Company totaling $410,000, $572,000 and $347,000
during the years ended December 31, 1995, 1996 and 1997, respectively.
8--INCOME TAXES:
The provision for income taxes consisted of the following for the years
ended December 31:
<TABLE>
<CAPTION>
1995 1996 1997
---------- ---------- ----------
<S> <C> <C> <C>
Currently payable:
Federal.................................. $1,800,607 $2,006,948 $2,945,692
State.................................... 718,075 773,975 1,062,227
---------- ---------- ----------
2,518,682 2,780,923 4,007,919
---------- ---------- ----------
Deferred taxes:
Federal.................................. 2,018,798 2,911,903 2,447,101
State.................................... 870,650 410,776 941,203
---------- ---------- ----------
2,889,448 3,322,679 3,388,304
---------- ---------- ----------
Provision for income taxes................. $5,408,130 $6,103,602 $7,396,223
========== ========== ==========
</TABLE>
F-13
<PAGE>
MTL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The net deferred tax liability, which includes no valuation allowances,
consisted of the following at December 31:
<TABLE>
<CAPTION>
1996 1997
------------ ------------
<S> <C> <C>
Deferred tax assets:
Reserves for guarantee of lease obligations...... $ 291,631 $ 245,646
Capital leases treated as operating leases for
tax purposes as lessee.......................... 769,004 220,840
Tax credit carryforwards......................... 1,273,755 113,149
Self-insurance reserves.......................... 3,144,885 3,865,424
Allowance for doubtful accounts.................. 475,070 618,977
Investment basis difference...................... 206,323 216,855
Accrued vacation pay............................. 144,220 162,395
Other............................................ 119,191 174,530
------------ ------------
6,424,079 5,617,816
------------ ------------
Deferred tax liabilities:
Property and equipment basis difference.......... (21,819,799) (23,798,672)
State taxes...................................... (3,756,268) (4,562,246)
Capital leases treated as operating leases for
tax purposes as lessor.......................... (1,493,368) (1,132,308)
Other............................................ (284,783) (443,033)
------------ ------------
(27,354,218) (29,936,259)
------------ ------------
Net deferred tax liability..................... $(20,930,139) $(24,318,443)
============ ============
</TABLE>
The Company's effective tax rates differ from the federal statutory rate of
34 percent. The reasons for those differences are as follows for the years
ended December 31:
<TABLE>
<CAPTION>
1995 1996 1997
---------- ---------- ----------
<S> <C> <C> <C>
Tax expense at the statutory rate....... $4,491,328 $5,079,705 $6,079,059
State income taxes, net of federal
benefit................................ 1,048,559 781,936 1,322,264
Other................................... (131,757) 241,961 (5,100)
---------- ---------- ----------
Provision for income taxes............ $5,408,130 $6,103,602 $7,396,223
========== ========== ==========
</TABLE>
At December 31, 1997, the Company had alternative minimum tax credit
carryforwards of $113,149 (no expiration).
The Company has not provided a valuation allowance for deferred tax assets
based upon the assumption that the Company will achieve sufficient taxable
income from operations in the future.
9--INCENTIVE STOCK OPTION PLAN:
In 1992, an incentive stock option plan (the Old Plan) was adopted which
allowed for 100,000 options to be granted to eligible employees. During 1994,
the Company's Board of Directors elected to adopt a new incentive stock option
plan (the Plan). The Plan absorbed the options granted under the Old Plan, and
an additional 200,000 options were approved for granting at an exercise price
not to be less than the market price of the common stock at the date of grant.
During 1996, an additional 400,000 shares were approved for granting under the
Plan. Options are granted at the discretion of the Board of Directors and are
exercisable for shares of unissued common stock or treasury stock. Options
vest 20 percent each year, other than 11,490 options granted in 1994 and
100,000 options granted in 1996, which vested immediately. Substantially all
employees, officers and directors are eligible for participation in the Plan.
F-14
<PAGE>
MTL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Company uses Accounting Principles Board Opinion No. 25, "Accounting for
Stock-Based Compensation," and the related interpretations to account for the
Plan. No compensation cost has been recognized under the Plan as the option
price has been greater than or equal to the market price of the common stock
on the applicable measurement date for all options issued. The Company adopted
SFAS No. 123, "Accounting for Stock-Based Compensation" (SFAS 123), for
disclosure purposes in 1996. For SFAS 123 purposes, the fair value of each
option grant has been estimated as of the grant date using the Black-Scholes
option pricing model with the following weighted average assumptions: risk
free interest rate of 6.18 percent for options with an expected life of four
years and 6.39 percent for options with an expected life of six years,
expected option life of four or six years, expected dividend rate of 0
percent, and expected volatility of 30.05 percent. Using these assumptions,
the fair value of stock options granted in 1995 and 1996 are $222,110 and
$2,054,875, respectively, which would be amortized as compensation over the
vesting period of the options. No options were granted during 1997.
Had compensation cost relating to the Plan been determined based upon the
fair value at the grant date for awards under the Plan consistent with the
method described in SFAS 123, the Company's net income and earnings per share
would have been as follows for the years ended December 31:
<TABLE>
<CAPTION>
1995 1996 1997
------ ------ -------
<C> <S> <C> <C> <C>
Net income: As reported (in thousands)....... $7,802 $8,837 $10,483
Pro forma (in thousands)......... 7,725 8,010 10,217
Earnings per share: As reported...................... $ 1.72 $ 1.92 $ 2.23
Pro forma........................ 1.70 1.74 2.17
</TABLE>
Because the method of accounting described in SFAS 123 has not been applied
to options granted prior to January 1, 1995, the above may not be
representative of that in future years.
Combined stock option activity for the Plan for the years ended December 31,
1995, through December 31, 1997, is as follows:
<TABLE>
<CAPTION>
WEIGHTED
RANGE OF AVERAGE
NUMBER OF OPTION EXERCISE SHARES EXPIRATION
SHARES PRICES PRICE VESTED DATE
--------- ----------- -------- ------- ----------
<S> <C> <C> <C> <C> <C>
Options outstanding at
December 31, 1994......... 255,378 $6.25-15.00 $11.89 49,740 2002-2004
1995 option activity:
Vesting of prior-year
options................. -- 6.25-15.00 47,628 2002-2004
Granted.................. 43,461 15.00-15.50 15.17 -- 2005
Exercised................ (1,500) 6.25 6.25 (1,500) 2002
Canceled................. (19,916) 6.25-15.50 14.34 (1,894) 2002-2005
------- -------
Options outstanding at
December 31, 1995......... 277,423 6.25-15.50 12.26 93,974 2002-2005
1996 option activity:
Vesting of prior-year
options................. -- 6.25-15.50 59,073 2002-2005
Granted.................. 320,014 15.00-18.25 17.68 100,000 2006
Exercised................ (6,506) 6.25-15.00 7.33 (6,506) 2002-2004
Canceled................. (13,869) 6.25-16.00 15.07 (1,791) 2002-2006
------- -------
Options outstanding at
December 31, 1996......... 577,062 6.25-18.25 15.24 244,750 2002-2006
1997 option activity:
Vesting of prior-year
options................. -- 6.25-18.25 82,576 2002-2006
Exercised................ (26,085) 6.25-15.50 11.95 (26,085) 2002-2006
Canceled................. (13,799) 6.25-15.50 14.60 (1,266) 2002-2006
------- -------
Options outstanding at
December 31, 1997......... 537,178 6.25-18.25 15.42 299,975 2002-2006
======= =======
</TABLE>
F-15
<PAGE>
MTL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The 537,178 options outstanding at December 31, 1997, are summarized as
follows:
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
WEIGHTED AVERAGE AVERAGE
AVERAGE REMAINING EXERCISE PRICE
NUMBER OF EXERCISE CONTRACTUAL SHARES OF VESTED
PRICE RANGE SHARES PRICE LIFE (IN YEARS) VESTED SHARES
----------- --------- -------- --------------- ------- --------------
<S> <C> <C> <C> <C> <C>
$6.25 72,250 $ 6.25 4.48 72,250 $ 6.25
15.00-18.25 464,928 16.61 8.01 227,725 16.61
</TABLE>
The Company expects that approximately 10 percent of the outstanding awards
at December 31, 1997, will eventually be forfeited. At December 31, 1997, a
total of 128,631 authorized shares remain available for granting.
10--PROFIT SHARING PLAN:
The Company has a profit sharing plan for substantially all employees.
Contributions are made at the discretion of the Board of Directors. A $300,000
contribution was made for 1995 and 1996. A $300,000 contribution was approved
for 1997.
11--GEOGRAPHIC SEGMENTS:
The Company's operations are located primarily in the United States and
Canada. Inter-area sales are not significant to the total revenue of any
geographic area. Information about the Company's operations in different
geographic areas for the year ended December 31, 1997, is as follows:
<TABLE>
<CAPTION>
U.S. CANADA MEXICO ELIMINATIONS CONSOLIDATED
------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Operating Revenues...... $252,942,603 $33,818,166 $ 356,065 $ (1,069,709) $286,047,125
Net operating income.... 19,977,129 913,745 202,020 -- 21,092,894
Identifiable assets..... 178,347,163 26,340,103 4,574,919 (15,225,804) 194,036,381
Depreciation and
amortization........... 14,707,920 2,483,677 143,524 -- 17,335,121
Capital expenditures.... 23,042,573 8,332,387 3,745,916 -- 35,120,876
</TABLE>
12--SUBSEQUENT EVENTS:
On February 10, 1998, the Company entered into an agreement with Sombrero
Acquisition Corporation (Sombrero), an affiliate of Apollo Management LP
(Apollo), pursuant to which Sombrero will merge with the Company. According to
the terms of the merger agreement, stockholders of the Company will receive
$40 per share in cash. The total transaction value is approximately $250
million, including outstanding stock options, fees and approximately $54
million of net debt.
The transaction will be subject to the customary conditions, including the
affirmative vote of the holders of a majority of the outstanding stock of the
Company.
The Company will be funded by an equity investment of approximately $70
million from Apollo and members of the Company's existing management.
Approximately $200 million of senior subordinated and bank debt will be used
to finance the acquisition. Additionally, a $100 million revolving credit
facility will be available to the Company for working capital and acquisition
purposes.
F-16
<PAGE>
MTL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
----------- ------------
(UNAUDITED) *
<S> <C> <C>
ASSETS
Current Assets:
Cash................................................ $ 3,188 $ 1,377
Accounts receivable................................. 42,004 40,152
Allowance for doubtful accounts..................... (2,352) (1,980)
Current maturities of other receivables............. 1,163 1,163
Notes receivable.................................... 635 547
Inventories......................................... 679 958
Prepaid expenses.................................... 1,192 2,822
Prepaid tires....................................... 4,469 4,324
Income tax receivable............................... 3,719 --
Deferred income taxes............................... 3,034 2,686
Other............................................... 128 127
-------- --------
Total Current assets.............................. 57,859 52,176
Property, plant and equipment......................... 222,534 211,530
Less--accumulated depreciation and amortization..... (83,555) (75,020)
-------- --------
138,979 136,510
Other Assets.......................................... 11,582 5,350
-------- --------
$208,420 $194,036
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
----------- ------------
(UNAUDITED) *
<S> <C> <C>
Current Liabilities:
Current maturities of indebtedness.................... $ 659 $ 2,307
Accounts payable and accrued expenses................. 16,952 15,201
Independent contractors payable..................... 4,975 6,432
Other current liabilities........................... 4,994 4,906
Income tax payable.................................. 90 798
-------- --------
Total Current liabilities......................... 27,670 29,644
Long term debt, less current maturities............... 199,568 52,433
Capital lease obligations, less current maturities.... 207 358
Other long term obligations........................... 4,345 5,065
Deferred income taxes................................. 27,494 27,004
Commitments and contingent liabilities
Redeemable common stock (30,239)...................... 1,210 --
Stockholders' equity
Common stock........................................ 17 45
Additional paid-in-capital.......................... 92,809 30,459
Retained earnings................................... 45,534 49,241
Stock recapitalization.............................. (189,579) --
Other stockholders' equity.......................... (455) (213)
Note receivable..................................... (400) --
-------- --------
Total stockholders' equity (Deficit)................ (52,074) 79,532
-------- --------
$208,420 $194,036
======== ========
</TABLE>
- --------
* Condensed from audited financial statements.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
F-17
<PAGE>
MTL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------
1998 1997
-------- --------
<S> <C> <C>
Operating Revenues
Transportation.............................................. $137,767 $129,727
Other....................................................... 10,855 9,462
-------- --------
148,622 139,189
Operating Expenses
Purchased transportation.................................... 91,433 88,065
Depreciation and amortization............................... 9,916 8,051
Compensation--options....................................... 13,433 --
Other operating expenses.................................... 35,894 32,870
-------- --------
Operating income (loss)................................... (2,054) 10,203
Interest expense, net....................................... 3,305 1,555
Other expense............................................... (16) (19)
-------- --------
Income (loss) before taxes................................ (5,343) 8,667
Income taxes................................................ (2,259) 3,578
-------- --------
Net income (loss) before extraordinary item................. (3,084) 5,089
Extraordinary item, net of tax.............................. 623 --
-------- --------
Net income (loss)........................................... $ (3,707) $ 5,089
======== ========
Per Share Data:
Basic earnings per share
Net income before extraordinary item.................... $ (.74) $ 1.12
Extraordinary item.................................... (.15) --
-------- --------
Net earnings per share.............................. $ (.89) $ 1.12
======== ========
Average shares outstanding................................ 4,144 4,529
======== ========
Diluted earnings per share
Net income before extraordinary item.................... N/A $ 1.09
Extraordinary item.................................... N/A --
-------- --------
Net earnings per share................................ N/A $ 1.09
======== ========
Average shares outstanding.................................. N/A 4,687
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
F-18
<PAGE>
MTL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
1998 1997
------------- ------------
<S> <C> <C>
Cash provided by (used for)
Operating activities:
Net income (loss)................................ $ (3,707) $ 5,089
Adjustments for non cash charges................. 10,058 10,179
Changes in assets and liabilities................ (4,996) (2,953)
------------- ------------
Net cash provided by operating activities........ 1,355 12,315
Investing activities:
Advance to investee.............................. -- (332)
Other investments................................ -- (533)
Capital expenditures............................. (13,547) (12,280)
Proceeds from asset dispositions................. 882 381
Other............................................ 453 --
------------- ------------
Net cash used for investing activities........... (12,212) (12,764)
Financing activities:
Proceeds from issuance of long term debt......... 200,107 4,852
Payment of obligations........................... (54,498) (3,002)
Issuance of common stock......................... 62,333 115
Recapitalization expenditures.................... (189,579) --
Deferred financing costs......................... (6,803) --
Other............................................ 1,199 --
------------- ------------
Net cash provided by financing activities........ 12,759 1,965
------------- ------------
Net Increase in cash............................... 1,902 1,516
Effect of exchange rate changes on cash............ (91) (108)
Cash, beginning of period.......................... 1,377 695
------------- ------------
Cash, end of period................................ $ 3,188 $ 2,103
============= ============
Cash payments for:
Interest......................................... $ 3,688 $ 1,821
Income taxes..................................... $ 1,536 $ 1,363
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
F-19
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
MTL INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation
The accompanying unaudited condensed, consolidated financial statements of
MTL Inc. (the Company) have been prepared in accordance with the instructions
to Form 10-Q and do not include all of the information and notes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included. For
further information, refer to the consolidated financial statements and notes
thereto for the year ended December 31, 1997, included in the Company's Form
10-K dated March 23, 1998.
Operating results for the quarter ended June 30, 1998 are not necessarily
indicative of the results that may be expected for the entire fiscal year.
2. RECAPITALIZATION:
On June 9, 1998, the Company completed the transactions contemplated by an
agreement with Sombrero Acquisition Corporation (Sombrero), an affiliate of
Apollo Management L.P. (Apollo), pursuant to which Sombrero merged with and
into the Company. According to the terms of the merger agreement, the stock-
holders of the Company (other than certain management shareholders) received
$40.00 per share in cash. The total transaction value was approximately $250.0
million, including payment for outstanding stock options and payment of
approximately $51.0 million in debt.
The transaction was accounted for as a leveraged recapitalization. The
effect of the recapitalization on stockholders' equity can be summarized as
follows:
<TABLE>
<CAPTION>
SHAREHOLDERS'
EQUITY OR (DEFICIT)
-------------------
<S> <C>
Balance December 31, 1997................................ $ 79,532
Year to date loss as of June 30, 1998................... (3,707)
Equity investment--New.................................. 62,333
Recapitalization expenditures........................... (189,579)
Other................................................... (653)
---------
Balance June 30, 1998.................................... $ (52,074)
=========
</TABLE>
The recapitalization was funded by a cash equity investment of approximately
$62.3 million from Apollo, members of the Company's existing management and
third party financing sources. $140.0 million of senior subordinated debt was
used to finance the acquisition along with $60.0 million dollars of senior
secured bank debt. Additionally, a $100 million revolving credit facility is
available to the Company for working capital and acquisition purposes.
3. PROPOSED ACQUISITION:
On June 24, 1998, the Company announced it had entered into an agreement and
plan of merger with Chemical Leaman Corporation ("CLC") and the shareholders
of CLC. This transaction is expected to close no later than October 31, 1998,
however, an earlier closing date is anticipated.
The closing of this acquisition is subject to certain financing arrangements
and other conditions.
F-20
<PAGE>
MTL INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)--(CONTINUED)
On June 27, 1998 the Company initiated a tender offer to purchase CLC's 10
3/8% senior notes due 2005 at a purchase price equal to:
(i) the present value on the payment date of $1,051.88 per note (the
amount payable on June 15, 2001, which is the first date on which the notes
are redeemable) ("the Earliest Redemption Date")) and all future interest
payments payable up to the Earliest Redemption Date, determined on the
basis of a yield to the Earliest Redemption Date equal to the sum of (x)
the yield on the 5 5/8 percent U.S. Treasury Notes due May 15, 2001, based
on the bid price for such security as of 2:00 p.m., New York City time, on
August 19, 1998, the third business day immediately preceeding the
scheduled expiration date of the tender offer, plus (y) 75 basis points
less (ii) a consent payment of $20.00 per $1,000.00 principal amount on
notes for which a valid consent to certain matters relating to the notes is
received in connection with the tender offer.
The sources of funds to consummate the merger are expected to include
additional loans of approximately $235.0 million, preferred equity of
approximately $20.0 million and common equity of approximately $12.0 million.
The Company is currently in the process of securing the required financing.
This transaction will be accounted for as a purchase.
4. NEW ACCOUNTING PRONOUNCEMENTS:
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130 "Reporting Comprehensive Income" (SFAS
130). SFAS 130 requires that an enterprise (a) classify items of other
comprehensive income by their nature in the financial statements and (b)
display the accumulated balance of other comprehensive income separately from
retained earnings and additional paid-in-capital in the stockholders' equity
section of the consolidated balance sheets for annual financial statements.
The Company adopted SFAS 130 in 1998 and accordingly, Comprehensive Income
is as follows:
<TABLE>
<CAPTION>
SIX MONTHS THREE MONTHS ENDED
ENDED JUNE 30 JUNE 30,
1998 1997 1998 1997
------- ------ --------- ---------
<S> <C> <C> <C> <C>
Net Income or (loss)................... $(3,707) $5,089 $ (6,416) $ 2,755
Other comprehensive income, net of tax:
Foreign currency translation
adjustments........................... (242) (45) (261) (27)
------- ------ --------- ---------
Comprehensive Income or (loss)........ $(3,949) $5,044 $ (6,677) $ 2,728
======= ====== ========= =========
</TABLE>
In June 1997, the Financial Accounting Standards Board released Statement of
Financial Standards No.131 (SFAS 131) "Disclosures about Segments of an
Enterprise and Related Information". SFAS 131 requires that a public business
enterprise report financial and descriptive information about its reportable
segments. The Company has not considered the effects of SFAS 131 on the
consolidated financial statements.
In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-1 "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use" (SOP 98-1). SOP 98-1 provides guidance
for capitalizing and expensing the costs of computer software developed or
obtained for internal use. SOP 98-1 is effective for financial statements for
fiscal years beginning after December 15, 1998. The effect of SOP 98-1 has not
been determined at this time.
F-21
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Chemical Leaman Corporation:
We have audited the accompanying consolidated balance sheets of Chemical
Leaman Corporation (a Pennsylvania corporation) and subsidiaries as of
December 31, 1997 and 1996, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1997. These financial statements and the
schedule referred to below are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
schedule 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 financial statements referred to above present fairly,
in all material respects, the financial position of Chemical Leaman
Corporation and subsidiaries as of December 31, 1997 and 1996, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1997, in conformity with generally accepted
accounting principles.
As discussed in Note 2 to the consolidated financial statements, in the
fourth quarter of fiscal 1997 the Company adopted the provisions of Emerging
Issues Task Force Issue No. 97-13, "Accounting for Costs Incurred in
Connection with a Consulting Contract or an Internal Project That Combines
Business Process Reengineering and Information Technology Transformation."
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to
financial statements is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in our audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
Arthur Andersen LLP
Philadelphia, Pennsylvania
March 20, 1998
F-22
<PAGE>
CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1997
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
-------------------
1996 1997
--------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (includes restricted cash of
$3,541 at December 31, 1996, and $0 at
December 31, 1997)........................................ $ 5,788 $ 2,681
Accounts receivable, net of allowance of $570 at December
31, 1996, and $850 at December 31, 1997................... 36,859 22,871
Operating supplies......................................... 1,548 940
Prepaid expenses and other................................. 7,982 8,252
--------- ---------
Total current assets...................................... 52,177 34,744
PROPERTY AND EQUIPMENT:
Land....................................................... 5,131 5,131
Buildings and improvements................................. 26,728 28,233
Revenue equipment.......................................... 147,767 151,625
Other equipment............................................ 49,087 59,009
--------- ---------
Total property and equipment, at cost..................... 228,713 243,998
ACCUMULATED DEPRECIATION................................... 119,924 134,127
--------- ---------
PROPERTY AND EQUIPMENT, net................................ 108,789 109,871
--------- ---------
NOTES RECEIVABLE........................................... 3,500 3,500
RECOVERABLE ENVIRONMENTAL COSTS............................ 13,680 14,002
DEFERRED TAXES AND OTHER ASSETS............................ 4,398 15,397
--------- ---------
$ 182,544 $ 177,514
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts and drafts payable................................ $ 18,028 $ 19,317
Accrued salaries and wages................................. 4,336 5,383
Other accrued liabilities.................................. 3,828 4,028
Estimated self-insurance liabilities....................... 4,238 4,183
Current maturities of long-term debt....................... 4,364 462
Current maturities of equipment obligations................ 4,957 166
--------- ---------
Total current liabilities................................. 39,751 33,539
--------- ---------
LONG-TERM EQUIPMENT OBLIGATIONS............................ 53,484 10,177
--------- ---------
LONG-TERM DEBT............................................. 46,219 101,496
--------- ---------
ESTIMATED SELF-INSURANCE LIABILITIES....................... 16,783 18,889
--------- ---------
OTHER NONCURRENT LIABILITIES............................... 5,266 5,082
--------- ---------
REDEEMABLE PREFERRED STOCK................................. 5,318 5,318
--------- ---------
STOCKHOLDERS' EQUITY:
Common stock -- par value $2.50; 3,000,000 shares autho-
rized; 550,895 shares issued.............................. 2,677 2,677
Additional paid-in capital................................. 533 533
Retained earnings.......................................... 33,192 21,446
--------- ---------
36,402 24,656
Less --
Treasury stock, 2,593 shares, at cost...................... 16,881 16,881
Stock subscriptions receivable............................. 3,598 3,598
Minimum pension liability, net of tax...................... 200 1,164
--------- ---------
Total stockholders' equity................................ 15,723 3,013
--------- ---------
$ 182,544 $ 177,514
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
F-23
<PAGE>
CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------
1995 1996 1997
---------- ---------- ----------
<S> <C> <C> <C>
OPERATING REVENUES......................... $ 245,706 $ 281,075 $ 329,977
---------- ---------- ----------
OPERATING EXPENSES:
Salaries, wages and benefits............... 63,546 67,737 70,788
Purchased transportation and rents......... 98,903 122,635 150,108
Operations and maintenance................. 50,240 52,924 71,451
Depreciation and amortization.............. 13,731 16,255 19,817
Taxes and licenses......................... 2,755 2,613 3,167
Insurance and claims....................... 3,483 4,766 6,782
Communication and utilities................ 6,056 7,213 6,880
---------- ---------- ----------
Loss from insolvency of insurers........... -- -- 4,772
Loss on sale of revenue equipment, net..... 573 290 275
---------- ---------- ----------
Total operating expenses................. 239,287 274,433 334,040
---------- ---------- ----------
OPERATING INCOME (LOSS).................... 6,419 6,642 (4,063)
INTEREST EXPENSE, net...................... 5,978 7,553 10,299
OTHER (INCOME) EXPENSE, net................ (110) (795) 165
---------- ---------- ----------
Income (loss) before income taxes.......... 551 (116) (14,527)
INCOME TAX PROVISION (BENEFIT)............. 220 46 (5,310)
---------- ---------- ----------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE.... $ 331 $ (162) $ (9,217)
---------- ---------- ----------
EXTRAORDINARY LOSS on early extinguishment
of debt, less applicable income taxes of
$133...................................... -- -- (199)
---------- ---------- ----------
CUMULATIVE EFFECT OF ACCOUNTING CHANGE,
less applicable income taxes of $1,018.... -- -- (1,975)
---------- ---------- ----------
NET INCOME (LOSS).......................... $ 331 $ (162) $ (11,391)
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-24
<PAGE>
CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
ADDITIONAL STOCK MINIMUM
COMMON PAID-IN RETAINED TREASURY SUBSCRIPTION PENSION
STOCK CAPITAL EARNINGS STOCK RECEIVABLE LIABILITY TOTAL
------ ---------- -------- -------- ------------ --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1,
1995................... $2,820 $2,291 $33,535 $(16,881) $(1,520) $ -- $ 20,245
Net income.............. -- -- 331 -- -- -- 331
Retirement of common
stock.................. (48) (592) -- -- -- -- (640)
Issuance of common
stock.................. 38 418 -- -- (456) -- --
Preferred stock divi-
dends.................. -- -- (157) -- -- -- (157)
------- --------
BALANCE, DECEMBER 31,
1995................... $2,810 $2,117 $33,709 $(16,881) $(1,976) $ -- $ 19,779
Net loss................ -- -- (162) -- -- -- (162)
Retirement of common
stock.................. (56) (740) -- -- -- -- (796)
Issuance of common
stock.................. 150 1,647 -- -- (1,622) -- 175
Issuance of preferred
stock.................. (227) (2,491) -- -- -- -- (2,718)
Preferred stock divi-
dends.................. -- -- (355) -- -- -- (355)
Adjustment to recognize
minimum pension liabil-
ity.................... -- -- -- -- -- (200) (200)
BALANCE, DECEMBER 31,
1996................... $2,677 $ 533 $33,192 $(16,881) $(3,598) $ (200) $ 15,723
Net loss................ -- -- (11,391) -- -- -- (11,391)
Preferred stock divi-
dends.................. -- -- (355) -- -- -- (355)
Adjustment to recognize
minimum pension liabil-
ity.................... -- -- -- -- -- (964) (964)
BALANCE, DECEMBER 31,
1997................... $2,677 $ 533 $21,446 $(16,881) $(3,598) $(1,164) $ 3,013
====== ====== ======= ======== ======= ======= ========
</TABLE>
The accompanying notes are an integral part of these statements.
F-25
<PAGE>
CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)............................... $ 331 $ (162) $(11,391)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activi-
ties-- Depreciation and amortization............ 13,731 16,255 19,817
Provision for doubtful accounts................. 338 318 691
(Benefit) provision for deferred income taxes... (1,777) 813 (5,377)
Loss on sale of revenue equipment............... 573 290 275
Extraordinary loss--early extinguishment of
debt........................................... 199
Changes in assets and liabilities............... 4,248 (12,837) (15,954)
-------- -------- --------
Net cash provided by (used in) operating activi-
ties........................................... 17,444 4,677 (11,740)
-------- -------- --------
INVESTING ACTIVITIES:
Acquisition of business......................... -- (15,517) --
Additions to property and equipment............. (13,270) (20,020) (24,345)
Proceeds from sales of property and equipment... 2,780 1,264 1,189
-------- -------- --------
Net cash used in investing activities........... (10,490) (34,273) (23,156)
-------- -------- --------
FINANCING ACTIVITIES:
Payments on equipment obligations............... (20,893) (11,149) (62,439)
Proceeds from issuance of equipment obliga-
tions.......................................... 15,986 40,554 5,891
(Decrease) increase in bank overdrafts.......... (1,529) 923 1,199
Proceeds from issuance of long-term debt........ -- 10,000 109,946
Payments on long-term debt...................... (2,211) (12,491) (22,121)
Payments on early extinguishment of debt........ -- -- (332)
Issuance of common stock........................ -- 175 --
Retirement of common stock...................... (640) (796) --
Preferred stock dividends....................... (157) (355) (355)
-------- -------- --------
Net cash (used in) provided by financing activi-
ties........................................... (9,444) 26,861 31,789
-------- -------- --------
Net decrease in cash and cash equivalents....... (2,490) (2,735) (3,107)
CASH AND CASH EQUIVALENTS:
Beginning of year............................... 11,013 8,523 5,788
-------- -------- --------
End of year..................................... $ 8,523 $ 5,788 $ 2,681
======== ======== ========
CHANGES IN ASSETS AND LIABILITIES:
Decrease (increase) in accounts receivable...... $ 1,912 $ (8,327) $(14,703)
Increase in prepaid expenses, operating supplies
and other assets............................... (2,560) (3,515) (4,133)
Decrease (increase) in recoverable environmental
costs.......................................... 9,853 (5,533) (322)
Increase in accounts payable.................... 270 3,132 90
(Decrease) increase in accrued salaries and
wages.......................................... (2,721) (154) 1,047
Increase in other accrued liabilities........... 1,644 1,042 200
(Decrease) increase in estimated self-insurance
liabilities.................................... (2,302) (94) 2,051
(Decrease) increase in other noncurrent liabili-
ties........................................... (1,848) 612 (184)
-------- -------- --------
$ 4,248 $(12,837) $(15,954)
======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMA-
TION:
Cash paid during the period for--
Interest........................................ $ 6,038 $ 7,742 $ 10,153
Income taxes.................................... 2,601 326 52
Noncash investing and financing activities--
Issuance of capital lease obligations........... 5,716 6,889 2,867
Assets acquired with capital lease obligations.. (5,716) (6,889) (2,867)
Fleet capital lease obligations assumed......... -- 7,400 --
Fleet assets acquired subject to capital lease
obligation..................................... -- (7,400) --
Issuance of common stock for a note............. 456 1,622 --
Stock subscription note receivable.............. (456) (1,622) --
Adjustment required to recognize minimum pension
liability...................................... -- 200 964
Stockholders' equity adjustment for minimum pen-
sion liability................................. -- (200) (964)
Off balance sheet treatment of asset backed cer-
tificate....................................... -- -- (28,000)
Off balance sheet treatment of accounts receiv-
able........................................... -- -- 28,000
Cumulative effect of change in accounting prin-
ciple.......................................... -- -- 1,975
Reduction of Other Equipment (See Note 2)....... -- -- (1,975)
</TABLE>
The accompanying notes are an integral part of these statements.
F-26
<PAGE>
CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BUSINESS:
Chemical Leaman Corporation (a Pennsylvania corporation) and its
subsidiaries (the "Company") offer a full range of specialized transportation
services, including short and long-haul transportation, intermodal services,
materials handling and third-party logistics, principally to the chemical
industry. In addition, the Company provides tank cleaning and driver-related
services to its own fleet as well as to independent owner-operators and third-
party carriers.
The Company derived approximately 94%, 84%, and 71% of its revenues from its
wholly owned trucking subsidiary, Chemical Leaman Tank Lines, Inc. ("CLTL"),
for the years ended December 31, 1995, 1996 and 1997, respectively. CLTL
operates 70 terminals throughout the United States and the Canadian Provinces
of Quebec and Ontario. CLTL has 22 of its terminals located in the Northeast
region of the country. CLTL generated 15%, 16% and 19% of its revenues from a
single customer in the years ended December 31, 1995, 1996 and 1997,
respectively. CLTL's top ten customers accounted for approximately 45%, 47%
and 51% of CLTL revenues in the years ended December 31, 1995, 1996 and 1997,
respectively. The Company derives the majority of its remaining revenue from
its wholly owned trucking subsidiary, Fleet Transport Company, Inc. ("Fleet")
(see Note 13), and from tank cleaning services through its wholly owned
subsidiary, Quala Systems, Inc. ("QSI").
The business of the Company is subject to limited seasonality, with revenues
generally declining slightly during winter months (namely the first and fourth
fiscal quarters) and over holidays. Highway transportation can be adversely
affected depending upon the severity of the weather in various sections of the
country during the winter months. The Company's operating expenses also have
been somewhat higher in the winter months, due primarily to decreased fuel
efficiency and increased maintenance costs of revenue equipment in colder
months.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its subsidiaries. All significant intercompany balances and transactions
have been eliminated.
Use of Estimates
The preparation of financial statements in accordance 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. The most significant estimates with regard to these
financial statements are in the areas of estimated self-insurance liabilities
and environmental recoveries and liabilities. Actual results could differ from
these estimates.
Accounts Receivable
At December 31, 1995, 1996 and 1997 substantially all accounts receivable
were due from customers within the chemical processing industry. The Company
does not require any security arrangements with respect to these receivables
(see Note 5).
Operating Supplies
Operating supplies, representing repair parts, fuel and unmounted tires for
revenue equipment, are valued at the lower of first-in, first-out ("FIFO")
cost or market value. The Company records initial and replacement tire
purchases as prepaid expenses and amortizes the amounts over the estimated
useful life of 27 months. Recapped tires are also recorded as prepaid
expenses, but are amortized over 16 months.
F-27
<PAGE>
CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Prepaid Expenses
Prepaid expenses consist principally of tires and hoses placed in service
and are valued at cost and amortized over their estimated useful lives, which
range from 16 to 27 months.
Property and Equipment
Property and equipment are stated at cost. Depreciation, including
amortization of capitalized leases, is computed using the straight-line method
over the estimated useful lives of the assets, net of estimated salvage
values, or the lease periods, whichever is shorter. Estimated useful lives are
as follows: buildings and improvements, 5 to 30 years; revenue equipment, 2 to
7 years; other equipment, 2 to 10 years. Maintenance and repairs are charged
to operations as incurred. Major repairs and improvements which extend the
useful life of the related assets are capitalized and depreciated over their
estimated useful lives. When assets are retired or otherwise disposed of, the
cost and related accumulated depreciation are removed from the accounts and
any resulting gain or loss is included in operating results.
Included in other equipment is $7,871,000 and $11,584,000 at December 31,
1996 and 1997, respectively, of capitalized costs related to the development
and implementation of a new management information system. The Company expects
to incur additional costs related to this project during 1998, which will also
be capitalized. These costs will be amortized over a period of seven years,
beginning in the second quarter of 1998, when the Company expects to complete
the project. See "Changes in Accounting Principles"
Recoverable Environmental Costs
Recoverable environmental costs consist principally of recoverable costs
under various insurance policies related to environmental matters at the
Bridgeport Site (see Note 11).
Other Assets
Other assets include deferred financing costs and the long term receivable
from insurers resulting from the settlement of an insurance claim (See Note
9).
Revenue Recognition
The Company recognizes revenue when shipments are delivered or when tank
cleaning services are provided. Amounts payable to leased operators for
purchased transportation and to Company drivers for wages are accrued when the
related revenue is recognized.
Income Taxes
The Company accounts for income taxes under the liability method, whereby
deferred tax assets and liabilities are recognized for the tax effects of
temporary differences between the financial reporting and tax bases of assets
and liabilities using enacted tax rates. A valuation allowance is recorded
when it is more likely than not that a portion of the net deferred tax assets
will not be realized.
Environmental Expenditures
Environmental expenditures that relate to an existing condition caused by
past operations and that do not contribute to current or future revenue
generation are expensed. Liabilities are recorded when environmental
assessments and/or cleanups are probable, and the costs can be reasonably
estimated (see Note 11).
F-28
<PAGE>
CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Estimated Self-Insurance Liabilities
The Company is currently self-insured up to the following per-occurrence
retention levels:
<TABLE>
<S> <C>
. Public liability and property damage, cargo losses, and sud-
den and accidental environmental losses....................... $1,000,000
. Workers' compensation........................................ $500,000
. Medical benefits for salaried employees...................... $100,000
. Collision and other environmental losses..................... No Limit
</TABLE>
The Company is responsible up to an aggregate of $9,000,000 and $5,500,000
per year for public liability at December 31, 1996 and December 31, 1997,
respectively, and $4,000,000 per year for workers' compensation liability.
The Company has excess coverage beyond the deductible levels for public
liability, property damage and sudden and accidental environmental losses. The
Company's insurable limit was $100,000,000 at December 31, 1996 and December
31, 1997 with a $2,000,000 deductible at December 31, 1996 and $1,000,000
deductible at December 31, 1997. Effective March 1, 1998, the Company's
deductible was reduced to $500,000.
The liability for self-insurance is accrued based on claims incurred, with
the liability for unsettled claims and claims incurred but not yet reported
being estimated based on management's evaluation of the nature and severity of
individual claims and the Company's past claims experience (the case reserve
method). The case reserve method, although acceptable under generally accepted
accounting principles, results in reserve levels that are below the reserve
levels that would be determined actuarially on a fully developed basis.
Statement of Cash Flows
The Company considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents.
Fair Value of Financial Instruments
The carrying amounts reported in the accompanying balance sheets for cash,
accounts receivable, and accounts and drafts payable approximate fair value
because of the immediate or short-term maturities of these financial
instruments.
The fair value of the Company's debt is estimated based on the quoted market
prices for the same or similar issues or on the current rates offered to the
Company for debt of the same remaining maturities.
The book value of the Company's debt approximates fair market value.
The fair value of the Company's notes receivable is estimated by discounting
the future cash flows using the current rates at which similar loans would be
made to borrowers with similar credit ratings and for the same remaining
maturities. The fair value of the Company's notes receivable is $3,385,000 and
$3,426,000 as of December 31, 1996, and 1997, respectively.
Reclassifications
Certain prior period amounts have been reclassified to conform with the
December 31, 1997 presentation.
F-29
<PAGE>
CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Changes in Accounting Principles
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation" ("SFAS No. 123") was effective for 1996. This statement
provides for a fair value based method of accounting for grants of equity
instruments to employees or suppliers in return for goods or services. With
respect to stock-based compensation to employees, SFAS No. 123 permits
entities to continue to apply the provisions prescribed by APB Opinion No. 25;
however, certain pro forma disclosures must be presented as if the fair value
based method had been applied in measuring compensation cost. There were no
transactions requiring disclosure in 1995, 1996 or 1997.
In June 1996, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities" ("SFAS No.
125"). This statement provides accounting and reporting standards for
transfers and servicing of financial assets and extinguishments of
liabilities. Those standards are based on consistent application of a
financial-components approach that focuses on control. Under that approach,
after a transfer of financial assets, an entity recognizes the financial and
servicing assets it controls and the liabilities it has incurred, derecognizes
financial assets when control has been surrendered, and derecognizes
liabilities when extinguished. SFAS No. 125 provides consistent standards for
distinguishing transfers of financial assets that are sales from transfers
that are secured borrowings. SFAS No. 125 was effective for transfers and
servicing of financial assets and extinguishments of liabilities occurring
after December 31, 1996. The Company adopted this statement during the first
quarter of 1997 and accounts for its $28,000,000 asset backed certificates as
a sale for financial reporting purposes (see Note 5). Accordingly, the asset
backed certificates of $28,000,000 and the associated accounts receivable of
$28,000,000 are not reflected on the consolidated balance sheet as of December
31, 1997.
In October 1996, the American Institute of Certified Public Accountants
issued Statement of Position (SOP) 96-1, "Environmental Remediation
Liabilities." This SOP provides that environmental remediation liabilities
should be accrued when the criteria of Financial Accounting Standards Board
(FASB) Statement of Financial Accounting Standards No. 5, "Accounting for
Contingencies," are met, and that the accrual should include incremental
direct costs of the remediation effort and the costs of compensation and
benefits for those employees who are expected to devote a significant amount
of time directly to the remediation effort, to the extent of the time expected
to be spent directly on the remediation effort. The Company adopted this SOP
on January 1, 1997. The effect of the adoption was not material.
In November of 1997, the Emerging Issues Task Force (EITF) of the FASB
reached a consensus on Issue No. 97-13 "Accounting for Costs Incurred in
Connection with a Consulting Contract or an Internal Project That Combines
Business Process Reengineering and Information Technology Transformation." The
Task Force determined that the cost of business process reengineering
activities, whether done internally or by third parties, is to be expensed as
incurred. The consensus also applies when the business process reengineering
activities are part of a project to acquire, develop, or implement internal-
use software. The consensus requires companies to expense any previously
capitalized reengineering costs (for both current and previous projects) as a
cumulative change in accounting principle. Based upon the detailed guidance of
EITF 97-13, the Company recorded a charge of $1,975,000, net of tax, in the
fourth quarter of fiscal 1997. This charge is classified as a cumulative
effect of an accounting change in the accompanying consolidated statement of
operations.
In 1998, the American Institute of Certified Public Accountants issued SOP
98-1, "Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use." This SOP provides authoritative guidance on the proper
accounting treatment for costs incurred in connection with computer software
developed or obtained for internal use and provides guidance for determining
whether computer software is for internal use. This SOP is effective for
fiscal years beginning after December 15, 1998. The Company will adopt this
statement
F-30
<PAGE>
CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
prospectively during the first quarter of 1999. The adoption in 1999 is not
expected to result in any material adjustment to the Company's financial
statements.
In June of 1997, the Financial Accounting Standards Board issued SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information."
Under this Statement, reporting standards were established for the way that
public business enterprises report information about operating segments in
annual financial statements and selected information about operating segments
in interim financial reports issued to shareholders. Generally, financial
information is required to be reported on the basis that it is used internally
for evaluating segment performance and deciding how to allocate resources to
segments. This Statement is effective for financial statements for periods
beginning after December 15, 1997. In the initial year of application,
comparative information for earlier years presented is to be restated. This
Statement need not be applied to interim financial statements in the initial
year of its application, but comparative information for interim periods in
the initial year of application is to be reported in financial statements for
interim periods in the second year of application. The Company will adopt this
statement prospectively for the year ended December 31, 1998.
3. INCOME TAXES:
The components of income tax expense (benefit) related to earnings (loss)
before the extraordinary loss and before the cumulative effect of the change
in accounting were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------
1995 1996 1997
----------- ---------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
U.S. federal:
Current............................... $ 1,894 $ (776) $ --
Deferred.............................. (1,692) 918 (4,666)
State:
Current............................... 103 9 67
Deferred.............................. (85) (105) (711)
----------- --------- -----------
$ 220 $ 46 $ (5,310)
=========== ========= ===========
</TABLE>
A reconciliation of the statutory to actual income tax provision (benefit)
is as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------
1995 1996 1997
---------- ---------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Statutory tax (benefit) provision....... $ 187 $ (39) $ (4,939)
Increase (decrease) resulting from:
State income taxes, net of federal tax
benefit................................ 104 142 (125)
Provision (benefit) of foreign tax
credit carryforwards................... (102) 51 51
Other, net.............................. 31 (108) (297)
--------- --------- -----------
Actual tax provision (benefit).......... $ 220 $ 46 $ (5,310)
========= ========= ===========
</TABLE>
F-31
<PAGE>
CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Gross deferred tax assets at December 31, 1996 and 1997 consist of the
following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1996 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Gross deferred tax assets:
Self insurance liabilities.................................. $ 7,413 $ 5,536
Pensions.................................................... 1,205 1,455
Other Accruals.............................................. 851 1,103
AMT and other credit carryforwards.......................... 1,921 1,928
NOL carryovers.............................................. 1,487 6,764
Other....................................................... 2,220 2,018
------- -------
Total deferred tax assets................................. $15,097 $18,804
Valuation allowance......................................... -- 600
------- -------
Net deferred taxes.......................................... $15,097 $18,204
======= =======
Gross deferred tax liabilities at December 31, 1996 and 1997 consist of the
following:
<CAPTION>
DECEMBER 31,
---------------
1996 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Gross deferred tax liabilities:
Depreciation................................................ $ 7,782 $ 8,365
Recoverable Environmental Costs............................. 5,145 2,638
Other....................................................... 2,821 772
------- -------
$15,748 $11,775
======= =======
</TABLE>
Net deferred tax assets (liabilities) at December 31, 1996, and 1997 were
$(651), and $6,429, respectively. The net deferred tax assets (liabilities)
are included in Other Noncurrent Liabilities at December 31, 1995 and 1996,
and are included in Deferred Taxes and Other Assets in 1997.
The Company has an alternative minimum tax ("AMT") credit carryforward of
approximately $1,911,000 at December 31, 1997 that can be used to offset
future regular taxes in excess of AMT. The Company has AMT net operating loss
("NOL") carryforwards of approximately $433,000 and $13,276,000 at December
31, 1996 and 1997, respectively, for financial reporting purposes which will
be used in future years to offset AMT income. The Company has a federal net
operating loss ("NOL") carryforward of $19,893,000 for tax purposes at
December 31, 1997 which begins to expire in 2012. The Company also has state
net operating loss ("NOL") carryforwards of $26,911,000 for tax purposes at
December 31, 1997 which expire over the next 3 to 15 years. The Company has
recorded a $600,000 valuation allowance against the deferred tax benefit of
the state NOL's since it is more likely than not that such portion of the
state NOL's will not be utilized within the carryforward period.
The Internal Revenue Service is presently reviewing the Company's federal
income tax return for the year ended December 31, 1996. Management believes
that the ultimate outcome of the review will not have a material adverse
effect on the financial condition or the results of operations of the Company.
4. EMPLOYEE BENEFIT PLANS:
The Company maintains two noncontributory benefit plans that cover full-time
salaried employees and certain other employees under a collective bargaining
agreement. Retirement benefits for employees covered by
F-32
<PAGE>
CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
the salaried plan are based on years of service and compensation levels. The
monthly benefit for employees under the collective bargaining agreement plan
is based on years of service multiplied by a monthly benefit factor. Assets of
the plans are invested primarily in equity securities and fixed income
investments. Pension costs are funded in accordance with the provisions of the
applicable law. Pension expense for these plans was $696,000, $297,000 and
$337,000 for the years ended December 31, 1995, 1996 and 1997, respectively.
The Company also provides supplemental retirement benefits to its employees
through defined contribution 401(k) plans. Participation in these plans is
elective. Assets of these plans are invested primarily in mutual funds. The
Company does not provide any matching contributions to this plan.
The components of net periodic pension cost for the years ended December 31,
1995, 1996 and 1997 are as follows:
<TABLE>
<CAPTION>
1995 1996 1997
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost...................................... $ 814 $ 1,045 $ 1,072
Interest cost..................................... 2,305 2,377 2,509
Actual return on plan assets...................... (5,486) (3,037) (1,768)
Net amortization and deferral..................... 3,063 (88) (1,476)
------- ------- -------
$ 696 $ 297 $ 337
======= ======= =======
</TABLE>
The actuarial assumptions used in accounting for the plans are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
-------------------------
1995 1996 1997
----------- ------ ------
<S> <C> <C> <C>
Discount rates................................... 8.25%-8.75% 7.75% 7.25%
Rate of assumed compensation increase............ 5% 5% 5%
Expected long-term rates of return on plan
assets.......................................... 9%-9.5% 9%-11% 9%-11%
</TABLE>
The following table sets forth the funded status of the two plans and the
amount recognized in the Company's consolidated balance sheets at December 31,
1996 and 1997:
<TABLE>
<CAPTION>
ASSETS ACCUMULATED ACCUMULATED ACCUMULATED
EXCEED BENEFITS BENEFITS BENEFITS
ACCUMULATED EXCEED EXCEED EXCEED
BENEFITS ASSETS ASSETS ASSETS
----------- ----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Actuarial present value of
benefit obligations:
Vested..................... $19,686 $ 8,700 $22,702 $ 9,948
Nonvested.................. 343 338 404 354
Accumulated benefit
obligations............... $20,029 $ 9,038 $23,106 $10,302
======= ======= ======= =======
Projected benefit
obligations............... $22,738 $ 9,038 $26,504 $10,302
Plan assets at market
value..................... 22,471 7,407 22,870 7,899
------- ------- ------- -------
Projected benefit
obligation less than (in
excess of) plan assets.... (267) (1,631) (3,634) (2,403)
Unrecognized actuarial gain
(loss).................... (3,272) 692 58 1,704
Unrecognized prior service
cost...................... 1,721 315 1,361 140
Unrecognized transition
amount.................... (894) 61 (298) 8
Adjustment required to
recognize minimum
liability................. -- (1,068) -- (1,853)
------- ------- ------- -------
Accrued pension liability,
included in other
noncurrent liabilities.... $(2,712) $(1,631) $(2,513) $(2,404)
======= ======= ======= =======
</TABLE>
F-33
<PAGE>
CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Company charged to operations payments to multiemployer pension plans
required by collective bargaining agreements of $1,992,000, $1,870,000 and
$1,885,000 for the years ended December 31, 1995, 1996 and 1997. These defined
benefit plans cover substantially all of the Company's union employees not
covered under the Company's plan. The actuarial present value of accumulated
plan benefits and net assets available for benefits to employees under these
multiemployer plans is not readily available (see Note 9).
SFAS No. 87, "Employers' Accounting for Pensions", requires the recognition
of an additional minimum liability for each defined benefit plan for which the
excess of the accumulated benefit obligation over plan assets exceeds the
pension liability recorded. A portion of this amount has been offset by the
recording of an intangible asset. Because the asset recognized may not exceed
the amount of unrecognized prior service cost and transition obligation on an
individual plan basis, the balance, net of tax benefits, is reported as a
reduction of stockholders' equity at December 31, 1997.
5. LONG-TERM DEBT AND EQUIPMENT OBLIGATIONS:
Long-term debt as of December 31, 1996 and 1997 consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1996 1997
------- --------
(IN THOUSANDS)
<S> <C> <C>
Senior Notes.............................................. $ -- $100,000
Asset-backed certificate.................................. 28,000 --
Capital lease obligations................................. 21,729 1,958
Mortgage notes............................................ 854 --
Less -- Amounts due in one year or less................... (4,364) (462)
------- --------
$46,219 $101,496
======= ========
</TABLE>
On June 16, 1997 the Company completed the sale of $100 million of Senior
Notes (the "Notes"). The Notes bear interest at a rate per annum of 10 3/8%
and are due 2005. The Notes are redeemable at the option of the Company, in
whole or in part, at any time on or after June 15, 2001, at redemption prices
as defined in the Purchase Agreement. In addition on or prior to June 15,
2000, the Company may redeem up to 25% of the Notes at a redemption price of
110 3/8% with the net proceeds of a Public Equity Offering, provided that not
less than $75 million in aggregate principal amount of the Notes is
immediately outstanding after giving effect to such redemption. If there is a
change of control in the ownership of the Company, each Note holder will have
the right to require the Company to purchase all or a portion of such holder's
Notes at a purchase price equal to 101% of the principal amount thereof. The
Notes rank pari passu in right of payment with all existing and future
unsecured and unsubordinated indebtedness of the Company and senior in right
of payment to all existing and future subordinated indebtedness of the
Company. In connection with the Notes, the Company is subject to certain
covenants that among other things, limit (1) the incurrence of additional
indebtedness by the Company, (2) the payment of dividends on and redemption of
capital stock of the Company, (3) certain investments by the Company, (4)
certain sales of assets, and (5) consolidations and mergers of the Company.
The Company was in compliance with all of these covenants at December 31,
1997. The Company used the proceeds from the Notes to repay substantially all
of the Company's outstanding indebtedness and for working capital and general
corporate purposes.
In May 1993, the Company, through one of its wholly owned subsidiaries, sold
a $23,000,000 Asset Backed Certificate (the "Certificate") to an insurance
company (the "Investor") pursuant to the terms of the related Receivables
Contribution and Purchase Agreement and the Pooling and Servicing Agreement
(the "Agreements"). The Agreements were amended and restated as of December
16, 1994, and as of December 30,
F-34
<PAGE>
CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1996, to allow for increases to the Certificate amount now totaling
$28,000,000. The Certificate is secured by the Company's receivables, as
defined in the Agreements, and may be repurchased at any time for a purchase
price equal to the unpaid principal and interest due. The Certificate bears
interest at a per-annum rate equal to the London Interbank Offered Rate
("LIBOR") plus 80 basis points. The Certificate is scheduled to mature in
December 1999. In accordance with the terms of the Agreements, the Company
held $3,541,400 and $0 in a restricted cash account at December 31, 1996 and
1997, respectively. On March 30, 1997, the Agreements were amended and
restated and the provision permitting the Company to repurchase the
Certificate at any time was eliminated. As a result, the transaction is
accounted for as a sale for financial reporting purposes. Accordingly, the
Certificate of $28,000,000 and the associated accounts receivable of
$28,000,000 are not reflected on the consolidated balance sheet as of December
31, 1997. On June 11, 1997, the Agreements were amended and restated and the
provision requiring the net worth of the Company be $21,000,000 was lowered to
$15,000,000. In addition, the Termination Event provision of the Agreement was
amended and restated, thus defining a termination event as follows: (i) the
Company fails to maintain an average Fixed Charge Ratio of at least 1.75 to 1
for any twelve consecutive accounting periods, or (ii) a minimum Consolidated
Stockholders Equity, as defined, of at least $15,000,000. On December 31,
1997, the Agreements were amended and restated and the provision requiring the
net worth of the Company be $15,000,000 was lowered to $14,000,000. As a
result of a number of adjustments recorded in the fourth quarter of 1997, the
Agreements were further amended and restated and the net worth provision was
reduced to $7,000,000 effective December 31, 1997. The Company was in
compliance with the amended covenants of the Agreement as of December 31,
1997. Effective January 1998, the facility was increased from $28,000,000 to
$33,000,000.
The capital lease obligations are payable in monthly installments to the
year 2001 at interest rates ranging from 6.2% to 12.0%.
Equipment obligations as of December 31, 1996 and 1997 consist of the
following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1996 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
$20,000,000 Revolving Credit Agreement.................... $ -- $ 8,450
$12,500,000 Revolving Credit Agreement.................... 6,829 --
$26,000,000 Revolving Credit Agreement.................... 24,855 --
$10,000,000 Revolving Credit Agreement.................... 8,325 --
Other equipment obligations at interest rates ranging from
7.5% to 12.7%, payable in installments through 2003...... 18,432 1,893
Less -- Amounts due in one year........................... (4,957) (166)
------- -------
$53,484 $10,177
======= =======
</TABLE>
In May 1993, the Company entered into a $10,000,000 Revolving Credit
Agreement with a bank. The agreement was amended in July 1995 and again in
July 1996, and the revolving credit line was increased to $12,500,000.
Borrowings under this agreement bear interest, based upon the election of the
Company, at the Base Rate, as defined, plus .75% per annum or the Adjusted
LIBOR, as defined, plus 3%. This agreement was terminated and all outstanding
amounts were repaid in June of 1997 with the proceeds of the Note Offering.
The $26,000,000 Revolving Credit Agreement was with an asset-based lender.
Borrowings under this agreement bear interest at rates indexed from .75% to
1.5% above a bank's prime rate, with a floor of 7.5%. This agreement was
terminated and all outstanding amounts were repaid in June of 1997 with the
proceeds of the Note Offering.
F-35
<PAGE>
CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The $10,000,000 Revolving Credit Agreement is with an asset-based lender.
Borrowings under this agreement bear interest rates indexed from .75% to 1.5%
above a bank's prime rate, with a floor of 6.5%. This agreement was terminated
and all outstanding amounts were repaid in June of 1997 with the proceeds of
the Note Offering.
In connection with the Offering of the Notes, Chemical Leaman Corporation
entered into a revolving credit facility with CoreStates Bank, N.A. (the "New
Revolving Credit Facility"). The New Revolving Credit Facility provides for up
to $20 million of revolving loans and $8.5 million of letters of credit.
Borrowings under the New Revolving Credit Facility may be used for working
capital and the purchase of revenue equipment. Amounts outstanding under the
New Revolving Credit Facility will bear interest at a variable rate at the
Company's election of (i) the Base Rate (as defined therein) plus 1/2% or (ii)
LIBOR (as defined therein) plus 1.80%. The Company will be required to pay a
letter of credit fee of 1.80% per annum of letters of credit outstanding and a
commitment fee of 3/8% per annum of the unused portion of the facility. The
New Revolving Credit Facility will mature in June 2000, subject to a maximum
of two annual extensions at the option of the Company upon the approval of
CoreStates. The New Revolving Credit Facility had borrowings outstanding of
$8,450,000 at December 31, 1997 and $3,900,000 of stand-by letters of credit
which were rolled over from a previous facility. The New Revolving Credit
Facility is secured by $25 million of revenue equipment held by Chemical
Leaman Corporation and availability under the facility is limited to 80% of
the value of such equipment.
The New Revolving Credit Facility contains various financial covenants
including a minimum net worth test and a minimum fixed charge coverage ratio.
In addition, the New Revolving Credit Facility contains covenants that
restrict certain mergers, acquisitions and sales of assets, the incurrence of
indebtedness, the payment of dividends, the repurchase of stock, the making of
loans to shareholders and the granting of liens. As a result of a number of
adjustments recorded in the fourth quarter of 1997, the Agreement was amended
and the tangible net worth provision was reduced to $7,000,000 as of December
31, 1997. The Company was in compliance with the amended covenants of the New
Revolving Credit Facility at December 31, 1997. Under the amended agreement,
the tangible net worth provision will be increased from $7 million to $9
million effective January 1, 1999.
The Company does not utilize interest rate swaps or other derivative
financing arrangements to limit its interest rate risk.
Annual maturities of debt following December 31, 1998, excluding letters of
credit, are as follows:
<TABLE>
<CAPTION>
LONG-
TERM EQUIPMENT
DEBT OBLIGATIONS
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
1999.................................................... $ 796 $ 8,631
2000.................................................... 610 198
2001.................................................... 90 215
2002.................................................... 234
2003.................................................... 899
Subsequent.............................................. 100,000 --
-------- -------
$101,496 $10,177
======== =======
</TABLE>
6. STOCKHOLDERS' EQUITY:
In January 1998, Mr. Boucher purchased 2,900 shares of Common Stock from the
Company for a purchase price of $87,000, payable under a promissory note
bearing interest at an annual rate of 7.25% and maturing in January 2008.
In April 1996, the Company completed a reverse merger transaction whereby
stockholders who owned less than 50 common shares had their shares converted
into a right to receive $6,000 per share in cash; 111 shares were converted as
a result of this transaction.
F-36
<PAGE>
CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
In October 1996, the Company issued a stock dividend effected in the form of
a 199-to-1 stock split to its stockholders whereby each stockholder received
199 shares of common stock for each common share held. The 1995 financial
statements have been adjusted to reflect the stock dividend.
In 1996, officers of the Company were granted and immediately exercised
rights for the purchase of 299 shares of common stock at $6,000 per share, and
as consideration executed promissory notes in favor of the Company with a
maturity date of December 31, 2006, with interest payable annually at the rate
of 7.25%. These notes receivable have been classified as a stock subscription
receivable in stockholders' equity.
In 1995, an officer of the Company was granted and immediately exercised
rights for the purchase of 76 shares of common stock at $6,000 per share, and
as consideration executed a promissory note in favor of the Company with a
maturity date of December 31, 2004, and interest payable annually at the rate
of 6.83%. This note receivable has been classified as a stock subscription
receivable in stockholders' equity.
In 1996, the Company canceled certain options that were granted to Company
officers and paid $315,000 as consideration to the employees to cancel the
options.
In 1988, an officer of the Company exercised rights for the purchase of 250
shares of common stock at $6,080 per share, and as consideration executed a
promissory note in favor of the Company with a term of 10 years and interest
payable annually at the rate of 9.39%. This note receivable has been
classified as a stock subscription receivable in stockholders' equity.
7. MANDATORILY REDEEMABLE PREFERRED STOCK:
In August 1992, the Company issued Series A Preferred stock (the "Series A
Preferred") which has a $20,000 stated value per share and a 6% cumulative
dividend payable quarterly, subject to certain legal and contractual
limitations. The Series A Preferred can be redeemed at a premium by the
Company during the first seven years after issuance, after which time the
Company may redeem the Series A Preferred at par value plus accumulated unpaid
dividends. After ten years, the Series A Preferred holders have the right to
require redemption at par value plus accumulated unpaid dividends. The Company
may not amend certain of the terms of the Series A Preferred without the prior
written consent of the holders of at least 90% of the then-outstanding shares
of Series A Preferred. The Company may not issue any class or series of
capital stock that is senior in priority to the Series A Preferred while any
of the shares thereof are issued and outstanding. The Series A Preferred, as a
class, has the right to elect one member of the Board of Directors, but has no
other voting rights. The Series A Preferred has no conversion features.
In May 1996, the Company converted 151 shares of common stock held by a
stockholder into 151 Series B convertible preferred shares (the "Series B
Preferred"). The Series B Preferred has a $6,000 stated value per share and a
6% cumulative dividend payable quarterly, subject to certain legal and
contractual limitations. After ten years, the Series B Preferred holders have
the right to require redemption at par value plus accumulated unpaid
dividends. The Series B Preferred is convertible into an equal number of fully
paid and nonassessable shares of common stock at the option of the Series B
Preferred Stockholders. The Company may not issue any class or series of
capital stock that is senior in priority to the Series B Preferred, except for
the shares of Series A Preferred, while any of the shares thereof are issued
and outstanding.
In May 1996, the Company converted 302 shares of common stock held by
stockholders into 302 Series C convertible preferred shares (the "Series C
Preferred"). The Series C Preferred has a $6,000 stated value per share and an
8% cumulative dividend payable quarterly, subject to certain legal and
contractual limitations. After ten years, the Series C Preferred holders have
the right to require redemption at par value plus accumulated unpaid
dividends. The Series C Preferred has no conversion features. The Company may
not issue any class or
F-37
<PAGE>
CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
series of capital stock that is senior in priority to the Series C Preferred,
except for the shares of Series A Preferred, while any of the shares thereof
are issued and outstanding. The Company's shares of Series C Preferred rank,
as to dividends and liquidation, equally with each other, equally with shares
of the Series B Preferred, senior and prior to the Company's common stock, and
senior to, or on a parity with, classes or series of capital stock (other than
the Company's common stock and Series A Preferred) hereafter issued by the
Company.
8. LEASES:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1995 1996 1997
------- ------- ------
(IN THOUSANDS)
<S> <C> <C> <C>
Building, revenue equipment and other equipment
financed under capital leases..................... $20,757 $30,627 $4,869
Less--Accumulated depreciation..................... 7,234 10,409 3,630
------- ------- ------
$13,523 $20,218 $1,239
======= ======= ======
</TABLE>
The Company leases certain terminal facilities and revenue equipment under
noncancellable operating leases with terms ranging through the year 2001.
Annual rent expense was $824,000, $1,369,000 and $1,669,000 for the years
ended December 31, 1995, 1996, and 1997, respectively.
The following is a schedule of future minimum lease payments for capital and
operating leases as of December 31, 1997:
<TABLE>
<CAPTION>
CAPITAL LEASES
LEASES OPERATING
------- ---------
(IN THOUSANDS)
<S> <C> <C>
1998....................................................... $ 781 $ 4,132
1999....................................................... 792 3,166
2000....................................................... 664 1,975
2001....................................................... 99 1,150
Subsequent................................................. -- 2,038
------ -------
Total minimum lease payments............................... $2,336 $12,461
====== =======
Less--Amount representing interest......................... 378
------
Present value of minimum lease payments.................... $1,958
======
</TABLE>
9. COMMITMENTS AND CONTINGENT LIABILITIES:
Commitments to purchase revenue equipment amounted to approximately
$5,504,000 and $1,873,000 at December 31, 1996 and December 31, 1997,
respectively.
In 1997, the Company settled a dispute with a multiemployer pension plan
covering certain of the Company's union employees. Under the settlement
agreement, the Company has agreed to provide a minimum level of future
contributions to the plan for a four-year period ending September 1, 2001. At
that time, the plan trustees may renew their claim that they have the right to
terminate the Company's participation in the plan with respect to some or all
of its employees, and the Company retains any and all defenses it has with
respect to such claim. If the Company's participation were to have terminated
during 1997 with respect to a group of employees, the Company would have been
assessed a partial withdrawal liability of approximately $3.8 million payable
over a period of two years commencing in 1999. The Company anticipates that
any withdrawal liability that might be due on account of a partial withdrawal
in or after 2001 will be substantially reduced from that level.
F-38
<PAGE>
CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Company was a party to a lawsuit filed in 1987 against the Company and
approximately 25 other defendants in the Superior Court of New Jersey, Passaic
County (A.L.U. Textile Combining Corp., et al. v. Texaco Chemical Co., et al.,
No. L-23905-87). The approximately 175 plaintiffs sought damages claimed to
exceed $100 million resulting from a fire set to a building by trespassing
arsonists. On September 19, 1997, the Company agreed to settle all claims in
the lawsuit for $19 million. Although the Company had insurance coverage with
several companies and syndicates for that amount, a portion of the insurance
coverage was carried by insurers, which are currently insolvent. As a result,
the Company funded the portion of the settlement, aggregating $7,397,390, for
which the insolvent carriers provided coverage, with the solvent insurers
paying the balance of the settlement. Most of the insolvent insurers have
entered into an arrangement approved by the British courts, pursuant to which
the Company received additional coverage payments of $794,659 in the fourth
quarter of 1997. In addition, based on its review of the most recent annual
report to creditors of the insolvent insurers and discussions with
representatives of such insurers, the Company expects periodic payments over
the next 10 years up to an aggregate amount of $3.2 million. As of December
31, 1997, the Company has recorded a long-term receivable of $1,830,000
representing the discounted value of the aggregate payments to be received
over 10 years. For the year ended December 31, 1997 the Company expensed
$4,772,000 for this lawsuit which represents the settlement, net of the
expected recoveries.
The Company is involved in other litigation in the normal course of
business. After consultation with legal counsel, management is of the opinion
that various claims and litigation currently pending will not materially
affect the Company's financial position or results of operations (see Note
11).
10. RELATED-PARTY TRANSACTIONS:
The Company paid consulting fees of $730,000, $1,251,000 and $820,000 for
the years ended December 31, 1995, 1996 and 1997, respectively, to a director
of the Company. The Company also paid consulting fees totaling $162,000 per
year for the years ended December 31, 1995, 1996 and 1997, respectively, to
certain preferred stockholders.
In 1995 and 1996, the Company and a consulting firm (the "Consulting Firm")
entered into agreements under which the Consulting Firm agreed to assist in
the development and implementation of the Company's new information technology
system. The president, controlling stockholder and a director of the
Consulting Firm is a director of the Company. The Consulting Agreement
terminated on December 31, 1997. The Company paid $670,000, $2,525,000 and
$2,815,000 for the years ended December 31, 1995, 1996, and 1997,
respectively, to the consulting firm.
During 1995, the Company extended a $2,500,000 loan to its Chairman and
Chief Executive Officer. The loan is evidenced by a promissory note and bears
interest at 8.25% per annum. Interest under this loan is payable annually, and
the principal is due upon maturity at December 31, 2004. During 1996, the
Company extended an additional $1,000,000 loan to this officer. This loan is
also scheduled to mature December 31, 2004, and bears interest at a rate of
6.50% per annum. The loan amounts are included in notes receivable on the
consolidated balance sheets.
11. ENVIRONMENTAL MATTERS:
For a number of years the Company has been involved in two sites that have
been designated as Superfund sites by the United States Environmental
Protection Agency ("EPA") located in Bridgeport, New Jersey and West Caln
Township, Pennsylvania.
Bridgeport, New Jersey. During 1991, the Company entered into a Consent
Decree with the EPA filed in the U.S. District Court for the District of New
Jersey, U.S. v. Chemical Leaman Tank Lines, Inc., Civil Action
F-39
<PAGE>
CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
No. 91-2637 (JFG) (D.N.J.), with respect to its site located in Bridgeport,
New Jersey, requiring the Company to remediate groundwater contamination. The
Consent Decree allowed the Company to undertake Remedial Design and Remedial
Action ("RD/RA") related to the groundwater operable unit of the cleanup.
Costs associated with performing the RD/RA were $443,000 in 1997. No decision
has been made as to the extent of soil remediation to be required, if any.
In August 1994, the EPA issued a Record of Decision ("ROD") selecting a
remedy for the wetlands operable unit at the Bridgeport site. The Company has
submitted comments to the EPA that vigorously dispute the merits of the EPA's
remedy. The Company has offered to settle the EPA's claim for past response
costs associated with the soil, groundwater and wetlands operable units for
approximately $3.6 million, to be paid over a three-year period. The EPA has
not yet responded to the Company's offer.
The Company is in litigation with its insurers to recover its costs in
connection with the environmental cleanup at the Bridgeport site. On April 7,
1993, the U.S. District Court for the District of New Jersey entered a
judgment requiring the insurers to reimburse the Company for substantially all
past and future environmental cleanup costs at the Bridgeport site. The
insurers appealed the judgment to the U.S. Court of Appeals for the Third
Circuit, but before the appeal was decided the Company and its primary insurer
settled all of the Company's claims, including claims asserted or to be
asserted at other sites, for $11.5 million. This insurer dismissed its appeal,
but the excess carriers did not. On June 20, 1996, the U.S. Court of Appeals
affirmed the judgment against the excess insurance carriers, except for the
allocation of liability among applicable policies, and remanded the case for
an allocation of damage liability among the insurers and applicable policies
on a several basis. On September 15, 1997, the District Court issued an order
and an accompanying opinion ruling on the allocation of damages among the
applicable policies as directed by the Court of Appeals. The District Court's
decision finds that the Company has already recovered $11,055,000 in past
Bridgeport investigation and remediation costs from its primary insurer under
the previously mentioned settlement agreement. The District Court's decision
further finds that the Company is entitled to have the balance of its past and
all future Bridgeport investigation and remediation costs allocated among
liable excess insurance carriers. In February 1998, both the Company and the
excess carriers appealed portions of the District Court's order. The Company
intents to argue one issue on appeal, i.e., that the District Court
erroneously ruled that $11,055,000 of the primary insurer settlement amount is
attributable to the Bridgeport site. The Company believes that the court
should have enforced the settlement agreement with the primary insurer, which
divides the primary insurer's payment of $11.5 million among all of the
Company's environmental claims, attributing approximately $5.225 million to
Bridgeport, and about $6.75 million to other sites. The Company's and the
excess carriers' appeals of the September 15, 1997 order are pending. The
Company has not accounted for this additional potential recovery.
It is the belief of environmental counsel to the Company, and management,
that receipt of insurance proceeds sufficient to recover substantially all of
the costs of remediating the Bridgeport site, including attorney fees and
expenses for the litigation with the insurance carriers, is likely to occur.
The Company capitalized $4,243,000 and $322,000 during 1996 and 1997,
respectively, of current costs related to the Bridgeport site based upon their
probable future recovery. The recoverable costs of $13,680,000 and $14,002,000
are classified as recoverable costs in the consolidated balance sheets at
December 31, 1996 and 1997, respectively.
West Caln Township, Pennsylvania. The EPA has alleged that the Company
disposed of hazardous materials at the William Dick Lagoons Superfund Site
located in West Caln Township, Pennsylvania. In 1991, the EPA issued ROD I,
requiring the installation of a public water supply for some residents near
the site. In November 1991, the EPA issued special notice letters to the
Company and another potentially responsible party ("PRP") soliciting
implementation of ROD I. In March 1992, the EPA issued a unilateral order to
the Company and the other party directing them to implement ROD I. The Company
declined to comply based on its belief that it had sufficient cause not to
comply.
F-40
<PAGE>
CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
In April 1993, the EPA issued ROD II, selecting a remedy for the soil
remediation phase of this cleanup program. The EPA and the Company agreed that
the Company would be afforded the opportunity to implement its preferred
remedy for the soil remediation phase and to settle its differences with the
EPA regarding the public water supply issue.
Pursuant to a Consent Decree lodged with the U.S. District Court for the
Eastern District of Pennsylvania on October 10, 1995, U.S. v. Chemical Leaman
Tank Lines, Inc., Civil Action No. 95-CV-4264 (RJB) (E.D.P.A.), the Company
paid the EPA $309,100 in November of 1995, $713,674 in June 1996, $713,674 in
October 1996, and $684,274 in October 1997. These payments settled EPA's claim
relating to past response costs and failure to install a public water supply
in accordance with ROD I. The Consent Decree requires the Company to perform
an interim groundwater remedy at the site, and to finance the soil remedy at
an estimated cost of approximately $4.1 million. The Consent Decree does not
cover the final groundwater remedy or other site remedies, or claims, if any,
for natural resource damages.
Other Sites. On August 5, 1992, the Company entered into a Consent Decree
("CD") with the City and State of New York settling its liability for alleged
contamination of five municipal landfills located in New York City. The CD,
which was entered by the United States District Court for the Southern
District of New York on August 7, 1992, obligated the Company to pay to the
State of New York $133,227 by September 16, 1992. This payment was made as
required. The CD also obligated the Company to pay the City of New York
$1,419,183 on June 30, 1995. The Company and the City of New York agreed in
principle to a deferral of the June 30, 1995 payment in exchange for an
increase in the total amount due from the Company. In accordance with that
agreement, the Company paid the City of New York $500,000 in June 1995. Three
additional payments of $250,000 were made on March 31, 1996, June 30, 1996,
and March 30, 1997. A final payment of $379,576 was made on June 30, 1997.
In October of 1989, the New Jersey Department of Environmental Protection
(NJDEP) filed a claim against the Company and other defendants seeking
reimbursement of response costs for remediation of the Helen Kramer Landfill
in Mantua, New Jersey. This case has been consolidated with a similar case
brought by the EPA against many ofthe same defendants. The defendants in these
cases have filed third-party claims against more than 250 third-party
defendants. The Company has been participating in settlement efforts, and
after a diligent search of its records, believes that its involvement at this
site is minimal. The Company is also participating in an offer to de minimis
parties to the action. The Company was part of a preliminary and nonbinding
allocation process at the site which assigned to it 1.32% of the total
liability, which the Company believes is materially overstated. The parties
are close to entering into a global settlement agreement with the United
States and State of New Jersey. The Company estimates that its share of the
settlement costs will be approximately $800,000, which will be payable over a
multi-year period. Based on the status of settlement discussions during the
fourth quarter of 1997, the Company recorded a charge to earnings of $800,000
for this site.
On August 16, 1994, the Company entered into an Administrative Consent Order
(ACO) with the West Virginia Division of Environmental Protection (DEP)
regarding its former facility in Putnam County, West Virginia. Pursuant to the
ACO, the Company agreed to reimburse DEP's past costs and undertake an
investigation and remediation of conditions at the site. The Company has
submitted a workplan to DEP which calls for the removal, dewatering,
treatment, and on-site disposal of sludge from a former lagoon, and has
retained a consultant for this purpose. The Company estimates that this work
will cost $1.4 million. Based on the developments at this site during the
fourth quarter of 1997, the Company recorded a charge to earnings of $1.4
million for this site.
In addition, the Company has also been named as a defendant and a
potentially responsible party at a number of former waste disposal sites. In
these matters the Company's involvement is relatively limited and generally
arises out of shipment of wastes by or for the Company in the ordinary course
of business over many years to contaminated sites owned and operated by third
parties.
F-41
<PAGE>
CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Although the extent and timing of the litigation, settlement and possible
cleanup costs at the foregoing sites, other than certain phases of the
Bridgeport, West Caln Township, Helen Kramer Landfill, and Putnam County
sites, are not reasonably estimable at this time, it is anticipated that the
Company will expend substantial amounts with respect to such sites.
The Company has recorded total charges to income of $2,388,000, $2,280,000
and $4,659,000 for the years ended December 31, 1995, 1996 and 1997,
respectively, with regard to the foregoing environmental cleanup and related
charges. At December 31, 1995 and 1996, and December 31, 1997, the reserve for
environmental liabilities was approximately $15,309,000, $13,115,000 and
$13,461,000, respectively, and this reserve is included in estimated self-
insurance liabilities in the consolidated balance sheets.
12. INVESTMENT:
The Company has a zero coupon bond of $2,236,000, which is required as
security under the Company's insurance program. The bond is scheduled to
mature February 15, 2016. The bond is classified as held-to-maturity, and has
a value of $834,732 which consists of the initial purchase price and accretion
of income and is included in other assets on the consolidated balance sheets.
13. ACQUISITION:
In June 1996, the Company and BMI Transportation, Inc. ("BMI") signed an
asset purchase agreement in which the Company purchased certain assets
(equipment and receivables) and assumed certain liabilities, as defined, of
Fleet Transport Company, Inc. ("Fleet"), a division of BMI. The consideration
for the assets purchased was $15,500,000 and the assumption of capital lease
obligations of approximately $7,400,000. Additionally, the Company assumed
certain operating leases related to revenue equipment. The Company retained
$1,500,000 of the purchase price to be utilized to perform any necessary or
appropriate environmental cleanup on the facilities purchased from BMI. This
amount is reflected as a liability in the consolidated balance sheet. To the
extent the Company does not utilize the $1,500,000 on or prior to the second
anniversary of the closing date, the Company is required to pay one half of
the unused portion to BMI with interest thereon at an annual rate of 8%. The
balance of the unused portion is required to be paid to BMI on the third
anniversary of the closing date with interest thereon at an annual rate of 8%.
The acquisition was accounted for under the purchase method of accounting.
Based on the allocation of the purchase price, no goodwill resulted from this
acquisition. Under the terms of the asset purchase agreement, there is an
additional contingent payment of up to a maximum of $7,000,000 that the
Company is required to make if revenues and operating results of Fleet exceed
certain levels, as defined, for the 12-month period ended December 31, 1997.
Based on the revenues and operating results of Fleet for the year ended
December 31, 1997, the Company does not expect to make any payment. Operating
results for Fleet are included in the Company's consolidated statement of
operations beginning June 29, 1996. The accompanying statement of operations
for the years ended December 31, 1996 and 1997, includes $461,000 and
$479,000, respectively, of net loss attributable to the Fleet acquisition.
F-42
<PAGE>
CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JULY 5, DECEMBER 31,
1998 1997
----------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and cash equivalents............................ $ 2,639 $ 2,681
Accounts receivable, net of allowance of $1,122 at
July 5, 1998 and $850 at December 31, 1997.......... 20,018 22,871
Operating supplies................................... 949 940
Prepaid expenses and other........................... 9,510 8,252
-------- --------
Total current assets............................. 33,116 34,744
-------- --------
Property and equipment, net.......................... 111,938 109,871
Recoverable environmental costs...................... 14,685 14,002
Other assets......................................... 18,882 18,897
-------- --------
$178,621 $177,514
======== ========
<CAPTION>
JULY 5, DECEMBER 31,
1998 1997
----------- ------------
(UNAUDITED)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts and drafts payable.......................... $ 18,962 $ 19,317
Accrued salaries and wages........................... 4,277 5,383
Other accrued liabilities............................ 4,971 4,028
Estimated self-insurance liabilities................. 2,073 4,183
Current maturities of long-term debt................. 488 462
Current maturities of equipment obligations.......... 319 166
-------- --------
Total current liabilities........................ 31,090 33,539
Long-term equipment obligations...................... 18,858 10,177
Long-term debt....................................... 101,155 101,496
Estimated self-insurance liabilities................. 15,012 18,889
Other non-current liabilities........................ 5,184 5,082
Redeemable preferred stock........................... 5,318 5,318
Stockholders' equity
Common stock....................................... 2,677 2,677
Other stockholders' equity......................... (673) 336
-------- --------
Total stockholders' equity....................... 2,004 3,013
-------- --------
$178,621 $177,514
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
F-43
<PAGE>
CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
------------------
JULY 5, JUNE 29,
1998 1997
-------- --------
<S> <C> <C>
OPERATING REVENUES......................................... $183,082 $156,545
-------- --------
OPERATING EXPENSES:
Salaries, wages and benefits............................... 36,512 34,947
Purchased transportation and rents......................... 88,619 69,131
Operations and maintenance................................. 32,988 32,158
Depreciation and amortization.............................. 10,867 9,336
Taxes and licenses......................................... 1,800 1,457
Insurance and claims....................................... 2,514 4,402
Communication and utilities................................ 3,847 3,320
Loss on disposition of revenue equipment, net.............. 291 45
-------- --------
Total operating expenses................................... 177,438 154,796
-------- --------
OPERATING INCOME........................................... 5,644 1,749
INTEREST EXPENSE, net...................................... 6,158 4,515
OTHER EXPENSE, net......................................... 764 165
-------- --------
Loss before income tax benefit............................. (1,278) (2,931)
INCOME TAX BENEFIT......................................... (447) (1,223)
-------- --------
LOSS BEFORE EXTRAORDINARY ITEM............................. (831) (1,708)
-------- --------
EXTRAORDINARY LOSS on early extinguishment of debt, less
applicable
income taxes of $133...................................... -- (199)
-------- --------
NET LOSS................................................... $ (831) $ (1,907)
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
F-44
<PAGE>
CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
--------------------------
JUNE 29,
JULY 5, 1998 1997
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net cash provided by (used in) operating
activities...................................... $ 1,314 $ (3,519)
INVESTING ACTIVITIES:
Acquisition of business.......................... (1,598)
Additions to property and equipment.............. (12,834) (11,006)
Proceeds from the sales of property and
equipment....................................... 1,207 751
------------ ------------
Net cash used in investing activities............ (13,225) (10,255)
------------ ------------
FINANCING ACTIVITIES:
Payments on equipment obligations................ (162) (62,439)
Proceeds from issuance of equipment obligations.. 1,796 3,998
Proceeds from revolving credit facility.......... 7,200
(Decrease) increase in bank overdrafts........... (1,472) 2,882
Proceeds from issuance of long-term debt......... 100,000
Payments on long-term debt....................... (315) (21,355)
Payments on early extinguishment of debt......... (199)
Proceeds from sale of receivables................ 5,000
Preferred stock dividends........................ (178) (178)
------------ ------------
Net cash provided by financing activities...... 11,869 22,709
------------ ------------
Net (decrease) increase in cash and cash
equivalents................................... (42) 8,935
CASH AND CASH EQUIVALENTS:
Beginning of year................................ 2,681 5,788
------------ ------------
End of year...................................... $ 2,639 $ 14,723
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-45
<PAGE>
CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Preparation
The unaudited condensed consolidated financial statements of Chemical Leaman
Corporation (the "Company") included herein have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission. Although
certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, the Company believes that the disclosures included herein are
adequate to make the information presented not misleading. Operating results
for the three and six month periods ended July 5, 1998 and June 29, 1997 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 1998 or for future fiscal periods. These unaudited
condensed consolidated financial statements should be read in conjunction with
the financial statements included in the Company's Form 10-K for the year
ended December 31, 1997, filed with the Securities and Exchange Commission
("Annual Report").
In the opinion of the Company, the unaudited condensed consolidated
financial statements contain all adjustments necessary for a fair statement of
the results of operations for the three and six month periods ended July 5,
1998 and June 29, 1997 and for a fair presentation of financial position at
July 5, 1998.
RECENT ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income" was issued in July 1997. The Company adopted SFAS No.
130 on January 1, 1998, as required. SFAS No. 130 established standards for
the reporting and display of comprehensive income and its components. The main
objective of the statement is to report a measure of all changes in equity
that result from transactions and other economic events of the period other
than transactions with owners. Such components of total comprehensive income
for the Company are net income and a minimum pension liability adjustment made
pursuant to SFAS No. 87. The effect of the minimum pension liability
adjustment for the first and second quarter of 1998 was immaterial.
NOTE 2--DECEMBER 31, 1997 BALANCE SHEET
The amounts presented in the balance sheet as of December 31, 1997 were
derived from the Company's audited consolidated financial statements which
were included in the Annual Report.
NOTE 3--CONTINGENCIES/LITIGATION
BRIDGEPORT, NEW JERSEY
The Company is in litigation with its insurers to recover its costs in
connection with the environmental cleanup at its Bridgeport, NJ site, Chemical
Leaman Tank Lines, Inc. v. Aetna Casualty & Surety Co., et al, Civil Action
No. 89-1543 (SSB) (D.N.J.). On April 7, 1993, the U.S. District Court for the
District of New Jersey entered a judgment requiring the insurers to reimburse
the Company for substantially all past and future environmental cleanup costs
at the Bridgeport site. The insurers appealed the judgment to the U.S. Court
of Appeals for the Third Circuit, but before the appeal was decided the
Company and its primary insurer settled all of the Company's claims, including
claims asserted or to be asserted at other sites, for $11.5 million. This
insurer dismissed its appeal, but the excess carriers did not. On June 20,
1996, the U.S. Court of Appeals affirmed the judgment against the excess
insurance carriers, except for the allocation of liability among applicable
policies,
and remanded the case for an allocation of damage liability among the insurers
and applicable policies on a several basis. On September 15, 1997, the
District Court issued an order and accompanying opinion ruling on the
allocation of damages among the applicable policies as directed by the Court
of Appeals. The District Court's
F-46
<PAGE>
CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
decision found that the Company has already recovered $11.5 million in past
Bridgeport investigation and remediation costs from its primary insurer under
the aforementioned settlement agreement. The District Court's decision further
found that the Company is entitled to have the balance of its past costs and
all future Bridgeport investigation and remediation costs allocated among the
liable excess carriers, according to specific percentages set forth in the
District Court's Order. The Company and its excess carriers are engaged in
settlement negotiations in an effort to resolve all of the Company's claims,
including those relating to the Bridgeport, NJ site.
It is the belief of the environmental counsel to the Company, and
management, that receipt of insurance proceeds sufficient to recover
substantially all of the costs of remediating the Bridgeport, NJ site,
including natural resources damages, and attorneys' fees and expenses, is
likely to occur.
NOTE 4--OTHER EVENTS
On June 24, 1998, the Company announced that Palestra Acquisition Corp.
("Palestra"), a Delaware corporation and a wholly owned subsidiary of MTL
Inc., a Florida corporation ("MTL"), had entered into an Agreement and Plan of
Merger ("CLC Merger Agreement"), dated as of June 23, 1998, by and among
Palestra, the Company and its shareholders (each a "Shareholders" and,
collectively, the "Shareholders"). On July 28, 1998, MTL announced that
Palestra and the Company had entered into an Amendment No. 1 ("Amendment") to
the CLC Merger Agreement. Under the terms of the CLC Merger Agreement, as
amended, MTL has agreed, subject to the satisfaction of certain terms and
conditions, to acquire all of the outstanding shares of common stock, $2.50
par value per share, of CLC ("CLC Common Stock") through the merger ("Merger")
of Palestra with and into the Company, which thereby will become a wholly-
owned subsidiary of MTL. The Shareholders have approved the consummation of
the Merger. The Merger is expected to close in August or September of 1998,
and has an outside closing date of October 31, 1998.
Under the terms of the CLC Merger Agreement, as amended, all shares
("Shares") of CLC Common Stock held by the Shareholders shall, by virtue of
the Merger, be converted into the right to receive an aggregate amount in cash
(and Common Stock of MTL, as described below) equal to $72.8 million less
Transaction Expenses (as defined in the CLC Merger Agreement, as amended) in
excess of $100,000, plus shares of preferred stock of MTL having a stated
value equal to $5.0 million (collectively "Merger Consideration"), subject to
certain setoffs as set forth in the CLC Merger Agreement. A portion of the
Shares held by certain Shareholders who are officers of CLC shall not be
converted into cash, but in lieu thereof, shall be converted into the shares
of the Common Stock of MTL as set forth in their employment agreements. In
connection with the transactions contemplated by the Merger, the Company will
transfer all of the common stock of Leaman Air Services, Inc., a subsidiary of
the Company, to a principal stockholder of the Company, as additional
consideration for the Shares held by such Shareholder.
The aggregate consideration for the outstanding shares of the Company's
Common Stock was determined based upon arms-length negotiation between
Palestra and the Company. Prior to the execution of the Merger Agreement, no
material relationship existed between the Company and MTL, or any of its
affiliates, any director or officer of CLC or any associate of any such
director or officer.
In conjunction with the Merger, Palestra has initiated detailed Phase I and
Phase II environmental studies related to certain environmental sites. The
results of these studies are not presently known.
F-47
<PAGE>
CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
On July 28, 1998, MTL initiated a tender offer and consent solicitation for
the Company's 10 3/8% senior notes due 2005 (the "Notes"). This tender offer
is scheduled to expire August 24, 1998 unless extended.
The closing of the Merger is subject to the completion of the tender offer
for the Notes and an amendment to certain of the terms of these Notes in
connection therewith, satisfaction of all of the conditions to MTL's financing
arrangements in connection with the Merger, and customary conditions.
Accordingly, there can be no assurance that the merger will be successfully
completed.
F-48
<PAGE>
CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
BEGINNING OF END OF
PERIOD ADDITIONS DEDUCTIONS PERIOD
------------ --------- ---------- ----------
<S> <C> <C> <C> <C>
FOR YEAR ENDED DECEMBER 31, 1997
Accounts receivable allowance
for doubtful accounts.......... $570 $691 $(411) $850
FOR YEAR ENDED DECEMBER 31, 1996
Accounts receivable allowance
for doubtful accounts.......... 323 318 (71) 570
FOR YEAR ENDED DECEMBER 31, 1995
Accounts receivable allowance
for doubtful accounts.......... 212 338 (227) 323
</TABLE>
F-49
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ALL TENDERED OLD NOTES, EXECUTED LETTERS OF TRANSMITTAL AND OTHER RELATED
DOCUMENTS SHOULD BE DIRECTED TO THE EXCHANGE AGENT. QUESTIONS AND REQUESTS FOR
ASSISTANCE AND REQUESTS FOR ADDITIONAL COPIES OF THE PROSPECTUS, THE LETTER OF
TRANSMITTAL AND OTHER RELATED DOCUMENTS SHOULD BE ADDRESSED TO THE EXCHANGE
AGENT AS FOLLOWS:
By Mail or Overnight Delivery:
United States Trust
Company of New York
P.O. Box 843, Cooper Station
New York, New York 10276
Attention: Corporate Trust Services
By Hand Delivery;
Unites States Trust Company
of New York
111 Broadway
New York, NY 10006
Attention: Lower Level Corporate Trust Window
By Facsimile Transmission:
(212) 780-0592
Attention: Customer Service
For Information or Confirmation by Telephone:
(800) 648-6565
(Originals of all documents submitted by facsimile should be sent promptly by
hand, overnight delivery, or registered or certified mail.)
----------------
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY MTL. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY
IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN
SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE IN-
FORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF MTL SINCE SUCH DATE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
---------------------------
PROSPECTUS
---------------------------
$140,000,000
$100,000,000 10% SERIES B SENIOR SUBORDINATED NOTES DUE 2006
$40,000,000 SERIES B FLOATING INTEREST
RATE SUBORDINATED TERM SECURITIES
DUE 2006 (FIRSTSSM)
, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Bylaws of MTL (the "Bylaws") state that MTL shall, to the full extent
permitted by the Florida Business Corporation Act, as amended or interpreted
from time to time, (the "FBCA"), indemnify all directors, officers, employees
and persons who are or were serving at the request of MTL as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against reasonably incurred expenses and amounts
paid in settlement of any threatened, pending or completed action, suit or
other type of proceeding by or in the right of MTL. Such indemnification shall
only be authorized if such person acted in good faith and in a manner such
person reasonably believed to be in, or not opposed to, the best interests of
MTL.
In addition, the Bylaws state that MTL shall, to the full extent permitted
by the FBCA indemnify any person who is or was a director or officer of MTL or
is or was serving at the request of MTL as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against judgments, amounts paid in settlement, penalties, fines and
expenses actually and reasonably incurred in connection with any action, suit
or other proceeding (other than an action by or in the right of MTL). Such
indemnification shall only be authorized if such person acted in good faith
and in a manner such person reasonably believed to be in, or not opposed to,
the best interests of MTL.
Section 607.0850 of the FBCA permits indemnification against expenses,
fines, judgments and settlements incurred by any director, officer or employee
of a company in the event of pending or threatened civil, criminal,
administrative or investigative proceedings, if such person was, or was
threatened to be made, a party by reason of the fact that he or she is or was
a director, officer, or employee of the company. Such indemnification shall
only be authorized if such person acted in good faith and in a manner such
person reasonably believed to be in, or not opposed to, the best interests of
MTL. Section 607.0850 also provides that the indemnification provided for
therein shall not be deemed exclusive of any other rights to which those
seeking indemnification may otherwise be entitled. In addition, MTL maintains
a directors' and officers' liability insurance policy.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
2.1 --Agreement and Plan of Merger, dated as of February 10, 1998,
by and among MTL and Sombrero Acquisition Corp.
2.2 --Agreement and Plan of Merger, dated as of June 23, 1998, by
and among Palestra Acquisition Corp., CLC and the shareholders
of CLC.
2.3 --Amendment No. 1 to the Agreement and Plan of Merger, dated as
of July 27, 1998, by and among Palestra Acquistion Corp., CLC
and the shareholders of CLC.
2.4 --Amendment No. 2 to the Agreement and Plan of Merger, dated as
of August 25, 1998, by and among Palestra Acquistion Corp., CLC
and the shareholders of CLC.
3.1 --Articles of Incorporation of MTL.
3.2 --Bylaws of MTL.
4.1 --Credit Agreement, dated as of June 9, 1998 and amended and
restated as of August 28, 1998, between the Company, Levy
Transport, Ltd., the lenders party thereto and Credit Suisse
First Boston Corporation, as administrative agent.
4.2 --Indenture, dated as of June 9, 1998, by and among the Company,
the Guarantors and United States Trust Company of New York, as
trustee (including form of 10% Senior Subordinated Notes due
2006 and form of Floating Interest Rate Subordinated Term
Securities due 2006).
4.3 --First Supplemental Indenture, dated as of August 28, 1998, by
and among the Company, CLC and its subsidiaries as Guarantors,
to the Indenture dated as of June 9, 1998.
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
4.4 --Exchange Indenture re: 13.75% Senior Exchangeable Preferred
Stock.
4.5 --Articles of Amendment for 8% Redeemable Preferred Stock.
4.6 --Articles of Amendment for 13.75% Senior Exchangeable Preferred
Stock.
4.7 --Indenture, dated as of June 16, 1997 between CLC and First
Union Bank, as Trustee.
4.8 --First Supplemental Indenture, dated as of August 12, 1998,
between CLC and First Union National Bank to the Indenture
dated as of June 16, 1997.
4.9 --Form of 10% Senior Subordinated Notes due 2006 (filed as part
of Exhibit 4.2).
4.10 --Form of Floating Interest Rate Subordinated Term Securities
due 2006 (filed as part of Exhibit 4.2).
4.11 --Registration Rights Agreement, dated as of June 9, 1998, by
and among the Company, the Guarantors and BT Alex. Brown
Incorporated, Credit Suisse First Boston Corporation and
Salomon Brothers Inc.
5.1 --Opinion of Dewey Ballantine LLP as to the legality of the
securities being registered.
10.1 --MTL 1998 Employee Stock Option Plan.
10.2 --Employment Agreement, dated as of February 10, 1998, by and
between Charles J. O'Brien and Montgomery Tank Lines, Inc.
10.3 --Supplemental Letter dated as of February 10, 1998 to
Employment Agreement between Charles J. O'Brien and Montgomery
Tank Lines, Inc.
10.4 --Employment Agreement, dated as of February 10, 1998, by and
between Richard J. Brandewie and Montgomery Tank Lines, Inc.
10.5 --Employment Agreement, dated as of February 10, 1998, by and
between Marvin Sexton and Montgomery Tank Lines, Inc.
10.6 --Consulting Agreement between Montgomery Tank Lines and Elton
E. Babbit, dated February 10, 1998.
10.7 --Shareholders' Agreement by and between Elton E. Babbit,
Charles J. O'Brien, Jr., Richard J. Brandewie, Marvin E.
Sexton and Apollo, dated as of February 10, 1998.
10.8 --Non-Competition Agreement with Elton E. Babbit, dated as of
February 10, 1998.
10.9 --Non-Competition Agreement with Gordon Babbit, dated as of
February 10, 1998.
10.10 --Management Agreement between Apollo and the Company, dated as
of February 10, 1998.
10.11 --Marvin Sexton Limited Recourse Secured Promissory Note, dated
as of June 9, 1998.
12.1 --Statement of Computation of Ratio of Earnings to Fixed
Charges.
16.1 --Letter re: Change in Certifying Accountant.
21.1 --List of the Subsidiaries of MTL.
23.1 --Consent of Arthur Andersen LLP re: MTL.
23.2 --Consent of Arthur Andersen LLP re: CLC.
23.3 --Consent of Dewey Ballantine LLP (included as part of its
opinion filed as Exhibit 5.1 hereto).
24.1 --Power of Attorney (included in Part II of this Registration
Statement).
25.1 --Form T-1 Statement of Eligibility of Trustee.
99.1 --Form of Letter of Transmittal.
99.2 --Form of Notice of Guaranteed Delivery.
</TABLE>
II-2
<PAGE>
ITEM 22. UNDERTAKINGS.
1. The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
2. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
3. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
4. The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
5. The undersigned registrant hereby undertakes to supply by means of post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in
the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF PLANT CITY, STATE OF
FLORIDA, ON NOVEMBER 3, 1998.
MTL INC.
/s/ Charles J. O'Brien
By: _________________________________
CHARLES J. O'BRIEN
CHAIRMAN OF THE BOARD, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
KNOW ALL PERSONS BY THESE PRESENTS, THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW HEREBY SEVERALLY CONSTITUTES AND APPOINTS CHARLES J. O'BRIEN AND RICHARD
J. BRANDEWIE, AND EACH OF THEM, HIS OR HER TRUE AND LAWFUL ATTORNEY-IN-FACT
AND AGENT, WITH FULL POWER OF SUBSTITUTION AND RESUBSTITUTION FOR HIM OR HER
AND IN HIS OR HER NAME, PLACE AND STEAD, IN ANY AND ALL CAPACITIES TO SIGN ANY
AND ALL AMENDMENTS (INCLUDING POST-EFFECTIVE AMENDMENTS) TO THE REGISTRATION
STATEMENT, AND TO FILE THE SAME, WITH ALL EXHIBITS THERETO, AND OTHER
DOCUMENTS IN CONNECTION THEREWITH, WITH THE SECURITIES AND EXCHANGE
COMMISSION, GRANTING UNTO SAID ATTORNEY-IN-FACT AND AGENTS, AND EACH OF THEM,
FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND EVERY ACT AND THING
REQUISITE OR NECESSARY FULLY TO ALL INTENTS AND PURPOSES AS HE OR SHE MIGHT OR
COULD DO IN PERSON, HEREBY RATIFYING AND CONFIRMING ALL THAT EACH SAID
ATTORNEYS-IN-FACT AND AGENTS OR ANY OF THEM OR THEIR OR HIS OR HER SUBSTITUTE
OR SUBSTITUTES, MAY LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE HEREOF.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Charles J. O'Brien Chairman of the November 3,
- ------------------------------------- Board, President 1998
CHARLES J. O'BRIEN and Chief Executive
Officer
/s/ Richard J. Brandewie Senior Vice November 3,
- ------------------------------------- President, 1998
RICHARD J. BRANDEWIE Treasurer and Chief
Financial Officer
/s/ Marvin E. Sexton Director November 3,
- ------------------------------------- 1998
MARVIN E. SEXTON
/s/ Joshua J. Harris Director November 3,
- ------------------------------------- 1998
JOSHUA J. HARRIS
/s/ Michael D. Weiner Director November 3,
- ------------------------------------- 1998
MICHAEL D. WEINER
i
<PAGE>
SIGNATURE TITLE DATE
/s/ Robert A. Katz Director November 3,
- ------------------------------------- 1998
ROBERT A. KATZ
/s/ Marc J. Rowan Director November 3,
- ------------------------------------- 1998
MARC J. ROWAN
/s/ John Kissick Director November 3,
- ------------------------------------- 1998
JOHN KISSICK
ii
<PAGE>
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
by and between
SOMBRERO ACQUISITION CORP.
and
MTL INC.
Dated as of February 10, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
ARTICLE 1
THE MERGER
<S> <C>
1.1. The Merger......................................................... 1
1.2. The Closing........................................................ 2
1.3. Effective Time..................................................... 2
ARTICLE 2
ARTICLES OF INCORPORATION AND
BYLAWS OF THE SURVIVING CORPORATION
2.1. Articles of Incorporation.......................................... 2
2.2. By-laws............................................................ 2
ARTICLE 3
DIRECTORS AND OFFICERS OF THE
SURVIVING CORPORATION
3.1. Directors.......................................................... 3
3.2. Officers........................................................... 3
ARTICLE 4
EFFECT OF THE MERGER ON SECURITIES OF
SUB AND THE COMPANY
4.1. Sub Common Stock................................................... 3
4.2. The Company Common Stock........................................... 3
4.3. Options............................................................ 4
4.4. Exchange Of Certificates........................................... 4
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
5.1. Existence; Good Standing; Corporate Authority...................... 7
5.2. Authorization, Validity and Effect of Agreements................... 8
5.3. Capitalization..................................................... 8
5.4. Subsidiaries....................................................... 9
5.5. No Violation....................................................... 9
5.6. SEC Documents; Financial Statements................................ 10
5.7. Accounts Receivable................................................ 10
5.8. Insurance.......................................................... 11
5.9. Litigation......................................................... 11
5.10. Absence of Certain Changes......................................... 11
</TABLE>
<PAGE>
<TABLE>
<S> <C>
5.11. Tax Matters....................................................... 12
5.12. Employee Benefit Plans............................................ 14
5.13. Labor Matters; Suppliers; Distributors and Customers.............. 17
5.14. Absence of Undisclosed Liabilities................................ 18
5.15. Title to Properties and Related Matters........................... 19
5.16. Material Contracts................................................ 19
5.17. Compliance With Laws.............................................. 20
5.18. Environmental, Health and Safety Matters.......................... 21
5.19. Assets............................................................ 24
5.20. No Brokers........................................................ 25
5.21. Intellectual Property............................................. 25
5.22. State Takeover Statutes........................................... 26
5.23. Board Recommendation.............................................. 26
5.24. Related Party Transactions........................................ 26
5.25. Affiliate Programs, Etc........................................... 26
5.26. Opinion of Financial Advisor...................................... 27
5.27. Proxy Statement; Schedule 13E-3; Form S-4......................... 28
5.28. Alternative Proposal.............................................. 28
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF SUB
6.1. Existence; Good Standing; Corporate Authority...................... 28
6.2. Authorization, Validity and Effect of Agreements................... 28
6.3. Capitalization..................................................... 29
6.4. No Violation....................................................... 29
6.5. Interim Operations of Sub.......................................... 29
6.6. Financing.......................................................... 29
ARTICLE 7
COVENANTS
7.1. Alternative Proposals............................................. 30
7.2. Interim Operations................................................ 31
7.3. Meetings of Stockholders.......................................... 33
7.4. Filings and Other Action.......................................... 34
7.5. Access to Information............................................. 34
7.6. Publicity......................................................... 34
7.7. Proxy Statement; Form S-4......................................... 35
7.8. Further Action.................................................... 36
7.9. Schedule 13E-3.................................................... 36
7.10. Expenses.......................................................... 36
7.11. Insurance; Indemnity.............................................. 36
7.12. Certain Tax Matters............................................... 37
7.13. Other Actions..................................................... 37
7.14. Advice of Changes; Filings........................................ 37
7.15. Financial Information............................................. 37
</TABLE>
ii
<PAGE>
<TABLE>
ARTICLE 8
CONDITIONS
<S> <C>
8.1. Conditions to Each Party's Obligation to Effect the Merger......... 38
8.2. Conditions to Obligation of the Company to Effect the Merger....... 38
8.3. Conditions to Obligation of Sub to Effect the Merger............... 39
ARTICLE 9
TERMINATION
9.1. Termination by Mutual Written Consent.............................. 40
9.2. Termination by Either Sub or the Company........................... 40
9.3. Termination by the Company......................................... 40
9.4. Termination by Sub................................................. 41
9.5. Effect of Termination and Abandonment.............................. 41
9.6. Extension; Waiver.................................................. 42
ARTICLE 10
GENERAL PROVISIONS
10.1. Non-survival of Representations, Warranties...................... 43
10.2. Notices.......................................................... 43
10.3. Assignment; Binding Effect....................................... 44
10.4. Entire Agreement................................................. 44
10.5. Amendment........................................................ 44
10.6. Governing Law.................................................... 44
10.7. Counterparts..................................................... 44
10.8. Headings......................................................... 44
10.9. Interpretation................................................... 45
10.10. Waivers.......................................................... 45
10.11. Severability..................................................... 45
10.12. Enforcement of Agreement......................................... 45
10.13. Interpretation................................................... 45
SCHEDULE A
</TABLE>
iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 10, 1998 by and
between Sombrero Acquisition Corp., a Florida corporation ("Sub"), and MTL Inc.,
a Florida corporation (the "Company").
WHEREAS, the respective Boards of Directors of Sub and the Company
have approved, and deemed it advisable and in the best interests of their
respective companies and stockholders to consummate, the merger of Sub with and
into the Company (the "Merger"), upon the terms and subject to the conditions
set forth herein;
WHEREAS, simultaneously with the execution of this Agreement and as an
inducement to Sub to enter into this Agreement, Sub and certain stockholders of
the Company are entering into a Voting Agreement (the "Voting Agreement")
pursuant to which such stockholders have, among other things, agreed, upon the
terms and subject to the conditions set forth in the Voting Agreement to vote
their shares of Company Common Stock (as defined below) in favor of the Merger;
WHEREAS, simultaneously with the execution of this Agreement, certain
employees of a Subsidiary (as defined in Section 10.13 below) of the Company are
entering into employment agreements with such Subsidiary, providing for the
terms of their employment following the Merger and certain stockholders of the
Company are entering into agreements restricting their ability to compete with
the Company and its Subsidiaries following the Merger;
WHEREAS, the parties desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger; and
WHEREAS, it is intended that the Merger be recorded as a
recapitalization for financial reporting purposes.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
THE MERGER
1.1. The Merger. Upon the terms and subject to the conditions
----------
of this Agreement, at the Effective Time (as defined in Section 1.3), Sub shall
be merged with and into the Company and the separate corporate existence of Sub
shall cease. The Company shall be the surviving corporation in the Merger
(sometimes hereinafter
<PAGE>
referred to as the "Surviving Corporation"). The Merger shall have the effects
specified in the Florida Business Corporation Act (the "FBCA").
1.2. The Closing. Upon the terms and subject to the conditions
-----------
of this Agreement, the closing of the Merger (the "Closing") shall take place
(a) at the offices of Dewey Ballantine LLP, 1301 Avenue of the Americas, New
York, New York, at 10:00 a.m., local time, on the first business day immediately
following the day on which the last to be satisfied or waived of the conditions
set forth in Article 8 (other than those conditions that by their nature are to
be satisfied at the Closing, but subject to the satisfaction or waiver of those
conditions) shall be satisfied or waived in accordance herewith or (b) at such
other time, date or place as Sub and the Company may agree. The date on which
the Closing occurs is hereinafter referred to as the "Closing Date."
1.3. Effective Time. Upon the terms and subject to the conditions
--------------
of this Agreement, at the Closing the parties shall cause Articles of Merger to
be executed and filed in accordance with the requirements of the FBCA. The
Merger shall become effective upon the filing of the Articles of Merger with the
Florida Department of State in accordance with the FBCA or at such later time
which the parties hereto shall have agreed upon and designated in such filing as
the effective time of the Merger (the "Effective Time").
ARTICLE 2
ARTICLES OF INCORPORATION AND
BYLAWS OF THE SURVIVING CORPORATION
2.1. Articles of Incorporation. The Articles of Incorporation of
-------------------------
the Company in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation, until duly changed or
amended as provided therein or in accordance with applicable law.
2.2. By-laws. The by-laws of the Company in effect immediately
-------
prior to the Effective Time shall be the by-laws of the Surviving Corporation,
until duly changed or amended as provided therein or in accordance with
applicable law.
ARTICLE 3
DIRECTORS AND OFFICERS OF THE
SURVIVING CORPORATION
3.1. Directors. The directors of Sub immediately prior to the
---------
Effective Time shall be the directors of the Surviving Corporation as of the
Effective Time and until their successors are duly appointed or elected in
accordance with applicable law.
3.2. Officers. The officers of the Company immediately prior to
--------
the Effective Time shall be the officers of the Surviving Corporation as of the
Effective Time
2
<PAGE>
and until their successors are duly appointed or elected in accordance with
applicable law.
ARTICLE 4
EFFECT OF THE MERGER ON SECURITIES OF
SUB AND THE COMPANY
4.1. Sub Common Stock. At the Effective Time, by virtue of the
----------------
Merger and without any action on the part of the holder thereof, the shares of
common stock, par value $.01 per share, of Sub ("Sub Common Stock") outstanding
immediately prior to the Effective Time shall be converted into 1,452,193
validly issued, fully paid and non-assessable shares of common stock, par value
$.01 per share, of the Surviving Corporation (the "Surviving Corporation Common
Stock"), which number shall be decreased by the number of shares of Surviving
Corporation Common Stock issued pursuant to the Stock Election, as set forth in
Section 4.2(a) hereof.
4.2. The Company Common Stock.
------------------------
(a) At the Effective Time, by virtue of the Merger and without any
action on the part of the holder thereof, each share of common stock, par value
$.01 per share, of the Company (the "Company Common Stock"), issued and
outstanding immediately prior to the Effective Time, other than Roll-Over Shares
(as defined in Section 4.2(b) below) and Excluded Shares (as defined in Section
4.2(c) below), shall be converted into the right to receive $40.00 in cash (the
"Cash Merger Price"); provided, that, at Sub's election (the "Stock Election")
--------
made prior to the mailing of the Proxy Statement (as defined below), Sub shall
have the right to substitute, on a pro-rata basis for each share of Company
Common Stock issued and outstanding immediately prior to the Effective Time (the
"Stock Election Shares"), up to $1.60 (the "Stock Election Consideration") of
the Cash Merger Price in the form of Surviving Corporation Common Stock, such
Surviving Corporation Common Stock to be valued at $40.00 per share.
(b) At the Effective Time, by virtue of the Merger and without any
action on the part of the holder thereof, each share of Company Common Stock
held by certain officers and key employees of the Company as set forth on
Schedule A hereto (each, a "Roll-Over Share") shall be converted into one share
- ----------
of Surviving Corporation Common Stock (the "Roll-Over Share Consideration").
(c) At the Effective Time, by virtue of the Merger and without any
action on the part of the holder thereof, each share of Company Common Stock
held in the Company's treasury (the "Excluded Shares") shall be cancelled and
retired without payment of any consideration therefor.
(d) Immediately prior to the Effective Time, at Sub's election, the
Company shall effect a recapitalization, to be effective as of the Effective
Time, of the securities of the Surviving Corporation, and the number of
outstanding shares and options of the Surviving Corporation shall be
appropriately adjusted.
3
<PAGE>
4.3. Options.
-------
(a) Except as set forth in 4.3(b) below and except to the extent
that Sub and the holder of any option otherwise agree, the Company shall cause
each outstanding employee or director stock option (the "Options") to purchase
shares of Company Common Stock granted under the Company's 1994 Incentive and
Non-Statutory Stock Option Plan (the "Company Stock Option Plan") whether or not
then exercisable or vested, to be cancelled and in consideration of such
cancellation, cause the Company to pay to such holders of Options an amount in
respect thereof equal to the product of (x) the excess, if any, of the Cash
Merger Price over the exercise price of each such Option and (y) the number of
shares of Company Common Stock previously subject to the Option immediately
prior to its cancellation (such payment to be net of withholding taxes).
(b) Prior to the Effective Time, the Company shall use its best
efforts to obtain any consents from holders of the Options and make any
amendments to the terms of the Company Stock Option Plan or arrangements that
are necessary to give effect to the transactions contemplated by this Section
4.3. Notwithstanding the foregoing provisions of this Section 4.3, payment may
be withheld in respect of any Option until necessary consents are obtained. The
cancellation of an Option in exchange for the payment provided by Section 4.3(a)
shall be deemed a release of any and all rights the holder of any such Option
had or may have had in respect of such Option.
4.4. Exchange Of Certificates.
------------------------
(a) As of or after the Effective Time of the Merger, Sub shall
deposit with the Paying Agent as necessary, for the benefit of the holders of
shares of Company Common Stock, for payment in accordance with this Article 4,
the funds necessary to pay the Cash Merger Price (less the Stock Election
Consideration if the Stock Election is exercised) for each share.
(b) As soon as practicable after the Effective Time of the Merger,
(i) each holder of an outstanding certificate or certificates which pursuant to
Section 4.2 represent the right to receive shares of the Surviving Corporation,
upon surrender to the Paying Agent of such certificate or certificates and
acceptance thereof by the paying agent selected by Sub (the "Paying Agent"),
shall be entitled to a certificate or certificates representing the Roll-Over
Share Consideration into which the number of Roll-Over Shares previously
represented by such certificate or certificates surrendered shall have been
converted pursuant to this Agreement and (ii) each other holder of an
outstanding certificate or certificates which prior hereto represented shares of
Company Common Stock (other than Roll-Over Shares), upon surrender to a paying
agent selected by Sub (the "Paying Agent") of such certificate or certificates
and acceptance thereof by the Paying Agent, shall be entitled to receive in
exchange therefor either (A) the Cash Merger Price multiplied by the number of
shares of Company Common Stock formerly represented by such certificate or (B)
if the Stock Election is exercised, (x) the Cash Merger Price (less the Stock
Election Consideration) multiplied by the number of Stock Election Shares
formerly represented by such certificate and (y) a certificate or
4
<PAGE>
certificates representing the Stock Election Consideration multiplied by the
number of Stock Election Shares formerly represented by such certificate divided
by the Cash Merger Price, and the certificate shall forthwith be cancelled. No
interest will be paid on or accrue on the Cash Merger Price. The Paying Agent
shall accept such certificates upon compliance with such reasonable terms and
conditions as the Paying Agent may impose to effect an orderly exchange thereof
in accordance with normal exchange practices. After the Effective Time of the
Merger, there shall be no further transfer on the records of the Company or its
transfer agent of certificates representing shares of Company Common Stock which
have been converted, in whole or in part, pursuant to this Agreement, into the
right to receive cash, and if such certificates are presented to the Company for
transfer, they shall be canceled against delivery of such cash.
If any certificate or certificates for Roll-Over Share Consideration
or Stock Election Consideration, if applicable, is to be issued in, or if cash
is to be remitted to, a name other than that in which the certificate for shares
of Company Common Stock surrendered for exchange is registered, it shall be a
condition of such exchange that the certificate so surrendered shall be properly
endorsed, with signature guaranteed or otherwise in proper form for transfer and
that the person requesting such exchange shall pay to the Company or its
transfer agent any transfer or other taxes required by reason of the issuance of
certificates for such Roll-Over Share Consideration or Stock Election
Consideration, if applicable, in a name other than that of the registered holder
of the certificate surrendered, or establish to the satisfaction of the Company
or its transfer agent that such tax has been paid or is not applicable. Until
surrendered as contemplated by this Section 4.4(b), (i) each certificate for
Roll-Over Shares shall be deemed at any time after the Effective Time of the
Merger to represent only the right to receive upon such surrender a new
certificate or certificates for each Roll-Over Share, as contemplated by Section
4.2(b) and (ii) each certificate for shares of Company Common Stock (other than
the Roll-Over Shares) shall be deemed at any time after the Effective Time of
the Merger to represent (A) only the right to receive upon such surrender the
Cash Merger Price for each share of Company Common Stock or (B) if the Stock
Election is exercised, the right to receive upon such surrender (x) the Cash
Merger Price (less the Stock Election Consideration) for each Stock Election
Share and (y) a new certificate or certificates for each Stock Election Share,
as contemplated by Section 4.2(a).
(c) No dividends or other distributions with respect to Roll-Over
Shares or Stock Election Shares, if applicable, with a record date after the
Effective Time of the Merger shall be paid to the holder of any certificate for
shares of Company Common Stock not surrendered with respect to the Roll-Over
Shares or the Stock Election Shares, if applicable, represented thereby and no
cash payment in lieu of fractional shares of Company Common Stock shall be paid
to any such holder pursuant to Section 4.4(e) until the surrender of such
certificate in accordance with this Article 4. Subject to applicable law,
following surrender of any such certificate, there shall be paid to the holder
of the certificate or certificates representing whole shares issued for the
Roll-Over Share Consideration or Stock Election Consideration, if applicable,
without interest (i) at the time of such surrender, the amount of any cash
payable in lieu of a fractional share representing the Roll-Over Share
Consideration or the Stock Election Consideration, if applicable, to which such
holder is entitled pursuant to Section 4.4(e) and the
5
<PAGE>
proportionate amount of dividends or other distributions with a record date
after the Effective Time of the Merger therefor paid with respect to such shares
representing the Roll-Over Share Consideration or the Stock Election
Consideration, if applicable, and (ii) at the appropriate payment date, the
proportionate amount of dividends or other distributions with a record date
after the Effective Time of the Merger but prior to such surrender and a payment
date subsequent to such surrender payable with respect to such whole shares
representing the Roll-Over Share Consideration and the Stock Election
Consideration, if applicable.
(d) All cash paid upon the surrender for exchange of certificates
representing shares of Company Common Stock in accordance with the terms of this
Article 4 (including any cash paid pursuant to Section 4.4(e)) shall be deemed
to have been paid in full satisfaction of all rights pertaining to the shares
exchanged for cash theretofore represented by such certificates.
(e) Notwithstanding any other provision of this Agreement, each
holder of Roll-Over Shares or Stock Election Shares who would otherwise have
been entitled to retain a fraction of a share representing the Roll-Over Share
Consideration or the Stock Election Consideration (after taking into account all
Roll-Over Shares and Stock Election Shares, as the case may be, delivered by
such holder) shall receive, in lieu thereof, a cash payment (without interest)
equal to such fraction multiplied by the Cash Merger Price.
(f) Any cash deposited with the Paying Agent pursuant to this
Section 4.4 (the "Exchange Fund") which remains undistributed to the holders of
the certificates representing shares of Company Common Stock 180 days after the
Effective Time of the Merger shall be delivered to the Surviving Corporation at
such time and any holders of shares of Company Common Stock (other than Roll-
Over Shares) prior to the Merger who have not theretofore complied with this
Article 4 shall thereafter look only to the Surviving Corporation and only as
general unsecured creditors thereof for payment of their claim for cash, if any.
(g) None of Sub, the Company or the Paying Agent shall be liable to
any person in respect of any cash from the Exchange Fund delivered to a public
office pursuant to any applicable abandoned property, escheat or similar law. If
any certificates representing shares of Company Common Stock shall not have been
surrendered prior to one year after the Effective Time of the Merger (or
immediately prior to such earlier date on which any cash in respect of such
certificate would otherwise escheat to or become the property of any federal,
state, local, or municipal, foreign or other government or subdivision, branch,
department or agency thereof and any governmental or quasi-governmental
authority of any nature, including any court or other tribunal (each a
"Governmental Entity")), any such cash in respect of such certificate shall, to
the extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any person previously
entitled thereto.
(h) In the event any certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such certificate to be lost, stolen or destroyed and, if required by Surviving
Corporation, the posting by such
6
<PAGE>
person of a bond in such reasonable amount as Surviving Corporation may direct
as indemnity against any claim that may be made against it with respect to such
certificate, the Paying Agent will issue in exchange for such lost, stolen or
destroyed certificate the shares representing the Roll-Over Share Consideration
or the Stock Election Consideration, as the case may be (and cash in lieu of
fractional shares), and unpaid dividends and distributions on shares
representing the Roll-Over Share Consideration and the Stock Election
Consideration, if applicable, deliverable in respect thereof pursuant to this
Agreement, or cash, as the case may be.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Sub as follows:
5.1. Existence; Good Standing; Corporate Authority. The Company is
---------------------------------------------
a corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation. The Company is duly licensed or
qualified to do business as a foreign corporation and is in good standing under
the laws of any other state of the United States in which the character of the
properties owned or leased by it or in which the transaction of its business
makes such qualification necessary. The Company has all requisite corporate
power and authority to own, operate and lease its properties and carry on its
business as now conducted. Each of the Company's Subsidiaries is a corporation
or partnership duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization, has the corporate or
partnership power and authority to own its properties and to carry on its
business as it is now being conducted, and is duly qualified to do business and
is in good standing in each jurisdiction in which the ownership of its property
or the conduct of its business requires such qualification, except where the
failure to be so qualified or in good standing, when taken with all other such
failures, would not have a Company Material Adverse Effect (as defined below).
The copies of the Company's Articles of Incorporation (the "Articles of
Incorporation") and by-laws previously delivered to Sub are complete and correct
and in full force and effect.
5.2. Authorization, Validity and Effect of Agreements. The Company
------------------------------------------------
has the requisite corporate power and authority to execute and deliver this
Agreement and all agreements and documents contemplated hereby. Subject only to
the approval of this Agreement and the transactions contemplated hereby by the
majority of all the votes entitled to be cast on the Merger by the holders of
Company Common Stock, the consummation by the Company of the transactions
contemplated hereby has been duly authorized by all requisite corporate action.
This Agreement constitutes a valid and legally binding obligation of the
Company, enforceable against the Company in accordance with its terms.
5.3. Capitalization. The authorized capital stock of the Company
--------------
consists of (x) 15,000,000 shares of Company Common Stock and (y) 5,000,000
shares of preferred stock, par value $.01 per share (the "Company Preferred
Stock"). As of
7
<PAGE>
January 31, 1998, there were 4,550,650 shares of Company Common Stock and no
shares of Company Preferred Stock issued and outstanding. Since such date, no
additional shares of capital stock of the Company have been issued, except
shares of Company Common Stock issued upon the exercise of options outstanding
under any Company Stock Option Plan. As of January 31, 1998, options to acquire
536,352 shares of Company Common Stock pursuant to the Company Stock Option Plan
were outstanding. The company disclosure letter (which identifies the Section or
subsection of this Agreement to which each item on such company disclosure
letter relates) delivered by the Company to Sub on the date hereof (the "Company
Disclosure Letter"), includes a complete and correct list of outstanding Options
under such plan (including the number of Options and exercise price of each such
Option) held by each employee, participant in the Affiliate Program (as defined
in Section 5.25 below) or director. The Company has no outstanding bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or which are convertible into or exercisable for securities having the
right to vote) with the stockholders of the Company on any matter. All issued
and outstanding shares of Company Common Stock are duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights. Other than as
set forth above, there are no outstanding shares of capital stock of the Company
or existing options, warrants, calls, subscriptions, convertible securities, or
other rights, agreements or commitments which obligate the Company or any of its
Subsidiaries to issue, transfer or sell any shares of capital stock of the
Company or any of its Subsidiaries. After the Effective Time, other than those
Options for which the consents contemplated by Section 4.3(b) shall not have
been obtained, the Surviving Corporation will have no obligation to issue,
transfer or sell any shares of capital stock or other securities of the Company
or the Surviving Corporation. The Company Disclosure Letter sets forth the total
amount of indebtedness for borrowed money and the total amount of cash on hand
of the Company and its Subsidiaries on a consolidated basis as of January 31,
1998. Except as provided in the Company Disclosure Letter, all such indebtedness
is prepayable without more than two business days notice and without the payment
of any penalty.
5.4. Subsidiaries. The Company owns directly or indirectly each of
------------
the outstanding shares of capital stock (or other ownership interests) of each
of the Company's Subsidiaries. Each of the outstanding shares of capital stock
(or other ownership interests) of each of the Company's Subsidiaries is duly
authorized, validly issued, fully paid and nonassessable, and is owned, directly
or indirectly, by the Company free and clear of all Encumbrances (as defined in
Section 5.15), other than Encumbrances set forth in the Company Disclosure
Letter. The following information for each Subsidiary of the Company is set
forth in the Company Disclosure Letter: (i) its name and jurisdiction of
incorporation or organization; (ii) its authorized capital stock (or other
ownership interests); and (iii) the number of issued and outstanding shares of
capital stock (or other ownership interests). Except for interests in the
Company's Subsidiaries or as provided in the Company Disclosure Letter, neither
the Company nor any of the Company's Subsidiaries owns directly or indirectly
any interest or investment (whether equity or debt) in any corporation,
partnership, joint venture, business, trust or entity.
8
<PAGE>
5.5. No Violation. Neither the execution and delivery by the
------------
Company of this Agreement nor the consummation by the Company of the
transactions contemplated hereby in accordance with the terms hereof, will: (i)
conflict with or result in a breach of any provision of the Articles of
Incorporation or by-laws of the Company or similar organizational document of
any Subsidiary of the Company; (ii) result in a breach or violation of, a
default under or the complete withdrawal from, or the triggering of any payment
or other obligations pursuant to, or, except as provided in the Company
Disclosure Letter, accelerate vesting under or require the consent of any
participant under, any Company Benefit Plan, including the Company Stock Option
Plan, or any grant or award made under the foregoing or in any benefit plan
contained in any collective bargaining agreement to which the Company or any of
its Subsidiaries is a party; (iii) violate, conflict with, result in a breach of
any provision of, constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, result in the termination or
in a right of termination or cancellation of, accelerate the performance
required by, result in the triggering of any payment or other obligations
pursuant to, result in the creation of any Encumbrance upon any of the
properties of the Company or its Subsidiaries under, or result in being declared
void, voidable or without further binding effect, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust or any
license, franchise, permit, lease, contract, agreement or other instrument,
commitment or obligation to which the Company or any of its Subsidiaries is a
party, or by which the Company or any of its Subsidiaries or any of their
respective properties is bound or affected, except for any of the foregoing
matters which would not, individually or in the aggregate, have a Company
Material Adverse Effect (as defined below); or (iv) other than the filing of the
Articles of Merger, filings required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act"), the Securities Exchange Act of 1934
(the "Exchange Act"), the Securities Act of 1933 (the "Securities Act") or
applicable state securities and "Blue Sky" laws (collectively, the "Regulatory
Filings"), require any consent, approval or authorization of, or declaration,
filing or registration with, any governmental or regulatory authority or other
person or entity, the failure to obtain or make which would, individually or in
the aggregate, have a Company Material Adverse Effect. As used herein, a
"Company Material Adverse Effect" shall mean events, changes, facts or effects
which, individually or in the aggregate, have had or are reasonably likely to
have a material adverse effect on the business, prospects, results of
operations, assets or financial condition of the Company and its Subsidiaries
taken as a whole, or prevent the consummation of the transactions contemplated
hereby.
5.6. SEC Documents; Financial Statements. The Company has filed
-----------------------------------
all forms, reports and documents required to be filed by it with the Securities
and Exchange Commission ("SEC") since June 17, 1994 through the date of this
Agreement (collectively, the "Company Reports"). As of their respective dates,
the Company Reports (i) complied in all material respects with the applicable
requirements of the Securities Act, the Exchange Act, and the rules and
regulations thereunder and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. The Company Disclosure Letter
includes the unaudited financial statements of the Company and its Subsidiaries
on
9
<PAGE>
a consolidated basis for the year ended December 31, 1997, including a balance
sheet as of such date and statements of income and cash flows for such period
(the "Company 1997 Financial Statements"). Each of the consolidated balance
sheets of the Company included in or incorporated by reference into the Company
Reports (including the related notes and schedules therein) and the Company 1997
Financial Statements fairly presents the consolidated financial position of the
Company and its Subsidiaries as of its date, and each of the consolidated
statements of income and cash flows of the Company included in or incorporated
by reference into the Company Reports (including the related notes and schedules
therein) and the Company 1997 Financial Statements fairly presents the results
of operations or cash flows, as the case may be, of the Company and its
Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to normal year-end audit adjustments which would not be
material in amount or effect), in each case in accordance with United States
generally accepted accounting principles ("GAAP") consistently applied during
the periods involved, except as may be noted therein.
5.7. Accounts Receivable.
-------------------
Except as provided in the Company Disclosure Letter, all accounts receivable,
notes receivable and other amounts due and owing from any third or related party
or other receivables of the Company and its Subsidiaries (the "Accounts
Receivable") represent sales actually made or services actually delivered or
loans or advances of cash in the ordinary course of business consistent with
past practice, and are reflected on the books and records of the Company net of
reserves, which are adequate and are calculated in accordance with GAAP and
consistent with past practices of Company. Except as provided in the Company
Disclosure Letter, all Accounts Receivable are fully collectible through the use
of ordinary collection procedures in the full aggregate face amount thereof less
any allowance for bad debt loss set forth in the Company Reports, the Company
1997 Financial Statements or thereafter accrued on the books of the Company and
its Subsidiaries calculated in accordance with GAAP and consistent with past
practices of the Company. Except as provided in the Company Disclosure Letter,
there are no refunds, discounts or other adjustments payable in respect of any
of the Receivables or any defenses, rights of set-off, assignments, restrictions
or Encumbrances enforceable by third parties on or affecting the Receivables.
5.8. Insurance. The Company Disclosure Letter contains a complete
---------
and correct list of all effective insurance policies which cover the business,
properties and assets of the Company and its Subsidiaries and all premiums due
thereon have been paid. The insurance coverage provided by insurance policies
listed in the Company Disclosure Letter and, to the best Knowledge of the
Company, the insurance coverage maintained by each participant in the Affiliate
Program, is adequate and suitable for the business and operations of the Company
and its Subsidiaries or the participant in the Affiliate Program, as the case
may be, and, to the best knowledge of the Company, is on such terms, covers such
risks (including, to the best Knowledge of the Company, those arising out of the
activities of the participants in the Affiliate Program), contains such
deductibles and retentions, and is in such amounts, as the insurance customarily
carried by comparable companies of established reputation similarly situated and
carrying on the same or similar business operations. Complete and correct copies
of all such policies have been provided to Sub prior to the date hereof. No
notice of cancellation or non-
10
<PAGE>
renewal has been received by the Company or its Subsidiaries and neither the
Company nor any of its Subsidiaries is in default under any such policy. The
financial statements included in the Company Reports and the Company 1997
Financial Statements reflect adequate reserves for any insurance programs which
require (or have required) the Company or its Subsidiaries to retain a portion
of each loss, including, but not limited to, deductible and self-insurance
programs, except to the extent the amount of any failures to reflect adequate
reserves for any insurance programs would not, individually or in the aggregate,
have a Company Material Adverse Effect.
5.9. Litigation. Except as provided in the Company Disclosure
----------
Letter, there are no actions, suits, arbitrations, charges or proceedings
pending or, to the best knowledge of the Company, threatened, at law or in
equity, or before or by any court, agency or other governmental or regulatory
authority or entity, that would, if adversely determined, have, individually or
in the aggregate, a Company Material Adverse Effect.
5.10. Absence of Certain Changes. Except as set forth in the
--------------------------
Company Disclosure Letter, since December 31, 1996, the Company and its
Subsidiaries have conducted their respective businesses only in the usual,
regular and ordinary course, consistent with past practice, and there has not
been any Company Material Adverse Effect or any non-recurring event in the
absence of which there would have been a Company Material Adverse Effect; and
since September 30 ,1997, there has not been (i) any delivery of a notice of
non-renewal or any other failure to renew contracts or agreements which are
material to the Company and its Subsidiaries taken as a whole, (ii) through the
date hereof any loss of any employee who earned more than $100,000 in the most
recent fiscal year (in salary, bonus and other cash compensation), (iii) any
acquisition or disposition of assets in a transaction or series of related
transactions in excess of $250,000, other than in the ordinary course, (iv) any
action taken by the Company or any of its Subsidiaries of the type contemplated
by Section 7.2(iii) and (vi)-(xvi) hereof or (vi) any failure to take any action
by the Company or any of its Subsidiaries of the type contemplated by Section
7.2(i) and (ii) hereof.
5.11. Tax Matters. Except for such matter that (i) would not,
-----------
individually or in the aggregate, have a Company Material Adverse Effect; (ii)
is disclosed in the Company Disclosure Letter or (iii) is contained in the
Company Reports:
(a) Definitions:
"Code" means the Internal Revenue Code of 1986, as amended. All
----
citations to provisions of the Code, or to the Treasury Regulations promulgated
thereunder, shall include any amendments thereto and any substitute or successor
provisions thereto.
"Taxes" means any and all federal, state, local and foreign taxes,
-----
assessments and other governmental charges, duties, impositions and liabilities,
including, without limitation, taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, gains, franchise, withholding, payroll, recapture, employment, excise,
unemployment, insurance, social
11
<PAGE>
security, business license, occupation, business organization, stamp,
environmental and property taxes, together with all interest, penalties and
additions imposed with respect to such amounts. For purposes of this Agreement,
"Taxes" also includes any obligations under any agreements or arrangements with
any person with respect to the liability for or sharing of Taxes (including
pursuant to Treas. Reg. (S) 1.1502-6 or comparable provisions of state, local or
foreign tax law) and including liability for Taxes as a transferee or successor,
by contract or otherwise.
"Taxable Period" means any taxable year or any other period that is
--------------
treated as a taxable year (or other period, or portion thereof, in the case of a
Tax imposed with respect to such period or portion thereof, e.g., a quarter)
with respect to which any Tax may be imposed under any applicable statute, rule,
or regulation.
"Tax Reserve" shall have the meaning set forth in Section 5.11.
-----------
"Tax Return" shall mean any report, return, election, notice,
----------
estimate, declaration, information statement and other forms and documents
(including all schedules, exhibits and other attachments thereto) relating to
and filed or required to be filed with a taxing authority in connection with any
Taxes (including, without limitation, estimated Taxes).
(b) All Tax Returns required to be filed by or with respect to the
Company and/or any of its Subsidiaries have been timely filed. All such Tax
Returns (i) were prepared in the manner required by applicable law, (ii) are
true, correct and complete in all respects, and (iii) reflect the liability for
Taxes of the Company and each of its Subsidiaries. All Taxes shown to be
payable on such Tax Returns, and all assessments of Tax made against the Company
and/or any of its Subsidiaries with respect to such Tax Returns, have been paid
when due. No adjustment relating to any such Tax Return has been proposed or
threatened formally or informally by any Taxing authority and no basis exists
for any such adjustment.
(c) The Company and each of its Subsidiaries have made (or there has
been made on their behalf) all required current estimated Tax payments
sufficient to avoid any underpayment penalties.
(d) The Company and each of its Subsidiaries have (i) timely paid or
caused to be paid all Taxes that are or were due, whether or not shown (or
required to be shown) on a Tax Return and (ii) provided a sufficient reserve for
the payment of all Taxes not yet due and payable (the "Tax Reserve") on the
financial statements of the Company included in the Company Reports. There are
no Taxes that would be due if asserted by a Taxing authority, except with
respect to which the Company and each of its Subsidiaries are maintaining
adequate reserves on the financial statements of the Company included in the
Company Reports.
(e) The Company and each of its Subsidiaries have complied (and
until the Closing Date will comply) in all material respects with the provisions
of the Code relating to the withholding and payment of Taxes, including, without
limitation, the
12
<PAGE>
withholding and reporting requirements under Code sections 1441 through 1464,
3401 through 3406, and 6041 through 6049, as well as similar provisions under
any other laws, and have within the time and in the manner prescribed by law,
withheld from employee wages and paid over to the proper governmental
authorities all amounts required.
(f) None of the Tax Returns have been or is currently being examined
by the Internal Revenue Service (the "IRS") or relevant state, local or foreign
Taxing authorities.
(g) No material claim has ever been made in writing by any Taxing
authority with respect to the Company or any of its Subsidiaries in a
jurisdiction where the Company and/or any of its Subsidiaries do not file Tax
Returns that the Company or any such Subsidiary is or may be subject to Taxation
by that jurisdiction. Except for liens for real and personal property Taxes
that are not yet due and payable, there are no liens for any Tax upon any asset
of the Company or any of its Subsidiaries.
(h) The Company and each of its Subsidiaries have made available
(or, in the case of Tax Returns filed after the date hereof, will make available
at such time and place as Sub may request) to Sub complete and accurate copies
of such Tax Returns, and amendments thereto, filed by the Company and/or its
Subsidiaries as Sub may request.
(i) Neither the Company nor any of its Subsidiaries is a party to
any agreement relating to allocating or sharing the payment of, or liability
for, Taxes for any Taxable Period.
(j) Neither the Company nor any of its Subsidiaries has distributed
the stock of any corporation in a transaction satisfying the requirements of
Section 355 of the Code since April 16, 1997.
(k) There is no contract, agreement, plan or arrangement covering
any person that, individually or collectively, could give rise to, nor will the
consummation of the transactions contemplated hereby obligate the Company or Sub
to make, the payment of any amount that would not be deductible by the Company
or any or its Subsidiaries by reason of Section 280G of the Code.
(l) Neither the Company nor any of its Subsidiaries has executed any
outstanding waivers or comparable consents regarding the application of the
statute of limitations with respect to any Taxes or Tax Returns.
(m) All Company Stock Options granted under any Stock Option Plan
qualify under Section 162(m)(4) of the Code as an exception from "applicable
employer remuneration," and as such, no deduction of the Company or any of its
Subsidiaries relating to the Company Stock Options would be disallowed by reason
of Section 162(m) of the Code.
(n) The Company is the common parent of an affiliated group (within
the meaning of Code section 1504(a)) that files a consolidated U.S. federal
income tax return and includes the corporations listed on the Company Disclosure
Letter.
13
<PAGE>
(o) Neither the Company nor any of its Subsidiaries owns an interest
in a partnership or could be treated as a partner in a partnership for U.S.
federal income tax purposes.
5.12. Employee Benefit Plans.
----------------------
(a) The Company Disclosure Letter sets forth all pension,
retirement, savings, profit sharing, medical, dental, health, disability, life,
death benefit, group insurance, deferred compensation, stock option, stock
purchase, restricted stock, bonus or incentive, severance pay, employment or
termination agreement, and any other employee benefit or compensation plan,
trust, arrangement, contract, agreement, policy or commitment, including,
without limitation, any "employee benefit plan" as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
whether formal or informal, written or oral, under which current or former
employees, directors or independent contractors of the Company or any of its
Subsidiaries are entitled to participate or have participated by reason of their
relationship with the Company or any of its Subsidiaries, and (i) to which the
Company or any of its Subsidiaries is a party or a sponsor or a fiduciary
thereof or by which the Company or any of its Subsidiaries (or any of their
rights, properties or assets) is currently bound or (ii) with respect to which
the Company or any of its Subsidiaries has any obligation to make payments or
contributions, or may otherwise have any current or future liability (but
excluding any such Plan covering solely employees of an independent contractor
of the Company or any "multiemployer plan" within the meaning of Section 3(37)
of ERISA) (collectively, the "Benefit Plans").
(b) Each Benefit Plan has at all times been operated and
administered in compliance in all material respects with its terms, the
applicable requirements of ERISA and the Code and all other applicable laws
(including regulations and rulings thereunder) of the United States or any
foreign jurisdiction, including their respective political subdivisions. Each
Benefit Plan that is intended to be tax qualified under Section 401(a) of the
Code has received a favorable determination letter from the Internal Revenue
Service stating that it is so qualified and that any trust associated with the
Plan is tax exempt under Section 501(a) of the Code, and there is no reason why
the qualified status of any such Plan or trust would be denied or revoked,
whether retroactively or prospectively. All amendments to the Benefit Plans
that were required to be made through the date hereof and the Effective Time to
maintain the continued qualified status of such Benefit Plans under Section
401(a) of the Code have been or will be made by the Effective Time.
(c) No actual or threatened disputes, lawsuits, claims (other than
routine claims for benefits), investigations, audits or complaints to, or by,
any person or Governmental Entity have been filed or are pending with respect to
the Benefit Plans or the Company or any of its Subsidiaries in connection with
any Benefit Plan or the fiduciaries or administrators thereof, and no state of
facts or conditions exist which, to the best knowledge of the Company, could be
reasonably expected to subject the Company or any of its Subsidiaries to any
liability (other than routine claims for benefits) under the terms of the
Benefit Plan or applicable law. With respect to each Benefit Plan, there has
14
<PAGE>
not occurred, and no person or entity is contractually bound to enter into, any
nonexempt "prohibited transaction" within the meaning of Section 4975 of the
Code or Section 406 of ERISA, nor any transaction that would result in a civil
penalty being imposed under Section 409 or 502(i) of ERISA.
(d) No liability under Title IV of ERISA has been or is expected to
be incurred by the Company or any Subsidiary with respect to any ongoing, frozen
or terminated Benefit Plan which is a "single-employer plan" within the meaning
of Section 4001(a)(15) of ERISA (a "Pension Plan"), or any single-employer plan
of any entity (an "ERISA Affiliate") that is considered one employer with the
Company under Section 4001 of ERISA or Section 414 of the Code (an "ERISA
Affiliate Plan"). With respect to each Pension Plan and each ERISA Affiliate
Plan, as of the last day of the most recent plan year ended prior to the date
hereof, the actuarially determined present value of all "benefit liabilities"
within the meaning of Section 4001(a)(16) of ERISA (as determined on the basis
of the actuarial assumptions contained in the Plans' most recent actuarial
valuation) did not exceed the then current value of the assets of such Plans,
and there has not been an adverse change in the financial condition of such
Plans which would have caused a material change in the funded status of such
Plans. No notice of a "reportable event", within the meaning of Section 4043 of
ERISA for which the 30-day reporting requirement has not been waived has been
required to be filed for any Pension Plan or by any ERISA Affiliate Plan within
the three-year period ending on the date hereof. The Pension Benefit Guaranty
Corporation has not instituted proceedings to terminate any Pension Plan or
ERISA Affiliate Plan and no condition exists that presents a material risk that
such proceedings will be instituted. Neither the Company, its Subsidiaries nor
any ERISA Affiliate has incurred, nor does the Company expect that any such
entity will incur, any withdrawal liability with respect to a "multiemployer
plan" (within the meaning of Section 3(37) of ERISA) under Title IV of ERISA or
any material liability in connection with the reorganization or termination of
any multiemployer plan.
(e) All contributions or payments made or deemed to have been made
with respect to each Benefit Plan that is a deferred compensation plan,
including any Pension Plan, are presently, and have been during the years to
which they relate, fully deductible pursuant to Section 404 of the Code and are
not presently, and have never been during the years to which they relate,
subject to any excise tax under Section 4972 of the Code. The Company has not
requested, nor has pending as of the date hereof or the Effective Time, a
minimum funding variance or waiver within the meaning of Section 412(d) of the
Code. As of the Effective Time, all payments of outstanding contributions, due
on or prior to that date, including minimum contributions, premiums, and funding
obligations imposed by the terms of an Benefit Plan or by any law or government
agency (including under Part 3 of ERISA and Section 412 of the Code) shall have
been made with respect to each Benefit Plan. All contributions to and payments
with respect to or under the Benefit Plans that are required to be made with
respect to periods ending on or before the Effective Time have been made or
accrued before the Effective Time by the Company in accordance with the
appropriate plan documents, financial statement, actuarial report, collective
bargaining agreements or insurance contracts or arrangements. With respect to
each Benefit Plan that is an "employee welfare benefit plan" under Section 3(1)
of ERISA (a "Welfare Plan") that is partially or fully funded through a trust,
15
<PAGE>
all tax deductions claimed by the Company or any of its Subsidiaries relating to
any such trust are allowable, and all tax returns and other governmental filings
required to be filed with respect to any such trust, whether by the Company or
any of its Subsidiaries or the trust, have been made in a timely manner.
(f) Except as specifically set forth in the Company Disclosure
Letter, no Plan providing medical or death benefits (whether or not insured)
with respect to current or former employees of the Company continues such
coverage or provides such benefits beyond their date of retirement or other
termination of service (other than coverage mandated by section 601 of ERISA,
the cost of which is fully paid by the former employee or his or her
dependents).
(g) Each trust fund associated with a Welfare Plan that is
established under Section 501(c)(9) of the Code and is intended to be tax-exempt
under Section 501(a) of the Code (a "VEBA") has received a favorable
determination letter from the IRS stating that the trust fund is so exempt, and
there is no reason why the tax-exempt status under Section 501(a) of the Code of
any such VEBA would be denied or revoked, whether retroactively or
prospectively, by any governmental agency, including, without limitation, the
IRS and the United States Department of Labor. Each VEBA has satisfied all
applicable requirements of Section 419, 419A and 505 of the Code, and neither
the Company nor any Subsidiary has become subject to any excise tax under
Section 4976 of the Code.
(h) With respect to each Benefit Plan, the Company has made
available to Sub complete and correct copies of the following documents, to the
extent in each case that such documents exist or are required by law: (1)
current plan documents, subsequent plan amendments, or any and all other
documents that establish or describe the existence of the plan, trust,
arrangement, contract, policy or commitment; (2) current summary plan
descriptions and summaries of material modifications; (3) the most recent tax
qualified determination letters, if any, received from or applications pending
with the IRS; (4) the three most recent Form 5500 Annual Reports, including
related schedules and audited financial statements and opinions of independent
certified public accountants; (5) with respect to each defined contribution
plan, the most recent annual and quarterly or monthly valuations; (6) with
respect to each Pension Plan, a copy of the most recent actuarial valuation
report; and (7) the most recent nondiscrimination testing results under Sections
401(a)(4), 401(k) and 410(b) of the Code.
(i) The execution of, and performance of the transactions
contemplated in, this Agreement will not (either alone or upon the occurrence of
any additional or subsequent events) constitute an event under any plan, policy,
arrangement or agreement or any trust or loan that will or may result in any
payment (whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any current or former employee, director or consultant
of the Company.
(j) Except as set forth in the Company Disclosure Letter, to the
best Knowledge of the Company, neither the Company nor any of its Subsidiaries
has any
16
<PAGE>
liability, contingent or otherwise, with respect to any employee benefit or
compensation plan, program, arrangement or agreement that is sponsored,
maintained or contributed to by any participant in the Affiliate Program or any
other independent owner/operator with whom the Company or any of its
Subsidiaries has a contractual relationship including, without limitation, with
respect to any such "multiemployer plan" (within the meaning of Section 3(37) of
ERISA) or other such "employee benefit plan" (within the meaning of Section 3(3)
of ERISA).
5.13. Labor Matters; Suppliers; Distributors and Customers.
----------------------------------------------------
(a) The Company Disclosure Letter lists all collective bargaining or
other labor union contracts to which the Company or any of its Subsidiaries is a
party and which is applicable to persons employed by the Company or any of its
Subsidiaries. There is no pending or, to the best knowledge of the Company,
threatened union organizational effort, material labor dispute, strike or work
stoppage against the Company or any of its Subsidiaries. Neither the Company
nor any of its Subsidiaries, nor their respective representatives or employees,
has committed any material unfair labor practices in connection with the
operation of the respective businesses of the Company or any of its
Subsidiaries, and there is no pending or, to the best knowledge of the Company,
threatened charge or complaint against the Company or any of its Subsidiaries by
the National Labor Relations Board or any similar governmental agency. The
Company and all of its Subsidiaries, and to the best knowledge of the Company,
Jefferies Transportation and Lloyd Transportation and, to the best Knowledge of
the Company, each participant in the Affiliate Program, have in the past been
and are in compliance in all respects with all applicable collective bargaining
agreements and laws respecting employment, employment practices, labor
relations, safety and health, wages, hours and terms and conditions of
employment, except for such failures to be in compliance as have not had,
individually or in the aggregate, a Company Material Adverse Effect that has not
been cured and would not have, individually or in the aggregate, a Company
Material Adverse Effect. Neither the Company nor any of its Subsidiaries has
experienced within the past 12 months a "plant closing" or "mass layoff" within
the meaning of the Worker Adjustment and Retraining Notification Act, 29 U.S.C.
(S)(S) 2101 et seq. The Company Disclosure Letter also sets forth the aggregate
number of drivers that work for any of the Company, its Subsidiaries, any
participant in the Affiliate Program and any other independent owner/operator
with whom the Company has a contractual relationship, specifying, in the case of
the Company and its Subsidiaries, the number of such drivers who belong to a
union or are otherwise covered by an employment agreement or a collective
bargaining agreement.
(b) The relationships with the suppliers and distributors for and
customers of, including, without limitation, all contractors under the Affiliate
Program, the Company and its Subsidiaries are satisfactory working commercial
relationships and, during the twelve-month period ended on the date of Closing,
no such supplier, distributor or customer has cancelled or otherwise terminated
its relationship with or decreased its services, supplies or materials to or its
usage or purchase of the services or products of the Company or any of its
Subsidiaries in a manner which has had or would have a Company Material Adverse
Effect. Neither the Company nor any of its
17
<PAGE>
Subsidiaries is aware of any intention of any such supplier, distributor or
customer to take any such action.
5.14. Absence of Undisclosed Liabilities. Neither the Company nor
----------------------------------
any of its Subsidiaries has any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise, whether due or to become due,
except (a) liabilities or obligations reflected or reserved against in the
financial statements of the Company included in the Company Reports or the
Company 1997 Financial Statements and (b) liabilities or obligations which would
not, individually or in the aggregate, have a Company Material Adverse Effect.
5.15. Title to Properties and Related Matters. Each of the Company
---------------------------------------
and its Subsidiaries has good and marketable title (and with respect to all
owned real property (the "Owned Real Property"), fee simple title) to all of the
properties and assets which it purports to own, real, personal, tangible and
intangible (including those reflected in the financial statements included in
the Company Reports and in the Company 1997 Financial Statements, except as
since sold or otherwise disposed of in the ordinary course), free of any
mortgage, claim, lien, pledge, option, charge, security, security interest or
other similar interest, encumbrance, easement, judgment or imperfection of title
of any nature whatsoever (each, an "Encumbrance") except (i) those reflected or
reserved against in the latest financial statements of the Company included in
the Company Reports or the Company 1997 Financial Statements, (ii) Taxes and
general and special assessments not in default and payable without penalty and
interest, and (iii) Encumbrances which would (x) not materially detract from the
value, or interfere with the present use, of the properties of the Company and
its Subsidiaries, and (y) would not otherwise materially impair the business
operations of the Company and its Subsidiaries (collectively, "Permitted
Encumbrances").
(b) Set forth in the Company Disclosure Letter is a list of all
leases, subleases and other agreements (the "Real Property Leases") under which
the Company or any of its Subsidiaries uses or occupies or has the right to use
or occupy, now or in the future, any real property or facility (the "Leased Real
Property") (including all modifications, amendments and supplements thereto) and
a summary of the material terms and amounts of payments due under such Real
Property Leases. The Company has heretofore provided to Sub complete and correct
copies (or accurate summaries or abstracts) of all Real Property Leases. Each
Real Property Lease and each other lease with respect to any personal property
leased by the Company or any of its Subsidiaries is valid and binding on the
Company or its Subsidiary, as the case may be, and in full force and effect, and
no termination event or condition or uncured default on the part of the Company
or any such Subsidiary or, to the best knowledge of the Company, the landlord or
lessor, as the case may be, exists under any Real Property Lease or any such
other lease. Each of the Company and its Subsidiaries has a good and valid
leasehold interest in each parcel of Leased Real Property and possesses and
quietly enjoys the Leased Real Property under the Real Property Leases free and
clear of all Encumbrances, except for Permitted Encumbrances.
18
<PAGE>
5.16. Material Contracts. There have been made available to Sub or
------------------
its designees complete and correct copies of all of the following contracts to
which the Company or any of its Subsidiaries is a party or by which any of them
is bound (collectively, the "Material Contracts"): (i) contracts with any
current officer, director, "affiliate" or "associate" (as such terms are defined
in Rule 12b-2 under the Exchange Act) of the Company or any of its Subsidiaries;
(ii) contracts for the sale of any of the assets of the Company or any of its
Subsidiaries other than in the ordinary course of business or for the grant to
any person of any preferential rights to purchase any of its assets; (iii)
contracts containing covenants of the Company or any of its Subsidiaries not to
compete in any line of business or with any person in any geographical area or,
other than forms of contracts with independent contractors in connection with
the Affiliate Program, covenants of any other person not to compete with the
Company or any of its Subsidiaries in any line of business or in any
geographical area; (iv) indentures, credit agreements, mortgages, promissory
notes, and other contracts relating to the borrowing of money which are in
excess of $1,000,000 in the aggregate, (v) contracts or obligations with all
employees, consultants and agents providing for annual payments in excess of
$150,000, (vi) contracts which contain change of control provisions or whose
severance provisions will be accelerated upon consummation of the transactions
contemplated hereby; (vii) forms of contracts with independent contractors in
connection with the Affiliate Program which are substantially the same as all
such contracts; and (viii) all other agreements contracts or instruments which
are material to the Company. All of the Material Contracts are in full force and
effect and are the legal, valid and binding obligation of the Company or its
Subsidiaries, enforceable against them in accordance with their respective
terms. Neither the Company nor any Subsidiary is in default under any Material
Contract nor, to the best knowledge of the Company, is any other party to any
Material Contract in default thereunder.
5.17. Compliance With Laws. The Company and each of its
--------------------
Subsidiaries, and to the best Knowledge of the Company, each participant in the
Affiliate Program have been in the past and are in compliance with all
applicable statutes, laws, codes, ordinances, regulations, rules, Permits (as
defined below), judgments, decrees and orders of any Governmental Entity, except
for such failures to be in compliance as have not had, individually or in the
aggregate, a Company Material Adverse Effect that has not been cured and would
not have, individually or in the aggregate, a Company Material Adverse Effect.
The Company and each of its Subsidiaries and, to the best Knowledge of the
Company, each participant in the Affiliate Program has in effect (and the
Company and/or each Subsidiary and, to the best Knowledge of the Company, each
participant in the Affiliate Program has timely made appropriate filings for
issuance or renewal thereof) all Federal, state, local and foreign governmental
approvals, authorizations, certificates, filings, franchises, licenses, notices,
permits and rights, including all authorizations under Environmental Laws (as
defined below) and exemptions from any of the foregoing (collectively,
"Permits") necessary for it to own, lease or operate its properties and assets
and to carry on its business as now conducted, except for the failure to have
such Permits that, individually or in the aggregate, has not had and would not
have a Company Material Adverse Effect. The Company Disclosure Letter contains a
list of all of the type of Permits which are material to the Company and its
Subsidiaries and the Company or a Subsidiary of the Company has all such Permits
and all such Permits are in full force and
19
<PAGE>
effect, except as set forth in the Company Disclosure Letter. Copies of such
Permits have been provided to Sub or its counsel or will be so provided upon
request. No default under any Permit has occurred, except for defaults under
Permits that, individually or in the aggregate, would have a Company Material
Adverse Effect. Except as set forth in the Company Disclosure Letter, neither
the Company nor any of its Subsidiaries, nor to the best Knowledge of the
Company, any participant in the Affiliate Program has received notice of any
pending investigation or review by any Governmental Entity with respect to the
Company or any of its Subsidiaries or any participant in the Affiliate Program.
To the best knowledge of the Company, no such investigation or review is
threatened.
5.18. Environmental, Health and Safety Matters. Except for such
----------------------------------------
matter that (i) would not, individually or in the aggregate, have a Company
Material Adverse Effect; (ii) is disclosed in the Company Disclosure Letter or
(iii) is contained in the Company Reports:
(a) The Company and each of its Subsidiaries comply, and the Company
and each of its Subsidiaries at all times have complied, with all EHS
Requirements of Law (as defined below) applicable to their operations or the
Properties (as defined below), including, without limitation, the use,
maintenance and operation of the Properties, and all activities and conduct of
business by them related thereto, including, without limitation, the treatment,
remediation, removal, transport, storage and/or disposal of any Contaminant (as
defined below);
(b) The Company and each of its Subsidiaries have obtained or have
taken appropriate steps, as required by EHS Requirements of Law, to obtain all
EHS Permits necessary for their operations and the ownership and operation of
the Properties, all such EHS Permits (as defined below) are in good standing,
and the Company and each of its Subsidiaries are currently in compliance with
all terms and conditions of such EHS Permits. No material change in the facts
or circumstances reported or assumed in the applications for or the granting of
such EHS Permits exists. There are not any proceedings threatened which would
jeopardize the validity of any such EHS Permits;
(c) All of the third parties with which the Company or any of its
Subsidiaries have arranged, engaged or contracted to accept, treat, transport,
store, dispose or remove any Contaminant generated or present at any of the
Properties, or which otherwise participate or have participated in activities or
conduct related to the operations of the Company or any of its Subsidiaries or
the Properties, were, to the knowledge of the Company, properly permitted at the
relevant time to perform the foregoing activities or conduct;
(d) Neither the Company nor any of its Subsidiaries is subject to
any investigation, or any judicial or administrative proceeding, notice, order,
judgment, decree or settlement, alleging or addressing in connection with the
operations or the Properties (i) any violation of any EHS Requirements of Law,
or (ii) any Remedial Action (as defined below), or (iii) any claims or
liabilities and costs arising from the Release (as defined below) or threatened
Release of any Contaminant;
20
<PAGE>
(e) No Environmental Lien (as defined below) has attached to any of
the Properties;
(f) Neither the Company nor any of its Subsidiaries has received or
is otherwise aware of any notice, claim or other communication concerning (i)
any alleged violation of any EHS Requirements of Law at any of the Properties,
whether or not corrected to the satisfaction of the appropriate authority, (ii)
alleged liability of the Company or any Subsidiary for EHS Damages (as defined
below) arising out of or related to the operations or any of the Properties, or
(iii) any alleged liability of the Company or any of its Subsidiaries arising
out of or related to the operations or the Properties for the Release or
threatened Release of a Contaminant at any location, and there exists no writ,
injunction, decree, order or judgment outstanding, nor any lawsuit, claim,
proceeding, citation, directive, summons or investigation, pending or
threatened, relating to the condition, ownership, use, maintenance or operation
of any of the Properties, or the suspected presence of Contaminants thereon or
therefrom, nor does there exist any basis for such lawsuit, claim, proceeding,
citation, directive, summons or investigation being instituted or filed;
(g) There has been no Release of any Contaminants in reportable
quantities at, to or from any of the Properties;
(h) None of the Properties is listed or proposed for listing on the
National Priorities List ("NPL") pursuant to the Comprehensive Environmental
---
Response, Compensation, and Liability Act, as amended ("CERCLA"), or listed on
------
the Comprehensive Environmental Response Compensation Liability Information
System List ("CERCLIS") or any similar state list of sites, and neither the
-------
Company nor any of its Subsidiaries is aware of any conditions at any of such
Properties which, if known to a Governmental Entity, would qualify such
Properties for inclusion on any such list;
(i) Neither the Company nor any of its Subsidiaries has any
contingent liability in connection with its operations or the ownership or
operation of any of the Properties for the Release or threatened Release of any
Contaminant at any location;
(j) Neither the Company nor any of its Subsidiaries has disposed (as
such term is defined in the Federal Resource Conservation and Recovery Act) of
any Contaminant at any of the Properties;
(k) Neither the Company nor any of its Subsidiaries has transported
or arranged for the transport of any Contaminant to any facility or site for the
purpose of treatment or disposal which (i) is included on the NPL or CERCLIS,
(ii) is or was, at the time of disposal, subject to a Remedial Action
requirement (other than routine, anticipated, closure-related corrective action
obligations affecting closed solid waste management units at such facility)
issued under the federal Resource Conservation and Recovery Act or any state,
local or foreign solid or hazardous waste regulatory law, or (iii) at the time
of the disposal had received a notice of violation or was otherwise subject to a
governmental enforcement action with respect to alleged violations of any EHS
Requirements of Law;
21
<PAGE>
(l) No Contaminant has migrated from any of the Properties onto or
underneath other properties, nor has any Contaminant migrated or threatened to
migrate from other properties upon, about or beneath any of the Properties;
(m) No underground improvements, including but not limited to
treatment or storage tanks, sumps, or water, gas or oil wells, or associated
piping, are or have ever been located on any of the Properties;
(n) There is not constructed, placed, deposited, released, stored,
disposed, leaching nor located on any of the Properties any polychlorinated
biphenyls ("PCBs") or transformers, capacitors, ballasts, or other equipment
----
which contain dielectric fluid containing PCBs; and
(o) Neither the Company nor any of its Subsidiaries has any
liability, or has received or is otherwise aware of any notice, claim or other
communication alleging liability on the part of the Company or any of its
Subsidiaries, for the violation of any EHS Requirements of Law, for EHS Damages,
or for the Release or threatened Release of any Contaminant in connection with
any businesses or properties previously owned or operated by the Company or any
of its Subsidiaries or any former subsidiary.
For purposes hereof, the following terms shall have the following meanings:
"Contaminant" means any pollutant, chemical substances, hazardous
-----------
substance, radioactive substance, toxic substance, hazardous waste, medical
waste, radioactive waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos, PCBs, or any hazardous or toxic constituent
thereof and includes, but is not limited to, any substance regulated, restricted
or addressed by or under EHS Requirements of Law.
"EHS Damages" means all claims, judgments, damages (including punitive
-----------
damages), losses, penalties, fines, interest, fees, liabilities (including
strict liability), encumbrances, liens, costs, and expenses of investigation and
defense of any claim, whether or not such claim is ultimately defeated, and of
any good faith settlement of judgment, of whatever kind or nature, contingent or
otherwise, matured or unmatured, foreseeable or unforeseeable, including,
without limitation, reasonable attorneys' fees and disbursements and
consultants' fees, any of which are incurred at any time as a result of the
existence of Contaminants at any location or noncompliance with EHS Requirements
of Law, including without limitation:
(i) Damages for personal injury or threatened personal injury
(including sickness, disease or death), or injury or threatened injury to
property or natural resources, foreseeable or unforeseeable, including,
without limitation, the cost of demolition and rebuilding of any
improvements on real property;
(ii) Reasonable fees incurred for the services of attorneys,
consultants, contractors, doctors, experts, laboratories and all other
reasonable costs incurred in connection with any damages as described in
subparagraph (i) of this definition, and the investigation or remediation
of Contaminants or the suspected
22
<PAGE>
presence of Contaminants or the violation or threatened violation of EHS
Requirements of Law including, but not limited to, the preparation of any
feasibility studies or reports or the performance of any investigations,
cleanup, treatment, remediation, removal, response, abatement, containment,
closure, storage, disposal, transport, restoration or monitoring work
required by any federal, state, local or foreign governmental agency or
political subdivision, or otherwise expended in connection with such
conditions, and including, without limitation, any reasonable attorneys'
fees, costs and expenses incurred in enforcing this Agreement or collecting
any sums due hereunder; and
(iii) Liability to any third person or Governmental Entity to
indemnify such person or Governmental Entity for costs expended in
connection with the items referenced in subparagraphs (i) and (ii) of this
definition.
"EHS Permits" means all permits, consents, licenses, and other
-----------
approvals or authorizations required under EHS Requirements of Law.
"EHS Requirements of Law" means all federal, state, local and foreign
-----------------------
laws, statutes, codes, ordinances, rules, regulations, directives, binding
policies, EHS Permits, or orders relating to or addressing the environment,
health or safety, including, but not limited to, any law, statute, code,
ordinance, rule, regulation, directive, binding policy, EHS Permit or order
relating to (x) the use, handling or disposal of any Contaminant or (y)
workplace or worker safety and health, as such requirements are promulgated by
the specifically authorized Governmental Entity responsible for administering
such requirements.
"Environmental Lien" means a lien in favor of any Governmental Entity
------------------
for any (a) liability under any EHS Requirement of Law, or (b) damages arising
from, or costs incurred by, such Governmental Entity in response to a Release or
threatened Release of a Contaminant into the environment.
"Properties" means all real or personal property of any kind or
----------
description presently owned, leased, operated, or otherwise under the control of
the Company or any Subsidiary.
"Release" means the presence, release, spill, emission, leaking,
-------
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migrating into the indoor or outdoor environment of any Contaminant through or
in the air, soil, subsurface, surface water, groundwater or Properties.
"Remedial Action" means actions required to (i) clean up, remove,
---------------
treat or in any other way address Contaminants in the indoor or outdoor
environment; (ii) prevent the Release or threat of Release or minimize the
further Release of Contaminants; or (iii) investigate and determine if a
remedial response is needed, to design such a response and post-remedial
investigation, monitoring, operation, maintenance and care.
5.19 Assets. The Company Disclosure Letter sets forth a complete
------
and correct list of all fixed assets, including the net book value of such
assets, of the
23
<PAGE>
Company and its Subsidiaries. At the Effective Time, the assets of the Company,
its Subsidiaries and, to the best Knowledge of the Company, the participants in
the Affiliate Program will constitute all the equipment and other assets
presently used in the conduct of (except as sold or retired in the ordinary
course of business) or necessary to operate the businesses of the Company and
its Subsidiaries in accordance with past practice. All assets of the Company,
its Subsidiaries and, to the best Knowledge of the Company, the participants in
the Affiliate Program, including those assets set forth on the Company
Disclosure Letter, including those reflected in the financial statements
included in the Company Reports, the Company 1997 Financial Statements or
otherwise, are, in the aggregate, well maintained and in good operating
condition, and, with respect to the tank trailers, facilities and tractors, are
free from all structural flaws and design and engineering deficiencies which
would materially reduce the useful life of such assets, except for reasonable
wear and tear and except for items which have been written down in the financial
statements included in the Company Reports or the Company 1997 Financial
Statements to a realizable market value or for which adequate reserves have been
provided in the financial statements included in the Company Reports or the
Company 1997 Financial Statements. The present quantity of all such equipment of
the Company, its Subsidiaries and the participants in the Affiliate Program is
reasonably necessary, in the aggregate, in the present course of the business
conducted by the Company and its Subsidiaries. All of such equipment (except for
leased equipment for which the lessors have valid security interest) is free and
clear of any Encumbrance other than Permitted Encumbrances.
5.20. No Brokers. Neither the Company nor any of its Subsidiaries
----------
has entered into any contract, arrangement or understanding with any person or
firm which may result in the obligation of the Company or any of its
Subsidiaries or the Surviving Corporation to pay any finder's fees, brokerage or
agent's commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions contemplated
hereby, except that the Company has retained BT Alex. Brown Incorporated as its
financial advisor, the arrangements with which have been disclosed in writing to
Sub prior to the date hereof. Other than the foregoing arrangements, the Company
is not aware of any claim for payment of any finder's fees, brokerage or agent's
commissions or other like payments in connection with the negotiations leading
to this Agreement or the consummation of the transactions contemplated hereby.
5.21. Intellectual Property. The Company and each Subsidiary owns, or
---------------------
is validly licensed or otherwise has the right to use, without any obligation to
make any fixed or contingent payments, including any royalty payments, as
applicable, all patents, patent rights, trademarks, trademark rights, trade
names, trade name rights, service marks, service mark rights, copyrights and
other proprietary intellectual property rights and computer programs that are
used in the conduct of the business of the Company as now operated
(collectively, "Intellectual Property Rights"). The Company Disclosure Letter
sets forth a description of all patents, trademarks and copyrights and
applications therefor owned by or licensed to the Company and its Subsidiaries
that are used in the conduct of the business of the Company and its Subsidiaries
as now operated (excluding customary commercial software licenses). No claims
are pending or, to the best
24
<PAGE>
knowledge of the Company, threatened that the Company is, and to the best
knowledge of the Company, neither the Company nor any Subsidiary is, infringing
or otherwise adversely affecting the rights of any person with regard to any
Intellectual Property Right. To the best knowledge of the Company, no person is
infringing the rights of the Company or any Subsidiary with respect to any
Intellectual Property Right. Neither the Company nor any Subsidiary has
licensed, or otherwise granted, to any third party, any rights in or to any
Intellectual Property.
5.22. State Takeover Statutes. The Board of Directors of the Company
-----------------------
has approved this Agreement and the Voting Agreement and the transactions
contemplated hereby and thereby (including the Merger) and such approval is
sufficient to render inapplicable to such agreements and transactions the
provisions of any "fair price," "moratorium," "control share," "interested
shareholder," "affiliated transaction" or other anti-takeover statute or
regulation (including Sections 607.0901 and 607.0902 of the FBCA) and any
applicable anti-takeover or other restrictive provision of the Articles of
Incorporation, by-laws or other governing instruments. The Company does not have
a "shareholder rights plan" or other arrangement of similar effect.
5.23. Board Recommendation. The Board of Directors of the Company, at
--------------------
a meeting duly called and held, has (a) determined that this Agreement and the
transactions contemplated hereby are advisable and in the best interests of the
Company and its stockholders and (b) resolved to recommend that the holders of
Company Common Stock approve this Agreement and the transactions contemplated
hereby, including the Merger.
5.24. Related Party Transactions. Except as set forth in the Company
--------------------------
Reports or in the Company Disclosure Letter, no director, officer, partner,
"affiliate" or "associate" (as such terms are defined in Rule 12b-2 under the
Exchange Act) of the Company or any of its Subsidiaries owns any direct or
indirect interest of any kind in, or is a director, officer, employee, partner,
affiliate or associate of, or consultant or lender to, or borrower from, or has
the right to participate in the management, operations or profits of, any person
or entity which is (a) a competitor, supplier, customer, distributor, lessor,
tenant, creditor or debtor of the Company or any of its Subsidiaries, (b)
engaged in a business related to the business of the Company or any of its
Subsidiaries or (c) is otherwise participating in any transaction to which the
Company or any of its Subsidiaries is a party.
5.25. Affiliate Programs, Etc.
------------------------
(a) The Company Disclosure Letter contains an accurate summary of
the arrangements of the Company and its Subsidiaries with the affiliate
partners, more commonly known as the "Affiliate Program." The Company and its
Subsidiaries have furnished to Sub copies of the standard form of the contracts
used by the Company and its Subsidiaries in connection with the Affiliate
Program (also known as the MTL Contractor Agreement), and the actual terms and
provisions of the arrangements (contractual or otherwise) between the Company
and/or any of its Subsidiaries, on the one hand, and the participants in the
Affiliate Program, on the other hand, (a) are not in
-
25
<PAGE>
any material respect (individually and/or taken as a whole) different from those
set forth in such standard contracts, (b) are on arms' length terms and (c) do
- -
not contain any unusual or burdensome provision which, individually or in the
aggregate, has had, or would have, a Company Material Adverse Effect. Neither
the Company nor any of its Subsidiaries (x) owns or is obligated to make any
-
investment in any participant in the Affiliate Program or (y) has consummated
-
during the 12-month period ended on the date of the Closing or is obligated to
consummate at any time in the future, any transaction with any participant in
the Affiliate Program other than in the ordinary course of business consistent
with past practice or as otherwise provided in the Company Disclosure Letter.
Neither the Company nor any of its Subsidiaries has outstanding any obligation
or indebtedness owing to any participant in the Affiliate Program other than in
the ordinary course of business consistent with past practice. All of the
material agreements between the Company and/or any of its Subsidiaries, on the
one hand, and participants in the Affiliate Program, on the other hand, are
legal, valid and binding obligations of the Company or its Subsidiaries and, to
the best knowledge of the Company, of each of the other parties thereto,
enforceable against such parties in accordance with their respective terms.
Neither the Company nor any of its Subsidiaries nor, to the best knowledge of
the Company, any participant in the Affiliate Program is in default under any
term of any such agreement, which default, individually or in the aggregate,
would have a Company Material Adverse Effect.
(b) The Company and its Subsidiaries have furnished to Sub copies of
the standard form of the Master Trailer Lease Agreement, Agreement for
Transportation Services and Independent Contractor Agreement. The actual terms
and provisions of the arrangements (contractual or otherwise) between the
Company and/or any of its Subsidiaries, on the one hand, and the
owner/operators, drivers, independent contractors, trailer lessees, shippers and
customers, on the other hand, (a) are not in any material respect (individually
-
and/or taken as a whole) different in form from those set forth in such standard
contracts, (b) are on arms' length terms and (c) do not contain any unusual or
- -
burdensome provision which, individually or in the aggregate, has had, or would
have, a Company Material Adverse Effect. All of such agreements between the
Company and/or any of its Subsidiaries, on the one hand, and the
owner/operators, drivers, independent contractors, trailer lessees, shippers and
customers, on the other hand, are legal, valid and binding obligations of the
Company or its Subsidiaries and, to the best knowledge of the Company, of each
of the other parties thereto, enforceable against such parties in accordance
with their respective terms. Neither the Company nor any of its Subsidiaries
nor, to the best knowledge of the Company, the owner/operators, drivers,
independent contractors, trailers lessees, shippers or customers who are parties
to such agreements is in default under any term of any such agreement, which
default, individually or in the aggregate, would have a Company Material Adverse
Effect.
5.26. Opinion of Financial Advisor. The Company has received, and
----------------------------
has furnished to Sub a copy of, the opinion of BT Alex. Brown Incorporated to
the effect that, as of the date hereof, the Merger Consideration is fair to the
holders of Company Common Stock from a financial point of view.
26
<PAGE>
5.27. Proxy Statement; Schedule 13E-3; Form S-4. The Proxy
-----------------------------------------
Statement (as defined below) to be mailed to the stockholders of the Company in
connection with the special meeting of the stockholders of the Company (the
"Special Meeting") and the Schedule 13E-3 (as defined below) and the Form S-4
(as defined below), if filed, and any amendment thereof or supplement thereto
(excluding any information supplied in writing by Sub specifically for inclusion
therein), when, in the case of the Proxy Statement, mailed and at the time of
the Special Meeting, and, in the case of the Schedule 13E-3 and the Form S-4
when and if filed and, in the case of the Form S-4 and any amendment or
supplement thereto, when it becomes effective, shall not contain any untrue
statement of a material fact, or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not false or misleading, and shall
comply with all requirements of the Securities Act and the Exchange Act.
5.28. Alternative Proposal. On or prior to the date hereof, there
--------------------
has not been any bona fide publicly announced Alternative Proposal (as defined
in Section 7.1 hereof) with respect to the Company or any of its Subsidiaries
nor has there been made public an intention (whether or not conditional) to make
such an Alternative Proposal with respect to the Company or any of its
Subsidiaries.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF SUB
Sub represents and warrants to the Company as follows:
6.1. Existence; Good Standing; Corporate Authority. Sub is a
---------------------------------------------
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation. Sub is duly licensed or qualified to
do business as a foreign corporation and is in good standing under the laws of
any other state of the United States in which the character of the properties
owned or leased by it or in which the transaction of its business makes such
qualification necessary. Sub has all requisite corporate power and authority to
own, operate and lease its properties and carry on its business as now
conducted. The copies of Sub's Articles of Incorporation and by-laws previously
delivered to the Company are complete and correct and in full force and effect.
Sub has no subsidiaries.
6.2. Authorization, Validity and Effect of Agreements. Sub has the
------------------------------------------------
requisite corporate power and authority to execute and deliver this Agreement
and all agreements and documents contemplated hereby. The consummation by Sub of
the transactions contemplated hereby has been duly authorized by all requisite
corporate action. This Agreement constitutes a valid and legally binding
obligation of Sub, enforceable against Sub in accordance with its terms.
6.3. Capitalization. The authorized capital stock of Sub consists
--------------
of 1,000,000 shares of Sub Common Stock and 250,000 shares of preferred stock,
par value $.01 per share, of Sub of which 100 shares are issued and outstanding.
Notwithstanding
27
<PAGE>
any provisions to the contrary, Sub may, in its sole discretion, increase the
number of shares of authorized Sub Common Stock and the number of shares of Sub
Common Stock issued and outstanding.
6.4. No Violation. Neither the execution and delivery by Sub of
------------
this Agreement, nor the consummation by Sub of the transactions contemplated
hereby in accordance with the terms hereof, will: (i) conflict with or result in
a breach of any provision of the Articles of Incorporation or by-laws of Sub;
(ii) violate, conflict with, result in a breach of any provision of, constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default) under, result in the termination or in a right of
termination or cancellation of, accelerate the performance required by, result
in the triggering of any payment or other material obligations pursuant to,
result in the creation of any Encumbrance upon any of the material properties of
Sub under, or result in being declared void, voidable or without further binding
effect, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust or any material license, franchise, permit, lease,
contract, agreement or other instrument, commitment or obligation to which Sub
is a party, or by which Sub or any of its properties is bound or affected,
except for any of the foregoing matters which would not, individually or in the
aggregate, prevent or delay the consummation of the transactions contemplated
hereby; or (iii) other than the Regulatory Filings, require any consent,
approval or authorization of, or declaration, filing or registration with, any
governmental or regulatory authority, the failure to obtain or make which would,
individually or in the aggregate, prevent or delay the consummation of the
transactions contemplated hereby.
6.5. Interim Operations of Sub. Sub was formed solely for the
-------------------------
purpose of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby.
6.6. Financing. Sub has sufficient sources of liquid capital funds,
---------
and at the Effective Time will fund, in cash, to the Company sufficient equity
capital to pay all amounts required by Section 4.2 hereof and to pay all other
amounts required to be paid hereunder by Sub at the Effective Time. Sub has
delivered to the Company complete and correct executed copies of letters with
respect to the financing (the "Financing Letters") required for the consummation
of the transactions contemplated hereby. Assuming satisfaction of all applicable
conditions set forth in the Financing Letters and full funding thereunder, such
financing, together with the other funds available to Sub as provided above,
will provide sufficient funds to consummate the transactions contemplated
hereby.
ARTICLE 7
COVENANTS
7.1. Alternative Proposals.
---------------------
(a) The Company agrees (x) that neither it nor any of its
Subsidiaries shall, and the Company shall cause its officers, directors,
employees, agents and
28
<PAGE>
representatives (including, without limitation, any investment banker, attorney
or accountant retained by it or any of its Subsidiaries) not to, initiate,
solicit or encourage, directly or indirectly, any inquiries or the making or
implementation of any proposal or offer (including, without limitation, any
proposal or offer to its stockholders) with respect to a merger, acquisition,
consolidation, share exchange or similar transaction involving, or any purchase
of all or any significant portion of the assets or any securities of, the
Company or any of its Subsidiaries (any such proposal or offer being hereinafter
referred to as an "Alternative Proposal") or engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any person relating to an Alternative Proposal, or otherwise
facilitate (including by waiving the terms of any confidentiality or standstill
agreement) any effort or attempt to make or implement an Alternative Proposal
and (y) that it will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing, and it will take the necessary steps to
inform the individuals or entities referred to above of the obligations
undertaken in this Section 7.1.
(b) Notwithstanding the foregoing, nothing contained in this Section
7.1 shall prohibit the Board of Directors of the Company or its designees from
furnishing information to or entering into discussions or negotiations with any
person or entity that makes an unsolicited bona fide written Alternative
Proposal, if, and only to the extent that, (w) the furnishing of such
information is pursuant to a reasonable and customary confidentiality agreement,
(which confidentiality agreement shall be on terms no more favorable in the
aggregate to such person or entity than those set forth in the confidentiality
agreement between the Company and Apollo Management, L.P.), (x) the Board of
Directors of the Company determines in good faith after consultation with
outside counsel that such action is required for the Board of Directors to
comply with its fiduciary duties to stockholders imposed by law, (y) the Board
of Directors of the Company determines in good faith after consultation with its
financial advisor that such Alternative Proposal, if accepted, is reasonably
likely to be consummated, taking into account all legal, financial and
regulatory aspects of the proposal and the person or entity making the proposal
and would, if consummated, result in a more favorable transaction than the
transaction contemplated by this Agreement and (z) the Company is otherwise in
compliance with this Section 7.1. Nothing in this Section 7.1 shall prevent the
Company from complying with Rule 14e-2 under the Exchange Act, to the extent
applicable.
(c) The Company agrees that it will notify Sub immediately if any
such inquiries or proposals are received by (including the identity of the party
making the inquiry or proposal and the terms of the proposal), any such
information is requested from the Company, or any such negotiations or
discussions are sought to be initiated or continued with the Company. The
Company agrees that it will keep Sub informed, on an immediate basis, of the
status and the terms of any such discussions or negotiations, including any
amendments or modifications to the proposal.
(d) Nothing in this Section 7.1 shall (x) permit the Company to
terminate this Agreement (except as specifically provided in Article 9 hereof),
(y) permit the Company to enter into any agreement (other than the
confidentiality agreement contemplated by Section 7.1(b)(w)) with respect to an
Alternative Proposal during the
29
<PAGE>
term of this Agreement, it being agreed that during the term of this Agreement,
the Company shall not enter into any agreement with any person that provides
for, or in any way facilitates, an Alternative Proposal, or (z) affect any other
obligation of the Company under this Agreement.
7.2. Interim Operations. Prior to the Effective Time, except as set
------------------
forth in the Company Disclosure Letter or as contemplated by any other provision
of this Agreement, unless Sub has consented in writing thereto, the Company:
(i) shall, and shall cause each of its Subsidiaries to, conduct its
operations and business according to their usual, regular and ordinary
course consistent with past practice;
(ii) shall use its best efforts, and shall cause each of its
Subsidiaries to use its best efforts, to preserve intact their business
organizations and goodwill, keep available the services of their respective
officers and employees and maintain satisfactory relationships with those
persons having business relationships with them;
(iii) shall not, and shall cause its Subsidiaries not to, amend their
respective Articles of Incorporation or by-laws or comparable governing
instruments;
(iv) shall promptly notify Sub of (x) any material change in its
condition (financial or otherwise), business, prospects, properties,
assets, liabilities or the normal course of its business or of its
properties, (y) any material litigation or material governmental
complaints, investigations or hearings (or communications indicating that
the same may be contemplated), or (z) the breach of any representation or
warranty contained herein;
(v) shall promptly deliver to Sub correct and complete copies of
any report, statement or schedule filed with the SEC subsequent to the date
of this Agreement;
(vi) shall not, and shall not permit any of its Subsidiaries to,
authorize, propose or announce an intention to authorize or propose, or
enter into an agreement with respect to, any merger, consolidation or
business combination (other than the Merger), release or relinquishment of
any material contract rights, or any acquisition or disposition of assets
or securities in excess of $100,000 in the aggregate other than in the
ordinary course of business consistent with past practice;
(vii) shall not, and shall not permit any of its Subsidiaries to, (x)
grant, confer or award any options, warrants, conversion rights or other
rights, not existing on the date hereof, to acquire any shares of its
capital stock or other securities of the Company or its Subsidiaries or (y)
accelerate, amend or change the period of exercisability of options or
restricted stock granted under any
30
<PAGE>
employee stock plan or, except as contemplated by Section 4.3(a)(i),
authorize cash payments in exchange for any options granted under any of
such plans;
(viii) shall not, and shall not permit any of its Subsidiaries to,
amend in any material respect the terms of the Benefit Plans, including,
without limitation, any employment, severance or similar agreements or
arrangements in existence on the date hereof, or adopt any new employee
benefit plans, programs or arrangements or any employment, severance or
similar agreements or arrangements;
(ix) shall not, and shall not permit any of its Subsidiaries to (x)
increase or agree to increase the compensation payable or to become payable
to its officers or, other than increases in accordance with past practice
which are not material, to its employees or (y) enter into any collective
bargaining agreement;
(x) shall not, and shall not permit any of its Subsidiaries to, (x)
incur, create, assume or otherwise become liable for borrowed money or
assume, guarantee, endorse or otherwise become responsible or liable for
the obligations of any other individual, corporation or other entity or (y)
make any loans or advances to any other person, except in the case of
clause (x) for borrowings under existing credit facilities in the ordinary
course of business and, except in the case of clause (y) for advances
consistent with past practice which are not material;
(xi) shall not, and shall not permit any of its Subsidiaries to, (x)
materially change any practice with respect to Taxes, (y) make, change or
revoke any material Tax election, or (z) settle or compromise any material
dispute involving a Tax liability;
(xii) shall not, and shall not permit any of its Subsidiaries to, (x)
declare, set aside or pay any dividend or make any other distribution or
payment with respect to any shares of its capital stock or other ownership
interests or (y) directly or indirectly redeem, purchase or otherwise
acquire any shares of its capital stock or capital stock of any of its
Subsidiaries, or make any commitment for any such action or (z) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock;
(xiii) shall not, and shall not permit any of its Subsidiaries to,
issue, deliver, sell, pledge or otherwise encumber any shares of its
capital stock, any other securities or any securities convertible into, or
any rights, warrants or options to acquire, any such shares, securities or
convertible securities (other than the issuance of shares of Company Common
Stock upon the exercise of Company Stock Options outstanding on the date
hereof in accordance with their present terms);
31
<PAGE>
(xiv) shall not, and shall not permit any of its Subsidiaries to,
make or agree to make any capital expenditure or expenditures with respect
to property, plant or equipment which, individually or in a series of
related transactions, is in excess of $100,000 or, in the aggregate, are in
excess of $500,000 except as otherwise in the ordinary course of business
consistent with past practice in order to satisfy actual or expected
contractual commitments to customers;
(xv) shall not, and shall not permit any of its Subsidiaries to,
change any accounting principles or practices;
(xvi) shall not, and shall not permit any of its Subsidiaries to,
pay, discharge, settle or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction, in the ordinary course of
business consistent with past practice or in accordance with their terms,
of liabilities reflected or reserved against in the most recent
consolidated financial statements (or the notes thereto) of the Company
included in the Company Reports or incurred thereafter in the ordinary
course of business consistent with past practice, or waive any material
benefits of, or agree to modify in any material respect, any
confidentiality, standstill, non-solicitation or similar agreement to which
the Company or any Subsidiary is a party; and
(xvii) shall not, and shall not permit any of its Subsidiaries to
take, or agree (in writing or otherwise) or resolve to take, any of the
foregoing actions.
7.3. Meetings of Stockholders. The Company will take all action
------------------------
necessary in accordance with applicable law and its Articles of Incorporation
and by-laws, including the timely mailing of the Proxy Statement, to convene the
Special Meeting of its stockholders as promptly as practicable to consider and
vote upon the approval of this Agreement and the transactions contemplated
hereby. Subject to fiduciary obligations under applicable law, the Board of
Directors of the Company shall recommend such approval, shall not withdraw or
modify such recommendation and shall take all lawful action to solicit such
approval. Without limiting the generality of the foregoing, in the event that
the Board of Directors of the Company withdraws or modifies its recommendation,
the Company nonetheless shall cause the meeting of the stockholders to be
convened and a vote taken with respect to the Merger and the Board of Directors
of the Company shall communicate to the Company's stockholders its basis for
such withdrawal or modification as contemplated by Section 607.1103(2)(a) of the
FBCA.
7.4. Filings and Other Action. Subject to the terms and conditions
------------------------
herein provided, the Company and Sub shall: (a) promptly make their respective
filings and thereafter make any other required submissions under the HSR Act
with respect to the Merger; (b) use all reasonable efforts to cooperate with one
another in (i) determining which filings are required to be made prior to the
Effective Time with, and which consents, approvals, permits or authorizations
are required to be obtained prior to the Effective Time from, governmental or
regulatory authorities of the United States, the
32
<PAGE>
several states and foreign jurisdictions in connection with the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby and (ii) promptly making all such filings and promptly seeking all such
consents, approvals, permits or authorizations; and (c) use all reasonable
efforts to take, or cause to be taken, all other action and do, or cause to be
done, all other things necessary, proper or appropriate, including in connection
with obtaining the funding contemplated by the Financing Letters, to consummate
and make effective the transactions contemplated by this Agreement as promptly
as practicable.
7.5. Access to Information. From the date hereof to the Effective
---------------------
Time, the Company shall (i) allow all designated officers, attorneys,
accountants and other representatives of Sub reasonable access at all reasonable
times to the offices, records and files, correspondence, audits and properties,
including for the purpose of conducting such environmental examinations and
audits as Sub shall request, as well as to all information relating to
commitments, contracts, titles and financial position, or otherwise pertaining
to the business and affairs, of the Company and its Subsidiaries (ii) furnish to
Sub, Sub's counsel, financial advisors, auditors and other authorized
representatives such financial and operating data and other information as such
persons may reasonably request and (iii) instruct the employees, counsel and
financial advisors of the Company to cooperate with Sub in Sub's investigation
of the business of the Company and its Subsidiaries.
7.6. Publicity. The initial press release relating to this
---------
Agreement shall be a joint press release and thereafter the Company and Sub
shall, subject to their respective legal obligations (including requirements of
stock exchanges and other similar regulatory bodies), consult with each other,
and use reasonable efforts to agree upon the text of any press release, before
issuing any such press release or otherwise making public statements with
respect to the transactions contemplated hereby and in making any filings with
any federal or state governmental or regulatory agency or with any national
securities exchange with respect thereto.
7.7. Proxy Statement; Form S-4.
-------------------------
(a) Sub and the Company shall cooperate and prepare, and the Company
shall file with the SEC as soon as practicable, a proxy statement with respect
to the Special Meeting of the stockholders of the Company in connection with the
Merger (the "Proxy Statement"), respond to comments of the staff of the SEC,
clear the Proxy Statement with the staff of the SEC and promptly thereafter mail
the Proxy Statement to all holders of record of Company Common Stock. If the
Stock Election is exercised, Sub and the Company shall cooperate and prepare,
and the Company shall file a Registration Statement on Form S-4 (the "Form S-4")
under the Securities Act with the SEC promptly following receipt of final
comments from the staff of the SEC on the Proxy Statement (or advice that the
staff will not review such filing) or such other time as Sub may determine. The
Company will comply in all respects with the requirements of the Exchange Act
and the Securities Act and the rules and regulations of the SEC thereunder
applicable to the Proxy Statement, the Form S-4 and the solicitation of proxies
for the Special Meeting (including any requirement to amend or supplement the
Proxy Statement) and each party
33
<PAGE>
shall furnish to the other such information relating to it and its affiliates
and the transactions contemplated by this Agreement and such further and
supplemental information as may be reasonably requested by the other party. The
Proxy Statement shall include the recommendation of the Company's Board of
Directors in favor of the Merger, unless otherwise required by the fiduciary
duties of the directors under applicable law as contemplated hereby. The Company
shall use all reasonable efforts, and Sub will cooperate with the Company, to
have the Form S-4 declared effective by the SEC as promptly as practicable. The
Company shall use its best efforts to obtain prior to the effective date of the
Form S-4, all necessary state securities law or "Blue Sky" permits or approvals
required to carry out the transactions contemplated by this Agreement and will
pay all expenses incident thereto.
(b) The Company agrees that the Proxy Statement, and if applicable
the Form S-4, and each amendment or supplement thereto at the time of mailing
thereof and at the time of the meeting of stockholders of the Company, or, in
the case of the Form S-4 and each amendment or supplement thereto, at the time
it is filed or becomes effective, will not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not false or misleading; provided, however, that the
-------- -------
foregoing shall not apply to the extent that any such untrue statement of a
material fact or omission to state a material fact was made by the Company in
reliance upon and in conformity with written information concerning Sub
furnished to the Company by Sub specifically for use in the Proxy Statement or
the Form S-4. Sub agrees that the written information concerning Sub provided
by it for inclusion in the Proxy Statement and each amendment or supplement
thereto, at the time of mailing thereof and at the time of the meeting of
stockholders of the Company, or, in the case of the Form S-4 or any amendment or
supplement thereto, at the time it is filed or becomes effective, will not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not false or misleading.
(c) No amendment or supplement to the Proxy Statement or the Form S-
4 will be made by Sub or the Company without the approval of the other party.
The Company will advise Sub of any request by the SEC for amendment of the Proxy
Statement or the Form S-4 or comments thereon and responses thereto or requests
by the SEC for additional information.
7.8. Further Action. Each party hereto shall, subject to the
--------------
fulfillment at or before the Effective Time of each of the conditions of
performance set forth herein or the waiver thereof, perform such further acts
and execute such documents as may be reasonably required to effect the Merger.
7.9. Schedule 13E-3.
--------------
(a) If, in the opinion of the Company's counsel after consultation
with counsel to Sub, the filing with the SEC of a Transaction Statement on
Schedule 13E-3 (the "Schedule 13E-3") in connection with the Merger is required
by Rule 13e-3 under
34
<PAGE>
the Exchange Act, the Company will file the Schedule 13E-3 with the SEC at the
time of filing of the Proxy Statement. If the Schedule 13E-3 is filed, at the
time of any amendment to the Proxy Statement, the parties will cause to be filed
with the SEC an appropriate amendment to the Schedule 13E-3.
7.10. Expenses. Except as set forth in Section 9.5, whether or not
--------
the Merger is consummated, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expenses except as expressly provided herein.
7.11. Insurance; Indemnity. (a) Sub agrees that all rights to
--------------------
indemnification for acts or omissions occurring prior to the Effective Time in
favor of the current or former directors or officers of the Company as provided
in the Articles of Incorporation or by-laws of the Company shall survive the
Merger and shall continue in full force and effect in accordance with their
terms from the Effective Time of the Merger until the expiration of the
applicable statute of limitations with respect to any claims against the current
or former directors or officers of the Company arising out of such acts or
omissions. With respect to the officers and directors of the Company immediately
prior to the Closing, the Company shall purchase (and Sub shall not object to
such purchase) a run-off policy for current directors' and officers' liability
insurance maintained by the Company, such policy to become effective at the
Closing and remain in effect for a period of five years after the Closing, at a
premium not to exceed 200% of the annual premium of the Company's director's and
officer's insurance policy in effect on the date hereof.
(b) The Company agrees to use its best efforts to amend its existing
insurance policies or purchase a supplemental insurance policy which provides
pollution coverage at a level reasonably acceptable to Sub for wrongful or
negligent misdelivery of product transported by the Company, its Subsidiaries
and each participant in the Affiliate Program.
7.12. Certain Tax Matters. From the date hereof until the Effective
-------------------
Time, (i) the Company and each Subsidiary will prepare and file, in the manner
required by applicable law, all Tax Returns and reports ("Post-Signing Returns")
required to be filed; (ii) the Company and each Subsidiary will timely pay all
Taxes shown as due and payable on such Post-Signing Returns that are so filed;
(iii) the Company and each Subsidiary will make provision for all Taxes payable
by the Company and/or any such Subsidiary for which no Post-Signing Return is
due prior to the Effective Time; and (iv) the Company will promptly notify Sub
in writing of any action, suit, proceeding, claim or audit pending against or
with respect to the Company or any Subsidiary in respect of any Tax.
7.13. Other Actions. The Company shall not, and shall cause each of
-------------
its Subsidiaries not to, take or omit to take any action, the taking or omission
of which would reasonably be expected to result in (a) any of the
representations and warranties of the Company set forth in this Agreement
becoming untrue or inaccurate or (b) any of the conditions set forth in Article
8 not being satisfied.
35
<PAGE>
7.14. Advice of Changes; Filings. The Company shall confer with Sub
--------------------------
on a regular and frequent basis as reasonably requested by Sub, report on
operational matters and promptly advise Sub orally and, if requested by Sub, in
writing, of any material change with respect to the Company or any of its
Subsidiaries. The Company shall promptly provide to Sub (or its counsel) copies
of all filings made by the Company or any of its Subsidiaries with any
Governmental Entity in connection with this Agreement and the transactions
contemplated hereby.
7.15. Financial Information. The Company shall furnish to Sub as
---------------------
soon as available but in any event within 25 days of each calendar month, the
unaudited consolidated balance sheets and income statements of the Company (to
be prepared in accordance with GAAP consistently applied), showing its financial
condition as of the close of such month and the results of operations during
such month and for the then elapsed portion of the Company's fiscal year, in
each case, setting forth the comparative figures for the corresponding month in
the prior fiscal year and the corresponding elapsed portion of the prior fiscal
year.
ARTICLE 8
CONDITIONS
8.1. Conditions to Each Party's Obligation to Effect the Merger. The
----------------------------------------------------------
respective obligation of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Closing Date of the following conditions:
(a) This Agreement and the transactions contemplated hereby shall
have been approved by a majority of the holders of the issued and outstanding
shares of the Company Common Stock in accordance with applicable law.
(b) The waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated.
(c) No statute, rule, regulation, executive order, writ, decree,
ruling or injunction shall have been enacted, entered, promulgated or enforced
by any Governmental Entity which prohibits the consummation of the Merger. In
the event any such order or injunction shall have been issued, each party agrees
to use its reasonable efforts to have any such order or injunction lifted.
(d) If filed, the Form S-4 shall have become effective and shall be
effective at the Effective Time, and no stop order suspending effectiveness of
the Form S-4 shall have been issued, no action, suit, proceeding or
investigation by the SEC to suspend the effectiveness thereof shall have been
initiated and be continuing, and all necessary approvals under state securities
laws relating to the issuance or trading of the Surviving Corporation Common
Stock to be issued to holders of Company Common Stock in connection with the
Merger shall have been received.
36
<PAGE>
(e) All consents, authorizations, orders and approvals of (or
filings or registrations with) any governmental commission, board or other
regulatory body required in connection with the execution, delivery and
performance of this Agreement shall have been obtained or made, except for
filings in connection with the Merger and any other documents required to be
filed after the Effective Time and except where the failure to have obtained or
made any such consent, authorization, order, approval, filing or registration
would not have a material adverse effect on the business of the Company and its
Subsidiaries, taken as a whole, following the Effective Time.
8.2. Conditions to Obligation of the Company to Effect the Merger.
------------------------------------------------------------
The obligation of the Company to effect the Merger shall be subject to the
satisfaction at or prior to the Closing Date of the following condition: Sub
shall have performed in all material respects its agreements contained in this
Agreement required to be performed on or prior to the Closing Date (other than
those agreements which are qualified by materiality which shall have been
performed in all respects), the representations and warranties of Sub contained
in this Agreement and in any document delivered in connection herewith shall be
true and correct in all respects (except for those representations and
warranties which are not qualified by materiality, which shall be true and
correct in all material respects) as of the date hereof and as of the Closing
Date (except for those representations and warranties which address matters only
as of a particular date, other than the date hereof, which shall be true and
correct as of such date), and the Company shall have received a certificate of
the President of Sub, dated the Closing Date, certifying to such effect.
8.3. Conditions to Obligation of Sub to Effect the Merger. The
----------------------------------------------------
obligations of Sub to effect the Merger shall be subject to the satisfaction at
or prior to the Closing Date of the following conditions:
(a) The Company shall have performed in all material respects its
agreements contained in this Agreement required to be performed on or prior to
the Closing Date (other than those agreements which are qualified by materiality
which shall have been performed in all respects), the representations and
warranties of the Company contained in this Agreement and in any document
delivered in connection herewith shall be true and correct in all respects
(except for those representations and warranties which are not qualified by
materiality, which shall be true and correct in all material respects) as of the
date hereof and as of the Closing Date (except for those representations and
warranties which address matters only as of a particular date, other than the
date hereof, which shall be true and correct as of such date), and Sub shall
have received a certificate of the President of the Company, dated the Closing
Date, certifying to such effect.
(b) The funding contemplated by the Financing Letters shall have
been obtained.
(c) All notices required to be given prior to the Effective Time
with, and all consents, approvals, authorizations, waivers and amendments
required to be obtained prior to the Effective Time from, any third party in
connection with the consummation of the Merger and the finances thereof, have
been made or obtained other than those the
37
<PAGE>
failure of which to be made or obtained would not have a Company Material
Adverse Effect.
(d) Arthur Andersen LLP shall have completed its audit, in
accordance with generally accepted auditing standards, of the Company 1997
Financial Statements and shall have issued an unqualified report with respect
thereto (including that such audited financial statements are in accordance with
GAAP) and there shall be no material difference between such audited financial
statements and the Company 1997 Financial Statements (except reclassifications
(other than extraordinary and non-recurring items) and normal year-end
adjustments). For purposes hereof, a material difference shall mean a negative
variance in Revenue and Net Income in excess of 5%.
(e) From the date of this Agreement through the Effective Time,
there shall not have occurred a Company Material Adverse Effect.
(f) Two of the three employment agreements between the Company, on
the one hand, and Charles J. O'Brien, Jr., Marvin E. Sexton, and Richard
Brandewie, on the other hand, which are attached hereto as Exhibits A, B and C,
respectively, and the non-competition agreements between the Company, on the one
hand, and each of Elton E. Babbitt and Gordon Babbitt, on the other hand, which
are attached hereto as Exhibits D and E, respectively, shall have been executed
and delivered and shall be in full force and effect.
ARTICLE 9
TERMINATION
9.1. Termination by Mutual Written Consent. This Agreement may be
-------------------------------------
terminated and the Merger may be abandoned at any time prior to the Effective
Time, before or after the approval of this Agreement by the stockholders of the
Company, by the mutual written consent of Sub and the Company.
9.2. Termination by Either Sub or the Company. This Agreement may
----------------------------------------
be terminated and the Merger may be abandoned by action of the Board of
Directors of either Sub or the Company if:
(a) the Merger shall not have been consummated by the date which is
nine months from the date hereof; provided, that the terminating party shall not
have breached in any material respect its obligations under this Agreement in
any manner that shall have proximately contributed to the failure to consummate
the Merger by such date;
(b) the approval of the Company's stockholders required by Section
8.1(a) shall not have been obtained at a meeting duly convened therefor or at
any adjournment thereof;
(c) a Governmental Entity shall have issued an order, decree or
ruling or taken any other action permanently restraining, enjoining or otherwise
prohibiting the
38
<PAGE>
transactions contemplated by this Agreement and such order, decree, ruling or
other action shall have become final and non-appealable; provided, that, the
party seeking to terminate this Agreement pursuant to this clause (c) shall have
used all reasonable efforts to remove such injunction, order or decree; or
(d) there has been a breach by the other of any representation,
warranty or agreement contained in this Agreement (without regard to the
materiality qualifiers contained therein) which would result in a condition set
forth in Section 8.2(a) or 8.3(a) of this Agreement, as the case may be, not
being satisfied, which breach is not curable or, if curable, is not cured within
20 days after written notice of such breach is given by the other party.
9.3. Termination by the Company. This Agreement may be terminated
--------------------------
and the Merger may be abandoned at any time prior to the Effective Time, prior
to the approval by the stockholders of the Company referred to in Section
8.1(a), by action of the Board of Directors of the Company, if in the exercise
of its good faith judgment as to fiduciary duties to its stockholders imposed by
law, after consultation with outside counsel, the Board of Directors of the
Company determines that such termination is required in order to execute an
agreement providing for the implementation of the transactions contemplated by
an Alternative Proposal, provided, however, that the Company shall have
-------- -------
complied with the provisions of Section 7.1 hereof, including providing notice
of the terms of the Alternative Proposal. No termination of this Agreement by
the Company shall be effective unless and until the Company has paid Sub any
amounts owed by it pursuant to Section 9.5(a).
9.4. Termination by Sub. This Agreement may be terminated and the
------------------
Merger may be abandoned at any time prior to the Effective Time by action of the
Board of Directors of Sub, if the Board of Directors of Company shall have
withdrawn or modified in a manner materially adverse to Sub its approval or
recommendation of this Agreement or the Merger or shall have recommended an
Alternative Proposal or shall have failed to reconfirm its recommendation of
this Agreement and the transactions contemplated hereby within five business
days of Sub's request, made with reasonable frequency, that it do so.
9.5. Effect of Termination and Abandonment. In the event that this
-------------------------------------
Agreement is terminated by either party pursuant to:
(i) Section 9.2(b); then, if (A) (1) there shall not have been a
material breach of this Agreement by Sub and (2) subsequent to the date
hereof and prior to or at the time of the meeting referred to in Section
7.3 hereof a person or entity shall have made a bona fide publicly
announced Alternative Proposal with respect to the Company or any of its
Subsidiaries or shall have made public an intention (whether or not
conditional) to make such an Alternative Proposal with respect to the
Company or any of its Subsidiaries, the Company shall reimburse Sub for its
expenses in an amount not to exceed $3.0 million; or (B) if the conditions
set forth in clause (A)(2) above are not met, the Company shall reimburse
Sub for its expenses in an amount not to exceed $1.5 million; provided
--------
that in the event
39
<PAGE>
within 12 months of such termination the Company enters
into a definitive agreement with respect to a transaction that constitutes
an Alternative Proposal, the Company shall, at the time of entering into
such agreement, pay Sub a fee equal to $7.5 million less the amount
----
previously reimbursed to Sub pursuant to clause (A) or (B) above; or
(ii) Section 9.2(d) arising from (A) a willful breach of any
representation or warranty or the material breach of any agreement by the
Company, then the Company shall pay Sub a fee of $6.0 million and shall
reimburse Sub for its expenses in an amount not to exceed $1.5 million, (B)
a breach of any representation or warranty by the Company which breach
existed on or before the date hereof and does not constitute a willful
breach, then the Company shall reimburse Sub for its expenses in an amount
not to exceed $3.0 million, or (C) a breach of any representation or
warranty by the Company which arose after the date hereof and does not
constitute a willful breach, then the Company shall reimburse Sub for its
expenses in an amount not to exceed $1.5 million; provided, that in the
--------
event this Agreement shall have been terminated pursuant to clause (B) or
(C) above and within 12 months of such termination the Company enters into
a definitive agreement with respect to a transaction that constitutes an
Alternative Proposal, the Company shall, at the time of entering into such
agreement, pay Sub a fee equal to $7.5 million less the amount previously
----
reimbursed to Sub pursuant to clause (B) or (C) above; or
(iii) Section 9.3 or Section 9.4, then the Company shall pay Sub a
fee of $6.0 million and shall reimburse Sub for its expenses in an amount
not to exceed $1.5 million.
Any monies owed by the Company to Sub in accordance with the foregoing
shall be payable by wire transfer of same day funds either on the date
specifically contemplated thereby or, otherwise, within two business days after
such amount becomes due. The Company acknowledges that the agreements contained
in this Section 9.5(a) are an integral part of the transactions contemplated in
this Agreement, and that, without these agreements, Sub would not enter into
this Agreement; accordingly, if the Company fails to promptly pay the amount due
pursuant to this Section 9.5(a), and, in order to obtain such payment, Sub
commences a suit which results in a judgment against the Company for the fee set
forth in this Section 9.5(a), the Company shall pay to Sub its costs and
expenses (including attorneys' fees) in connection with such suit, together with
interest on the amount of the fee at the rate of 12% per annum from the date
such fee was required to be paid.
(b) In the event of termination of this Agreement and the
abandonment of the Merger pursuant to this Article 9, all obligations of the
parties hereto shall terminate, except the obligations of the parties set forth
in this Section 9.5. Nothing in this Section 9.5(b) shall relieve any party
from liability for willful breach of this Agreement.
9.6. Extension; Waiver. At any time prior to the Effective Time,
-----------------
any party hereto may, to the extent legally allowed, (a) extend the time for the
performance of
40
<PAGE>
any of the obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE 10
GENERAL PROVISIONS
10.1. Non-survival of Representations, Warranties. The
-------------------------------------------
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall terminate at the Effective Time.
10.2. Notices. Any notice required to be given hereunder shall be
-------
given in writing, addressed as follows:
If to Sub:
Joshua Harris
c/o Apollo Management, L.P.
1301 Avenue of the Americas
New York, New York 10019
Facsimile: (212) 261-4102
With copies to:
Morton A. Pierce, Esq.
Douglas L. Getter, Esq.
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
Facsimile: (212) 259-6333
If to the Company:
Richard J. Brandewie
MTL Inc.
3108 Central Drive
Plant City, Florida 33567
Facsimile: (813) 754-3288
41
<PAGE>
With copies to:
William J. Schifino, Esq.
Schifino & Fleischer, P.A.
Suite 2700
One Tampa City Center
Tampa, Florida 33602
Facsimile: (813) 223-3070
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been given upon receipt of such notice.
10.3. Assignment; Binding Effect. Neither this Agreement nor any of
--------------------------
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. Notwithstanding anything
contained in this Agreement to the contrary, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto or their respective heirs, successors, executors, administrators and
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
10.4. Entire Agreement. This Agreement, the Exhibits and the
----------------
Company Disclosure Letter and any documents delivered by the parties in
connection herewith constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings among the parties with respect thereto. No addition to or
modification of any provision of this Agreement shall be binding upon any party
hereto unless made in writing and signed by all parties hereto.
10.5. Amendment. This Agreement may be amended by the parties
---------
hereto at any time before or after approval of matters presented in connection
with the Merger by the stockholders of the Company, but after any such
stockholder approval, no amendment shall be made which by law requires the
further approval of stockholders without obtaining such further approval. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
10.6. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Florida without regard to
its rules of conflict of laws.
10.7. Counterparts. This Agreement may be executed by the parties
------------
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all of the parties
hereto.
42
<PAGE>
10.8. Headings. Headings of the Articles and Sections of this
--------
Agreement are for the convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
10.9. Interpretation. In this Agreement, unless the context
--------------
otherwise requires, words describing the singular number shall include the
plural and vice versa, and words denoting any gender shall include all genders
and words denoting natural persons shall include corporations and partnerships
and vice versa.
10.10. Waivers. Except as provided in this Agreement, no action
-------
taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. The waiver by
any party hereto of a breach of any provision hereunder shall not operate or be
construed as a waiver of any prior or subsequent breach of the same or any other
provision hereunder.
10.11. Severability. Any term or provision of this Agreement which
------------
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
10.12. Enforcement of Agreement. The parties hereto agree that
------------------------
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof, this being in addition to
any other remedy to which they are entitled at law or in equity.
10.13. Interpretation. As used in this Agreement, the word
--------------
"Subsidiary" or "Subsidiaries" means any corporation or other organization,
whether incorporated or unincorporated, of which the Company directly or
indirectly owns or controls at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of the
board of directors or others performing similar functions with respect to such
corporation or other organization, or any organization of which the Company is a
general partner. As used in this Agreement, "includes," "including" or similar
words shall be deemed to be followed by "without limitation." As used in this
Agreement, the word "Knowledge" (when so capitalized) means the knowledge of the
officers and directors of the Company without independent investigation.
43
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement and caused the
same to be duly delivered on their behalf on the day and year first written
above.
MTL INC.
By: __________________________
Charles J. O'Brien, Jr.
President
SOMBRERO ACQUISITION CORP.
By: __________________________
Joshua Harris
President
44
<PAGE>
EXHIBIT 2.2
================================================================================
AGREEMENT AND PLAN OF MERGER
AMONG
PALESTRA ACQUISITION CORP.,
CHEMICAL LEAMAN CORPORATION,
AND
THE SHAREHOLDERS OF CHEMICAL LEAMAN CORPORATION
Dated as of June 23, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I GENERAL..................................................... 2
1.1 The Merger.................................................... 2
1.2 Effective Time of the Merger.................................. 2
1.3 Effect of the Merger.......................................... 2
1.4 Charter, By-Laws, Officers and Directors of Surviving
Corporation................................................... 2
1.5 Taking of Necessary Action; Further Assurances................ 3
1.6 Authorization of the Merger, this Agreement, the Delaware
Certificate of Merger and the Pennsylvania Articles of Merger. 3
1.7 The Closing................................................... 3
ARTICLE II EFFECT OF MERGER............................................ 4
2.1 Purchase Price; Effect on Capital Stock....................... 4
2.2 Delivery of Funds; Surrender of Certificates.................. 6
ARTICLE III REPRESENTATIONS AND WARRANTIES ABOUT THE SHAREHOLDER....... 7
3.1 Title to the Shares........................................... 7
3.2 Authority; Noncontravention; Consents......................... 8
ARTICLE IV REPRESENTATIONS AND WARRANTIES ABOUT THE COMPANY............ 9
4.1 Organization, Power, Authority and Good Standing.............. 9
4.2 Authorization, Execution and Enforceability................... 9
4.3 Consents...................................................... 10
4.4 Capitalization................................................ 10
4.5 Subsidiaries; Investments..................................... 11
4.6 Absence of Changes............................................ 11
4.7 Financial Information......................................... 13
4.8 Absence of Undisclosed Liabilities............................ 14
4.9 Accounts and Notes Receivable................................. 14
4.10 Bank Accounts; Powers of Attorney............................. 15
4.11 Tax Matters................................................... 15
4.12 Title to Assets, Properties and Rights and Related Matters.... 17
4.13 Real Property--Owned or Leased................................ 18
4.14 Intellectual Property......................................... 19
4.15 Agreements, No Defaults, Etc.................................. 20
4.16 Litigation, Etc............................................... 21
4.17 Compliance with Laws.......................................... 21
4.18 Insurance..................................................... 21
4.19 Labor Management Relations; Employees......................... 22
4.20 ERISA Compliance.............................................. 25
4.21 Environmental Matters......................................... 28
4.22 Related Transactions.......................................... 30
4.23 Independent Contractors....................................... 30
4.24 Relationships................................................. 31
4.25 Disclosure.................................................... 31
4.26 Conflicts of Interest......................................... 31
4.27 State Takeover Statutes....................................... 32
4.28 SEC Documents................................................. 32
4.29 Brokers....................................................... 32
4.30 Year 2000 Compliance.......................................... 33
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER.................. 33
5.1 Organization; Corporate Authority............................. 34
</TABLE>
I-1
<PAGE>
<TABLE>
<S> <C>
5.2 Corporate Action; Authority; No Conflict...................... 35
5.3 Brokers....................................................... 35
5.4 Consents...................................................... 35
5.5 Financing..................................................... 35
ARTICLE VI COVENANTS AND AGREEMENTS.................................... 36
6.1 Access to Records and Properties of the Company............... 36
6.2 Conduct of the Company........................................ 37
6.3 Financial Information......................................... 39
6.4 Efforts to Consummate......................................... 39
6.5 Negotiation with Others....................................... 39
6.6 Notice of Prospective Breach.................................. 40
6.7 Public Announcements.......................................... 40
6.8 Filings....................................................... 40
6.9 [Intentionally Left Blank].................................... 40
6.10 Leaman Air Services, Inc...................................... 40
6.11 Hamilton Bonuses.............................................. 41
6.12 Senior Notes.................................................. 42
6.13 [Intentionally Left Blank].................................... 42
6.14 Environmental Transfer Acts................................... 42
6.15 Waivers....................................................... 43
6.16 Accounts Payable, Accrued Expenses and Accounts Receivable.... 43
6.17 No Transfers.................................................. 43
ARTICLE VII CONDITIONS................................................. 43
7.1 Conditions to Each Party's Obligation to Effect the Merger.... 43
7.2 Conditions to the Company's Obligation To Effect the Merger... 44
7.3 Conditions to Purchaser's Obligations to Effect the Merger.... 44
7.4 Conditions to Obligations of the Shareholders................. 46
ARTICLE VIII INDEMNIFICATION........................................... 47
8.1 Indemnification Generally; Etc................................ 47
8.2 Assertion of Claims........................................... 48
8.3 Notice and Defense of Third Party Claims...................... 49
8.4 Environmental Indemnification Procedures...................... 50
8.5 Survival of Representations and Warranties.................... 54
8.6 Limitations on Indemnification................................ 55
8.7 Letter of Credit.............................................. 56
8.8 No Indemnification Set-Offs................................... 56
ARTICLE IX TERMINATION; EFFECT OF TERMINATION.......................... 56
9.1 Termination................................................... 56
9.2 Effect of Termination......................................... 57
ARTICLE X MISCELLANEOUS PROVISIONS..................................... 58
10.1 Amendment..................................................... 58
10.2 Entire Agreement.............................................. 58
10.3 Severability.................................................. 58
10.4 Benefits of Agreement; Assignment............................. 59
10.5 Expenses...................................................... 59
10.6 Headings...................................................... 59
10.7 Notices....................................................... 59
10.8 Counterparts.................................................. 61
</TABLE>
I-2
<PAGE>
<TABLE>
<S> <C>
10.9 Governing Law................................................. 61
10.10 Incorporation of Exhibits and Schedules....................... 61
10.11 Independence of Covenants and Representations and Warranties.. 61
10.12 Interpretation; Construction.................................. 62
10.13 Remedies...................................................... 62
10.14 Waiver of Jury Trial.......................................... 62
</TABLE>
I-3
<PAGE>
SCHEDULES AND EXHIBITS
----------------------
Schedule I - Shareholders of the Company
Schedule 3.1(a) - Record Holders
Schedule 3.1(b) - Restrictions on Shares
Schedule 3.1(d) - Shareholder Indebtedness and Liabilities
Schedule 3.2(c) - Governmental Consents
Schedule 3.2(e) - Shareholder Agreements
Schedule 4.1(a) - Foreign Qualifications of the Company
Schedule 4.1(b) - Foreign Qualifications of Subsidiaries
Schedule 4.1(c) - Other Business and Trade Names
Schedule 4.2 - Violations
Schedule 4.3 - Consents
Schedule 4.4(a) - Capitalization of the Company
Schedule 4.4(c) - Warrants, Options, etc.
Schedule 4.5(a) - Subsidiaries
Schedule 4.5(b) - Capitalization of Subsidiaries
Schedule 4.6(a) - Material Adverse Changes
Schedule 4.6(b) - Intercompany Payments
Schedule 4.6(c) - Compensation
Schedule 4.6(d) - Accounting Methods
Schedule 4.6(e) - Customer Procedures
Schedule 4.6(f) - Expenditures
Schedule 4.6(g) - Assets
Schedule 4.6(h) - Breach of Section 6.2
Schedule 4.7(a) - Audited Balance Sheets
Schedule 4.7(b) - Unaudited Balance Sheets
Schedule 4.7(c) - Liabilities Required by GAAP
Schedule 4.7(d) - Prepayment
Schedule 4.7(e) - Indebtedness
Schedule 4.7(f) - Accounts Payable, Accrued Expenses and Accounts
Receivable
Schedule 4.8 - Liabilities
Schedule 4.9(a) - Accounts Receivable and Notes Receivable
Schedule 4.10 - Bank Accounts
Schedule 4.11(a) - Tax Returns
Schedule 4.11(c) - Tax Audits
Schedule 4.12(a) - Owned Tractors and Trailers
Schedule 4.12(b) - Leased Tractors and Trailers
Schedule 4.12(c) - Revenues from Independent Contractors
Schedule 4.12(d) - Encumbrances
Schedule 4.13(a) - Owned Real Property
Schedule 4.13(b) - Leased Real Property
Schedule 4.13(c) - Restrictions on Real Property
-i-
<PAGE>
Schedule 4.14(a) - Intellectual Property
Schedule 4.14(d) - Intellectual Property Violations
Schedule 4.14(e) - Intellectual Property Claims
Schedule 4.15(a) - Material Contracts
Schedule 4.16(a) - Litigation
Schedule 4.16(b) - Litigation Payments
Schedule 4.16(c) - Litigation Recoverable Expenses
Schedule 4.17(a) - Permits
Schedule 4.17(b) - Compliance
Schedule 4.18(a) - Insurance
Schedule 4.18(b) - Insurance Defaults
Schedule 4.19(a) - Directors, Officers and Key Management Employees
Schedule 4.19(b) - Drivers, Maintenance Employees, etc.
Schedule 4.19(c) - Amendments
Schedule 4.19(d) - Employment Agreements
Schedule 4.19(e) - Employee Payments
Schedule 4.19(g) - Related Party Transactions
Schedule 4.19(i) - Collective Bargaining Agreements
Schedule 4.19(j) - Labor Relations
Schedule 4.19(l) - Unfair Labor Practices
Schedule 4.19(m) - Joint Employer
Schedule 4.19(n) - Withdrawal Liability
Schedule 4.19(p) - Unfair Labor Practices and Material Adverse Effect
Schedule 4.20(a) - Employee Plans
Schedule 4.20(b) - Administration of Employee Plans
Schedule 4.21(a) - Compliance with EHS Requirements of Law
Schedule 4.21(b) - EHS Permits
Schedule 4.21(c) - Material EHS Permits
Schedule 4.21(d) - Third Parties
Schedule 4.21(e) - Investigations
Schedule 4.21(g) - Notices
Schedule 4.21(h) - Releases
Schedule 4.21(i) - National Priorities List
Schedule 4.21(j) - Disposal of Contaminants
Schedule 4.21(k) - Transport of Contaminants
Schedule 4.21(l) - Migration of Contaminants
Schedule 4.21(m) - Underground Improvements
Schedule 4.21(n) - PCBs
Schedule 4.21(o) - Liabilities under EHS Requirements of Law
Schedule 4.22 - Related Transactions
Schedule 4.23(a) - Independent Contractors
Schedule 4.21(b) - EHS Permits
Schedule 4.30 - Computer Products
-ii-
<PAGE>
Schedule 6.2(e) - Anticipated Equipment
Schedule 6.2(j) - Prepayment of Indebtedness
Schedule 6.10(d) - Leaman Air
Schedule 6.12 - Senior Notes
Schedule 7.3(p)(1) - Consultants
Schedule 7.3(p)(2) - Conditions Causing EHS Damages
Schedule 8.4(e) - Certain EHS Damages
Exhibit A - Form of Delaware Certificate of Merger
Exhibit B - Form of Pennsylvania Articles of Merger
Exhibit C - Articles of Incorporation of the Company
Exhibit D - Form of Letter of Transmittal
Exhibit E - Financing Letters
Exhibit F - Restrictive Covenant Agreement
Exhibit G - Waiver and Release
-iii-
<PAGE>
AGREEMENT AND PLAN OF MERGER (this
"Agreement") dated as of June 23, 1998, by and
among PALESTRA ACQUISITION CORP., a Delaware
corporation ("Purchaser"), CHEMICAL LEAMAN
---------
CORPORATION, a Pennsylvania corporation (the
"Company"), and THE SHAREHOLDERS OF THE COMPANY
-------
NAMED ON SCHEDULE I ATTACHED HERETO (each, a
----------
"Shareholder", and collectively, the
------------
"Shareholders"). Certain capitalized terms used
------------
herein are defined in ANNEX I hereto.
-------
WHEREAS, the Board of Directors of the Company has determined that it is
fair and in the best interests of its shareholders for Purchaser to merge with
and into the Company (the "Merger") pursuant to Section 252 of the Delaware
------
General Corporation Law (the "Delaware Statute") and Subchapter C of Chapter 19
----------------
of the Pennsylvania Business Corporation Law of 1988, as amended (the
"Pennsylvania Statute") upon the terms and subject to the conditions set forth
--------------------
herein;
WHEREAS, the Board of Directors of the Company has adopted resolutions
approving the Merger, this Agreement and the transactions to which the Company
is a party contemplated hereby, and has agreed, upon the terms and subject to
the conditions set forth herein, to recommend that the Company's shareholders
approve the Merger and this Agreement;
WHEREAS, the parties have agreed (subject to the terms and conditions of
this Agreement), as soon as practicable following the approval by the
shareholders of the Company, to effect the Merger, as more fully described
herein;
WHEREAS, simultaneously with the execution hereof, the Company and certain
of its employees are entering into letter agreements (the "Employment
----------
Agreements") with respect to the employment of such persons after the
- ----------
consummation of the Merger;
WHEREAS, simultaneously with the execution hereof, the Company and all the
Shareholders have entered into an agreement with respect to the appointment of a
representative of the Shareholders (the "Shareholders Representative"), a copy
---------------------------
of which has been furnished to Purchaser; and
WHEREAS, Purchaser, the Company and the Shareholders desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the premises and the mutual benefits to
be derived from this Agreement and the representations, warranties, covenants,
agreements and conditions hereinafter set forth, the parties hereto hereby agree
as follows:
<PAGE>
ARTICLE I
GENERAL
1.1 THE MERGER.
----------
In accordance with, and subject to, the provisions of this Agreement, the
Delaware Certificate of Merger in substantially the form of EXHIBIT A attached
---------
hereto (the "Delaware Certificate of Merger"), the Delaware Statute, the
------------------------------
Pennsylvania Articles of Merger in substantially the form of EXHIBIT B attached
---------
hereto (the "Pennsylvania Articles of Merger") and the Pennsylvania Statute,
-------------------------------
Purchaser shall be merged with and into the Company, which, at and after the
Effective Time, shall be and is hereinafter sometimes referred to as the
"Surviving Corporation." Purchaser and the Company are hereinafter sometimes
---------------------
collectively referred to as the "Constituent Corporations."
------------------------
1.2 EFFECTIVE TIME OF THE MERGER.
----------------------------
The Merger shall become effective on the Closing Date upon the filing by
the Surviving Corporation of the Delaware Certificate of Merger with the
Secretary of State of the State of Delaware. The Delaware Certificate of Merger
shall be executed and delivered in the manner provided under the Delaware
Statute. The Pennsylvania Articles of Merger shall be executed and delivered in
the manner provided under the Pennsylvania Statute and filed with the Secretary
of State of the Commonwealth of Pennsylvania concurrently with the filing of the
Delaware Certificate of Merger. The time when the Merger shall become effective
is referred to herein as the "Effective Time."
--------------
1.3 EFFECT OF THE MERGER.
--------------------
Except as specifically set forth herein or in the Pennsylvania Articles of
Merger, at the Effective Time, the identity, existence, corporate organization,
purposes, powers, objects, franchises, privileges, rights, immunities,
restrictions, debts, liabilities and duties (collectively, the "Corporate
Rights") of the Company shall continue in effect and be unimpaired by the
Merger, and the Corporate Rights of Purchaser shall be merged with and into the
Company, which shall, as the Surviving Corporation, be fully vested therewith.
At the Effective Time, the separate existence and corporate organization of
Purchaser shall cease, and Purchaser shall be merged with and into the Surviving
Corporation.
1.4 CHARTER, BY-LAWS, OFFICERS AND DIRECTORS OF SURVIVING CORPORATION.
-----------------------------------------------------------------
From and after the Effective Time, the articles of incorporation, as
amended, of the Company shall be amended and restated in their entirety to read
as set forth in EXHIBIT C hereto (the "Company's Charter") and, as so amended,
--------- -----------------
the Company's Charter shall be the articles of incorporation of the Surviving
Corporation until altered, amended or repealed as provided in the Pennsylvania
Statute; the by-laws of Purchaser shall become the by-laws of the Surviving
Corporation (the "Company's By-Laws"), unless and until altered, amended or
-----------------
repealed as provided in the Pennsylvania Statute, the Company's Charter or such
By-laws; and the officers and directors of Purchaser shall become the officers
and directors of the Surviving Corporation,
2
<PAGE>
respectively, unless and until removed or until their respective terms of office
shall have expired in accordance with the Pennsylvania Statute, the Company's
Charter or the Company's By-Laws, as applicable.
1.5 TAKING OF NECESSARY ACTION; FURTHER ASSURANCES.
----------------------------------------------
Prior to the Effective Time, and subject to the terms and conditions
contained in this Agreement, the parties hereto shall take or cause to be taken
all such actions as may be necessary or appropriate in order to effectuate, as
expeditiously as reasonably practicable, the Merger and the other transactions
contemplated by this Agreement.
1.6 AUTHORIZATION OF THE MERGER, THIS AGREEMENT, THE DELAWARE CERTIFICATE OF
------------------------------------------------------------------------
MERGER AND THE PENNSYLVANIA ARTICLES OF MERGER.
- ----------------------------------------------
(a) Prior to or simultaneously with the execution and delivery of this
Agreement, the Shareholders shall execute a written consent in lieu of a
meeting, which written consent shall include resolutions approving and adopting
the Merger, this Agreement, the Pennsylvania Articles of Merger, the Delaware
Certificate of Merger, and Related Documents and consummation of the
transactions contemplated hereby, as required by the Delaware Statute and the
Pennsylvania Statute.
(b) Prior to or simultaneously with the execution and delivery of this
Agreement, Purchaser shall execute a written consent in lieu of a meeting, which
written consent shall include resolutions approving and adopting the Merger,
this Agreement, the Delaware Certificate of Merger, the Pennsylvania Articles of
Merger, the Related Documents and the consummation of the transactions
contemplated hereby, as required by the Delaware Statute and the Pennsylvania
Statute.
(c) The Company shall take, and the Shareholders shall cause the
Company to take, as promptly as practicable, all such other actions as may be
necessary or advisable under the Delaware Statute, the Pennsylvania Statute and
any other applicable law or regulation in connection with this Agreement, the
Merger, the Delaware Certificate of Merger or the Pennsylvania Articles of
Merger. The Company shall prepare and distribute any written notice or other
materials relating to the Shareholders' action contemplated by Section 1.6(a)
required to be delivered pursuant to the Company's articles of incorporation,
the Company's by-laws, the Delaware Statute, the Pennsylvania Statute or any
other Federal or state law applicable to this Agreement, the Merger, the
Delaware Certificate of Merger, the Pennsylvania Articles of Merger, the Related
Documents or the Shareholders' action (collectively, the "Shareholders'
Materials"); provided, however, that Purchaser and its counsel shall have a
-------- -------
reasonable opportunity to review all Shareholders' Materials and all
Shareholders' Materials shall be reasonably satisfactory in form and substance
to Purchaser and its respective counsel.
1.7 THE CLOSING.
-----------
The closing of the transactions contemplated hereby (the "Closing") will
take place as promptly as practicable after satisfaction or waiver of the
conditions set forth in Article VII or such other date to be mutually agreed
upon by the parties(the "Closing Date"). On the Closing
------------
3
<PAGE>
Date, the Surviving Corporation shall file the Delaware Certificate of Merger
with the Secretary of State of the State of Delaware and the Pennsylvania
Articles of Merger with the Pennsylvania Secretary of State pursuant to Section
1.2 hereof. The Closing shall take place at the offices of O'Sullivan Graev &
Karabell, LLP, 30 Rockefeller Plaza, New York, New York 10112, unless another
place is agreed to in writing by the parties.
ARTICLE II
EFFECT OF MERGER
2.1 PURCHASE PRICE; EFFECT ON CAPITAL STOCK.
---------------------------------------
(a) Subject to any setoffs as set forth in Section 7.3(g) or Section
7.3(h), the aggregate purchase price payable at the Closing hereunder for the
issued and outstanding capital stock of the Company shall be equal to the Merger
Consideration minus the Net Transaction Expenses, plus with respect to George
McFadden, the consideration set forth in Section 6.10 hereof.
(b) The manner and basis of converting, exchanging or canceling the
shares of capital stock of each of the Constituent Corporations into or for cash
(or the contingent right to receive cash) or securities of the Surviving
Corporation shall be as follows:
(i) each share of common stock, $.01 par value, of Purchaser
issued and outstanding immediately prior to the Effective Time shall be
converted into one share of common stock, $.01 par value, of the Surviving
Corporation;
(ii) each Share issued and outstanding immediately prior to the
Effective Time and owned directly or indirectly by the Company (whether as
treasury stock or otherwise) shall, by virtue of the Merger and without any
action on the part of the holder thereof, be canceled and no consideration
shall be delivered in exchange therefor;
(iii) each Merger Share held by the Shareholders (other than the
Merger Shares held by David R. Hamilton and the Merger Shares held by David
M. Boucher) shall, by virtue of the Merger and without any action on the
part of the holders thereof, cease to be outstanding and be converted into
the right to receive, subject to the terms and conditions of this
Agreement, an amount in cash equal to a portion of the Merger Consideration
determined as follows:
(A) multiply the Merger Consideration by such
Shareholder's Common Equity Percentage to determine the "Base Merger
Consideration" for such Shareholder;
(B) subtract from the Base Merger Consideration for such
Shareholder, an amount equal to the sum of (x) the Hamilton Special Merger
Consideration multiplied by such Shareholder's Common Equity Percentage,
plus (y) the Boucher Special Merger Consideration multiplied by such
Shareholder's Common Equity
4
<PAGE>
Percentage, plus (z) the Net Transaction Expenses multiplied by such
Shareholders' Percentage of Merger Consideration, in order to determine
such Shareholder's portion of the Merger Consideration;
(iv) each Merger Share held by David R. Hamilton shall, by
virtue of the Merger and without any action on the part of Mr. Hamilton,
cease to be outstanding and shall be converted into the right to receive,
subject to the terms and conditions of this Agreement, an amount in cash
equal to a portion of the Merger Consideration determined as follows:
(A) multiply the Merger Consideration by such Shareholder's
Common Equity Percentage to determine the "Base Merger Consideration" for
such Shareholder;
(B) add to the Base Merger Consideration for such
Shareholder, an amount equal to the Hamilton Special Merger Consideration
(such sum, collectively, the "Hamilton Adjusted Merger Consideration");
(C) subtract from the Hamilton Adjusted Merger
Consideration, an amount equal to the sum of (x) the Boucher Special Merger
Consideration multiplied by Mr. Hamilton's Common Equity Percentage, plus
(y) the Net Transaction Expenses multiplied by Mr. Hamilton's Percentage of
Merger Consideration, in order to determine such Shareholder's portion of
the Merger Consideration;
(v) each Merger Share held by David M. Boucher shall, by virtue
of the Merger and without any action on the part of Mr. Boucher, cease to
be outstanding and shall be converted into the right to receive, subject to
the terms and conditions of this Agreement, an amount in cash equal to a
portion of the Merger Consideration determined as follows:
(A) multiply the Merger Consideration by such Shareholder's
Common Equity Percentage to determine the "Base Merger Consideration" for
such Shareholder;
(B) add to the Base Merger Consideration for such
Shareholder, an amount equal to the Boucher Special Merger Consideration
(such sum, collectively, the "Boucher Adjusted Merger Consideration");
(C) subtract from the Boucher Adjusted Merger
Consideration, an amount equal to the sum of (x) the Hamilton Special
Merger Consideration multiplied by Mr. Boucher's Common Equity Percentage
plus (y) the Net Transaction Expenses multiplied by such Shareholder's
Percentage of Merger Consideration, in order to determine such
Shareholder's portion of the Merger Consideration;
(vi) each authorized but unissued share of Company Common Stock
immediately prior to the Effective Time shall be canceled.
5
<PAGE>
(c) Notwithstanding the foregoing, all or a portion of the Merger
Shares held by certain Shareholders shall not be converted into cash, but in
lieu thereof shall be converted into common stock of MTL (the "MTL Stock") in
---------
accordance with the provisions of the Employment Agreements entered into by such
Shareholders.
2.2 DELIVERY OF FUNDS; SURRENDER OF CERTIFICATES.
--------------------------------------------
(a) At the Effective Time, upon surrender by the Shareholders to the
Surviving Corporation of the certificates which, immediately prior to the
Effective Time, represented Shares, the Surviving Corporation shall deposit with
the Transfer Agent for the benefit of the holders of the Shares, for payment in
accordance with this Article II, the funds necessary to pay the Merger
Consideration (taking into consideration the MTL Stock and subject to any
setoffs as set forth in Section 7.3(g) or Section 7.3(h)).
(b) Each holder of an outstanding certificate or certificates which
prior thereto represented Merger Shares, upon surrender at, or as soon as
practicable after, the Effective Time of the Merger (as the case may be) to the
Transfer Agent of such certificate or certificates (together with a letter of
transmittal signed by such holder in substantially the form of EXHIBIT D
---------
attached hereto), shall be entitled to the amount of cash into which the number
of Merger Shares previously represented by such certificate or certificates
surrendered shall have been converted pursuant to this Agreement (taking into
consideration the MTL Stock and subject to any setoffs as set forth in Section
7.3(g) or Section 7.3(h)). The Transfer Agent shall accept such certificates
and such letter of transmittal upon compliance with such reasonable terms and
conditions as the Transfer Agent may impose to effect an orderly exchange
thereof in accordance with normal practices. After the Effective Time of the
Merger, there shall be no further transfer on the records of the Company or its
transfer agent of certificates representing Merger Shares which have been
converted, in whole or in part, pursuant to this Agreement, into the right to
receive cash, and if such certificates are presented to the Company for
transfer, they shall be canceled against delivery of such cash. If cash is to
be remitted to a name other than that in which the certificate for Merger Shares
surrendered for exchange is registered, it shall be a condition of such exchange
that the certificate so surrendered shall be properly endorsed, with signature
guaranteed or otherwise in proper form for transfer. Until surrendered as
contemplated by this Section 2.2(b), each certificate for Merger Shares shall be
deemed at any time after the Effective Time of the Merger to represent only the
right to receive upon such surrender the Merger Consideration for each Merger
Share.
(c) No dividends or other distributions with respect to Shares with a
record date after the Effective Time of the Merger shall be paid to the holder
of any certificate for Shares not surrendered with respect to the Shares
represented thereby.
(d) All cash paid upon the surrender for exchange of certificates
representing Shares in accordance with the terms of this Article II shall be
deemed to have been paid in full satisfaction of all rights pertaining to the
Shares exchanged for cash theretofore represented by such certificates.
6
<PAGE>
(e) Any cash deposited with the Transfer Agent pursuant to this
Section 2.2 (the "Exchange Fund") which remains undistributed to the holders of
-------------
the certificates representing Shares 180 days after the Effective Time of the
Merger shall be delivered to the Surviving Corporation at such time and any
holders of Shares prior to the Merger who have not theretofore complied with
this Article II shall thereafter look only to the Surviving Corporation and only
as general unsecured creditors thereof for payment of their claim for cash.
(f) Neither Purchaser nor the Company shall be liable to any person in
respect of any cash from the Exchange Fund delivered to a public office pursuant
to any applicable abandoned property, escheat or similar law. If any
certificates representing Shares shall not have been surrendered prior to one
year after the Effective Time of the Merger (or immediately prior to such
earlier date on which any cash in respect of such certificate would otherwise
escheat to or become the property of any Governmental Entity), any such cash in
respect of such certificate shall, to the extent permitted by applicable law,
become the property of the Surviving Corporation, free and clear of all claims
or interest of any person previously entitled thereto.
(g) The Company shall invest any cash included in the Exchange Fund,
as directed by Purchaser, on a daily basis. Any interest and other income
resulting from such investments shall be paid to the Company. To the extent
that there are losses with respect to such investments, or the Exchange Fund
diminishes for other reasons below the level required to make prompt payments of
the Merger Consideration as contemplated hereby, Purchaser shall promptly
replace or restore the portion of the Exchange Fund lost through investments or
other events so as to ensure that the Exchange Fund is, at all times, maintained
at a level sufficient to make such payments.
ARTICLE III
REPRESENTATIONS AND WARRANTIES ABOUT THE SHAREHOLDER
Each Shareholder represents and warrants (severally as to such Shareholder
only) to Purchaser as follows:
3.1 TITLE TO THE SHARES.
-------------------
(a) Such Shareholder is the lawful owner, of record and beneficially,
of those Shares set forth opposite his, her or its name on Schedule 3.1(a) and
---------------
has good and marketable title to such Shares.
(b) Except to the extent set forth on Schedule 3.1(b), (i) such
---------------
Shareholder owns such Shares free and clear of any Encumbrances whatsoever and
with no restriction on the voting rights and other incidents of record and
beneficial ownership pertaining thereto, (ii) such Shareholder is not the
subject of any bankruptcy, reorganization or similar proceeding and (iii) except
for this Agreement and any agreements entered into pursuant hereto, there are no
agreements or understandings between such Shareholder and any other Person with
respect to the acquisition, disposition, transfer, registration or voting of or
any other matters in any way pertaining or relating to any of the capital stock
of the Company.
7
<PAGE>
(c) Such Shareholder does not have any right whatsoever to receive or
acquire any additional capital stock of the Company.
(d) Schedule 3.1(d) sets forth a schedule of all Indebtedness and
---------------
Liabilities owing by each Shareholder to the Company and each Subsidiary, all of
which, except as otherwise set forth in this Agreement shall be fully satisfied
at or prior to the Effective Time.
3.2 AUTHORITY; NONCONTRAVENTION; CONSENTS.
-------------------------------------
(a) Such Shareholder has the full and absolute right, capacity, power
and authority to enter into this Agreement and each Related Document to which
such Shareholder is or will be a party; this Agreement and each Related Document
to which such Shareholder is or will be a party has been, or upon the execution
and delivery thereof will be, duly and validly executed and delivered by such
Shareholder; and this Agreement and each Related Document is, or upon the
execution and delivery thereof will be, the valid and binding obligation of such
Shareholder, enforceable against such Shareholder in accordance with its terms,
except as enforceability may be limited by equitable principles of bankruptcy,
fraudulent conveyance or insolvency laws affecting creditors' rights generally.
(b) None of the execution, delivery or performance by such Shareholder
of this Agreement or the Related Documents to which such Shareholder is or will
be a party nor the consummation of the transactions contemplated hereby or
thereby nor compliance by such Shareholder with any of the provisions hereof or
thereof will (i) conflict with, or result in any violation of, or cause a
default (with or without notice or lapse of time, or both) under, or give rise
to any right of termination, amendment, cancellation or acceleration of any
obligations contained in or the loss of any benefit under, any term, condition
or provision of any Contract to which such Shareholder is a party, or by which
such Shareholder or its assets may be bound, except for any conflict, violation,
default, termination, amendment, cancellation or acceleration that is not
material, or (ii) violate any Law applicable to such Shareholder, which conflict
or violation could prevent the consummation of the transactions contemplated by
this Agreement or any of the Related Documents to which such Shareholder is or
will be a party or result in an Encumbrance on or against any assets, rights or
properties of such Shareholder, or on or against any capital stock of the
Company, or give rise to any claim against the Company or Purchaser.
(c) Except as set forth on Schedule 3.2(c) or otherwise contemplated
---------------
by this Agreement, no Permit, authorization, consent or approval of or by, or
any notification of or filing with, any Person (governmental or private) is
required in connection with the execution, delivery and performance by such
Shareholder of this Agreement or the Related Documents to which such Shareholder
is or will be a party or the consummation by such Shareholder of the
transactions contemplated hereby or thereby.
(d) The Company's execution and delivery of this Agreement and each
Related Document to which it is a party, and performance by the Company of its
obligations hereunder and thereunder are hereby duly and validly authorized and
approved by such Shareholder.
(e) Except as set forth on Schedule 3.2(e), no Shareholder is party to
---------------
or bound by any agreement, arrangement or understanding with any other
Shareholder, except for (i)
8
<PAGE>
agreements to which the Company is a party and (ii) agreements with respect to
which no party to, or beneficiary of, is expected to be an employee or officer
of the Company at or immediately after the Effective Time.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES ABOUT THE COMPANY
The Company represents and warrants to Purchaser as follows:
4.1 ORGANIZATION, POWER, AUTHORITY AND GOOD STANDING.
------------------------------------------------
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation and has
all requisite power and authority (corporate and otherwise) to own, lease and
operate its assets and properties and to carry on its business as presently
conducted. The Company is duly qualified and in good standing to transact
business as a foreign corporation in those jurisdictions set forth on Schedule
--------
4.1(a), which constitute all the jurisdictions in which the character of the
- ------
property owned, leased or operated by such entity or the nature of the business
or activities conducted by such entity makes such qualification necessary,
except where the failure to so qualify would not reasonably be expected to have
a Material Adverse Effect. Purchaser has been furnished with true, correct and
complete copies of the Company's Charter and the Company's By-Laws, in each case
as amended and in effect on the date hereof.
(b) Each Subsidiary is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite power and authority (corporate and otherwise) to own, lease and
operate its assets and properties and to carry on its business as presently
conducted. Each Subsidiary is duly qualified and in good standing to transact
business as a foreign corporation in those jurisdictions set forth on Schedule
--------
4.1(b), which constitute all the jurisdictions in which the character of the
- ------
property owned, leased or operated by such entity or the nature of the business
or activities conducted by such entity makes such qualification necessary,
except where the failure to so qualify would not reasonably be expected to have
a Material Adverse Effect. Purchaser has been furnished with true, correct and
complete copies of the organizational documents of each Subsidiary, including
all certificates or articles of incorporation, formation, or partnership, all
bylaws, partnership agreements, operating agreements, limited liability company
agreements or other organizational documents, in each case as amended and in
effect on the date hereof.
(c) Except as set forth on Schedule 4.1(c), neither the Company nor
---------------
any Subsidiary has (i) within the last three years, engaged in any business
other than the Business and (ii) used within the last three years any other
trade name or assumed names.
4.2 AUTHORIZATION, EXECUTION AND ENFORCEABILITY.
-------------------------------------------
The Company has all requisite power and authority (corporate and otherwise)
to execute, deliver and perform its obligations under this Agreement and each
Related Document to which it is or will be a party and to consummate the
transactions contemplated hereby and thereby. The
9
<PAGE>
Company's execution and delivery of this Agreement and each Related Document to
which it is or will be a party, and performance by the Company of its
obligations hereunder and thereunder have been duly and validly authorized by
all requisite action on the part of the Company and its Shareholders, and this
Agreement and each Related Document to which the Company is or will be a party
has been, or upon the execution and delivery thereof will be, duly and validly
executed and delivered by the Company and constitutes, or upon its execution and
delivery will constitute, a valid and binding obligation of the Company,
enforceable against the Company, as the case may be, in accordance with its
terms, except as enforceability may be limited by equitable principles of
bankruptcy, fraudulent conveyance or insolvency laws affecting creditors' rights
generally. Except as set forth on Schedule 4.2 or as otherwise contemplated by
------------
this Agreement, neither the Company's execution and delivery of, and/or
performance of its obligations under, this Agreement or the Related Documents to
which it is or will be a party, nor the consummation of the transactions
contemplated hereby or thereby will (a) violate, or result in the creation of an
Encumbrance upon any of the Company's assets as a result of, any Laws applicable
to the Company or any of its properties or assets or (b) conflict with, or
result in any violation or breach of, any of the terms, conditions or provisions
of, or constitute (with due notice or lapse of time, or both) a default or give
rise to any right of contingent payment, termination, cancellation or
acceleration, or result in the creation of any Encumbrance upon any of the
properties or assets of the Company, under, any provision of the Company's
Charter or the Company's By-laws or any Permit, Order or Material Contract to
which it is a party or by which it or any of its assets or properties is or may
be bound.
4.3 CONSENTS.
--------
Except as set forth on Schedule 4.3, no consent, approval, Permit, Order or
------------
authorization of, registration, declaration or filing with, or notification to
any Governmental Entity is required in connection with the execution, delivery
and performance by the Company or any Subsidiary of this Agreement or any
Related Document to which it is or will be a party or the consummation of the
transactions contemplated hereby or thereby.
4.4 CAPITALIZATION.
--------------
(a) The authorized capital stock of the Company consists of 3,500,000
shares, of which (i) 3,000,000 are designated as Common Stock, par value $2.50
per share and (ii) 500,000 are designated as Preferred Stock, no par value per
share, of which (A) 130 shares are designated as Series A Preferred Stock, (B)
151 shares are designated as Series B Cumulative Convertible Preferred Stock and
(C) 302 shares are designated as Series C Cumulative Preferred Stock. Schedule
--------
4.4(a) sets forth a true, correct and complete list of the owners of all issued
- ------
and outstanding shares of Common Stock, Series A Preferred Stock, Series B
Cumulative Convertible Preferred Stock and Series C Cumulative Preferred Stock
(setting forth the number of each such shares owned by each such owner). All
issued and outstanding shares set forth in such Schedule have been duly and
validly issued and are fully paid and nonassessable and are owned of record and
beneficially by the persons set forth in such Schedule. Prior to the Effective
Time, all of the Series B Cumulative Convertible Preferred Stock shall have been
converted into Common Stock.
10
<PAGE>
(b) [Intentionally Left Blank.].
(c) Except as set forth on Schedule 4.4(c), there are no securities
---------------
presently outstanding, that are convertible into, exchangeable for, or carrying
the right to acquire, equity securities of the Company or subscriptions,
warrants, options, calls, puts, convertible securities, registration or other
rights or arrangements obligating the Company to issue, sell, register, purchase
or redeem any of its equity securities or any ownership interest or rights
therein. There are no voting trusts or other agreements or understandings to
which the Company is bound with respect to the voting of the Company's capital
stock. There are no stock appreciation rights, phantom stock rights or similar
rights or arrangements outstanding. Except as set forth on Schedule 4.4(c) or
---------------
as otherwise contemplated by this Agreement, there are no Contracts,
commitments, arrangements, understandings or restrictions to which the Company,
the Shareholders or to the Best Knowledge of the Company any other Person is
bound relating in any way to any shares of capital stock or other securities of
the Company.
(d) Other than the Notes (as defined below), which have been
registered under the Securities Act, all securities issued by the Company have
been issued in transactions exempt from registration under the Securities Act
and the rules and regulations promulgated thereunder and all applicable state
securities or "blue sky" laws, and the Company has complied in all material
respects with the Securities Act and all applicable state securities or "blue
sky" laws in connection with the issuance of any such securities.
4.5 SUBSIDIARIES; INVESTMENTS.
-------------------------
(a) Schedule 4.5(a) sets forth a true, correct and complete list of
---------------
each Subsidiary of the Company and the percentage of the voting securities and
total equity interests of such Subsidiary owned by the Company (or one or more
of its Subsidiaries) and each other holder thereof. Except as set forth on such
Schedule, the Company does not own or hold, directly or indirectly, any equity
interest in any Person. All of the voting securities and equity interests set
forth on Schedule 4.5(a) are owned of record and beneficially by the Company or
---------------
one of its Subsidiaries, free and clear of all Encumbrances. All equity
interests of the Subsidiaries are fully paid, nonassessable and not subject to
preemptive rights.
(b) The authorized capital stock of each Subsidiary is as set forth in
Schedule 4.5(b).
- ---------------
4.6 ABSENCE OF CHANGES.
------------------
Since the Latest Balance Sheet Date, the Company and each Subsidiary has
been operated in the ordinary course, consistent with past practice, and there
has not been:
(a) except as set forth in Schedule 4.6(a), any change in the
---------------
business, operations, assets, condition (financial or otherwise), operating
results or Liabilities which has had or is reasonably likely to have a material
adverse effect on the Company and its Subsidiaries (taken as a whole) or any
material casualty loss or damage to the assets of the Company or any Subsidiary,
whether or not covered by insurance (a "Material Adverse Change");
-----------------------
11
<PAGE>
(b) except for intercompany payments in the ordinary course of
business or as set forth in Schedule 4.6(b), any declaration, setting aside or
---------------
payment of any distribution with respect to any shares of capital stock of the
Company or any Subsidiary, or any direct or indirect redemption, purchase or
other acquisition of any thereof, or any other payments of any nature outside
the ordinary course of business to any Affiliate of the Company whether or not
on or with respect to any shares of capital stock of the Company owned by such
Affiliate (excluding salaries and benefits in ordinary course consistent with
past practices at rates equal to those in effect on the Latest Balance Sheet
Date);
(c) except as set forth in Schedule 4.6(c), any general uniform
---------------
increase in the compensation of employees (including, without limitation, any
increase pursuant to any bonus, pension, profit-sharing or other plan or
commitment) of the Company or any Subsidiary, or any increase in any such
compensation payable to any officer, director or key management employee;
(d) except as set forth in Schedule 4.6(d), any change in the tax or
----------------
other accounting methods or practices followed by the Company or any Subsidiary,
any change in depreciation or amortization policies or rates previously adopted
or any write-up of inventory or other assets;
(e) except as set forth in Schedule 4.6(e) any material change in the
---------------
manner in which products or services of the Company or any Subsidiary are
marketed (including, without limitation, any material change in prices), any
material change in the manner in which the Company or any Subsidiary extends
discounts or credit to customers or any material change in the manner or terms
by which the Company or any Subsidiary collects its accounts receivable or
otherwise deals with customers;
(f) except as set forth in Schedule 4.6(f), any failure by the Company
----------------
or any Subsidiary to make scheduled capital expenditures or investments or any
failure to pay trade accounts payable or any other Liability of the Company or
any Subsidiary in the ordinary course consistent with past practices;
(g) except as set forth in Schedule 4.6(g), neither the Company nor
---------------
any Subsidiary has sold, leased, licensed, mortgaged or otherwise encumbered or
subjected to any Encumbrance or otherwise disposed of its properties or assets,
except (i) immaterial assets, (ii) in the ordinary course of business (including
for trade-ins) and (iii) where the amount of such sales does not exceed,
individually or in the aggregate, $250,000;
(h) except as set forth in Schedule 4.6(h), neither the Company nor
---------------
any Subsidiary has taken any action that would result in a breach of Section 6.2
if such action was taken after the date hereof; or
(i) any entry into any agreement or understanding, whether in writing
or otherwise, to take any of the actions specified in the foregoing clauses (a)
through (h).
12
<PAGE>
4.7 FINANCIAL INFORMATION.
---------------------
(a) Schedule 4.7(a) contains true, correct and complete copies of the
---------------
audited consolidated balance sheets of the Company and its Subsidiaries as of
December 31, 1995, 1996 and 1997 (each an "Audited Balance Sheet Date"), and the
--------------------------
related audited consolidated statements of operations and cash flows of the
Company and its Subsidiaries for the fiscal years then ended, including the
footnotes thereto, as audited by (and together with the report of their audit)
Arthur Andersen LLP (all of foregoing being hereinafter collectively called the
"Audited Financial Statements").
----------------------------
(b) Schedule 4.7(b) contains true, correct and complete copies of the
---------------
unaudited consolidated balance sheets of the Company and its Subsidiaries as of
April 5, 1998 (the "Latest Balance Sheet") and the related unaudited
--------------------
consolidated statements of operations and cash flows of the Company and its
Subsidiaries for the year-to-date period then ended (all of foregoing being
hereinafter collectively called the "Unaudited Financial Statements").
------------------------------
(c) The Audited Financial Statements and the Unaudited Financial
Statements were prepared in accordance with GAAP applied on a consistent basis
during the periods involved and fairly present, in all material respects, the
consolidated financial position of the Company and its Subsidiaries as of the
dates thereof and the results of its operations and cash flows for the periods
then ended, subject, in the case of the Unaudited Financial Statements, to
normal year-end adjustments. Except as set forth on Schedule 4.7(c),
---------------
liabilities set forth on the Latest Balance Sheet, and liabilities and
obligations incurred in the ordinary course of business consistent with past
practice since the date of the Latest Balance Sheet (the "Latest Balance Sheet
--------------------
Date"), neither the Company nor any of its Subsidiaries has any Liabilities of
- ----
any nature (whether accrued, absolute, contingent or otherwise) required by GAAP
to be set forth on a balance sheet or in the notes thereto. Management of the
Company has no reason to believe that with respect to its and its Subsidiaries'
long-lived assets and intangible assets which are subject to Financial
Accounting Standards No. 121, as of December 31, 1997, the undiscounted future
cash flows related to such assets did not exceed the carrying values thereof
recorded as of such date, as required by GAAP.
(d) Except as set forth in Schedule 4.7(d), all Indebtedness of the
---------------
Company and each Subsidiary may be prepaid in whole or in part at any time and
from time to time without premium or penalty. Schedule 4.7(d) sets forth a
---------------
schedule of all such prepayment premiums and penalties.
(e) Schedule 4.7(e) sets forth a true, correct and complete schedule
---------------
of the consolidated Indebtedness owed, as of the date hereof, by the Company and
its Subsidiaries to any third party (determined in accordance with GAAP
consistently applied), which schedule shall (i) identify the lender or lenders
and the aggregate principal amount outstanding and interest in respect thereof,
(ii) set forth the aggregate principal amount of Indebtedness owed in respect of
each tractor or trailer (if applicable) set forth in Schedule 4.12(a) or the net
present value of all future lease payments owed in respect of each tractor or
trailer (if applicable) set forth in Schedule 4.12(b) and (iii) set forth an
amortization schedule of all future principal payments in respect of such
Indebtedness and/or all future lease payments (identifying the
13
<PAGE>
portion attributable to financing in respect of the tractors and trailers and
the portion attributable to other financing).
(f) Schedule 4.7(f) sets forth a true, correct and complete summary of
---------------
all consolidated accounts payable, accrued expenses and accounts receivable of
the Company and its Subsidiaries as of the end of each of the three months ended
immediately prior to the date hereof, which schedule shall set forth the name of
the account debtor (in the case of accounts receivable) or account creditor (in
the case of accounts payable and accrued expenses) and the amount owed by or
owing to such account debtor or account creditor (identifying the portion of
such amount that is current, 30, 60, 90 and more than 90 days past due).
4.8 ABSENCE OF UNDISCLOSED LIABILITIES.
----------------------------------
Neither the Company nor any Subsidiary has any Liability except (i) as set
forth in Schedule 4.8, (ii) those Liabilities reflected or reserved against on
------------
the Latest Balance Sheet, (ii) Liabilities under the Contracts to which it is
party (excluding Liabilities resulting from any breach thereof) and (iv)
Liabilities incurred in the ordinary course of business consistent with past
practice since the Latest Balance Sheet Date (other than any such Liability
arising from breach of contract, breach of warranty, tort, infringement, or
violation of any Law or any Proceeding). There are no loss contingencies (as
such term is used in Statement of Financial Accounting Standards No. 5 issued by
the Financial Accounting Standards Board in March 1975) of or affecting the
Company or any Subsidiary which are not adequately provided for or disclosed on
the Latest Balance Sheet or in the notes thereto, in each case, to the extent
required by GAAP. Except as set forth on Schedule 4.8, neither the Company nor
------------
any Subsidiary has, either expressly or by operation of Law, assumed or
undertaken any Liability of any other Person, including without limitation any
obligation for corrective or remedial action relating to EHS Requirements of
Law.
4.9 ACCOUNTS AND NOTES RECEIVABLE.
-----------------------------
(a) Except as set forth on Schedule 4.9(a), all the accounts
---------------
receivable and notes receivable owing to the Company or any Subsidiary as of the
date hereof constitute valid and enforceable claims arising from bona fide
transactions in the ordinary course of business. Except to the extent reflected
in reserves on the consolidated books of the Company, there are no known or
asserted claims, refusals to pay or other rights of set-off against any such
accounts or notes receivable. Except as set forth on Schedule 4.9(a), there is
---------------
(i) no account debtor or note debtor that has refused or, to the Best Knowledge
of the Company, threatened to refuse to pay its obligations to the Company or
any Subsidiary for any reason, or has otherwise made a claim of set-off or
similar claim (other than in amounts not in excess of $25,000.00 per account
debtor or $100,000.00 in the aggregate) and (ii) to the Best Knowledge of the
Company, no account debtor or note debtor that owes the Company amounts in
excess of $25,000.00 in the aggregate that is insolvent or bankrupt.
(b) For purposes of Section 4.9(a), accounts receivable or notes
receivable owing to Pickering Way Funding Trust shall be deemed to be accounts
receivable or notes receivable owing to the Company or a Subsidiary, as the case
may be.
14
<PAGE>
4.10 BANK ACCOUNTS; POWERS OF ATTORNEY.
---------------------------------
Schedule 4.10 sets forth a true, correct and complete list of (i) all bank
-------------
accounts and safe deposit boxes of the Company and each Subsidiary and all
persons who are signatories thereunder or who have access thereto and (ii) the
names of all persons, firms, associations, corporations or business
organizations holding general or special powers of attorney from the Company or
any Subsidiary and a summary of the terms thereof (excluding ministerial powers
of attorney granted to representatives of the Company or any Subsidiary which
are terminable at will).
4.11 TAX MATTERS.
-----------
(a) Except as set forth on Schedule 4.11(a): (i) the Company and (ii)
----------------
each other Person included in any consolidated or combined Tax Return and part
of an affiliated group, within the meaning of Section 1504 of the Internal
Revenue Code of 1986, as amended (the "Code"), of which the Company is or has
----
been a member ("Tax Affiliate"), for the years that it was a Tax Affiliate of
-------------
the Company:
(i) has timely paid or caused to be paid all Taxes required to be
paid by it through the date hereof and as of the Closing Date (including
any Taxes shown due on any Tax Return);
(ii) has filed or caused to be filed in a timely and proper
manner (within any applicable extension periods) all Tax Returns required
to be filed by it with the appropriate Governmental Entities in all
jurisdictions in which such Tax Returns are required to be filed; and all
Tax Returns filed on behalf of the Company and each Tax Affiliate were
complete and correct in all material respects; and
(iii) has not requested or caused to be requested any extension
of time within which to file any Tax Return, which Tax Return has not since
been filed.
(b) The Company has previously delivered true, correct and complete
copies of all Federal Tax Returns filed by or on behalf of the Company through
the date hereof for the periods ending on and after December 31, 1994.
(c) Except as set forth in Schedule 4.11(c):
----------------
(i) since December 31, 1997, neither the Company nor any Tax
Affiliate (for the years that it was a Tax Affiliate of the Company) has
been notified by the Internal Revenue Service or any other taxing authority
that any issues have been raised (and no such issues are currently pending)
by the Internal Revenue Service or any other taxing authority in connection
with any Tax Return filed by or on behalf of the Company or to the Best
Knowledge of the Company any Tax Affiliate; there are no pending Tax audits
and no waivers of statutes of limitation have been given or requested with
respect to the Company or to the Best Knowledge of the Company any Tax
Affiliate (for the years that it was a Tax Affiliate of the Company); no
Tax liens have been filed against the Company or any Tax Affiliate (for the
years that it was a Tax Affiliate of the
15
<PAGE>
Company); no unresolved deficiencies or additions to Taxes have been
proposed, asserted, or assessed against the Company or to the Best
Knowledge of the Company any Tax Affiliate (for the years that it was a Tax
Affiliate of the Company);
(ii) full and adequate accrual has been made (A) on the Latest
Balance Sheet, and the books and records of the Company and each Subsidiary
for all Taxes currently due and all deferred Taxes not yet due and payable
by the Company and each Subsidiary, respectively, as if they were stand-
alone corporations for all periods ending on or prior to the Latest Balance
Sheet Date, and (B) on the books and records of the Company and each
Subsidiary for all Taxes payable by the Company and each Subsidiary,
respectively, as if they were stand-alone corporations for all periods
beginning after the Latest Balance Sheet Date;
(iii) neither the Company nor any Subsidiary has incurred any
Liability for Taxes from and after the Latest Balance Sheet Date other than
Taxes incurred in the ordinary course of business and consistent with past
practices;
(iv) neither the Company nor any Subsidiary has (A) made an
election (or had an election made on its behalf by another person) to be
treated as a "consenting corporation" under Section 341(f) of the Code or
----------------------
(B) been a "personal holding company" within the meaning of Section 542 of
------------------------
the Code;
(v) the Company and each Subsidiary has complied in all
material respects with all applicable Laws relating to the collection or
withholding of Taxes (such as sales Taxes or withholding of Taxes from the
wages of employees);
(vi) neither the Company nor any Subsidiary has any liability
in respect of any Tax sharing agreement with any Person and all Tax sharing
agreements to which either the Company or any Subsidiary has been bound
have been terminated;
(vii) neither the Company nor any Subsidiary has incurred any
Liability to make any payments either alone or in conjunction with any
other payments in connection with the transactions contemplated hereby or
otherwise that:
(A) shall be non-deductible under, or would otherwise
constitute a "parachute payment" within the meaning of Section 280G of the
-----------------
Code (or any corresponding provision of state, local or foreign income Tax
Law); or
(B) are or may be subject to the imposition of an excise
Tax under Section 4999 of the Code;
(viii) neither the Company nor any Subsidiary has agreed to (nor
has any other person agreed to on its behalf) and is not required to make
any adjustments or changes either on, before or after the Closing Date, to
its accounting methods pursuant to Section 481 of the Code, and the
Internal Revenue Service has not proposed any such adjustments or changes
in the accounting methods of the Company;
16
<PAGE>
(ix) no claim has been made within the last three years by any
taxing authority in a jurisdiction in which the Company or any Subsidiary
does not file Tax Returns that the Company or such Subsidiary is or may be
subject to taxation by that jurisdiction;
(x) the consummation of the transactions hereunder will not
trigger the realization or recognition of intercompany gain or income to
the Company under the Federal consolidated return regulations with respect
to Federal, state, or local taxes;
(xi) none of the Shareholders are foreign Persons within the
meaning of (S) 1.1445-2(b) of the rules and regulations promulgated under
Section 1445 of the Code, and Purchaser has been furnished with a true and
accurate certificate of the Company so stating which complies in all
respects with (S) 1.1445-2(b)(1) of such rules and regulations; and
(xii) The Company is not currently, nor has it been at any time
during the previous five years, a "U.S. real property holding corporation"
and, therefore, the Shares are not "U.S. real property interests," as such
terms are defined in Section 897 of the Code.
4.12 TITLE TO ASSETS, PROPERTIES AND RIGHTS AND RELATED MATTERS.
----------------------------------------------------------
(a) Schedule 4.12(a) sets forth a true, correct and complete list, as
----------------
of the Latest Balance Sheet Date, of all tractors and trailers owned by the
Company and each Subsidiary, including the net book value of such assets and the
following information with respect to each such tractor and/or trailer:
(i) the net book value of such tractor or trailer as of the
Latest Balance Sheet Date, determined in accordance with GAAP;
(ii) the date of purchase and the age of such tractor or
trailer;
(iii) the purchase price of such tractor or trailer; and
(iv) the revenues for the twelve months ended on the Latest
Balance Sheet Date derived from such tractor or trailer (to the extent
applicable), determined from the Company's books and records.
(b) Schedule 4.12(b) sets forth a true, correct and complete list as
----------------
of the Latest Balance Sheet Date of all tractors and trailers leased by the
Company and each Subsidiary, and the following information with respect to each
such tractor and/or trailer:
(i) the net book value of such tractor or trailer as of the
Latest Balance Sheet Date;
(ii) the date of delivery and the age of such tractor or
trailer; and
17
<PAGE>
(iii) the revenues for the twelve months ended on the Latest
Balance Sheet Date derived from such tractor or trailer (to the extent
applicable), determined from the Company's books and records.
(c) Schedule 4.12(c) set forth a list of the revenues derived from
----------------
each tractor operated by an Independent Contractor for the three month period
ended April 5, 1998, determined from the Company's books and records.
(d) The Company and/or one of its Subsidiaries has good and marketable
title to all of the assets, properties and interests in properties, real,
personal or mixed, reflected on the Latest Balance Sheet or acquired after the
Latest Balance Sheet Date (except inventory or other property sold or otherwise
disposed of since the Latest Balance Sheet Date in the ordinary course of
business and accounts receivable and notes receivable to the extent collected
subsequent to the Latest Balance Sheet Date), free and clear of all
Encumbrances, of any kind or character, except for those Encumbrances set forth
on Schedule 4.12(d) and Permitted Encumbrances. Such assets comprise all of the
----------------
assets necessary or required for the conduct of the Business as currently
conducted.
(e) Such assets are in good operating condition and repair (normal
wear and tear excepted), and are not subject to any condition which materially
interferes with the economic value or use thereof. With respect to any leased
assets, such assets are in such condition as to permit the surrender thereof by
the Company or its Subsidiary to the lessors thereunder on the date hereof
without any cost or expense for repair or restoration if the terms of the
related leases expired on the date hereof in the ordinary course of business.
With respect to tank trailers, facilities and tractors, such assets are free
from all structural flaws and design and engineering deficiencies which would
materially reduce the useful life of such assets, except for reasonable wear and
tear and except for items which have been written down in the Audited Financial
Statements or the Unaudited Financial Statements (as the case may be).
4.13 REAL PROPERTY--OWNED OR LEASED.
------------------------------
(a) Schedule 4.13(a) contains a true, correct and complete list, as of
----------------
the date hereof, by location of all of the real property owned by Company or any
of its Subsidiaries (the "Owned Property"), including the name of the owner
--------------
thereof. All Owned Property is located in the United States and, except as set
forth on Schedule 4.13(a), is owned by the Company or one of its wholly owned
----------------
Subsidiaries free and clear of all Encumbrances except Permitted Encumbrances.
There are no rights of first refusal or other options to purchase any parcel of
Owned Property or any portion or interest therein.
(b) Schedule 4.13(b) contains a true, correct and complete list, as of
----------------
the date hereof, by location of all of the real property leased by the Company
or any Subsidiary subject to one or more leases (the "Leased Property"),
---------------
including the names of the lessor and the lessee. The Company or such Subsidiary
is the owner and holder of all the leasehold estates purported to be granted by
such leases.
(c) The Leased Property and the Owned Property constitute all real
property used or occupied by the Company or any Subsidiary of the Company in
connection with the
18
<PAGE>
Business. Except as set forth on Schedule 4.13(c): (i) no portion thereof is
----------------
subject to any pending condemnation Proceeding or Proceeding by any Governmental
Entity and, to the Best Knowledge of the Company, there is no threatened
condemnation or Proceeding with respect thereto; (ii) the physical condition of
each of the Owned Property and the Leased Property is sufficient to permit the
continued conduct of the Business as presently conducted and as proposed by the
Company to be conducted, subject to the provision of usual and customary
maintenance and repair performed in the ordinary course; (iii) there are no
Contracts, written or oral, to which the Company or any Affiliate thereof is a
party, granting to any party or parties the right of use or occupancy of any
portion of the parcels of the Leased Property or the Owned Property; (iv) there
are no parties (other than the Company or their lessees disclosed pursuant to
clause (iii) above) in possession of either the Leased Property or the Owned
Property and (v) no notice of any increase in the assessed valuation of either
the Leased Property or the Owned Property and no notice of any contemplated
special assessment has been received by the Company and to the Best Knowledge of
the Company, there is no threatened increase in assessed valuation or threatened
special assessment pertaining to any of the Leased Property or any of the Owned
Property.
4.14 INTELLECTUAL PROPERTY.
---------------------
(a) Schedule 4.14(a) sets forth a true, correct and complete list, as
----------------
of the date hereof, of all patents, trademarks, service marks and copyrights
licensed by or registered or filed for by the Company or any Subsidiary (other
than readily-available off-the-shelf software licensed by the Company or any
Subsidiary).
(b) The Company or one of its Subsidiaries owns, has the right to use,
sell, license and dispose of, and has the right to bring actions for the
infringement of (excluding readily available off-the-shelf software), all
Intellectual Property Rights purported to be owned by the Company or any
Subsidiary and necessary or required for the conduct of the Business (the "Owned
-----
Requisite Rights"), including "Qualawash", "Chemshuttle", "Bulkmodal",
- ----------------
"Continuous Improvement Drives Our Success", "C Chemical Tank Lines Inc. and
Design", "C and Design" and "Fleet (stylized)". The Company has the right to
use all other Intellectual Property Rights used by it, for which the Company has
a valid license (collectively, the "Licensed Requisite Rights"; and, together
-------------------------
with the Owned Requisite Rights, the "Requisite Rights"). The Company's rights
----------------
to use, sell, license, dispose of and bring actions are exclusive with respect
to the Owned Requisite Rights;
(c) The Company and each Subsidiary have taken reasonable and
practicable steps designed to safeguard and maintain (i) the secrecy and
confidentiality of Confidential or Proprietary Information and (ii) the
proprietary rights of the Company in all of its Owned Requisite Rights;
(d) Except as set forth on Schedule 4.14(d), neither the Company nor
----------------
any Subsidiary has interfered with, infringed upon, misappropriated or otherwise
come into conflict with any Intellectual Property Rights of any Person and has
complied in all material respects with all applicable Laws relating to unfair
competition, and neither the Company nor any
19
<PAGE>
Subsidiary has received from any Person in the past three years any notice,
charge, complaint, claim or assertion thereof; and
(e) Except as set forth on Schedule 4.14(e), the Company has not sent
----------------
to any Person or otherwise communicated to any Person, in the past three years,
any notice, charge, complaint, claim or other assertion of any present,
impending or threatened infringement by or misappropriation of, or other
conflict with, any Intellectual Property Rights of the Company by such other
Person or any acts of unfair competition by such other Person, nor to the Best
Knowledge of the Company, is any such infringement, misappropriation, conflict
or act of unfair competition occurring or threatened.
4.15 AGREEMENTS, NO DEFAULTS, ETC.
----------------------------
(a) Schedule 4.15(a) sets forth a true, correct and complete list, as
----------------
of the date hereof, of all Contracts to which the Company or any Subsidiary, or
any of their Affiliates, is a party or by which any of their respective assets
or properties are bound that (i) involves payment over the remaining term
(without regard to any early termination or cancellation rights) of such
Contract of more than $50,000 or requires the Company and/or its Subsidiaries,
or any of their Affiliates, to provide goods or services with a value of more
than $50,000, (ii) evidences or provides for any Indebtedness of the Company or
any Subsidiary, or any of their Affiliates, or any Encumbrance securing such
Indebtedness, (iii) guarantees the performance, liabilities or obligations of
any other Person, (iv) restricts the Company or any Subsidiary, or any of their
Affiliates, from engaging in any line of business, (v) provides for the payment
of commissions or fees in respect of the sale, distribution or marketing of
products or services of the Company or any Subsidiary, or any of their
Affiliates (including forms of contracts of with Independent Contractors), (vi)
are with any current officer, director, Affiliate or "associate" (as defined in
Rule 12b-2 under the Exchange Act), (vii) relate to the ownership, leasing,
licensing or use of real property or any Intellectual Property Right, (viii)
relate to any proposed Alternative Transaction (as defined below) as to which
discussions have not been terminated prior to the date hereof, including all
Contracts containing confidentiality, standstill, non-solicitation or similar
provisions, (ix) are otherwise material to the business, financial condition or
results of operations of the Company and its Subsidiaries, or any of their
Affiliates, taken as a whole (collectively, "Material Contracts").
------------------
(b) Neither the Company nor any Subsidiary, nor any of their
Affiliates, is and, to the Best Knowledge of the Company, no other party is in
violation of or in default under (nor does there exist any condition affecting
the Company or any Subsidiary, or to the Best Knowledge of the Company, other
parties to such Material Contracts which upon the passage of time or the giving
of notice or both would reasonably be expected to cause such a violation of or
default under) any Material Contract to which it is a party or by which it or
any of its properties or assets is bound. Each Material Contract constitutes a
valid and binding obligation of the Company and/or Subsidiary, or any of their
Affiliates, party thereto and, to the Best Knowledge of the Company, each other
party thereto, enforceable against such other party in accordance with its
terms, except as enforceability may be limited by equitable principles of
bankruptcy, fraudulent conveyance or insolvency laws affecting creditors' rights
generally.
20
<PAGE>
(c) To the Best Knowledge of the Company, each party to each Material
Contract (other than the Company and its Subsidiaries) has all Permits necessary
or advisable for the conduct of its business and to the Best Knowledge of the
Company there are no adverse claims, suits, actions, Proceedings or
investigations pending or threatened against such Person, in each case, relating
to such Material Contract or services.
4.16 LITIGATION, ETC.
---------------
(a) Except as disclosed on Schedule 4.16(a), there are no (i)
----------------
Proceedings pending or, to the Best Knowledge of the Company, threatened against
the Company, whether at law or in equity, whether civil or criminal in nature,
or (ii) Orders of any Governmental Entity or arbitrator with respect to,
involving or against the Company.
(b) Schedule 4.16(b) sets forth a true, correct and complete list of
----------------
each matter described in Section 4.16(a) that was in existence within the last
---------------
three years that resulted in any criminal sanctions or payments in excess of
$100,000.00 by the Company (whether as a result of a judgment, civil fine,
settlement or otherwise).
(c) To the Best Knowledge of the Company, the Company is entitled to
recover the amounts set forth in Schedule 4.16(c) in respect of legal fees and
----------------
other expenses related to the litigation matter described in such Schedule,
there are no rights of set-off with respect to such amounts, and all of such
sums are collectible prior to December 31, 1999.
(d) Except as required under EHS Requirements of Law, neither the
Company nor any Subsidiary has any Liability in respect of any settlement or any
judgment resulting from any Proceeding.
4.17 COMPLIANCE WITH LAWS.
--------------------
(a) Intentionally omitted.
(b) Except for those required by EHS Requirements of Law, the Company,
each Subsidiary and, to the Best Knowledge of the Company, each Independent
Contractor (i) except as set forth on Schedule 4.17(a), has complied in all
----------------
material respects with, and is in compliance in all material respects with, all
Laws, Orders and Permits applicable to it and the Business and (ii) has all
Permits (other than local business Permits or licenses containing no change of
control provision) used or necessary in the conduct of its Business. All Permits
are in full force and effect, no violations with respect to any thereof have
occurred or are or have been recorded, no Proceeding is pending or, to the Best
Knowledge of the Company, threatened to revoke or limit any thereof. No
investigation or review by any Governmental Entity with respect to the Company
or any Subsidiary is pending or, to the Best Knowledge of the Company,
threatened, nor has any Governmental Entity notified the Company of its
intention to conduct the same.
4.18 INSURANCE.
---------
(a) Schedule 4.18(a) contains a true, correct and complete list of all
----------------
policies of liability, theft, fidelity, life, fire, product liability, workmen's
compensation, health and other
21
<PAGE>
forms of insurance held by the Company and each Subsidiary (specifying the
insurer, amount of coverage, type of insurance, policy number, deductible or
retention amount, premium, policy term, Best's rating of the insurer and any
pending claims thereunder). The Company and each Subsidiary has maintained such
insurance coverage at all times during the course of the operation of the
Business, and such insurance coverage has been maintained on an occurrence (as
opposed to a claims made) basis. The Company and its Subsidiaries have not
exhausted the insurance coverage available under the Company's currently
existing insurance policies.
(b) Except as set forth on Schedule 4.18(b), with respect to each
----------------
policy of insurance listed on Schedule 4.18(a): (i) all premiums with respect
----------------
thereto are currently paid and are not subject to adjustment, and no Person is
in default in any respect with respect to its obligations under such policy, and
no basis exists that would give any insurer under any such policy the right to
cancel or unilaterally reduce or limit the stated coverages contained in such
policy; (ii) there are no outstanding claims currently pending under such policy
that reasonably would be expected to cause a substantial increase in the
insurance rates of the Company or any Subsidiary, and no facts or circumstances
exist that might reasonably be expected to relieve the insurer under such policy
of its obligations to satisfy in full any claim thereunder and (iii) neither the
Company nor any Subsidiary has received any notice that such policy has been or
shall be canceled or terminated or will not be renewed on substantially the same
terms as are now in effect or the premium on such policy shall be materially
increased on the renewal thereof.
(c) The Audited Financial Statements and the Unaudited Financial
Statements reflect adequate reserves, determined using the case reserve method,
for any insurance programs which requires (or has required) the Company or its
Subsidiaries to retain a portion of each loss, including deductible and self
insurance programs.
4.19 LABOR MANAGEMENT RELATIONS; EMPLOYEES.
-------------------------------------
(a) Schedule 4.19(a) sets forth a true, correct and complete list of
----------------
all directors, officers and key management employees of the Company and each
Subsidiary as of the date hereof, together with their respective titles (if
any), their current compensation (including salary, wages, current bonus plans
and commissions) and the respective dates on which they commenced employment.
To the extent any such employee is on a leave of absence, Schedule 4.19(a)
----------------
indicates the nature of such leave of absence and such employee's anticipated
date of return to active employment. To the Best Knowledge of the Company, none
of the key management employees listed on Schedule 4.19(a) has any plans or
-------- -------
intends to terminate his or her employment or engagement with the Company and no
former key management employee has left the service of the Company within the
last six months.
(b) Schedule 4.19(b) sets forth the aggregate number of drivers,
----------------
maintenance employees, shop employees, tank cleaners and all other non-
supervisory personnel that work for any of the Company, any Subsidiary or any
independent contractor or any person or legal entity which leases drivers or
other personnel to the Company or a Subsidiary, specifying in the case of the
Company and its Subsidiaries, the number of such drivers or other listed
personnel that belong to a union or are otherwise covered by an employment
agreement or a collective bargaining agreement, identified by terminal location
or facility.
22
<PAGE>
(c) Except as disclosed on Schedule 4.19(c) or as expressly provided
----------------
in this Agreement, since the Latest Balance Sheet Date, there has not been any
adoption or amendment in any material respect by the Company or any Subsidiary
of any collective bargaining agreement or any bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan or arrangement providing
benefits to any current or former employee, officer or director of the Company
or any Subsidiary (for the avoidance of doubt, regular salary and/or wage
increases and modifications to bonus, commission and other incentive
compensation arrangements in case with respect to non-officer employees of the
Company or any Subsidiary in the ordinary course of business and consistent with
past practice are excluded from the foregoing).
(d) Except as set forth in Schedule 4.19(d) and except as provided in
----------------
the Company's Charter and the Company's By-Laws or as expressly provided in this
Agreement, there exist no employment, consulting, severance, termination or
indemnification agreements or arrangements between the Company and any current
or former employee, officer or director of the Company.
(e) Schedule 4.19(e) contains a true, correct and complete list of all
----------------
amounts payable or that will or may become payable to each director, officer or
employee or former director, officer or employee of the Company or any
Subsidiary pursuant to any employment, change-in-control, severance or
termination agreement or arrangement.
(f) Intentionally omitted.
(g) Schedule 4.19(g) sets forth a true, correct and complete
----------------
description of all transactions between the Company or its Subsidiaries, on the
one hand, and any of their respective Affiliates, directors, officers,
employees, or consultants, on the other hand, in each case consummated at any
time since January 1, 1995. Except as set forth on Schedule 4.19(g), there are
----------------
no Contracts or arrangements between the Company or its Subsidiaries, on the one
hand, and any of their respective Affiliates, directors, officers, employees or
consultants, on the other hand, with respect to any such transactions. Except
as set forth on Schedule 4.19(g), no Affiliate, director, officer, employee or
----------------
consultant of the Company owns any interest in any asset or property (real or
personal, tangible or intangible), business or contract used or intended for use
or otherwise relating to the business currently conducted or proposed to be
conducted by the Company or any Subsidiary.
(h) Neither the Company nor any of its Subsidiaries has experience
within the past twelve months a "plant closing" or "mass layoff" within the
meaning of the Worker Adjustment and Retraining Notification Act, 29 U.S.C.
(S)(S) 2101 et seq.
(i) Schedule 4.19(i) sets forth a true, correct and complete list, as
----------------
of the date hereof, of all collective bargaining agreements, union contracts or
similar agreements to which the Company or any Subsidiary is a party or by which
any of their respective properties or assets are bound. Except for the items
set forth on such Schedule, no collective bargaining agreements, union contracts
or similar agreements are being negotiated by the Company or any Subsidiary.
23
<PAGE>
To the Best Knowledge of the Company, no labor union has taken any action with
respect to organizing employees of the Company or any Subsidiary and no
representation question exists with respect to any such employees.
(j) Except as set forth on Schedule 4.19(j), there is no labor strike,
----------------
dispute or grievance, slowdown or stoppage pending or, to the Best Knowledge of
the Company, threatened against or involving the Company or any Subsidiary or
any dispute or grievance related thereto, and no such labor strike, dispute or
grievance, slowdown or stoppage has occurred since January 1, 1993.
(k) The Company agrees and acknowledges that it is responsible for
making any required notifications regarding this Agreement to any labor
organization if such notification is required or contemplated by the terms of
its, or any Subsidiary's, collective bargaining agreement(s) with said labor
organization(s). Further, the Company represents and warrants that neither the
execution and delivery of this agreement, nor the consummation by the Company of
transactions contemplated in accordance with the terms hereby will violate any
of the Company's, or any Subsidiary's, collective bargaining agreement(s) with
any labor organization(s); however, the Company represents that certain of its
collective bargaining agreements may require that in the event of a transfer or
merger of all or part of an operation that the transferred or merged operations
would remain subject to the terms and conditions of the collective bargaining
agreements.
(l) Schedule 4.19(l) sets forth a true, correct and complete list, as
----------------
of the date hereof, of any and all unfair labor practice charges or other
proceedings before the National Labor Relations Board, EEOC charges, employment
discrimination lawsuits, wrongful discharge lawsuits, OSHA citations and/or
litigation, wage and hour charges and/or litigation which are presently pending,
or to the best knowledge of the Company, threatened at law or in equity, and
this Schedule also sets forth a true, correct, and complete list of those
cases/charges/proceedings falling within the above categories which have been
settled or otherwise disposed of within the previous 3 years.
(m) Except as set forth in Schedule 4.19(m), the Company represents
----------------
and warrants that neither it nor any Subsidiary has been found to be or is
alleged to be a joint employer or alter ego, as construed under the National
Labor Relations Act, as amended, with or of any of its suppliers, distributors,
customers or other persons/legal entities with which it has any contractual
arrangement, including, but not limited to, any owner/operator with whom the
Company, or any Subsidiary, has a contractual relationship or any other entity
with which the Company, or any Subsidiary, has a leasing arrangement
(collectively referred to as "Third Parties") and that no Third Parties are
alter egos of the Company or its Subsidiaries. The Company represents and
warrants that neither it nor a Subsidiary: (1) exercises management power or
authority over the operations or personnel of any Third Parties; (2) supervises
the employees of any Third Parties but may dispatch Independent Contractors in
connection with such parties pick up and/or delivery of cargo; or (3) is
responsible for, or has the authority to establish, implement or effectively
recommend the labor relations or employment policies or actions, including
wages, hours, working conditions or any terms of employment, for any employee of
Third Parties. The Company represents and warrants that there is no interchange
of
24
<PAGE>
personnel, no common boards of directors and no common officers, managers or
employees between the Company, or any of its Subsidiaries, and the Third
Parties. Further, the Company represents and warrants that neither the Company
nor any of its Subsidiaries provides any administrative services for any Third
Parties which is not required by law or which is not provided in a bona fide,
arms' length transaction at fair market value. Any administrative services
provided by the Company, or its Subsidiaries, for any Third Parties have been
detailed in Schedule 4.19(m).
----------------
(n) Schedule 4.19(n) sets forth a true, correct and complete in all
----------------
material respects summary as of the date hereof of all contingent withdrawal
liability regarding the Company's or any Subsidiary's participation in
Multiemployer Plan(s) (as defined in Section 3(37) of ERISA), listing the amount
of potential contingent withdrawal liability by Multiemployer Plan(s), and to
the extent possible by terminal or facility within each fund.
(o) The Company, its Subsidiaries and their ERISA Affiliates have
complied in all respects with Laws relating to the hiring and retention of all
employees, leased employees and independent contractors relating to wages,
hours, Employee Plans, Foreign Employee Benefit Plans, equal opportunities,
collective bargaining and the payment of social security and other taxes.
(p) Except as set forth on Schedule 4.19(p), neither the Company nor
----------------
any Subsidiary, nor to the Best Knowledge of the Company, their respective
representatives, have committed any unfair labor practices in connection with
the operation of the respective business of the Company or any Subsidiary which
has had or reasonably could be expected to have a Material Adverse Effect, and
the Company and each Subsidiary has in the past been and is in compliance in all
material respects with all applicable collective bargaining agreements and Laws
in respect of employment, employment practices, labor relations, safety and
health, wages, hours and terms and conditions of employment.
4.20 ERISA COMPLIANCE.
----------------
(a) Schedule 4.20(a) contains a true, correct and complete list as of
----------------
the date hereof of all Employee Benefit Plans, Multiemployer Plans and Foreign
Employee Benefit Plans (collectively, the "Employee Plans"), as of the date
--------------
hereof, (i) that cover any employees, contract employees or former employees of
any entity or any spouses, family members or beneficiaries thereof (A) that are
maintained, sponsored or contributed to by any entity or (B) with respect to
which any entity is obligated to contribute or has any actual or potential
Liability, or (ii) with respect to which any entity has any actual or potential
Liability or obligation on account of the maintenance or sponsorship thereof or
contribution thereto by any present or former ERISA Affiliate (as defined below)
of any entity. The Company represents that it has no Foreign Pension Plans.
(b) Administration and Compliance. Except as set forth on Schedule
----------------------------- --------
4.20(b), with respect to each Employee Plan:
- -------
(i) each Employee Benefit Plan has been established,
maintained, operated and administered in accordance with its terms and in
compliance in all material
25
<PAGE>
respects with ERISA, the Code, and other applicable Laws (including with
respect to reporting and disclosure);
(ii) all required, declared or discretionary (in accordance
with historical practices) payments, premiums, contributions,
reimbursements or accruals for all periods ending prior to or as of the
date hereof have been made or properly accrued on the Latest Balance Sheet,
or with respect to accruals properly made after the Latest Balance Sheet
Date, on the books and records of the applicable entity and all amounts
withheld from employees have been timely deposited into the appropriate
trust or account;
(iii) there is no unfunded actual or potential Liability
relating to such Employee Plan which is not specifically accrued for on the
Latest Balance Sheet, or with respect to accruals properly made after the
Latest Balance Sheet Date, on the books and records of the applicable
entity;
(iv) no entity, any of their respective ERISA Affiliates or
any other "disqualified person" or "party in interest" (as such terms are
------------------- -----------------
defined in Section 4975 of the Code and Section 3(14) of ERISA,
respectively) with respect to such Employee Benefit Plan, has breached the
fiduciary rules of ERISA or engaged in a prohibited transaction that could
subject any of the foregoing Persons to any tax or penalty imposed under
Section 4975 of the Code of Section 502(i), (j) or (l) of ERISA;
(v) no Proceedings (other than routine claims for benefits)
are pending or, to the Best Knowledge of the Company, threatened against or
relating to any Employee Benefit Plan or any fiduciary thereof, and there
is, to the Best Knowledge of the Company, no basis for any such Proceeding
against any Employee Benefit Plan;
(vi) such Employee Benefit Plan, if intended to be
"qualified", within the meaning of Section 401(a) of the Code, has been
---------
determined by the Internal Revenue Service to be so qualified and the
related trusts are exempt from Tax under Section 501(a) of the Code, and
nothing has occurred that has or could reasonably be expected to adversely
affect such qualification or exemption;
(vii) except as may be required under Laws of general
application, such Employee Benefit Plan does not obligate any entity to
provide any employee or former employee, or their spouses, family members
or beneficiaries, any post-employment or post-retirement health or life
insurance, accident or other "welfare-type" benefits;
------------
(viii) each Employee Benefit Plan which is subject to the
requirements of the Consolidated Omnibus Budget Reconciliation of 1985
("COBRA") and the Health Insurance Portability and Accountability Act
-----
("HIPAA") has been maintained in compliance with COBRA and HIPAA, including
-----
all notice requirements, and no tax payable on account of Section 4980B or
any other section of the Code has been or is expected to be incurred;
26
<PAGE>
(ix) no benefit payable or which may become payable by the
Company or its ERISA Affiliates pursuant to any Employee Plan shall
constitute an "excess parachute payment," within the meaning of Section
280G of the Code, which is or may be subject to the imposition of an excise
tax under Section 4999 of the Code or which would not be deductible by
reason of Section 280G of the Code;
(x) each Employee Benefit Plan which is intended to meet the
requirements of Section 125 of the Code meets such requirements and each
program of benefits for which employee contributions are provided pursuant
to elections made under such Employee Benefit Plan meets the requirements
of the Code applicable thereto;
(xi) the present value of all accrued benefits (whether or not
vested) under each Employee Benefit Plan subject to Title IV of ERISA did
not exceed, as of the most recent plan valuation date, and will not exceed,
as of the Closing Date, the then current fair market value of the assets of
such Plan (for purposes of determining the present value of accrued
benefits under the Plans, the actuarial assumptions and methods used under
each Plan for the most recent plan valuation date shall be used);
(xii) no Employee Benefit Plan subject to Part (3) of Subtitle
B of Title I of ERISA or Section 412 of the Code has incurred any
"accumulated funding deficiency" (as defined in Section 412(a) of the
Code), whether or not waived;
(xiii) no liability under Title IV of ERISA has been incurred,
including without limitation, for previously terminated Employee Benefit
Plans, by the Company or its ERISA Affiliates that has not been satisfied,
and no condition exists that presents a risk to the Company or its ERISA
Affiliates of incurring any liability under such Title;
(xiv) no "reportable event" (within the meaning of Section 4043
of ERISA) has occurred with respect to any Employee Benefit Plan;
(xv) each Foreign Employee Benefit Plan has been maintained in
good standing with applicable Governmental Entity;
(xvi) all contributions have been made with respect to all
Foreign Employee Benefit Plans on a timely basis;
(xvii) neither the Company nor any ERISA Affiliate has incurred
any obligation in connection with the termination of or withdrawal from any
Foreign Employee Benefit Plan;
(xviii) the present value of the accrued benefit liabilities
(whether vested or not) under each Foreign Employee Benefit Plan,
determined as of the end of the Company's most recently ended fiscal year
on the basis of actuarial assumptions provided for in such Foreign Employee
Benefit Plan, did not exceed the current value of the assets of such
Foreign Plan allocable to such benefit liabilities;
27
<PAGE>
(xix) neither the Company nor any of its ERISA Affiliates has
within the past five years had a complete or partial withdrawal from any
Multiemployer Plan as to which any withdrawal liability is due or may be
assessed.
(c) Purchaser has been provided with true and complete copies, to the
extent applicable, of all documents pursuant to which such Employee Benefit Plan
is maintained and administered, the two most recent annual reports (Form 5500
and attachments) and financial statements therefor, all governmental rulings,
determinations, and opinions (and pending requests therefor), and, if such
Employee Benefit Plan provides post-employment or post-retirement health and
life insurance, accident or other "welfare-type" benefits, the most recent
------------
valuation of the present and future obligations under such Employee Benefit
Plan; and the foregoing documents accurately reflect all of the terms of such
Employee Benefit Plan (including, without limitation, any agreement or provision
which would limit the ability of any entity to make any prospective amendments
or terminate such Employee Benefit Plan).
4.21 ENVIRONMENTAL MATTERS.
---------------------
Except for any matter which individually is not reasonably likely to cost
more than $100,000:
(a) Except as set forth on Schedule 4.21(a), the Company and each of
----------------
its Subsidiaries comply, and the Company and each of its Subsidiaries at all
times have complied, with all EHS Requirements of Law applicable to their
operations or the Properties;
(b) Except as set forth on Schedule 4.21(b), the Company and each of
----------------
its Subsidiaries have obtained or have taken appropriate steps, as required by
EHS Requirements of Law, to obtain all EHS Permits necessary for their
operations and the ownership and operation of the Properties, all such EHS
Permits are in effect or the Company has submitted timely and complete
applications for such Permits, and the Company and each of its Subsidiaries are
currently in compliance with all terms and conditions of such EHS Permits. No
material change in the facts or circumstances reported by the Company or any
Subsidiary in the applications for or the granting of such EHS Permits exists
which has not been reported to the applicable Governmental Entity, if required.
There are not any Proceedings pending or threatened which would be expected to
result in the revocation of any such EHS Permits;
(c) Schedule 4.21(c) sets forth a true, complete list of all of the
----------------
Company's and its subsidiaries' material Permits or pending permit applications
required under EHS Requirements of Law;
(d) Except as set forth on Schedule 4.21(d), all of the third parties
----------------
with which the Company or any of its Subsidiaries have arranged, engaged or
contracted to Treat, Transport, or, dispose (as those terms are defined under
RCRA) any Contaminant generated or present at any of the Properties were, to the
Best Knowledge of the Company, properly permitted, if applicable, at the
relevant time to perform the foregoing activities or conduct pursuant to EHS
Requirements' of Law;
28
<PAGE>
(e) Except as set forth in Schedule 4.21(e), neither the Company nor
----------------
any of its Subsidiaries is subject to any pending investigation, Proceeding or
Order alleging, reporting or requiring, in connection with the operations or the
Properties, (i) any violation of any EHS Requirements of Law, or (ii) any
Remedial Action, or (iii) any claims or liabilities and costs arising from the
Release or threatened Release of any Contaminant;
(f) No Environmental Encumbrance has attached to any of the
Properties;
(g) Except as set forth in Schedule 4.21(g), neither the Company nor
----------------
any of its Subsidiaries has received any notice, claim or other communication
alleging (i) any violation of any EHS Requirements of Law at any of the
Properties, (ii) Liability of the Company or any Subsidiary for EHS Damages
arising out of or related to its operations or any of the Properties, or (iii)
any Liability of the Company or any of its Subsidiaries arising out of or
related to its operations or the Properties for the Release or threatened
Release of a Contaminant at any location, and there exists no Order, Proceeding
or summons, pending or, to the Best Knowledge of the Company, threatened,
relating to the presence or the suspected presence of Contaminants at any of the
Properties;
(h) Except as set forth in Schedule 4.21(h), there has been no Release
----------------
of any Contaminants in reportable quantities at, to or from any of the
Properties;
(i) Except as set forth in Schedule 4.21(i), none of the Properties is
----------------
listed or proposed for listing on the National Priorities List ("NPL") pursuant
---
to the Comprehensive Environmental Response, Compensation, and Liability Act, as
amended ("CERCLA"), or listed on the Comprehensive Environmental Response
------
Compensation Liability Information System List ("CERCLIS") or any similar state
-------
list of sites, and neither the Company nor any of its Subsidiaries is aware of
any conditions at any of such Properties which, if known to a Governmental
Entity, would qualify such Properties for inclusion on any such list;
(j) Except as set forth in Schedule 4.21(j), neither the Company nor
----------------
any of its Subsidiaries has disposed (as such term is defined under RCRA) of any
----
Contaminant at any of the Properties;
(k) Except as set forth in Schedule 4.21(k), since June 16, 1993 and,
----------------
to the Best Knowledge of the Company, prior to such date, neither the Company
nor any of its Subsidiaries has transported or arranged for the transport of any
Contaminant to any facility or site for the purpose of Treatment or Disposal (as
those terms are defined in the RCRA) which (i) is included on the NPL or CERCLIS
or (ii) is or was, at the time of disposal, subject to a Remedial Action
requirement (other than routine, normal operational or closure-related
corrective action obligations affecting solid waste management units at such
facility) issued under the RCRA or any state, local or foreign solid or
hazardous waste regulatory law;
(l) Except as set forth in Schedule 4.21(l), no Contaminant has
----------------
migrated from any of the Properties onto or underneath other properties and, to
the Best Knowledge of the Company, no Contaminant has migrated or threatened to
migrate from other properties upon, about or beneath any of the Properties;
29
<PAGE>
(m) Except as set forth in Schedule 4.21(m), no underground
----------------
improvements containing Contaminants, including, but not limited to, treatment
or storage tanks, sumps, or gas or oil wells, or associated piping, are, to the
Best Knowledge of the Company, or have ever been located on any of the
Properties during the time of ownership by the Company or any Subsidiary;
(n) Except as set forth in Schedule 4.21(n), no polychlorinated
----------------
biphenyls ("PCBs") or transformers, capacitors, ballasts, or other equipment
----
which contain dielectric fluid containing PCBs are located or at any time have
been located on any of the Properties; and
(o) Except as set forth in Schedule 4.21(o), neither the Company nor
----------------
any of its Subsidiaries has any Liability, or has received any notice, claim or
other communication alleging liability on the part of the Company or any of its
Subsidiaries, for the violation of any EHS Requirements of Law, for EHS Damages,
or for the Release or threatened Release of any Contaminant in connection with
any businesses or properties previously owned or operated by the Company or any
of its Subsidiaries or any former subsidiary.
4.22 RELATED TRANSACTIONS.
--------------------
Except as set forth on Schedule 4.22, no current or former Affiliate of the
-------------
Company or any "associate" (as defined in the rules promulgated under the
---------
Exchange Act) thereof, is now (i) party to any transaction or Contract with the
Company (including, but not limited to, any contract, agreement or other
arrangement providing for the furnishing of services by, or rental of real or
personal property from, or otherwise requiring payments in excess of $60,000
individually or in the aggregate to, any such Affiliate or Associate) or (ii)
the direct or indirect owner of an interest in any Person which is a present or
potential competitor, supplier or customer of the Company (other than non-
affiliated holdings in publicly held companies). Except as set forth on
Schedule 4.22, the Company is not a guarantor or otherwise liable for any actual
- -------------
or potential Liability of its Affiliates and their associates. Except as set
forth on Schedule 4.22, the Company does not (x) own or operate any vehicles,
-------------
boats, aircraft, apartments or other residential or recreational properties or
facilities for executive, administrative or sales purposes or (y) own or pay for
any social club memberships, whether or not for the benefit of the Company
and/or their executives.
4.23 INDEPENDENT CONTRACTORS.
-----------------------
(a) Schedule 4.23(a) contains a true, correct and complete summary, in
----------------
all material respects, of the arrangements of the Company and its Subsidiaries
with all Independent Contractors.
(b) The Company and its Subsidiaries have furnished to Purchaser
copies of the standard form of the Independent Contractor Service Agreement.
The actual terms and provisions of the arrangements (contractual or otherwise)
between the Company and/or any Subsidiary on the one hand, and the Independent
Contractors on the other hand, (a) are not in any material respect (taken as a
whole) different in form from those set forth in such standard contract, (b)
are on arms' length terms and (c) do not contain any unusual or burdensome
provision which, individually or in the aggregate, has or reasonably could be
expected to result in a Material Adverse Change. All of such agreements between
the Company and/or any
30
<PAGE>
Subsidiary on the one hand, and the Independent Contractors on the other hand,
are legal, valid and binding obligations of the Company or its Subsidiaries and,
to the Best Knowledge of the Company, of each of the other parties thereto,
enforceable against such parties in accordance with their respective terms.
Neither the Company nor any of its Subsidiaries nor, to the Best Knowledge of
the Company, the Independent Contractors who are parties to such agreement, is
in default under any term of any such agreement, which default, individually or
in the aggregate, has or reasonably could be expected to result in a Material
Adverse Change.
(c) The Company's and its Subsidiaries' contractual agreements with
Independent Contractors establish bona fide arrangements where said individuals
are independent contractors to, and not employees of, the Company or any of its
Subsidiaries and that there are no pending Proceedings, disputes, claims,
charges, allegations or, to the Best Knowledge of the Company, threatened at Law
or in equity before any Governmental Entity in any form, which challenges the
independent contractor nature of such agreements.
4.24 RELATIONSHIPS.
-------------
(a) Except in the ordinary course of business, neither any material
supplier, vendor or distributor for the Company or any Subsidiary (including all
Independent Contractors), nor any franchisee or licensee of the Company, has (i)
canceled or otherwise terminated, or, to the Best Knowledge of the Company,
threatened to cancel or otherwise terminate, its relationship with the Company
or has decreased, limited or otherwise adversely modified, or (ii) threatened to
decrease, limit or otherwise adversely modify, the services, supplies, materials
or services it provides to the Company, and the transactions proposed to be
consummated pursuant to this Agreement and the Related Documents, to the Best
Knowledge of the Company, shall not adversely affect the relationship of the
Company to any supplier, vendor, distributor, franchisee or licensee, except to
the extent that the Company's merger into or sale to MTL Inc. or any of its
subsidiaries (as opposed to another entity) is the primary cause of such adverse
affect.
(b) No customers to which more than $250,000 in the aggregate of the
Company's annual sales for the 12 month period ending December 31, 1997 are
attributable have notified the Company that they intend to, or, to the Best
Knowledge of the Company, have threatened to, terminate or materially curtail
their relationship and dealings with the Company, whether as a result of the
transactions contemplated by this Agreement or otherwise.
4.25 DISCLOSURE.
----------
This Agreement, including the schedules, attachments or exhibits hereto,
does not contain any untrue statement of a material fact and does not omit to
state any material fact necessary to make the statements made not misleading.
4.26 CONFLICTS OF INTEREST.
---------------------
None of the Shareholders, the Company, nor any officer, employee, agent or
other Person acting on behalf of the Company has, directly or indirectly, given
or agreed to give any money, gift or similar benefit (other than legal price
concessions to customers in the ordinary course of business) to any customer,
supplier, employee or agent of a customer or supplier, or official or
31
<PAGE>
employee of any Governmental Entity or other Person who was, is, or may be in a
position to help or hinder the business of the Company (or assist in connection
with any actual or proposed transaction) that (i) would be reasonably likely to
subject the Company to any damage or penalty in any Proceeding, (ii) if not
given in the past, would have resulted in a Material Adverse Change to the
Company (taken as a whole) or (iii) if not continued in the future, could
reasonably be expected to result in a Material Adverse Change. There is not now,
and there has never been, any employment by the Company of, or, to the Best
Knowledge of the Company, beneficial ownership in the Company by, any
governmental or political official in any jurisdiction in which the Company has
conducted or proposes to conduct business.
4.27 STATE TAKEOVER STATUTES.
-----------------------
The Board of Directors of the Company has approved this Agreement and the
Related Documents and the transactions contemplated hereby and thereby
(including the Merger) and such approval is sufficient to render inapplicable to
such agreements and transactions the provisions of any "fair price,"
"moratorium," "control share," "interested shareholder," "affiliated
transaction" or other anti-takeover statute or regulation and any applicable
anti-takeover or other restrictive provision of the Articles of Incorporation,
by-laws or other governing instruments.
4.28 SEC DOCUMENTS.
-------------
The Company has furnished the Purchaser with a correct and complete copy of
each report, schedule and registration statement filed by the Company with the
SEC on or after January 1, 1995 (the "SEC Documents"), which are all the
-------------
documents (other than preliminary material) that the Company was required to
file (or otherwise did file) with the SEC on or after such date. As of their
respective dates, none of the SEC Documents (including all exhibits and
schedules thereto and documents incorporated by reference therein) contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, and the
SEC Documents complied when filed in all material respects with the then
applicable requirements of the Securities Act or the Exchange Act, as the case
may be, and the rules and regulations promulgated by the SEC thereunder. The
financial statements of the Company included in the SEC Documents complied as to
form in all material respects with the then applicable accounting requirements
and the published rules and regulations of the SEC with respect thereto, were
prepared in accordance with GAAP during the periods involved (except as may have
been indicated in the notes thereto or, in the case of the unaudited statements,
as permitted by Form 10-Q promulgated by the SEC) and fairly present (subject,
in the case of the unaudited statements, to normal audit adjustments) the
consolidated financial position of the Company and its Subsidiaries as at the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended.
4.29 BROKERS.
-------
Neither the Shareholders nor the Company has employed any broker or finder
or incurred any Liability for any brokerage fees, commissions or finders' fees
in connection with the transactions contemplated hereby.
32
<PAGE>
4.30 YEAR 2000 COMPLIANCE.
--------------------
(a) Except as set forth on Schedule 4.30, all computer hardware and
-------------
software owned, licensed or used by the Company or any Subsidiary (collectively,
"Computer Products") has been designed to be used prior to, during and after the
-----------------
calendar year 2000 AD, and will operate during each such time period without
error relating to date data and date-dependent data, specifically including any
error relating to, or the product of, date data which represents or references
different centuries or more than one century.
(b) Without limiting the generality of the foregoing, and at no
additional cost to the Company or any Subsidiary, except as set forth on
Schedule 4.30.
- -------------
(i) each Computer Product will not abnormally end or provide
invalid or incorrect results as a result of date data, specifically
including date data which represents or references different centuries or
more than one century;
(ii) each Computer Product has been designed to ensure year
2000 compatibility, including, but not limited to, date data century
recognition, calculations which accommodate same century and multi-century
formulas and date values and date data interface values that reflect the
century; and
(iii) each Computer Product includes "Year 2000 Capabilities."
For the purposes of this Contract, "Year 2000 Capabilities" means each
Computer Product:
(A) manages and manipulates data involving dates, including
single century formulas and multi-century formulas, and will not cause an
abnormally ending scenario within the application or generate incorrect
values or invalid results involving such dates; and
(B) provides that all date-related user interface
functionalities and data fields include the indication of century; and
(C) provides that all date-related data interface
functionalities include the indication of century.
(c) At the Purchaser's request and upon reasonable notice, the Company
will provide written evidence sufficient to demonstrate adequate testing and
conversion of each Computer Product to meet the foregoing requirements.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Shareholders as follows:
33
<PAGE>
5.1 ORGANIZATION; CORPORATE AUTHORITY.
---------------------------------
Purchaser is a corporation duly organized, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation and has all
requisite power and authority (corporate or otherwise) to own, lease and operate
its assets and properties and to carry on its business as presently conducted
and as presently proposed to be conducted. The Company has been furnished with
true, correct and complete copies of the certificate of incorporation
("Purchaser's Charter") and by-laws (the "Purchaser's By-laws"), of Purchaser in
------------------- -------------------
each case as amended and in effect on the date hereof.
5.2 CORPORATE ACTION; AUTHORITY; NO CONFLICT.
----------------------------------------
Purchaser has all requisite power and authority (corporate and otherwise)
to execute, deliver and perform its obligations under this Agreement and each
Related Document to which it is or will be a party and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance by Purchaser of this Agreement and each Related Document to which it
is or will be a party, and performance of its obligations hereunder and
thereunder have been duly and validly authorized by all necessary corporate
action on the part of Purchaser and its Shareholders. This Agreement and each
Related Document to which it is or will be a party has been or upon the
execution thereof will be, duly and validly executed and delivered by Purchaser,
and constitutes, or upon its execution and delivery will constitute, a valid and
binding obligation of Purchaser, enforceable against it in accordance with its
terms. Neither Purchaser's execution and delivery of, and/or performance of its
obligations under, this Agreement and each Related Document to which it is or
will be a party, nor the consummation of the transactions contemplated hereby
and thereby shall (i) conflict with or result in any violation or breach of, any
of the terms, conditions or provisions of, or constitute (with due notice or
lapse of time, or both) a default under, or give rise to any right of
termination, cancellation or acceleration or result in the creation of any
Encumbrance upon any of the assets or properties of Purchaser under provision of
Purchaser's Charter or Purchaser's By-laws or any Contract to which Purchaser is
a party or by which it or any of its assets or properties is or may be bound or
(ii) violate, or result in the creation of an Encumbrance upon any of
Purchaser's assets as a result of, any Law's applicable to Purchaser or any of
its properties or assets.
5.3 BROKERS.
-------
Purchaser has not employed any broker or finder or incurred any Liability
for any brokerage fees, commissions or finders' fees in connection with the
transactions contemplated hereby for which the Company will be liable if the
transactions contemplated hereby have not been consummated, except as set forth
in Section 9.2.
5.4 CONSENTS.
--------
No consent, approval, Order or authorization of, or registration,
declaration or filing with or notification to (except for any filings required
under the HSR Act), any Governmental Entity or any third party is required in
connection with the execution, delivery and performance by Purchaser of this
Agreement or the Related Documents to which Purchaser is or will be a party or
the consummation of the transactions contemplated hereby or thereby.
34
<PAGE>
5.5 FINANCING.
---------
Purchaser has delivered to the Shareholders true and correct copies of
signed letters received by Purchaser with respect to the financing (the
"Financing Letters") required for the consummation of the transactions
-----------------
contemplated hereby. A copy of each Financing Letter is set forth in EXHIBIT E.
---------
Assuming satisfaction of all applicable conditions set forth in the Financing
Letters and full funding thereunder, such financing will provide sufficient
funds to pay the Merger Consideration and effect the Merger as set forth in
Article II hereof.
ARTICLE VI
COVENANTS AND AGREEMENTS
6.1 ACCESS TO RECORDS AND PROPERTIES OF THE COMPANY.
-----------------------------------------------
From and after the date hereof until the Closing, the Company shall afford
(i) to Purchaser, its potential lenders and other financing sources and their
respective authorized representatives, including accountants, free and full
access at all reasonable times during normal business hours and after reasonable
prior notice to the assets, business, facilities, properties, books, records
(including tax returns filed and in preparation), customers, consultants, and
key employees of or relating to the Company in order that Purchaser has full
opportunity to make such investigation as it shall reasonably desire to make of
the affairs of the Company, and the Company shall cooperate fully in connection
therewith and (ii) to the respective independent certified public accountants of
Purchaser, free and full access at all reasonable times during normal business
hours and after reasonable prior notice to the records of the independent
certified public accountants of the Company relating to the Company. Without
limiting the generality of the foregoing, the Purchaser or its representatives
shall be entitled to conduct Phase I environmental assessments of the Company's
and its Subsidiaries' properties and, based on the recommendation of Purchaser's
environmental consultants, such Phase II assessments as the Purchaser deems
reasonably necessary after considering the results of the Phase I Reports. The
Company may elect, but shall not be required, to receive copies of or review any
data, records, reports, or other information obtained or generated during the
Phase I and/or Phase II environmental site assessments (collectively the "ESA
Data"). Prior to Closing, Purchaser shall, except as required (in the event of
any dispute) to enforce its rights to terminate this Agreement pursuant to
Section 9.1(g) and in such event, to enforce its rights under Section 9.2, keep
all ESA Data strictly confidential, and shall not disclose any ESA Data to any
third party, other than its attorneys, accountants, affiliates, financial
institutions, their attorneys or consultants or any other advisors or
representatives of the Purchaser, its accountants or financial institutions
directly involved in the transaction contemplated by this Agreement, unless (a)
required to do so pursuant to a valid subpoena, order of a court of competent
jurisdiction or any EHS Requirements of Law or (b) the Company provides its
prior written consent to disclosure. If the transactions contemplated by this
Agreement are not consummated, then, at the Company's request, Purchaser and its
representatives, including without limitation, its consultants, shall certify in
writing to the Company that, unless otherwise required pursuant to a valid
subpoena, order of a court of competent jurisdiction or any EHS Requirements of
Law, all ESA Data including without limitation, drafts and copies thereof, have
been destroyed. If the transactions
35
<PAGE>
contemplated by this Agreement are not consummated, Purchaser's duties to
maintain the confidentiality of the ESA Data pursuant to this Section 6.1 shall
survive termination of the Agreement. The investigation contemplated by this
Section 6.1 shall not affect or otherwise diminish or obviate in any respect any
of the representations and warranties or the indemnification obligations of the
Shareholders contained in this Agreement.
From and after the Closing, the Company will afford to the Shareholders and
their counsel free and full access at all reasonable times during normal
business hours and after reasonable prior notice to the books and records of the
Surviving Corporation for the purpose of assuming the defense of any Third Party
Claim pursuant to Section 8.3. The Shareholders agree that all Confidential or
Proprietary Information shall not be disclosed by such Shareholders to any
Person except as it shall be used by the Shareholders solely for the purposes
set forth in this Section.
6.2 CONDUCT OF THE COMPANY.
----------------------
From the date hereof to the Effective Time, the Company shall carry on its
business in the ordinary course consistent with past practice and use reasonable
efforts to preserve intact its current business organization, keep available the
services of its current officers and employees and preserve its relationships
with customers, suppliers, licensors, licensees and others having significant
business dealings with it. Without limiting the generality of the foregoing,
from the date hereof to the Effective Time, the Company shall not without the
prior written consent of Purchaser:
(a) (i) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, (ii) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for Shares of its
capital stock, or (iii) except as expressly provided in Section 7.3(i) hereof,
purchase, redeem or otherwise acquire any Shares or any capital stock of the
Company or any Subsidiary or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities;
(b) change its practices, policies or procedures with respect to the
timing of the payment of accounts payable or the collection of accounts
receivable;
(c) except as provided in Section 7.3(i) hereof issue, deliver, sell,
pledge or otherwise encumber any shares of its capital stock, any other voting
securities or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities or convertible
securities;
(d) amend the Company's Charter or the Company's By-Laws or other
comparable charter or organizational documents;
(e) acquire or agree to acquire (i) by merging or consolidating with,
or by purchasing a substantial portion of the assets or stock of, or by any
other manner, any business or any person, or (ii) any assets except for the
purchase of (x) equipment as identified on
36
<PAGE>
Schedule 6.2(e) (the "Anticipated Equipment List") or (y) equipment or other
- --------------- --------------------------
assets in the ordinary course of business;
(f) sell, lease, license, mortgage or otherwise encumber or subject to
any Encumbrance or otherwise dispose of any of its properties or assets, except
(i) immaterial assets, (ii) in the ordinary course of business (including for
trade-ins) and (iii) where the amount of such sales does not exceed,
individually or in the aggregate, $50,000.00;
(g) (i) incur any Indebtedness or guarantee any such Indebtedness of
another person, issue or sell any debt securities or warrants or other rights to
acquire any debt securities of the Company or any Subsidiary, guarantee any debt
securities of another person, enter into any "keep well" or other agreement to
maintain any financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing except in the
ordinary course of business consistent with past practice, provided that any of
the foregoing shall be prepayable without premium or penalty, or (ii) make any
loans, advances (other than advances to Subsidiaries or among Subsidiaries) or
capital contributions to, or investments in, any other person;
(h) make or agree to make any capital expenditure or expenditures with
respect to property, plant or equipment which, individually, is in excess of
$50,000.00 or, in the aggregate, are in excess of $250,000.00, except as
identified on the Anticipated Equipment List;
(i) make any material tax election or settle or compromise any
material income tax liability;
(j) prepay any Indebtedness, Liability or other obligation, or pay,
discharge, settle or satisfy any claims, Liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction, in the ordinary course of business
consistent with past practice or in accordance with their terms, of liabilities
specifically accrued for in the most recent consolidated financial statements of
the Company or incurred thereafter in the ordinary course of business consistent
with past practice, or waive any material benefits of, or agree to modify in any
material respect, any confidentiality, standstill, non-solicitation or similar
agreement to which the Company or any Subsidiary is a party (it being understood
that the Company shall not, without limiting the generality of the foregoing,
prepay any Indebtedness with any proceeds received in respect of any loans
repaid by Shareholders pursuant to Section 7.3(g));
(k) modify, amend or terminate any Material Contract to which the
Company or any Subsidiary is a party, or waive, release or assign any rights or
claims, other than in the ordinary course of business consistent with past
practice;
(l) enter into any Material Contract relating to the provision of
services by the Company or any Subsidiary or the distribution, sale or marketing
by third parties of the Company's or any Subsidiary's services other than in the
ordinary course of business consistent with past practice;
37
<PAGE>
(m) except as required to comply with applicable law, (i) adopt, enter
into, terminate or amend any Employee Plan or other arrangement for the benefit
or welfare of any director, officer or current or former employee (including any
collective bargaining, employment or severance agreements), other than, in the
case of non-officer employees, in the ordinary course of business consistent
with past practice, (ii) increase in any manner the compensation or fringe
benefits of, or pay any bonus to, any director, officer or consultant, (iii) pay
any material benefit not provided for under any Benefit Plan, (iv) except as
permitted in clause (ii), grant any awards under any bonus, incentive,
performance or other compensation plan or arrangement or Employee Plan
(including the grant of stock options, stock appreciation rights, stock based or
stock related awards, performance units or restricted stock, or the removal of
existing restrictions in any Employee Plans or agreement or awards made
thereunder) or (v) take any action to fund or in any other way secure the
payment of compensation or benefits under any employee plan, agreement, contract
or arrangement or Employee Plan; or
(n) authorize any of, or commit or agree to take any of, the
foregoing actions.
6.3 FINANCIAL INFORMATION.
---------------------
The Company shall furnish to Purchaser the following financial statements:
(a) as soon as available, but in any event within 45 days following
the end of the fiscal quarter, the unaudited consolidated balance sheet, income
statement and statement of cash flows of the Company for the period ended June
30, 1998, showing its financial condition as of the close of such fiscal quarter
and the results of operations during such quarter on a basis of accounting which
shall not be materially different from the Audited Financial Statements or the
Unaudited Financial Statements;
(b) as soon as available, but in any event within 30 days following
the end of each calendar month, the unaudited financial statements of the
Company, showing its financial condition as of the close of such month and the
results of operations during such month and for the then elapsed portion of the
Company's fiscal year, in each case, setting forth the comparative figures for
the corresponding month in the prior fiscal year and the corresponding elapsed
portion of the prior fiscal year; and
6.4 EFFORTS TO CONSUMMATE.
---------------------
Subject to the terms and conditions of this Agreement, each party shall use
commercially reasonable efforts, in light of the obligations of each such party
hereunder, to take or cause to be taken all actions and do or cause to be done
all things required under all applicable Laws, in order to consummate the
transactions contemplated hereby. Without limiting the generality of the
foregoing, the Company and each Shareholder agrees to cause the transactions
contemplated by Section 7.3(f), 7.3(g), 7.3(h), 7.3(i) and 7.3(k) to be
consummated prior to the Closing Date. Purchaser shall use commercially
reasonable efforts to cause the financing pursuant to the Financing Letters to
be obtained on or prior to Closing.
38
<PAGE>
6.5 NEGOTIATION WITH OTHERS.
-----------------------
From and after the date hereof until the Closing, or the termination of
this Agreement pursuant to Article X, the Shareholders and the Company shall
not, and each shall cause its officers, directors, Affiliates, representatives
and agents not to, directly or indirectly, (i) take any action to solicit or
initiate any Acquisition Proposal, (ii) continue, initiate or engage in
negotiations or discussions relating to an Acquisition Proposal with, or
disclose or provide any non-public information or Confidential or Proprietary
Information (other than in the ordinary course of business or otherwise required
by Law, Order or similar compulsion) relating to the Company or any Person other
than the parties hereto and their respective representatives or (iii) enter into
any written or oral agreement or understanding with any Person (other than
Purchaser) regarding an Acquisition Proposal. If the Shareholders or the
Company receives any bona fide unsolicited offer or proposal to enter into
negotiations relating to any Acquisition Proposal, such party shall promptly
notify Purchaser of such offer or proposal and the general economic terms of
such offer or proposal and shall furnish a copy of any written offer or proposal
thereto.
6.6 NOTICE OF PROSPECTIVE BREACH.
----------------------------
Each party shall immediately notify the other parties in writing upon the
occurrence, or failure to occur, of any event, which occurrence or failure to
occur would be reasonably likely to cause any representation or warranty of such
notifying party that is contained in this Agreement or any Related Document to
be untrue or inaccurate in any material respect at any time from the date of
this Agreement to the Closing as if such representation and warranty were made
at such time.
6.7 PUBLIC ANNOUNCEMENTS.
--------------------
Each party agrees that, except (i) as otherwise required by Law and (ii)
for disclosure to its respective directors, officers, employees, financial
advisors, potential financing sources, legal counsel, independent certified
public accountants or other agents, advisors or representatives on a need-to-
know basis and with whom such party has a confidential relationship, it will not
issue any reports, statements or releases, in each case pertaining to this
Agreement or any Related Document to which it is a party or the transactions
contemplated hereby or thereby, without the prior written consent of the
Shareholders and Purchaser, which consent shall not unreasonably be withheld or
delayed; provided, however, that after reasonable prior notice to Purchaser,
-------- -------
Shareholders may make a public announcement concerning the execution and
delivery by each party of this Agreement.
6.8 FILINGS.
-------
Purchaser, the Company and as may be reasonably requested by it or them,
the Shareholders will make or cause to be made all such filings and submissions
under applicable Law and regulations as may be required for the consummation of
the transactions contemplated hereunder, including without limitation any
filings required under the HSR Act. Purchaser, the Company and as may be
reasonably requested by it or them, the Shareholders will cooperate and
coordinate with one another in connection with any such filings or submissions.
39
<PAGE>
6.9 [INTENTIONALLY LEFT BLANK]
6.10 LEAMAN AIR SERVICES, INC.
-------------------------
(a) At the Closing, the Company, as additional consideration for the
shares of the Company's capital stock held by George McFadden, will transfer all
of the common stock of Leaman Air Services, Inc. ("Leaman Air") to George
----------
McFadden.
(b) Mr. McFadden hereby agrees to be bound by the Restrictive Covenant
Agreement set forth in EXHIBIT F (it being understood that the signature to this
---------
Agreement shall be an agreement to be so bound) and hereby waives any and all
rights to receive any severance or compensatory payments in respect of Mr.
McFadden's role (as applicable) as a director, shareholder or consultant of the
Company (other than the right to receive the amounts otherwise payable pursuant
to this Agreement) and releases and forever discharges the Company and each
Subsidiary for all Liabilities.
(c) The Company represents and warrants to the Purchaser that the
transactions contemplated by this Section 6.10 could not reasonably be expected
to have a Material Adverse Effect on the Company.
(d) The Company represents and warrants to the Purchaser that Leaman
Air owns no assets or properties other than the airplane and related equipment
described in detail in Schedule 6.10(d).
----------------
6.11 HAMILTON BONUSES.
-----------------
(a) Subject to the prior approval of the shareholders of the Company
in accordance with Section 280G(b)(5) of the Code, 30 days after the Closing, in
consideration of services rendered in connection with the structuring and
negotiation of the transactions contemplated by this Agreement, the Company
shall pay to David R. Hamilton a bonus of $6,050,116, payable by setting off
such amount against the debt owing by Mr. Hamilton to the Company pursuant to
Section 7.3(g). The bonus payments provided for in the preceding sentence shall
not be subject to set off for any obligation owing or claims against Mr.
Hamilton.
(b) Subject to the prior approval of the shareholders of the Company
in accordance with Section 280G(b)(5) of the Code, the Company shall pay to Mr.
Hamilton a consulting payment of $1,600,000 payable in four equal annual
installments of $400,000 (on the Closing and on each of the next succeeding
three-year anniversaries thereof) and during such period, the Company shall
provide Mr. Hamilton medical benefits provided generally to executives of the
Company. The consulting payments provided for in the preceding sentence shall
be paid to Mr. Hamilton or his survivors notwithstanding Mr. Hamilton's death or
disability during the term of payments and shall not be subject to set off for
any obligation owing from or claims against Mr. Hamilton.
(c) Subject to the prior approval of the shareholders of the Company
in accordance with Section 280G(b)(5) of the Code, after the Closing, Mr.
Hamilton shall be entitled to the following until the first anniversary of the
Closing Date (at the expense of the
40
<PAGE>
Company, provided that the aggregate fees and expenses incurred by the Company
in respect of this Section 6.11(c) shall not exceed $100,000): (i) the continued
use of the office maintained by the Company for Mr. Hamilton in Chicago; (ii)
the use of a secretary in respect of such office and (iii) the continued use of
the Volvo automobile currently provided by the Company to Mr. Hamilton; and
(d) Mr. Hamilton hereby agrees to be bound by the Restrictive Covenant
Agreement and the Waiver and Release set forth in Exhibit G (it being understood
---------
that the signature to this Agreement shall be an agreement to be so bound).
(e) The Company may withhold from the Merger Consideration or from
other cash payments to be made to Mr. Hamilton the amount which the Company
determines is required to be withheld by applicable Law in respect of any
payments to be made to Mr. Hamilton under this Agreement, including the bonus
referred to in Section 6.11(a).
6.12 SENIOR NOTES.
------------
The Company agrees to use its commercially reasonable efforts to obtain,
without incurring a total cost of more than $4,000,000 therefor, the requisite
consent of the holders of the Company's 10 3/8% Senior Notes (the "Notes") to an
-----
amendment to the terms of the Indenture (the "Indenture") pursuant to which such
---------
notes were issued so that such notes will remain outstanding after the Effective
Time free of any default or conflict with the terms of the Indenture and so that
the covenants thereunder will be amended in a manner substantially as provided
on Schedule 6.12 hereto (it being understood that the foregoing shall not apply
-------------
to amendments that pursuant to the terms of the Indenture require the approval
of 100% of the holders of the Notes).
The Purchaser agrees to use its commercially reasonable efforts to obtain,
without incurring any cost therefor, the requisite consent of the holders of the
Notes as set forth in this Section 6.12.
6.13 [INTENTIONALLY LEFT BLANK]
6.14 ENVIRONMENTAL TRANSFER ACTS.
---------------------------
The Company shall fully comply with and have all obligations under the New
Jersey Industrial Site Recovery Act ("ISRA"), including, but not limited to,
making all filings with the NJDEP, conducting any and all investigation and
remediation activities required by the NJDEP, and satisfying any financial
assurance requirements thereunder except when not possible due to exigent
circumstances beyond the Company's control. Prior to all such filings,
investigations and/or remediation activities, the Company shall provide
Purchaser with all reports (including, but not limited to, draft and final
consultant reports, workplans and sampling data), consult with Purchaser thereon
and give reasonable consideration to Purchaser's comments regarding
investigation, remediation and filings with NJDEP. Purchaser shall review such
reports, workplans and data and provide comments to the Company in a timely
manner. The Company shall notify Purchaser and shall give Purchaser the
opportunity to attend any meetings with NJDEP or inspections by NJDEP. The
Company shall conduct as promptly as practicable after
41
<PAGE>
the date hereof any and all investigation, environmental testing and remediation
required by the NJDEP pursuant to ISRA, including, but not limited to, any
additional sampling of soil and groundwater at the Real Property.
6.15 WAIVERS.
-------
(a) Each Shareholder and the Company hereby waives any rights of
repurchase, rights of first refusal, rights of first offer and other rights that
any such Person may have in respect of the outstanding shares of capital stock
of the Company and/or any Subsidiary owned or held by any other Person (it being
understood that if this Agreement shall be terminated in accordance with its
terms, such waiver shall of no further force or effect).
(b) Each Shareholder hereby releases the Company and each Subsidiary
from any Liability or obligation that the Company or any Subsidiary may have in
respect of any severance or other arrangements arising as a result of the
consummation of the transactions contemplated by this Agreement (except with
respect to Mr. Parkerson, Mr. Hamilton and Mr. McFadden, other than any such
rights which require a termination of employment of such Person in addition to
the consummation of the transactions contemplated by this Agreement) (it being
understood that if this Agreement shall be terminated in accordance with its
terms, such release shall be of no further force or effect).
6.16 ACCOUNTS PAYABLE, ACCRUED EXPENSES AND ACCOUNTS RECEIVABLE.
----------------------------------------------------------
At least two business days prior to the Closing Date, the Company shall
provide a true, correct and complete listing of all consolidated accounts
payable, accrued expenses and accounts receivable of the Company and its
Subsidiaries as of the most reasonably practicable recent date and as of the end
of each month after the latest month provided in Schedule 4.7(f), which schedule
---------------
shall set forth the name of the account debtor (in the case of accounts
receivable) or account creditor (in the case of accounts payable and accrued
expenses) and the amount owed by or owing to such account debtor or account
creditor (identifying the portion of such amount that is current, 30, 60, 90 and
more than 90 days past due).
6.17 NO TRANSFERS.
------------
No Shareholder will, directly or indirectly, grant or suffer to exist any
Encumbrance (other than Encumbrances for the benefit of the Company) on any
Shares held by such Shareholder or otherwise transfer, sell, assign or otherwise
dispose of any Shares or any interest therein.
42
<PAGE>
ARTICLE VII
CONDITIONS
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
----------------------------------------------------------
The respective obligations of each party to effect the Merger are subject
to the satisfaction or waiver, where permissible, prior to the Effective Time,
of the following conditions:
(a) No statute, rule, regulation, executive order, decree or
injunction shall have been enacted, entered, promulgated or enforced by any
court or Governmental Entity that prohibits or restricts the consummation of the
Merger or makes such consummation illegal (each party agreeing to use
commercially reasonable efforts to have any such prohibition lifted).
(b) The waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated.
7.2 CONDITIONS TO THE COMPANY'S OBLIGATION TO EFFECT THE MERGER.
-----------------------------------------------------------
The obligation of the Company to effect the Merger shall be subject to the
satisfaction or waiver, prior to the proposed Effective Time, of the following
conditions: All of the representations and warranties of Purchaser set forth in
this Agreement shall be true and correct in all material respects (except for
those representations and warranties that are qualified as to materiality, which
shall be true and correct in all respects) as of the date hereof and (except for
those that are expressly made only as of another date) as of the Effective Time
as though made on and as of such time, and Purchaser shall have performed in all
material respects all covenants and agreements required to be performed by then
under this Agreement at or prior to the Effective Time.
7.3 CONDITIONS TO PURCHASER'S OBLIGATIONS TO EFFECT THE MERGER.
----------------------------------------------------------
The obligations of Purchaser to effect the Merger shall be subject to the
satisfaction or waiver by Purchaser, prior to the proposed Effective Time, of
the following conditions:
(a) All of the representations and warranties of the Company and the
Shareholders set forth in this Agreement, shall be true and correct in all
material respects (except for those representations and warranties that are
qualified as to materiality, which shall be true and correct in all respects) as
of the date hereof and (except for those that are expressly made only as of
another date) as of the Effective Time as though made on and as of such time,
and the Company and the Shareholders shall have performed in all material
respects all covenants and agreements required to be performed by it under this
Agreement at or prior to the Effective Time.
(b) There shall not have occurred any Material Adverse Change since
the Latest Balance Sheet Date.
43
<PAGE>
(c) The conditions set forth in the Financing Letters shall have been
satisfied or waived and the funding referred to therein shall be available to
Purchaser on terms no less favorable to Purchaser than are set forth in such
Financing Letters.
(d) All filings required to be made prior to the Effective Time with,
and all consents, approvals, authorizations and Permits required to be obtained
prior to the Effective Time from, any Governmental Entity in connection with the
consummation of the Merger including without limitation those under EHS
Requirements of Law, have been made and/or obtained, other than those the
failure of which to be made and/or obtained would not reasonably be expected to
have a Material Adverse Effect or prevent or materially delay the consummation
of the Merger.
(e) All notices required to be given prior to the Effective Time with,
and all consents, approvals, authorizations, waivers and amendments required to
be obtained prior to the Effective Time from, any third party in connection with
the consummation of the Merger and the financing thereof, have been made and/or
obtained (or, if the notice, consent, approval, authorization, waiver or
amendment that is not so made and/or obtained is required pursuant to the terms
of any of the Company's Indebtedness or obligations for money borrowed, the
Company repays such Indebtedness or obligation on or prior to the Effective
Time), other than those the failure of which to be made and/or obtained would
not reasonably be expected to have a Material Adverse Effect or prevent or
materially delay the consummation of the Merger.
(f) All Transaction Expenses shall have been paid prior to the Closing
and the Purchaser shall have received evidence reasonably satisfactory to it
that such payment has occurred.
(g) Subject to any provision contained in any Employment Agreement,
all Indebtedness and Liabilities owing to or from any shareholder, director,
officer or employee of the Company or any Subsidiary immediately prior to the
Effective Time shall be paid in full and the Purchaser shall have received
evidence satisfactory to it in its reasonable discretion that neither the
Company nor any Subsidiary shall have any Liability to any such Person from and
after the Closing and that each such other Person shall have fully satisfied all
Liabilities owing by any such Person to the Company or any Subsidiary (it being
understood that any amount owing to the Company shall be paid by setting off any
payments in respect of any Indebtedness or Liabilities against any Merger
Consideration or other payments to be made to such Persons at the Closing).
(h) Subject to any provision contained in any Employment Agreement,
all Contracts, arrangements or understandings with any current or former
shareholder, officer, director or employee of the Company or any Subsidiary
(other than any collective bargaining agreements, union contracts or similar
agreements covering employees of the Company) shall have been terminated
effective as of the Closing without any future Liability of the Company or any
Subsidiary and the Purchaser shall have received evidence reasonably
satisfactory to it of such termination (it being understood that any amount
owing to the Company in respect thereof shall be paid by setting off any
Liabilities owing to any such Person against any Merger Consideration or other
payments to be made to such Persons at the Closing).
44
<PAGE>
(i) All outstanding shares of Preferred Stock that are convertible
into Shares shall have been converted into Shares prior to the Closing and the
Purchaser shall have received evidence reasonably satisfactory to it of such
conversion.
(j) The holders no more than 5% in the aggregate of the outstanding
Shares shall have validly elected to demand the appraisal of their Shares
pursuant to the Pennsylvania Statute.
(k) All of the officers, directors and employees of the Company and
each Subsidiary requested by the Purchaser to resign shall have resigned.
(l) Subject to Section 7.14(c), the Company shall have filed a General
Information Notice (GIN) with the NJDEP with respect to the Real Property
located in New Jersey, and either (i) received a No Further Action Letter from
the NJDEP, or (ii) caused the Company to enter into a Remediation Agreement (as
defined under ISRA) with NJDEP specifying that the Company will be responsible
for any costs associated with any requirements thereunder, with respect to any
and all Real Property subject to ISRA.
(m) The terms of the Indenture shall have been amended, and the Notes
issued thereunder shall remain outstanding, in a manner acceptable to the
Purchaser, in its reasonable discretion, pursuant to Section 6.12 hereof.
(n) The Purchaser shall have been provided with a certificate from an
officer of the Company certifying that the conditions precedent to the
Purchaser's obligations set forth in this Section shall have been satisfied.
(o) The Purchaser shall have received from David R. Hamilton and
George McFadden a Qualifying Letter of Credit.
(p) (i) the sum of any EHS Damages which in the written opinion of
Purchaser's consultant (which shall be one or more of the consultants listed on
Schedule 7.3(p)(1)) are reasonably expected to be required to be incurred
- -------------------
pursuant to EHS Requirements of Law due to conditions other than those
identified on Schedule 7.3(p)(2) discovered by the Purchaser after the date
------------------
hereof and prior to the Closing in the course of Purchaser's due diligence or
due to any new Proceeding or Order or any new claim or amended claim arising in
connection with any existing Proceeding, Order or condition, plus (ii) the
reasonably expected costs based on the Purchaser's consultant's evaluation in
writing, for full compliance and remediation required pursuant to any EHS
Requirement of Law (including pursuant to ISRA and the Connecticut Transfer Act)
resulting from the announcement or consummation of the transactions contemplated
by this Agreement, shall not in the aggregate exceed $4,000,000; provided that,
--------
in the Shareholder Representative's sole discretion, such amount may be
increased, at any time prior to two days after Purchaser delivers a notice that
it intends to terminate this Agreement pursuant to Section 9.1 based upon the
condition set forth in this Section 7.3(p) not being satisfied, to an amount not
to exceed $5,000,000 (such excess amount over $4,000,000, the "Indemnity Cap
-------------
Adjustment Amount"); it being understood that if such amount exceeds $5,000,000,
- -----------------
Purchaser shall be under no obligation to effect the Merger.
45
<PAGE>
7.4 CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDERS.
---------------------------------------------
The obligations of the Shareholders under this Agreement are subject to
the satisfaction of the following conditions unless waived (to the extent such
conditions can be waived) by the Shareholders:
(a) Accuracy of Representations and Warranties. All representations
------------------------------------------
and warranties made by Purchaser in this Agreement and the Related Documents
shall be true and correct in all material respects as of the date hereof and at
and as of the Closing Date with the same effect as if such warranties and
representations had been made as of the Closing Date, and the Company and the
Shareholders shall have received a certificate to that effect signed by
Purchaser and by a principal executive officer of Purchaser.
(b) Performance of Obligations of Purchaser. Purchaser shall have
---------------------------------------
performed in all material respects all obligations and covenants required to be
performed by it under this Agreement and the Related Documents prior to or as of
the Closing Date and the Company and the Shareholders shall have received a
certificate to that effect signed by Purchaser.
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION GENERALLY; ETC.
-------------------------------
(a) Subject to the further terms of this Article VIII, the
Shareholders agree severally but not jointly with respect only to the
representations in Article III hereof and to any individual obligations
hereunder, and otherwise, the Shareholders agree, jointly and severally, to
indemnify, from and after the Closing Date, Purchaser Indemnified Persons for,
and hold them harmless from and against, any and all Purchaser Losses arising
from or in connection with any of the following (in each case without giving
effect to any qualification as to materiality contained in this Agreement):
(i) the inaccuracy or breach of any representation or warranty
of the Company or the Shareholders contained herein or in any certificate
delivered by any Shareholder or the Shareholders' Representative in
connection herewith at or before the Closing (or any facts or circumstances
constituting any such untruth, inaccuracy or breach);
(ii) the breach of any agreement or covenant of the Shareholders
or Company contained in this Agreement, excluding the covenants set forth
in Section 6.14, as to which the sole remedies are set forth in Section
7.3(q) and Article IX;
(iii) any Liabilities or obligations arising out of or relating
to Leaman Air (whether incurred prior to or after the Closing); and
(iv) any EHS Damages arising from or relating to (A) the
presence, Release, threatened or suspected Release, of any Contaminants,
from, in, to, on, or under
46
<PAGE>
any Property existing as of the Closing Date; (B) the shipment of
Contaminants generated by the Company, any predecessors of the Company, or
any Person previously owned by the Company, to any off-site location prior
to the Closing Date, (C) any violation of any EHS Requirement of Law by the
Company, any predecessor of the Company or any Person previously owned by
the Company prior to the Closing Date or (D) compliance with ISRA, the
Connecticut Transfer Act and any other EHS Requirement of Law triggered by
the transactions contemplated by this Agreement. Notwithstanding the
foregoing, the Shareholders' indemnification obligations hereunder shall
not extend to any EHS Damages that arise solely as a result of any act or
condition first created after the Closing Date and caused by Purchasers or
their representatives. After the Closing, the provisions of this Agreement
shall be the sole remedies available to the Parties for EHS Damages.
(v) The failure of the Company or the Surviving Corporation to
withhold any Tax due to be withheld from any amount paid or consideration
transferred pursuant to the terms hereof to any Shareholder of the Company.
(b) Subject to the further terms of this Article VIII, Purchaser
agrees to indemnify the Shareholders' Indemnified Persons for, and hold them
harmless from and against, any and all Shareholders' Losses arising from or in
connection with any of the following:
(i) the inaccuracy or breach of any representation or warranty
of Purchaser contained herein or any certificate delivered by Purchaser in
connection herewith at or before the Closing (or any facts or circumstances
constituting any such untruth, inaccuracy or breach); and
(ii) the breach of any agreement or covenant of Purchaser
contained in this Agreement.
(iii) (A) the operation of the Company after the Effective
Time, but only to the extent such Shareholders' Losses do not result from
the operation of the Company prior to the Effective Time, and (B) the
failure of the Company after the Effective Time to pay indefeasibly, and on
a timely basis, all amounts payable in respect of the shares of Series A
Preferred Stock and Series C Cumulative Preferred Stock issued and
outstanding immediately after the Effective Time.
(c) Notwithstanding the provisions of Section 8.1(a), with respect to
--------------
any Purchaser Loss for which the Shareholders are jointly and severally liable
pursuant to Section 8.1(a), Messrs. David Hamilton and George McFadden shall
--------------
each be jointly and severally liable for only up to 60% of such Purchaser Loss.
8.2 ASSERTION OF CLAIMS.
-------------------
No claim shall be brought for a breach of a representation or warranty
under Section 8.1 hereof unless the Indemnified Persons, or any of them, at any
time prior to the applicable Survival Date, give the Indemnifying Persons (a)
written notice of the existence of any such claim, specifying the nature and
basis of such claim and the amount thereof, to the extent known
47
<PAGE>
or (b) written notice pursuant to Section 8.3 of any Third Party Claim (as
hereinafter defined), the existence of which might give rise to such a claim.
Upon the giving of such written notice as aforesaid, the Indemnified Persons, or
any of them, shall have the right to commence legal proceedings subsequent to
the Survival Date for the enforcement of their rights under Section 8.1.
8.3 NOTICE AND DEFENSE OF THIRD PARTY CLAIMS.
----------------------------------------
The obligations and liabilities of an Indemnifying Person with respect to
Losses resulting from the assertion of liability by third parties (each, a
"Third Party Claim") shall be subject to the following terms and conditions:
- ------------------
(a) The Indemnified Persons shall give written notice to the
Indemnifying Persons of any Third Party Claim which might give rise to any Loss
by the Indemnified Persons, stating the nature and basis of such Third Party
Claim, and the amount thereof to the extent known; provided, however, that no
-------- -------
delay or inadequacy on the part of the Indemnified Persons in notifying any
Indemnifying Persons shall relieve the Indemnifying Persons from any liability
or obligation hereunder unless (and then solely to the extent) the Indemnifying
Person thereby is prejudiced by such delay. Such notice shall be accompanied by
copies of all relevant documentation with respect to such Third Party Claim,
including, without limitation, any summons, complaint or other pleading which
may have been served, any written demand or any other document or instrument.
(b) If the Indemnifying Persons shall acknowledge irrevocably in a
writing delivered to the Indemnified Persons that such Third Party Claim is
properly subject to their indemnification obligations hereunder, then the
Indemnifying Persons shall have the right to assume the defense of any Third
Party Claim at their own expense and by their own counsel, which counsel shall
be reasonably satisfactory to the Indemnified Persons; provided, however, that
the Indemnifying Persons shall not have the right to assume the defense of any
Third Party Claim, notwithstanding the giving of such written acknowledgment, if
(i) the Indemnified Persons shall have been advised by counsel that there are
one or more legal or equitable defenses available to them which are different
from or in addition to those available to the Indemnifying Persons, and, in the
reasonable opinion of the Indemnified Persons, counsel for the Indemnifying
Persons could not adequately represent the interests of the Indemnified Persons
because such interests could be in conflict with those of the Indemnifying
Persons, (ii) such action or proceeding involves, or could have a material
effect on, any material matter beyond the scope of the indemnification
obligation of the Indemnifying Persons or (iii) the Indemnifying Persons shall
not have assumed the defense of the Third Party Claim in a timely fashion.
(c) If the Indemnifying Persons shall assume the defense of a Third
Party Claim (under circumstances in which the proviso to the first sentence of
Section 8.3(b) is not applicable), the Indemnifying Persons shall not be
responsible for any legal or other defense costs subsequently incurred by the
Indemnified Persons in connection with the defense thereof. If the Indemnifying
Persons do not exercise their right to assume the defense of a Third Party Claim
by giving the written acknowledgment referred to in Section 8.3(b), or are
otherwise restricted from so assuming by the proviso to the first sentence of
Section 8.3(b), the
48
<PAGE>
Indemnifying Persons shall nevertheless be entitled to participate in such
defense with their own counsel and at their own expense. If the defense of a
Third Party Claim is assumed by the Indemnified Persons pursuant to clause (i)
or (ii) of the proviso of Section 8.3(b), the Indemnified Persons shall not be
entitled to settle such Third Party Claim without the prior written consent of
the Indemnifying Persons, which consent shall not be unreasonably withheld or
delayed.
(d) If the Indemnifying Persons exercise their right to assume the
defense of a Third Party Claim, (i) the Indemnified Persons shall be entitled to
participate in such defense with their own counsel at their own expense and (ii)
the Indemnifying Persons shall not make any settlement of any claims without the
written consent of the Indemnified Persons, which consent shall not be
unreasonably withheld or delayed.
8.4 ENVIRONMENTAL INDEMNIFICATION PROCEDURES.
----------------------------------------
(a) Application. Notwithstanding anything in this Agreement to the
-----------
contrary, (i) the indemnification procedures in this Section shall apply to any
claim for indemnification arising from or relating to EHS Damages or EHS
Requirements of Law, and (ii) after the Closing, the indemnities set forth in
this Article VIII shall be the parties' sole remedy with respect to EHS Damages.
(b) Environmental Response Action. The Purchaser shall determine the
-----------------------------
manner of resolution of, and shall otherwise control the management and
implementation of any part of the defense, response, Proceedings or settlement
relating to any Losses for which the Shareholders have an indemnity obligation
under Section 8.1(a)(i), (ii) or (iv) and which involves or relates to the
investigation, study, sampling, testing, abatement, monitoring, cleanup,
removal, remediation, other response action, third party action or regulatory
Proceeding relating to (i) the Release or presence of Contaminants at, from, in,
to, on, under, or about any Property currently leased or operated by the Company
or any Subsidiary, (ii) the Company's transportation to or arrangements for the
treatment, storage, handling or disposal of any Contaminants at any off-site
location or (iii) violation of any EHS Requirement of Law. For all matters
other than those identified on Schedule 8.4(e), Shareholders' indemnity
obligations with respect to the matters identified in this Section 8.4(b) shall
be governed in accordance with the following procedures until the Environmental
Survival Date:
(i) Purchaser shall provide written notice to the Shareholders
(each such notice an "Environmental Response Action Notice") setting forth
------------------------------------
with reasonable particularity the nature of the condition or event giving
rise to the related Environmental Response Action Notice, the nature of the
activities undertaken or to be undertaken by Purchaser with respect thereto
(to the extent then determinable), and the estimated cost associated with
such activities (to the extent then estimable).
(ii) The Shareholder Representative shall within fifteen (15)
days after receipt of an Environmental Response Action Notice, notify
Purchaser in writing that the Shareholders object in whole or in part to
the actions contemplated by the Environmental Response Action Notice. If
no such objection is received within such fifteen (15) day
49
<PAGE>
period, the Losses associated with the Environmental Response Action Notice
shall conclusively be deemed Losses for which Shareholders have an
indemnity obligation and the actions contemplated by the Environmental
Response Action Notice shall be conclusively deemed approved by the
Shareholders. The Shareholders agree that their approval of Environmental
Response Action Notices will not be unreasonably withheld. The parties
shall resolve any disputes regarding whether Shareholders' Indemnifying
Persons have an indemnification responsibility for any matter set forth in
an Environmental Response Action Notice according to the procedures set
forth in Section 8.4(d).
(iii) Subject to the provisions of Section 8.4(b)(ii), prior to
the Environmental Survival Date, Shareholders shall reimburse Purchaser for
Losses associated with Environmental Response Action Notices within thirty
days of receipt of an invoice or notice setting forth amounts incurred by
the Company for such Losses. Shareholders' indemnification obligations for
Losses associated with Environmental Response Action Notices that are
expected to be paid after the Environmental Survival Date shall be
determined in accordance with the procedures set forth in Section 8.4(e).
(iv) The Purchaser shall undertake all matters governed by this
Section 8.4 in good faith and in a responsible manner, and any activities
conducted in connection herewith shall be undertaken promptly and concluded
expeditiously using commercially reasonably efforts, subject to the
requirements, schedules and approvals required by the applicable
Governmental Entities. The parties agree to reasonably cooperate with one
another in connection with the requirements of this Section.
(c) Remedial Action. The obligations of Shareholders' Indemnifying
----------------
Persons hereunder with respect to Losses associated with any Remedial Action
shall be determined in accordance with the following criteria. Such Remedial
Action shall:
(i) Attain compliance in a reasonably cost-effective manner
with applicable EHS Requirements of Law, including without limitation, all
action levels or cleanup standards promulgated thereunder, and any lawful
order or directive of an appropriate Governmental Entity;
(ii) Interfere to the least extent reasonably practicable with
operations at any affected Properties; provided, that for purposes of this
--------
Section, a determination of what is "reasonably practicable" shall include
an evaluation of the relative costs and benefits of proposed Remedial
Action; and
(iii) Not be required to render any affected Properties suitable
for use beyond use as an industrial property, provided, however, that a
-------- -------
Remedial Action shall meet all lawful requirements imposed by a
Governmental Entity.
(d) Notification and Disputes. In the event the Shareholders object
-------------------------
to all or any part of an Environmental Response Action Notice or any Remedial
Actions planned by Purchaser on a timely basis, the Shareholder Representative
shall notify Purchaser in writing of their specific disagreement (and the basis
therefor) regarding such Environmental Response
50
<PAGE>
Action Notice or Remedial Action. If the Shareholders' objection relates to
Remedial Action, the Shareholders shall provide an alternative proposal
describing in reasonable detail the proposed activities or response, including
estimated costs associated therewith ("Dispute Notification"), within fifteen
--------------------
(15) days of its receipt of the related Environmental Response Action Notice
Purchaser and the Shareholders shall thereafter negotiate in good faith in an
attempt to reach an agreement as to the disputed Environmental Response Action
Notice or Remedial Action. If unable to resolve their dispute within twenty (20)
days, either Party may submit the dispute to Deloitte & Touche or a professional
skilled in mediation in a nationally accredited firm mutually agreed upon (the
"Neutral Third Party"). The parties may submit statements and documents to the
-------------------
Neutral Third Party regarding the dispute, provided that copies of any such
--------
statements or documents are simultaneously be provided to the other party. The
Neutral Third Party shall render a decision within thirty (30) days of
submission of the dispute to the Neutral Third Party. The Neutral Third Party's
decision shall be final, binding and unappealable by the Purchaser and the
Shareholders. Such decision shall be communicated by the Neutral Third Party to
Purchaser and Shareholders in writing and shall state the basis of the decision.
(e) Indemnity with Respect to Certain EHS Damages. Subject to the
----------------------------------------------
limitations contained in Section 8.6(b), with respect to matters identified in
Schedule 8.4(e) and with respect to Post True-Up EHS Damages, the Shareholders
shall satisfy their obligations pursuant to Section 8.1(a)(iv) as follows:
(i) EHS Damages Paid During the Environmental Survival Period.
----------------------------------------------------------
If, prior to the Environmental Survival Date, the Company shall have paid
Actual EHS Damages with a future value in excess of the future value of the
Expected EHS Damages, Shareholders shall pay to the Purchaser an amount
equal to such excess. If prior to the Environmental Survival Date, the
Company shall have paid Actual EHS damages with a future value less than
the future value of Expected EHS Damages, the Shareholders indemnity
obligations pursuant to Section 8.4(e)(ii) shall be reduced in the amount
of the difference between the future value of Actual EHS Damages and
Expected EHS Damages (the "Survival Period Credit"). The future value
----------------------
shall be calculated as of the Environmental Survival Date based on the time
of the actual or expected cash payments (as applicable), compounded
annually and using a discount factor equal to the rate of interest on the
notes sold by the Surviving Corporation or its Affiliates in connection
with the consummation of the transactions contemplated by this Agreement.
Subject to the other applicable procedures set forth in this Article VIII
and subject to the limitations set forth in Section 8.6, if at any time
prior to the Environmental Survival Date, the Company shall have paid
Actual EHS Damages in an aggregate amount of more than $5 million in excess
of the Expected EHS Damages for the period commencing on the Closing Date
and ending on the date of the determination of any such Actual EHS Damages,
then the Shareholders shall pay to the Purchaser Indemnified Persons,
promptly upon request an amount equal to the excess of the Actual EHS
Damages paid by the Company prior to the Environmental Survival Date over
the Expected EHS Damages for such period (such amount, the "Pre True-Up
-----------
Payment").
-------
(ii) EHS Damages to be Paid After the Environmental Survival
-------------------------------------------------------
Period. If, as of the Environmental Survival Date, the present value of
-------
the Post True-Up EHS
51
<PAGE>
Damages exceeds the present value of the Post True-Up Expected EHS Damages,
then the Shareholders shall pay to the Purchaser an amount equal to such
excess, less the Survival Period Credit (if any). If the present value of
the Post True-Up EHS Damages is less than the present value of the Post
True-Up Expected EHS Damages, the Shareholders' indemnity obligation
pursuant to paragraph 8.4(e)(i), if any, shall be reduced in an amount
equal to the difference between the Post True-Up EHS Damages and the Post
True-Up Expected EHS Damages. For the purposes of this Agreement, Post
True-Up EHS Damages shall be calculated as of the Environmental Survival
Date based on the time of the expected cash payments. The present value
shall be calculated as of the date of payment based on the schedule of the
Post True-Up EHS Damages and the Post True-Up Expected EHS Damages (as
applicable), compounded annually and using a discount factor equal to the
rate of interest on the notes sold by the Surviving Corporation or its
Affiliates in connection with the consummation of the transactions
contemplated hereby.
(iii) Procedures for Determining Post True-Up EHS Damages. For
---------------------------------------------------
the sixty day period immediately preceding the Environmental Survival Date,
the parties shall seek to agree in good faith upon the Post True-Up EHS
Damages. If the parties are unable to agree in good faith prior to the
Environmental Survival Date, the following procedures shall apply:
(A) On or prior to the Environmental Survival Date, the
parties shall submit the determination of Post True-Up EHS Damages to the
Neutral Third Party. The issues presented to the Neutral Third Party shall
be limited to the determination of the disputed items included in the
estimated amount of the Post True-Up EHS Damages.
(B) The parties may submit statements and documents to the
Neutral Third Party to assist in determination of Post True-Up EHS Damages.
(C) The Neutral Third Party shall render a decision
regarding the disputed Post True-Up EHS Damages within thirty days of
submission of the request for determination to the Neutral Third Party.
(D) Within ten (10) days of receipt of the Neutral Third
Party's determination, either Purchaser or the Shareholders (acting through
the Shareholders' Representative) may submit the Neutral Third Party's
decision to arbitration. Arbitration shall be conducted in New York, New
York and, to the extent reasonably practicable, the arbitrators selected
shall be resident in New York. Arbitration shall be limited to
determination of the disputed items included in the estimated amount of the
Post-True-Up EHS Damages, and the arbitrators shall have no jurisdiction or
authority to resolve any claims not so related, whether arising by way of
asserted rights, offsets, or otherwise.
(E) In the event that determination of the Post-True-Up
EHS Damages is submitted to arbitration, Purchaser and the Shareholders
(acting through the Shareholder Representative) shall appoint one
arbitrator each within 10 days after the request of the other Party, and a
third arbitrator shall be chosen by the other two
52
<PAGE>
arbitrators, provided that if the two arbitrators fail to agree upon the
--------
third arbitrator (or any Party fails to appoint an arbitrator in the period
specified above), the additional arbitrator(s) shall be appointed by the
American Arbitration Association, New York, New York. All three arbitrators
must be chosen within 20 days of receipt of notice for arbitration. The
arbitration shall be completed within 120 days of the date the matter is
submitted to arbitration. For purposes of this Section 8.4 time is of the
essence.
(F) The arbitrators' decision shall be final and binding
on the Parties. Upon delivery of such decision, the Purchaser shall be
entitled to draw against the Qualifying Letters of Credit for the amount to
which the Purchaser is entitled pursuant to the terms hereof (subject to
the limitations set forth in Section 8.4(e)(iii)(G)). Such decision shall
be communicated by the arbitrators to the Parties in writing and shall
state the basis of their decision. Any arbitration award shall be
enforceable in any court of competent jurisdiction. The parties hereby
consent to such jurisdiction and to entry of judgment thereon.
(G) Within ten (10) days of a determination of the Post
True-Up EHS Damages, the Shareholders shall pay Purchaser the excess of the
present value of the excess of the Post True-Up EHS Damages over the
present value of the Post True-Up Expected EHS Damages. The Purchaser
agrees not to draw against the Qualifying Letters of Credit until the
expiration of such 10-day period, unless the L/C Expiration Date (as
hereinafter defined) would occur during such time frame.
(H) Notwithstanding anything to the contrary contained in
this Agreement, the Shareholders indemnification under Section 8.1 with
respect to any EHS Damages shall survive the Environmental Survival Date
until the resolution of the matters referred to in this Section 8.4. Each
Party shall bear its own costs associated with determination by the Neutral
Third Party and/or arbitration.
(iv) Notwithstanding anything to the contrary herein, the
Shareholders' indemnity obligations shall be subject to the Cap or, if
applicable, the Adjusted Cap, as set forth in Section 8.6(b).
8.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
------------------------------------------
(a) Subject to the further provisions of Section 8.4 and this Section
8.5, the representations and warranties contained in this Agreement or in any
certificate or other writing delivered in connection with this Agreement shall
survive the Closing until the date that is 18 months immediately following the
Closing Date; provided, however, that (i) the representations and warranties
-------- -------
contained in (x) Sections 3.1 and 3.2, the first and last sentences of Section
4.1(a), the first sentence of Section 4.1(b), the first two sentences of Section
4.2 and Sections 4.4(a), 4.4(b), 4.4(c) and 4.12(d) (except for the last
sentence thereof) (collectively, the "Subject R&W"), (y) Section 5.1 and the
-----------
first two sentences of Section 5.2 and (z) the representations and warranties
contained in Section 4.11 shall survive the Closing Date until the expiration of
the respective statutes of limitation for Third Party Claims applicable to the
matters covered thereby, or, if there is no such statute of limitation, for six
years, (iii) the representations
53
<PAGE>
and warranties contained in Section 4.20 shall survive until the 5 year
anniversary of the Closing Date and (iii) subject to the provisions of Section
8.4(e), the representations and covenants contained in Section 4.21 shall
survive until the end of the 27th month immediately following the Closing Date
(the "Environmental Survival Date"). The covenants and other agreements of the
---------------------------
parties contained in this Agreement shall survive the Closing Date until they
are otherwise terminated by their terms. For convenience of reference, the date
upon which any representation or warranty and covenants contained herein shall
terminate, if any, is referred to herein as the "Survival Date".
-------------
(b) Subject to the provisions of Section 8.4(e), the Shareholders'
indemnification obligations pursuant to Section 8.1(a)(vi) shall survive until
the Environmental Survival Date.
(c) From and after the Closing, the Shareholders shall have no
recourse against the Company for any breach of any representation, warranty,
covenant or agreement of the Company set forth in this Agreement or in any
certificate or other writing delivered in connection with this Agreement.
8.6 LIMITATIONS ON INDEMNIFICATION.
------------------------------
(a) Indemnity Baskets for the Shareholders. Purchaser Indemnified
--------------------------------------
Persons shall not have the right to be indemnified for breaches of
representations and warranties pursuant to Section 8.1(a)(i) unless and until
Purchaser Indemnified Persons shall have incurred on a cumulative basis
aggregate Losses in an amount exceeding $500,000.00, in which event the right to
be indemnified shall apply only to the extent such Losses exceed $500,000.00;
provided, however, that in no event shall the limitations set forth in this
- -------- -------
Section 8.6(a) apply with respect to the representations and warranties set
forth in the Subject R&W or any claim arising as a result of fraud.
(b) Indemnity Limitations for the Shareholders. Except as provided
------------------------------------------
herein, the sum of all Losses pursuant to which indemnification is payable by
the Shareholders in the aggregate pursuant to Section 8.1(a)(i) and Section
8.1(a)(iv) shall not exceed $10,750,000 (the "Cap"), plus an amount equal to the
--- ----
Indemnity Cap Adjustment Amount (the "Adjusted Cap"), and no Shareholder shall
------------
be liable to Purchaser for any amount in excess of the portion of the Merger
Consideration received by such Shareholder; provided, however, that in no event
-------- -------
shall the limitations set forth in this Section 8.6(b) apply with respect to the
representations and warranties set forth in the Subject R&W or any claim arising
as a result of fraud.
(c) The Shareholders shall have no duty of indemnification with
respect to costs of compliance with EHS Requirements of Law enacted or amended
after the Closing to the extent that such EHS Requirements of Law impose
additional requirements, financial or other obligations or liabilities of any
kind or character that are more burdensome than those that would have been
imposed under EHS Requirements of Law in effect as of the Closing.
54
<PAGE>
8.7 LETTER OF CREDIT.
----------------
From and including the Closing Date until the third anniversary of the
Closing Date or the end of the 39th month after the Closing Date (or such
earlier date as payment has been made pursuant to 8.4(e)(iii)(G)) if, as of the
third anniversary thereof, (i) no final determination of Post True-Up EHS
Damages has been made, or (ii) if such a determination has been made and the
Purchaser is entitled to payment pursuant to 8.4(e)(iii)(G), but such payment is
not received prior to such date (such date, the "L/C Expiration Date"), David R.
-------------------
Hamilton and George McFadden shall cause one or more Qualifying Letters of
Credit to be issued (and, at all relevant times, maintained) in an aggregate
principal amount equal to the Adjusted Cap. The term "Qualifying Letter of
--------------------
Credit" means a letter of credit which is (a) irrevocable, (b) is issued by a
- ------
reputable and solvent bank with assets of at least $2 billion, (c) shall
specifically provide that it secures the Shareholders' obligations pursuant to
Article VIII, (d) shall specifically provide that the issuing bank shall pay to
the Purchaser Indemnified Persons, immediately after the failure of any
Shareholder to pay any amount to any such Person when due as required by this
Agreement and (e) shall remain outstanding until, and shall not mature prior to,
the L/C Expiration Date. Nothing contained in this Section 8.6(c) shall in any
way abrogate the liability of the Shareholders under Article VIII for a breach
of the representations and warranties set forth herein. The Purchaser agrees
(a) to draw upon each such Letter of Credit on an equal basis (unless, for any
reason, either of the Qualifying Letters of Credit shall cease to be available
before the L/C Expiration Date or the Adjusted Cap has been exhausted) and (b)
to pay the reasonable bank fee (up to an aggregate amount equal to 2% of the
face value of the Qualifying Letters of Credit per year) payable in respect of
the Qualifying Letters of Credit. The parties hereto agree and use all
commercially reasonable efforts to ensure that all procedures set forth herein
with respect to determining Post True-Up EHS Damages shall be finalized and any
payments required to be made pursuant to Section 8.4(e)(iii)(G) shall be made
prior to the L/C Expiration Date.
8.8 NO INDEMNIFICATION SET-OFFS.
---------------------------
Sums due under this Article VIII shall not be set off against or subject to
------------
set-off by, other sums due to and from the parties hereto.
ARTICLE IX
TERMINATION; EFFECT OF TERMINATION
9.1 TERMINATION.
-----------
This Agreement may be terminated at any time prior to the Closing by:
(a) the mutual written consent of Purchaser and the Company; or
(b) Purchaser, if there has been a material breach by the
Shareholders or the Company of any representation, warranty, covenant or
agreement set forth in this Agreement which is not cured by the Company or the
Shareholders within 10 days after notice thereof; or
55
<PAGE>
(c) the Company, if there has been a material breach by Purchaser of
any representation, warranty, covenant or agreement set forth in this Agreement
which is not cured by Purchaser within 10 days after notice thereof; or
(d) Purchaser, if the conditions set forth in Sections 7.1 or 7.3
shall not have been satisfied or waived by October 31, 1998; or
(e) the Company, if the conditions set forth in Sections 7.1 or 7.2
shall not have been satisfied or waived by October 31, 1998;
(f) Purchaser, or the Company, if any permanent injunction or other
Order of a court or other competent authority preventing the Closing shall have
become final and nonappealable; or
(g) Purchaser, if the condition set forth in Section 7.3(p) shall
not be satisfied.
provided, however, that none of the Shareholders, the Company or the Purchaser
- -------- -------
shall be entitled to terminate this Agreement if such party's breach of this
Agreement has prevented the satisfaction of a condition. Any termination
pursuant to this Section 9.1 (other than a termination pursuant to Section
9.1(a)) shall be effected by written notice from the party or parties so
terminating to the other parties hereto, which notice shall specify the Section
of this Agreement pursuant to which this Agreement is being terminated.
9.2 EFFECT OF TERMINATION.
---------------------
Without limiting the rights of Purchaser pursuant to Section 10.13, in the
event of the termination of this Agreement as provided in Section 9.1, this
Agreement shall be of no further force or effect except for this Section 9.2 and
Article X, each of which shall survive the termination of this Agreement.
Without limiting the rights of Purchaser pursuant to Section 10.13, if there
shall have occurred an intentional, willful or knowing breach by the
Shareholders or the Company of any one or more representations and warranties or
covenants in this Agreement and as a result thereof this Agreement is terminated
by the Purchaser pursuant to Section 9.1(b) or 9.1(d), then the Company shall
pay to Purchaser all costs and expenses (including reasonable attorneys' fees
and expenses) incurred by or on behalf of Purchaser in connection with the
transactions contemplated by this Agreement, including all costs and expenses
(including reasonable attorneys' fees and expenses) incurred by or on behalf of
Purchaser in connection with the transactions contemplated by the Financing
Letters and in enforcing this provision.
Without limiting the rights of the Company pursuant to Section 10.13, if
there shall have occurred an intentional, willful or knowing breach by Purchaser
of any one or more representations and warranties or covenants in this Agreement
and as a result thereof this Agreement is terminated by the Company pursuant to
Section 9.1(c) or 9.1(e), then the Purchaser (or its assignee) shall pay to the
Company all costs and expenses (including reasonable attorneys' fees and
expenses) incurred by or on behalf of the Company in connection with the
transactions contemplated by this Agreement, including all costs and expenses
(including reasonable
56
<PAGE>
attorneys' fees and expenses) incurred by or on behalf of the Company in
enforcing this provision.
The Liability of any party for any intentional, willful or knowing breach
by such party of the representations, warranties, covenants or agreements of
such party set forth in this Agreement occurring prior to the termination of
this Agreement shall survive the termination of this Agreement.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 AMENDMENT.
---------
This Agreement shall not be altered or otherwise amended except pursuant
to an instrument in writing signed by each party, except that any party may
waive any obligation owed to it by another party under this Agreement. No waiver
by any party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
10.2 ENTIRE AGREEMENT.
----------------
Except for that certain Confidentiality Agreement dated November 14, 1997
between an affiliate of Purchaser and the Company, which shall remain in full
force and effect until the Effective Time, notwithstanding the provisions of
this Section 10.2, this Agreement and the other agreements and documents
referenced herein (including, but not limited to, the schedules and the exhibits
(in their executed form) attached hereto) and any other document or agreement
contemporaneously entered into this Agreement contain all of the agreements
among the parties hereto with respect to the transactions contemplated hereby
and supersede all prior agreements or understandings among the parties with
respect thereto.
10.3 SEVERABILITY.
------------
It is the desire and intent of the parties that the provisions of this
Agreement be enforced to the fullest extent permissible under the Law and public
policies applied in each jurisdiction in which enforcement is sought.
Accordingly, in the event that any provision of this Agreement would be held in
any jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
57
<PAGE>
10.4 BENEFITS OF AGREEMENT; ASSIGNMENT.
---------------------------------
All the terms and provisions of this Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. Except as expressly provided herein, this Agreement shall
not confer any rights or remedies upon any Person other than the foregoing.
This Agreement may not be assigned by either party, whether by operation of law
or otherwise, without the consent of the other party; provided that Purchaser
--------
may assign its rights and obligations hereunder without the consent of any
Person to (a) any Affiliate of Purchaser or any shareholder, partner or member
of Purchaser or (b) Apollo Management, L.P. or any Person that is managed or
controlled by, or is an Affiliate of, Apollo Management, L.P.
10.5 EXPENSES.
--------
Except as otherwise provided in this Agreement, Purchaser, the Company and
the Shareholder shall each bear their own expenses, incurred in connection with
this Agreement and the Related Documents.
10.6 HEADINGS.
--------
Descriptive headings are for convenience only and shall not control or
affect in any way the meaning or construction of any provision of this
Agreement.
10.7 NOTICES.
-------
All notices or other communications pursuant to this Agreement shall be in
writing and shall be deemed to be sufficient if delivered personally, by
facsimile sent by nationally-recognized, overnight courier or mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at the following addresses (or at such other address for a part as shall
be specified by like notice):
(a) if to the Company, to:
Chemical Leaman Corporation
102 Pickering Way
Exton, Pennsylvania 19341-0200
Telephone: (610) 363-4215
Telecopier: (610) 363-4233
Attention: Mr. David Boucher
with a copy to (prior to the Effective Time, only):
Pepper Hamilton LLP
3000 Two Logan Square
Eighteenth and Arch Streets
Philadelphia, PA 19103-2799
Telephone: (215) 981-4000
58
<PAGE>
Telecopier: (215) 981-4750
Attention: Barry M. Abelson
(b) if to the Shareholders' Representative, to:
George McFadden & David Hamilton
c/o McFadden Brothers
745 Fifth Avenue
New York, N.Y.
Telephone:
Telecopier:
Attention:
with a copy to:
Pepper Hamilton LLP
3000 Two Logan Square
Eighteenth and Arch Streets
Philadelphia, PA 19103-2799
Telephone: (215) 981-4000
Telecopier: (215) 981-4750
Attention: Barry M. Abelson
(c) if to Purchaser, to:
Purchaser, Inc.
c/o Apollo Management, L.P.
1301 Avenue of the Americas, 38th Floor
New York, New York 10019
Telephone: (212) 261-4000
Telecopier: (212) 261-4102
Attention: Josh Harris
with a copy to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, New York 10112
Telephone No.: (212) 480-2400
Facsimile No.: (212) 728-5950
Attention: John J. Suydam, Esq.
All such notices and other communications shall be deemed to have been given and
received (i) in the case of personal delivery, on the date of such delivery,
(ii) in the case of delivery by facsimile, on the date of such delivery, (iii)
in the case of delivery by nationally-recognized, overnight courier, on the
Business Day following dispatch, and (iv) in the case of mailing, on the third
Business Day following such mailing.
59
<PAGE>
10.8 COUNTERPARTS.
------------
This Agreement may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute one agreement.
10.9 GOVERNING LAW.
-------------
THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
DOMESTIC LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF
LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK, OR ANY
OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE
STATE OF NEW YORK TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL
LAW OF THE STATE OF NEW YORK WILL CONTROL THE INTERPRETATION AND CONSTRUCTION
OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION'S CHOICE OF LAW OR CONFLICT
OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY
APPLY. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
RELATED DOCUMENT MAY BE BROUGHT EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW
YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HERETO HEREBY IRREVOCABLY
ACCEPTS FOR ITSELF OR HIMSELF AND IN RESPECT OF ITS OR HIS PROPERTY AND ASSETS,
GENERALLY AND UNCONDITIONALLY THE JURISDICTION OF THE AFORESAID COURTS.
10.10 INCORPORATION OF EXHIBITS AND SCHEDULES.
---------------------------------------
The Exhibits, Schedules and Annexes identified in this Agreement are
-------- --------- -------
incorporated herein by reference and made a part hereof.
10.11 INDEPENDENCE OF COVENANTS AND REPRESENTATIONS AND WARRANTIES.
------------------------------------------------------------
All covenants hereunder shall be given independent effect so that if a
certain action or condition constitutes a default under a certain covenant, the
fact that such action or condition is permitted by another covenant shall not
affect the occurrence of such default, unless expressly permitted under an
exception to such initial covenant. In addition, all representations and
warranties hereunder shall be given independent effect so that if a particular
representation or warranty proves to be incorrect or is breached, the fact that
another representation or warranty concerning the same or similar subject matter
is correct or is not breached shall not affect the incorrectness of or a breach
of a representation and warranty hereunder.
10.12 INTERPRETATION; CONSTRUCTION.
----------------------------
The term "Agreement" means this agreement together with all schedules and
---------
exhibits hereto, as the same may from time to time be amended, modified,
supplemented or restated in
60
<PAGE>
accordance with the terms hereof. In this Agreement, the term "Best Knowledge"
--------------
of any Person means (i) the actual knowledge of such Person and (ii) that
knowledge which would have been acquired by such Person after making due inquiry
of those officers, directors and key employees of the Person who should
reasonably be expected to have actual knowledge of the matters in question.
Without limiting the generality of the foregoing, when used in the case of the
Company, the term "Best Knowledge" shall include the Best Knowledge of the
Shareholders. The use in this Agreement of the term "including" means
---------
"including, without limitation." The words "herein", "hereof", "hereunder",
----------------------------- ------ ------ ---------
"hereby", "hereto", "hereinafter", and other words of similar import refer to
------ ------ -----------
this Agreement as a whole, including the schedules and exhibits, as the same may
from time to time be amended, modified, supplemented or restated, and not to any
particular article, section, subsection, paragraph, subparagraph or clause
contained in this Agreement. All references to articles, sections, subsections,
clauses, paragraphs, schedules and exhibits mean such provisions of this
Agreement and the schedules and exhibits attached to this Agreement, except
where otherwise stated. The title of and the article, section and paragraph
headings in this Agreement are for convenience of reference only and shall not
govern or affect the interpretation of any of the terms or provisions of this
Agreement. The use herein of the masculine, feminine or neuter forms shall also
denote the other forms, as in each case the context may require. Where specific
language is used to clarify by example a general statement contained herein,
such specific language shall not be deemed to modify, limit or restrict in any
manner the construction of the general statement to which it relates. The
language used in this Agreement has been chosen by the parties to express their
mutual intent, and no rule of strict construction shall be applied against any
party. Accounting terms used but not otherwise defined herein shall have the
meanings given to them under GAAP. Unless expressly provided otherwise, the
measure of a period of one month or year for purposes of this Agreement shall be
that date of the following month or year corresponding to the starting date,
provided that if no corresponding date exists, the measure shall be that date of
the following month or year corresponding to the next day following the starting
date. For example, one month following February 18 is March 18, and one month
following March 31 is May 1.
10.13 REMEDIES.
--------
The parties shall each have and retain all rights and remedies existing in
their favor under this Agreement, at law or equity, including rights to bring
actions for contract damages, specific performance and injunctive and other
equitable relief to enforce or prevent a breach or any violation of this
Agreement. All such rights and remedies shall, to the extent permitted by
applicable Law, be cumulative. Notwithstanding the foregoing, after the
Closing, the provisions of Article VIII hereof shall provide the parties'
------------
exclusive remedies with respect hereto.
10.14 WAIVER OF JURY TRIAL.
--------------------
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY RELATED DOCUMENT.
* * *
61
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Merger Agreement
as of the date first written above.
THE PURCHASER:
PALESTRA ACQUISITION CORP.
By: /s/ Charles J.O. Brien, Jr.
-------------------------------
Name: Charles J.O. Brien, Jr.
Title:President
THE COMPANY:
CHEMICAL LEAMAN CORPORATION
By: /s/ David M. Boucher
-------------------------------
Name: David M. Boucher
Title: Exec. V.P. and Secretary
THE SHAREHOLDERS:
__________________________________
David R. Hamilton
CATHARINE C. HAMILTON
CATHARINE ELIZABETH HAMILTON
TENNESSE ALEXIS HAMILTON
By:_______________________________
David R. Hamilton
Attorney-in-Fact
HAMILTON FAMILY TRUST
By:_______________________________
Trustee
__________________________________
Samuel C. Hamilton
62
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
Plan of Merger as of the date first written above.
DAVID R. HAMILTON
CATHARINE C. HAMILTON
CATHARINE ELIZABETH HAMILTON
TENNESSEE ALEXIS HAMILTON
HAMILTON FAMILY TRUST
SAMUEL C. HAMILTON
GEORGE MCFADDEN
JOHN H. MCFADDEN
TRUSTEES U/W/O ALEXANDER B.
MCFADDEN, DECEASED, F/B/O JOHN,
MARY AND GEORGE MCFADDEN
TRUSTEES U/W/O GEORGE MCFADDEN,
DECEASED, F/B/O GEORGE MCFADDEN
TRUSTEES U/W/O GEORGE MCFADDEN,
DECEASED, F/B/O JOHN H. MCFADDEN
TRUSTEES U/W/O GEORGE MCFADDEN,
DECEASED, F/B/O MARY JOSEPHINE
MCFADDEN
LESLEY TAYLOR
TRUSTEES F/B/O ELIZABETH CUTTING
MCFADDEN
EUGENE C. PARKERSON
DAVID M. BOUCHER
PHILIP J. RINGO
REUBEN M. ROSENTHAL
JACK H. ELROD
J. STEPHEN HAMILTON
LEON F. PALMER
DENNIS R. COPELAND
F.C. COLON-OSORIO
G. MICHAEL CRONK
KAREN SZABO LLOYD
FRANK LLOYD
By: /s/ David R. Hamliton
--------------------
David R. Hamilton
Attorney-in-Fact
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
and Plan of Merger as of the date first written above.
DAVID R. HAMILTON
CATHARINE C. HAMILTON
CATHARINE ELIZABETH HAMILTON
TENNESSEE ALEXIS HAMILTON
HAMILTON FAMILY TRUST
SAMUEL C. HAMILTON
GEORGE MCFADDEN
JOHN H. MCFADDEN
TRUSTEES U/W/O ALEXANDER B.
MCFADDEN, DECEASED, F/B/O JOHN,
MARY AND GEORGE MCFADDEN
TRUSTEES U/W/O GEORGE MCFADDEN,
DECEASED, F/B/O GEORGE MCFADDEN
TRUSTEES U/W/O GEORGE MCFADDEN,
DECEASED, F/B/O JOHN H. MCFADDEN
TRUSTEES U/W/O GEORGE MCFADDEN,
DECEASED, F/B/O MARY JOSEPHINE
MCFADDEN
LESLEY TAYLOR
TRUSTEES F/B/O ELIZABETH CUTTING
MCFADDEN
EUGENE C. PARKERSON
DAVID M. BOUCHER
PHILIP J. RINGO
REUBEN M. ROSENTHAL
JACK H. ELROD
J. STEPHEN HAMILTON
LEON F. PALMER
DENNIS R. COPELAND
G. MICHAEL CRONK
KAREN SZABO LLOYD
FRANK LLOYD
By: /s/ George McFadden
--------------------
George McFadden
Attorney-in-Fact
<PAGE>
ANNEX I
-------
DEFINITIONS
-----------
"Accounting Firm" means an independent "Big 6" public accounting firm or
---------------
their successors.
"Actual EHS Damages" means all EHS Damages paid by the Company and its
------------------
Subsidiaries after the Closing Date with respect to all matters identified on
Schedule 8.4(e), net of any Insurance Proceeds actually received by the Company
in respect of such EHS Damages.
"Agreement" has the meaning set forth in the first paragraph to this
---------
Agreement.
"Affiliate" means, with respect to any Person, (i) a director, officer or
---------
shareholder of such Person, (ii) a spouse of such Person, and (iii) any other
Person that, directly or indirectly through one or more intermediaries,
Controls, or is Controlled by, or is under common Control with, such Person.
"Alternative Transaction" means any direct or indirect acquisition or
-----------------------
purchase of assets of the Company or any Subsidiary outside the ordinary course
of business or any outstanding equity securities of the Company or any
Subsidiary, any tender offer or exchange offer that if consummated would result
in any person beneficially owning equity securities of the Company or any
merger, consolidation, business combination, sale of substantially all the
assets, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any Subsidiary, other than the transactions
contemplated by this Agreement and other than the acquisition of Shares pursuant
to the exercise of Company Stock Options or Warrants that are issued and
outstanding as of the date hereof.
"Audited Balance Sheet Date" has the meaning set forth in Section 4.7(a).
--------------------------
"Audited Financial Statements" has the meaning set forth in Section 4.7(a).
----------------------------
"Best Knowledge" has the meaning set forth in Section 10.12.
--------------
"Boucher Special Merger Consideration" means $200,000.
------------------------------------
"Business" means specialized transportation services, including short and
--------
long-haul transportation, intermodal services, materials handling and third
party logistics, principally to the chemical industry and tank cleaning and
driver-related services.
"Business Day" means any day that is not a Saturday, Sunday or a day on
------------
which banking institutions in New York, New York are not required to be open.
"Closing" has the meaning set forth in Section 1.7.
-------
"Closing Date" has the meaning set forth in Section 1.7.
------------
"Code" has the meaning set forth in Section 4.11(a).
----
"Common Equity Percentage" for a Shareholder means the percentage derived
------------------------
by dividing the number of Merger Shares owned by such Shareholder by the Merger
Share Number.
"Company" has the meaning set forth in the caption.
-------
"Company's By-Laws" has the meaning set forth in Section 1.4.
-----------------
<PAGE>
"Company's Charter" has the meaning set forth in Section 1.4.
-----------------
"Confidential or Proprietary Information" means all confidential or
---------------------------------------
proprietary information disclosed (i) by or on behalf of the Company or the
Shareholders to Purchaser, or to employees, consultants or others in a
confidential relationship with any of them, or (ii) by or on behalf of Purchaser
to the Company, the Shareholders or to employees, consultants or others in a
confidential relationship with any of them, in each case other than such
information which (A) becomes generally available to the public (other than as a
result of a breach of Section 6.6), (B) was known to the party to whom such
information was disclosed prior to its disclosure to such party, (C) is
hereafter available to the party to whom such information was disclosed on a
non-confidential basis from a source (other than the party disclosing or on
whose behalf such information was disclosed) which was, to the knowledge of the
receiving party after due inquiry, entitled to disclose the same or (D) is
required by law, governmental order or decree to be disclosed by the party to
whom such information was disclosed.
"Connecticut Transfer Act" shall mean the Connecticut Hazardous Waste
------------------------
Establishment Transfer Act, Conn. Gen. Stat., 22a-134 et. seq.
"Contaminant" means any Hazardous Substance defined or identified pursuant
-----------
to the Comprehensive Environmental Response Compensation and Liability Act, 42
U.S.C. (S) 9601 et seq. or any applicable state analogs thereto, any Hazardous
Waste as defined under RCRA or any applicable state analog, any Hazardous
Material as defined pursuant to the Hazardous Material Transportation Act, 49
U.S.C. (S) 1801 et seq. or any applicable state analog, radioactive substance or
petroleum or any fractions thereof.
"Contract" means any loan or credit agreement, note, bond, mortgage,
--------
indenture, lease, sublease, purchase order or other agreement, commitment,
instrument, Permit, concession, franchise or license.
"Control" means, with respect to any Person, the possession, directly or
-------
indirectly, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Covered Taxes" means all Taxes of the Company and each Tax Affiliate for
-------------
periods ending on or prior to the close of business on the Closing.
"Effective Time" has the meaning set forth in Article II.
--------------
"EHS Damages" means all claims, judgments, damages (including punitive
-----------
damages), Losses, Liabilities (including strict liability), Encumbrances, costs,
and expenses of investigation and defense of any claim, whether or not such
claim is ultimately defeated, and of any good faith settlement of judgment, of
whatever kind or nature, contingent or otherwise, matured or unmatured,
foreseeable or unforeseeable, including, without limitation, reasonable
attorneys' fees and disbursements and consultants' fees, any of which are
incurred at any time pursuant to EHS Requirements of Law or pursuant to common
law claims arising from or related to the existence of Contaminants at any of
the Properties or any off-site facility to which the Company (or its
predecessors) arranged for the treatment, storage or disposal of Contaminants,
including without limitation:
I-2
<PAGE>
(i) Damages for personal injury or threatened personal injury
(including sickness, disease or death), or injury or threatened injury to
property or natural resources, foreseeable or unforeseeable, including,
without limitation, the cost of demolition and rebuilding of any
improvements on real property;
(ii) Reasonable fees incurred for the services of attorneys,
consultants, contractors, doctors, experts, laboratories and all other
reasonable costs incurred in connection with any damages as described in
subparagraph (i) of this 'definition, and the investigation or remediation
of Contaminants or the suspected presence of Contaminants or the violation
or threatened violation of EHS Requirements of Law including, but not
limited to, the preparation of any feasibility studies or reports or the
performance of any investigations, cleanup, treatment, remediation,
removal, response, abatement, containment, closure, storage, disposal,
transport, restoration or monitoring work required by any federal, state,
local or foreign governmental agency or political subdivision, or otherwise
expended in connection with such conditions, and including, without
limitation, any reasonable attorneys' fees, costs and expenses incurred in
enforcing this Agreement or collecting any sums due hereunder; and
(iii) Liability to any third person or Governmental Entity to
indemnify such person or Governmental Entity for costs expended in
connection with the items referenced in subparagraphs (i) and (ii) of this
definition.
"EHS Permits" means all Permits required under EHS Requirements of Law.
-----------
"EHS Requirements of Law" means all civil and criminal Laws, EHS Permits,
-----------------------
or Orders issued promulgated or entered in order to protect human health,
welfare or the environment, whether now existing or subsequently enacted,
amended or superseded (except to the extent that any additional requirements,
financial or other obligations or liabilities of any kind or character are more
burdensome than those that would have been imposed under EHS Requirements of Law
in effect as of the Closing), including, but not limited to, any Law, directive,
binding policy, EHS Permit or Order relating to (x) the use, handling or
disposal of any Contaminant or (y) workplace or worker safety and health, as
such requirements are promulgated by the specifically authorized Governmental
Entity responsible for administering such requirements.
"Employee Benefit Plan" means (i) any qualified or non-qualified Employee
---------------------
Pension Benefit Plan (as defined in Section 3(2) of ERISA), including any
Multiple Employer Plan, (ii) any Employee Welfare Benefit Plan (as defined in
Section 3(1) of ERISA), or (iii) any employee benefit, fringe benefit,
compensation, severance, incentive, bonus, profit-sharing, stock option, stock
purchase or other plan, program or arrangement, whether or not subject to ERISA
and whether or not funded, but shall not include any Multiemployer Plan.
"Employee Plans" has the meaning set forth in Section 4.20(a).
--------------
"Encumbrances" shall mean and include security interests, mortgages, liens,
------------
pledges, charges, easements, reservations, restrictions, rights of way,
servitudes, options, rights of first refusal, community property interests,
equitable interests, restrictions of any kind and all other encumbrances,
whether or not relating to the extension of credit or the borrowing of money.
I-3
<PAGE>
"Environmental Encumbrance" means an Encumbrance in favor of any
-------------------------
Governmental Entity for any (a) Liability under any EHS Requirement of Law or
(b) Losses or damages arising from, or costs incurred by, such Governmental
Entity in response to a Release or threatened Release of a Contaminant into the
environment.
"Environmental Survival Date" has the meaning set forth in Section 8.5(a).
---------------------------
"ERISA Affiliate" means, with respect to any Person, any other Person that
---------------
is a member of a "controlled group of corporations" with, or is under "common
control" with, or is a member of the same "affiliated service group" with such
Person as defined in Section 414(b), 414(c), or 414(m) or 414(o) of the Code.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
------------
any successor thereto.
"Expected EHS Damages" means the dollar amount of EHS Damages expected to
--------------------
be incurred by the Company and its Subsidiaries from and after the Closing Date
to the Environmental Survival Date in respect of all matters identified on
Schedule 8.4(e) as such dollar amounts are set forth in Schedule 8.4(e) hereto,
net of all Insurance Proceeds which are expected to be recovered by the Company
in respect of such EHS Damages). EHS Damages for 1998 shall be prorated based
upon the number of days from the Closing Date through and including December 31,
1998); estimated net EHS Damages for 1999 and 2000 shall be as set forth on
Schedule 8.4(e); and estimated net EHS Damages for 2001 shall be prorated based
upon the number of days from December 31, 2000 through and including the
Environmental Survival Date.
"Foreign Employee Benefit Plan" means any employee benefit plan that is
-----------------------------
structured like an employee benefit plan described in Section 3(3) of ERISA
which is maintained outside the United States primarily for the benefit of
persons substantially all of whom are nonresident aliens and who are employees
of the Company or any of its ERISA Affiliates and is not covered by ERISA
pursuant to Section 4(b)(4) of ERISA.
"Foreign Pension Plan" means any employee benefit plan that is structured
--------------------
like an employee benefit plan described in Section 3(3) of ERISA which is (i)
maintained outside the United States primarily for the benefit of persons
substantially all of whom are nonresident aliens and who are employees of the
Company or any of its ERISA Affiliates, (ii) is not covered by ERISA pursuant to
Section 4(b)(4) of ERISA, and (iii) is required to be funded through a trust or
other funding vehicle.
"GAAP" means generally accepted accounting principles consistently applied.
----
"Governmental Entity" means federal, state, local or foreign government and
-------------------
any court, tribunal, administrative agency, commission or other governmental or
regulatory authority or agency, domestic, foreign or supranational.
"Group Health Plan" has the meaning set forth in Section 4.20(b)(viii).
-----------------
"Hamilton Special Merger Consideration" means $4,781,118.
-------------------------------------
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
-------
as amended.
I-4
<PAGE>
"ISRA" shall mean the New Jersey Industrial Site Recovery Act.
----
"Income Taxes" shall mean all Taxes based upon income, including without
------------
limitation income Taxes, franchise Taxes based upon income and any Taxes paid in
lieu of (or because they are greater than) any of the foregoing.
"Indebtedness" shall include all obligations in respect of indebtedness for
------------
borrowed money (including interest payable in respect thereof), obligations
incurred, issued or assumed as the deferred purchase price of property or
services other than accounts payable incurred in the ordinary course of business
consistent with past practice, Liabilities of others secured by (or, for which
the holder of such indebtedness has an existing right, contingent or otherwise,
to be secured) any Encumbrance on property or assets of the Company or any
Subsidiary, capital lease obligations, all prepayment premiums or penalties
resulting from or arising out of the transactions contemplated by this Agreement
and obligations in respect of guarantees of any of the foregoing or any "keep
well" or other agreement to maintain any financial statement condition of
another person, in each case, whether or not matured, liquidated, fixed,
contingent, or disputed.
"Indemnified Persons" means and includes the Shareholders' Indemnifying
-------------------
Persons or Purchaser Indemnified Persons, as the case may be.
"Indemnifying Persons" means and includes the Shareholders' Indemnifying
--------------------
Persons or Purchaser Indemnifying Persons, as the case may be.
"Indemnity Cap Adjustment Amount" has the meaning set forth in Section
-------------------------------
7.3(p).
"Independent Contractors" means any driver who works for the Company but is
-----------------------
not employed by the Company, including owner-operators who provide tractors to
and drive exclusively for the Company.
"Insurance Proceeds" means proceeds, other than those set forth on Schedule
------------------
4.16(c), from Qualified Insurance Carriers in respect of the Company's
properties located in Bridgeport, New Jersey. Qualified Insurance Carriers
means insurance carriers with a Moody's rating of at least [B+] and policies in
favor of the Company or its Subsidiaries in existence on the date hereof with
respect to the Company's properties located in Bridgeport, New Jersey.
"Intellectual Property Rights" means all intellectual property rights,
----------------------------
including, without limitation, patents, patent applications, trademarks,
trademark applications, tradenames, servicemarks, servicemark applications,
trade dress, logos and designs and the goodwill connected with the foregoing,
copyrights and copyright applications, know-how, trade secrets, proprietary
processes and formulae, confidential information, franchises, licenses,
inventions, including, without limitation, manuals, memoranda and records.
"Latest Balance Sheet" has the meaning set forth in Section 4.8.
--------------------
"Latest Balance Sheet Date" has the meaning set forth in Section 4.7(b).
-------------------------
"Law" means any applicable foreign, federal, state or local law, statute,
---
treaty, rule, directive, regulation, ordinances and similar provisions having
the force or effect of law or an Order of any Governmental Entity (including all
Environmental, Health and Safety Laws).
"Leased Property" has the meaning set forth in Section 4.13(b).
---------------
I-5
<PAGE>
"Liability" means any liability or obligation, whether known or unknown,
---------
asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated
or unliquidated and whether due or to become due, regardless of when asserted.
"Licensed Requisite Rights" has the meaning set forth in Section 4.14(b).
-------------------------
"Litigation Expense" means any reasonable out-of-pocket expenses incurred
------------------
in connection with investigating, defending or asserting any claim, legal or
administrative action, suit or Proceeding incident to any matter indemnified
against hereunder including, without limitation, court filing fees, court costs,
arbitration fees or costs, witness fees and fees and disbursements of outside
legal counsel, investigators, expert witnesses, accountants and other
professionals.
"Losses" means any and all losses, claims, shortages, damages, Liabilities,
------
expenses (including reasonable attorneys' and accountants' and other
professionals' fees and Litigation Expenses), assessments, Taxes (including
interest or penalties thereon) and insurance premium increases to the extent
such increases are directly attributable to any such matter that is the subject
of indemnification under Article VIII as reduced by (i) the amount actually
recovered under insurance policies (net of deductibles and incidental expenses
resulting therefrom) and (ii) tax benefits actually realized under Tax Laws in
respect of such Losses, in each case net of all costs and expenses of recovering
any such amount. For purposes of determining tax benefits actually realized,
there shall be included tax benefits actually realized before the taxable year
in which a payment for a Loss is received and tax benefits realized in the
taxable year in which a payment for a Loss is received.
"Material Adverse Change" has the meaning set forth in Section 4.6(a).
-----------------------
"Material Adverse Effect" means any event, condition, change, fact,
-----------------------
circumstance or effect, which, individually or in the aggregate, has had or is
reasonably likely to have a material adverse effect on the business, operations,
assets, condition (financial or otherwise), operating results, prospects or
Liabilities of the Company and its Subsidiaries (taken as a whole) or any
material casualty loss or damage to the assets of the Company or any Subsidiary,
whether or not covered by insurance
"Merger Consideration" means $77,800,000.
--------------------
"Merger Share Number" means the number of Merger Shares.
-------------------
"Merger Shares" means the shares of Company Common Stock that are issued
-------------
and outstanding immediately prior to the Effective Time that are owned by any
Person other than the Company.
"Net Transaction Expenses" means aggregate Transaction Expenses in excess
------------------------
of $100,000.
"No Further Action Letter" shall mean either (i) a No Further Action Letter
------------------------
(as defined under ISRA) issued by the NJDEP to the Shareholders or the Company
with respect to the Real Property or (ii) a written communication by the NJDEP
to the Shareholders or the Company notifying the Shareholders or the Company, as
the case may be, that neither the Shareholders nor the Company shall have any
further obligation relating to environmental contamination at the Real Property,
other than any one or more of the following: (A) institutional or engineering
I-6
<PAGE>
controls, (B) deed restriction, (C) monitoring, (D) groundwater
reclassification, (E) reopen for changed conditions.
"Orders" means judgments, writs, decrees, compliance agreements,
------
injunctions or judicial or administrative orders and determinations of any
Governmental Entity or arbitrator.
"Owned Property" has the meaning set forth in Section 4.13(a)
--------------
"Owned Requisite Rights" has the meaning set forth in Section 4.14(b).
----------------------
"Percentage of Merger Consideration" for each Shareholder means the
----------------------------------
percentage obtained by dividing the portion of the Merger Consideration to be
received by such Shareholder pursuant to this Agreement (assuming the Net
Transaction Expenses are equal to zero) by the Merger Consideration.
"Permits" means all permits, licenses, authorizations, registrations,
-------
franchises, approvals, certificates, variances and similar rights obtained, or
required to be obtained, from Governmental Entities.
"Permitted Encumbrances" means (i) Encumbrances for Taxes that are not yet
----------------------
delinquent or are being contested in good faith by appropriate proceedings and
for which there are adequate reserves on the books, (ii) workers or unemployment
compensation liens arising in the ordinary course of business; (iii) mechanic's,
materialman's, supplier's, vendor's or similar liens arising in the ordinary
course of business securing amounts that are not delinquent (iv) laws,
ordinances and governmental regulations regulating the use of occupancy of the
Leased Property or the Owned Property or the character, dimensions or locations
of the improvements thereon, provided that none of the same are or would be
violated by the continued use of any portion of the Leased Property or the Owned
Property for the purposes for which it has been customarily used by or in the
Business; and (v) exceptions discoverable by an inspection or survey or other
imperfections of title that do not make title unmarketable and are not so
substantial as to impair the value of or interfere with the continued or
contemplated use of any portion of the Owned Property or the Leased Property for
the purposes for which they have been used by or in the Business.
"Person" shall be construed broadly and shall include an individual, a
------
partnership, a corporation, a limited liability company, an association, a joint
stock company, a trust, a joint venture, an unincorporated organization or a
governmental entity (or any department, agency or political subdivision
thereof).
"Post True-Up EHS Damages" means the dollar amount of EHS Damages expected
------------------------
as of the Environmental Survival Date to be incurred by the Company for the
period from and after the Environmental Survival Date, net of all Insurance
Proceeds which are expected as of the Environmental Survival Date to be
recovered by the Company in respect of such EHS Damages (as such Insurance
Proceeds shall be determined by a nationally recognized insurance recoverables
expert chosen by mutual agreement of Purchaser and the Shareholders
Representative or, if no such agreement can be reached, as chosen by the Neutral
Third Party).
"Post True-Up Expected EHS Damages" means the dollar amount of EHS Damages
---------------------------------
expected as of the date hereof to be incurred by the Company from and after the
Environmental Survival Date in respect of all matters identified on Schedule
8.4(e) as such dollar amounts are
I-7
<PAGE>
set forth in Schedule 8.4(e), net of Insurance Proceeds which are expected to be
recovered by the Company for such EHS Damages.
"Proceeding" means any action, suit, investigation or proceedings before
----------
any Governmental Entity or arbitrator.
"Properties" means all real or personal property of any kind or description
----------
presently owned, leased, operated, or otherwise under the control of the Company
or any Subsidiary.
"Purchaser" has the meaning set forth in the first paragraph of this
---------
Agreement.
"Purchaser Indemnified Persons" means and includes Purchaser, its
-----------------------------
Affiliates, its and their successors and assigns, and the respective officers,
directors, employees and agents of each of the foregoing; provided, however,
-------- -------
that any such Person or entity who was, prior to the Closing Date, an officer,
director, employee, Affiliate, successor or assign of the Company or the
Shareholders shall not in such capacity, be a Purchaser Indemnified Person with
respect to a breach of this Agreement or any Related Document.
"Purchaser Indemnifying Persons" means Purchaser and its successors and
------------------------------
assigns.
"Purchaser Losses" means any and all Losses sustained, suffered or incurred
----------------
by any Purchaser Indemnified Person arising from or in connection with any such
matter which is the subject of indemnification under Article VIII.
"Purchaser's By-Laws" has the meaning set forth in Section 5.1.
-------------------
"Purchaser's Charter" has the meaning set forth in Section 5.1.
-------------------
"RCRA" means the federal Resource Conservation and Recovery Act.
----
"Release" means the presence, release, spill, emission, leaking, pumping,
-------
injection, deposit, disposal, discharge, dispersal, leaching or migrating into
the indoor or outdoor environment of any Contaminant through or in the air,
soil, subsurface, surface water, groundwater or Properties.
"Remedial Action" means actions required to (i) clean up, remove, treat or
---------------
in-any other way address Contaminants in the indoor or outdoor environment; (ii)
prevent the Release or threat of Release or minimize the further Release of
Contaminants; or (iii) investigate and determine if a remedial response is
needed, to design such a response and post-remedial investigation, monitoring,
operation, maintenance and care.
"Requisite Rights" has the meaning set forth in Section 4.12(a)(i).
----------------
"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
successor thereto.
"Shares" means the shares of Common Stock, par value $2.50 per share, of
------
the Company.
"Shareholder" has the meaning set forth in the caption.
-----------
"Shareholders' Indemnified Persons" means and includes the Shareholders and
---------------------------------
its successors and assigns.
"Shareholders' Indemnifying Persons" means and includes the Shareholders
----------------------------------
and its successors and assigns.
I-8
<PAGE>
"Shareholders' Losses" means any and all Losses sustained, suffered or
--------------------
incurred by any Shareholders' Indemnified Person arising from or in connection
with any matter which is the subject of indemnification under Article VIII.
"Shareholders' Representative" has the meaning set forth in the Recitals to
----------------------------
this Agreement.
"Subsidiary" means any Person of which more than 50% of the total voting
---------
power is owned directly or indirectly by any other Person, and if not specified,
means a Subsidiary of the Company.
"Survival Date" has the meaning set forth in Section 8.5(a).
-------------
"Tax Losses" means any and all Losses sustained, suffered or incurred by
----------
any Purchaser Indemnified Person arising from or in connection with the untruth,
inaccuracy or breach of the representations and warranties of the Company and
the Shareholders contained in Section 4.11.
"Tax Return" means any return, declaration, report, claim for refund, or
----------
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Taxes" means, with respect to any Person, (i) all income taxes (including
-----
any tax on or based upon net income, gross income, income as specially defined,
earnings, profits or selected items of income, earnings or profits) and all
gross receipts, sales, use, ad valorem, transfer, franchise, license,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property or windfall profits taxes, alternative or add-on minimum taxes, customs
duties and other taxes, fees, assessments or charges of any kind whatsoever,
together with all interest and penalties, additions to tax and other additional
amounts imposed by any taxing authority (domestic or foreign) on such Person (if
any) and (ii) any liability for the payment of any amount of the type described
in clause (i) above as a result of (A) being a "transferee" (within the meaning
of Section 6901 of the Code or any other applicable Law) of another Person, (B)
being a member of an affiliated, combined or consolidated group or (C) a
contractual arrangement or otherwise.
"Transaction Expenses" means all fees and expenses that are incurred by or
--------------------
on behalf of the Company or any Shareholder (whether incurred prior to, at or
after the Closing) in connection with the preparation for, and consummation of,
the transactions contemplated hereby, by the other agreements referred to herein
or otherwise in connection with a sale of the Company, including any payments to
terminate or purchase options to purchase equity interests of any Subsidiary
(including payments to Robert Johnson and William Kannehan) (it being understood
that Transaction Expenses shall not include either the $4,000,000 cost to obtain
the requisite consent of the holders of Notes to an amendment to the terms of
the Indenture, or the fees and expenses incurred by the Company in connection
with such solicitation of consents all as set forth in Section 6.12).
"Transfer Agent" means a transfer agent selected by the Company and
--------------
acceptable to the Purchaser.
"Third Party Claim" has the meaning set forth in Section 8.3.
-----------------
I-9
<PAGE>
EXHIBIT 2.3
AMENDMENT NO. 1 dated as of July 27, 1998
(this "Amendment") to the AGREEMENT AND PLAN OF
---------
MERGER (the "Original Agreement" and, as amended,
------------------
this "Agreement") dated as of June 23, 1998, by
---------
and among PALESTRA ACQUISITION CORP., a Delaware
corporation ("Purchaser"), CHEMICAL LEAMAN
---------
CORPORATION, a Pennsylvania corporation (the
"Company"), and THE SHAREHOLDERS OF THE COMPANY
--------
NAMED ON SCHEDULE I ATTACHED TO THE ORIGINAL
----------
AGREEMENT (each, a "Shareholder", and
-----------
collectively, the "Shareholders"). Capitalized
------------
term used but not defined herein shall have the
meanings ascribed to them in the Original
Agreement.
WHEREAS, the Board of Directors of the Company has adopted resolutions
approving this Amendment and the transactions to which the Company is a party
contemplated hereby, and has agreed, upon the terms and subject to the
conditions set forth herein, to recommend that the Company's shareholders
approve this Amendment.
NOW, THEREFORE, in consideration of the premises and the mutual
benefits to be derived from this Amendment and the representations, warranties,
covenants, agreements and conditions hereinafter set forth, the parties hereto
hereby agree as follows:
ARTICLE I
AMENDMENTS
1.1 PURCHASE PRICE; EFFECT ON CAPITAL STOCK.
---------------------------------------
(a) Annex I to the Original Agreement is hereby amended by deleting
the definition of "Merger Consideration" and replacing it with the following:
""Merger Consideration" means the sum of (i) the Aggregate Cash
--------------------
Merger Consideration plus (ii) shares of New Preferred Stock having a
stated value equal to $5 million."
(b) Annex I to the Original Agreement is hereby amended by adding the
following thereto:
""Aggregate Cash Merger Consideration" means $72,800,000.
-----------------------------------
<PAGE>
(c) Annex I to the Original Agreement is hereby amended by adding the
following thereto:
"New Preferred Stock" means shares of the Preferred Stock of MTL,
-------------------
the designations, rights and preferences of which are more
particularly described on Exhibit 2.1(b) hereto.
--------------
(d) Section 2.1(a) of the Original Agreement is hereby amended by
adding the following new sentence to the end thereof:
"Notwithstanding anything to the contrary contained in this
Agreement or in any Employment Agreement, the Purchaser shall be
obligated to pay in cash to the Shareholders an amount equal to but
not more than (i) the Aggregate Cash Merger Consideration, less (ii)
the product of (A) the aggregate number of Merger Shares that are to
be converted into MTL Stock pursuant to Section 2.1(c) and the
applicable Employment Agreements multiplied by (B) a fraction, the
numerator of which shall be the Merger Consideration less the Net
Transaction Expenses, and the denominator of which shall be the Merger
Share Number (the "MTL Stock Amount"), less (iii) the Net Transaction
----------------
Expenses."
(e) Sections 2.1(b)(iii), (iv) and (v) of the Original Agreement are
each hereby deleted in their entirety and shall be collectively replaced with
the following:
"(iii) the Merger Shares held by each Shareholder (other than the
Merger Shares that are to be converted into shares of MTL Stock)
shall, by virtue of the Merger and without any action on the part of
any Shareholder, cease to be outstanding and be converted into the
right to receive, subject to the terms and conditions of this
Agreement, (A) shares of New Preferred Stock having a stated value
equal to the product of such Shareholder's Common Equity Percentage
multiplied by $5 million and (B) cash in an amount equal to such
Shareholder's Cash Merger Consideration.
For purposes of the foregoing, "Cash Merger Consideration" means the
-------------------------
following:
(i) in respect of each Shareholder other than David R.
Hamilton and David M. Boucher, an amount equal to (A) the product of
such Shareholder's Common Equity Percentage multiplied by the
Aggregate Cash Merger Consideration, less (B) the product of the
Hamilton Special Merger Consideration multiplied by such Shareholder's
Post Hamilton Percentage, less (C) the product of the Boucher Special
Merger Consideration multiplied by such Shareholder's Post Boucher
Percentage, less (D) the product of such Shareholder's Percentage of
Merger Consideration multiplied by the Net Transaction Expenses;
(ii) in respect of David R. Hamilton, an amount equal to (A)
the product of Mr. Hamilton's Common Equity Percentage multiplied by
the Aggregate Cash Merger Consideration, plus (B) the Hamilton Special
Merger Consideration, less (C) the product of the Boucher Special
Merger Consideration multiplied by Mr. Hamilton's Post Boucher
Percentage, less (D) the product of
2
<PAGE>
Mr. Hamilton's Percentage of Merger Consideration multiplied by the
Net Transaction Expenses; and
(iii) in respect of David M. Boucher, an amount equal to (A) the
product of Mr. Boucher's Common Equity Percentage multiplied by the
Aggregate Cash Merger Consideration, plus (B) Boucher Special Merger
Consideration, less (C) the product of the Hamilton Special Merger
Consideration multiplied by Mr. Boucher's Post Hamilton Percentage,
less (D) the product of Mr. Boucher's Percentage of Merger
Consideration multiplied by the Net Transaction Expenses.
For purposes of the foregoing, the "Post Boucher Percentage" means in
-----------------------
respect of any Shareholder, the total number of Merger Shares held by such
Shareholder divided by the total number of Merger Shares held by all
Shareholders other than Mr. Boucher."
For purposes of the foregoing, the "Post Hamilton Percentage" means in
------------------------
respect of any Shareholder, the total number of Merger Shares held by such
Shareholder divided by the total number of Merger Shares held by all
Shareholders other than Mr. Hamilton."
1.2 DELIVERY OF FUNDS AND CERTIFICATES; SURRENDER OF CERTIFICATES.
-------------------------------------------------------------
(a) Section 2.2(a) of the Original Agreement is hereby amended by
deleting the words the "the funds necessary to pay the Merger Consideration
(taking into account the MTL Stock and subject to any setoffs as set forth in
Section 7.3(g) or Section 7.3(h))" contained therein and replacing such words
with the words "the funds necessary to pay the Aggregate Cash Merger
Consideration, less the Net Transaction Expenses, less the MTL Stock Amount and
less the aggregate amount of all setoffs pursuant to Section 7.3(g) and Section
7.3(h))."
(b) Section 2.2(b) of the Original Agreement is hereby deleted in its
entirety and replaced with the following:
"Each holder of an outstanding certificate or certificates which prior
thereto represented Merger Shares, upon surrender at, or as soon as
practicable after, the Effective Time of the Merger (as the case may
be) to the Transfer Agent of such certificate or certificates
(together with a letter of transmittal signed by such holder in
substantially the form of EXHIBIT A attached hereto), shall be
---------
entitled to the Cash Merger Consideration (subject to any setoffs as
set forth in Section 7.3(g) or Section 7.3(h)) and the shares of New
Preferred Stock into which such Merger Shares previously represented
by such certificate or certificates surrendered shall have been
converted pursuant to this Agreement. The Transfer Agent shall accept
such certificates and such letter of transmittal upon compliance with
such reasonable terms and conditions as the Transfer Agent may impose
to effect an orderly exchange thereof in accordance with normal
practices. After the Effective Time of the Merger, there shall be no
further transfer on the records of the Company or its transfer agent
of certificates representing Merger Shares which have been converted,
in whole or in part, pursuant to this Agreement, into the right to
receive cash, MTL Stock or New
3
<PAGE>
Preferred Stock, and if such certificates are presented to the Company
for transfer, they shall be canceled against delivery of such
consideration. If cash or a certificate representing shares of MTL
Stock or New Preferred Stock is to be remitted to a name other than
that in which the certificate for Merger Shares surrendered for
exchange is registered, it shall be a condition of such exchange that
the certificate so surrendered shall be properly endorsed, with
signature guaranteed or otherwise in proper form for transfer. Until
surrendered as contemplated by this Section 2.2(b), each certificate
for Merger Shares shall be deemed at any time after the Effective Time
of the Merger to represent only the right to receive, subject to any
setoffs pursuant to Section 7.3(g) or Section 7.3(h), for each Merger
Share represented thereby upon such surrender, cash, shares of New
Preferred Stock and/or shares of MTL Stock, in the amount determined
pursuant to Section 2.1(b) or the applicable Employment Agreement, as
the case may be."
(c) Section 2.2(d) of the Original Agreement is hereby deleted in its
entirety and replaced with the following:
"(d) All consideration (whether in the form of cash, New Preferred
Stock, MTL Stock or setoff pursuant to Section 7.3(g) or Section 7.3(h))
paid upon surrender of certificates representing Shares in accordance with
the terms of this Article II shall be deemed to have been paid in full
satisfaction of all rights pertaining to the Shares so exchanged that were
previously represented by such certificates."
1.3 SETOFFS.
-------
Sections 7.3(g) and (h) of the Original Agreement are each hereby amended
by deleting the words "any Merger Consideration or other payments" in each such
Section and replacing it in each such Section with the words "Cash Merger
Consideration or other cash payments."
1.4 CONDITIONS.
----------
Section 7.3(p) of the Original Agreement is hereby amended by deleting
"$4,000,000; provided that, in the Shareholder Representative's sole discretion,
--------
such amount may be increased, at any time prior to two days after Purchaser
delivers a notice that it intends to terminate this Agreement pursuant to
Section 9.1 based upon the condition set forth in this Section 7.3(p) not being
satisfied, to an amount not to exceed $5,000,000 (such excess amount over
$4,000,000, the "Indemnity Cap Adjustment Amount"); it being understood that if
-------------------------------
such amount exceeds $5,000,000, Purchaser shall be under no obligation to effect
the Merger" and replacing it with "$6,500,000."
1.5 INDEMNIFICATION.
---------------
(a) Section 8.6(b) of the Original Agreement is hereby deleted in its
entirety and replaced with the following:
"(b) Indemnity Limitations for the Shareholders. Except as
------------------------------------------
provided herein, the sum of all Losses pursuant to which
indemnification is payable by the
4
<PAGE>
Shareholders in the aggregate pursuant to Section 8.1(a)(i) and
Section 8.1(a)(iv) shall not exceed the sum of (i) $8,250,000 (the
"Cap"), plus (ii) an amount equal to the Indemnity Cap Adjustment
--- ----
Amount (as adjusted, the "Adjusted Cap"), and no Shareholder shall be
------------
liable to Purchaser for any amount in excess of the sum of (x) the
Cash Merger Consideration received by such Shareholder (which shall
include for these purposes shares of MTL Stock), plus (y) the stated
value of all shares of New Preferred Stock received by such
Shareholder in connection with the consummation of the Merger (which
shall not include, for purposes hereof, shares issued as a payment-in
-kind dividend); provided, however, that in no event shall the
-------- -------
limitations set forth in this Section 8.6(b) apply with respect to the
representations and warranties set forth in the Subject R&W or any
claim arising as a result of fraud. Notwithstanding anything else
provided herein or in the Original Agreement, any payment to Purchaser
in respect of Purchaser Losses, whether by setoff against the
Qualified Letters of Credit, cash payments, setoff against the New
Preferred Stock, or setoff or reduction made in respect of the stated
value of the New Preferred Stock or any dividends thereunder or
otherwise, shall be included in any calculation of amounts paid by the
Shareholders for the purpose of determining, and shall be credited
against, the Cap, the Adjusted Cap and the L/C Cap, and the amount of
the Qualified Letters of Credit shall be reduced to account for such
credit."
(b) Section 8.7 of the Original Agreement is hereby amended by (i)
deleting the words "Adjusted Cap" each time it appears therein and replacing it
with the words "L/C Cap" and (ii) adding a new sentence to the end thereof which
shall read as follows:
"Notwithstanding anything to the contrary contained herein, Purchaser
agrees not to draw on any Qualified Letter of Credit (i) prior to the
twenty-fourth month immediately following the Closing Date, unless at such
time all dividends on the shares of the New Preferred Stock have either (i)
been paid in cash or (ii) paid as a payment-in-kind dividend )("PIK
Shares"), the stated value of which has been reduced to zero, and (iii)
after the twenty fourth month immediately following the Closing Date, until
such time as the stated value of the outstanding PIK Shares has been
reduced to zero and the stated value of the outstanding shares of New
Preferred Stock that are issued at the Effective Time in connection with
the Merger has been reduced to $2.5 million."
(c) Annex I to the Original Agreement is hereby amended by deleting
the definition of "Indemnity Cap Adjustment Amount" and replacing it with the
following:
""Indemnity Cap Adjustment Amount" means an amount, not to exceed $2.5
-------------------------------
million, equal to the excess of (i) (a) the sum of any EHS Damages which in
the written opinion of Purchaser's consultant (which shall be one or more
of the consultants listed on Schedule 7.3(p)(1)) are reasonably expected to
-------------------
be required to be incurred pursuant to EHS Requirements of Law due to
conditions other than those identified on Schedule 7.3(p)(2) discovered by
------------------
the Purchaser after the date hereof and prior to the Closing in the course
of Purchaser's due diligence or due to any new Proceeding or Order or any
new claim or amended claim arising in connection with any existing
Proceeding, Order or condition, plus (b) the reasonably expected costs
based on the Purchaser's
5
<PAGE>
consultant's evaluation in writing, for full compliance and remediation
required pursuant to any EHS Requirement of Law (including pursuant to ISRA
and the Connecticut Transfer Act) resulting from the announcement or
consummation of the transactions contemplated by this Agreement over (ii)
$4,000,000.
(d) Annex I to the Original Agreement is hereby further amended by
adding the following thereto:
""L/C Cap" means, at any time, (i) the Cap, plus (ii) the Indemnity
------- ----
Cap Adjustment Amount, less (iii) the aggregate Preferred Stock Adjustment
----
Amount in effect at such time.
"Preferred Stock Adjustment Amount" means the sum of (i) the stated
---------------------------------
value of all outstanding PIK Shares that are issued or are required to be
issued pursuant to the terms of the New Preferred Stock as a payment-in-
kind dividend on shares of New Preferred Stock that are issued at the
Effective Time in connection with the Merger ("Initial PIK Shares"), plus
------------------
(ii) after the end of the twenty-fourth month immediately following the
Closing Date, if all shares of New Preferred Stock including all PIK Shares
have not been redeemed, $2.5 million, plus (iii) at Purchaser's option
(exercised by delivery of an irrevocable notice to the Shareholders
Representative), additional shares of New Preferred Stock that are issued
at the Effective Time in connection with the Merger having a stated value
equal to up to $2.5 million.
1.6 FINANCING.
---------
EXHIBIT E is hereby deleted in its entirety and replaced with EXHIBIT E
--------- ---------
hereto.
1.7 NOTES.
-----
(a) Purchaser covenants and agrees to use its commercially reasonable
best efforts to cause MTL Inc. to commence an offer to purchase up to all of the
outstanding Notes within five business days after the date hereof and to
complete such offer substantially in accordance with the terms and subject to
the conditions described in the draft of such offer to purchase which has been
previously provided to the Company. It is understood that any delay in
commencing such offer to purchase in connection with either (i) any act or
failure to act by the Company or any third party or (ii) Purchaser's compliance
with applicable law shall not constitute a breach of this Agreement.
(b) The Company agrees to use its commercially reasonable best
efforts (without incurring any costs) to cooperate with the Purchaser and the
holders of its Notes in connection with the offer to purchase set forth in
Section 1.7(a).
(c) Annex I to the Original Agreement is hereby amended by deleting
the definition of "Transaction Expenses" contained therein and replacing it with
the following:
"Transaction Expenses" means all fees and expenses that are
--------------------
incurred by or on behalf of the Company or any Shareholder (whether
incurred prior to, at or after the Closing) in connection with the
preparation for, and consummation of,
6
<PAGE>
the transactions contemplated hereby, by the other agreements referred
to herein or otherwise in connection with a sale of the Company,
including any payments to terminate or purchase options to purchase
equity interests of any Subsidiary (including payments to Robert
Johnson and William Kannehan) (it being understood that Transaction
Expenses shall not include either (a) the $4,000,000 cost to obtain
the requisite consent of the holders of Notes to an amendment to the
terms of the Indenture, or the fees and expenses incurred by the
Company in connection with such solicitation of consents all as set
forth in Section 6.12 or (b) any costs incurred by the Purchaser, MTL
Inc. or Apollo Management, L.P., in connection with any offer to
purchase the Notes commenced by MTL Inc.).
(d) Sections 6.12 and 7.3(m) of the Original Agreement are hereby
deleted in their entirety.
1.8 CLOSING.
-------
Each party hereto agrees to use its commercially reasonable efforts to
consummate the Merger on or prior to August 31, 1998.
ARTICLE II
MISCELLANEOUS PROVISIONS
2.1 AGREEMENT.
---------
Except as modified by this Amendment, the Original Agreement shall remain
in full force and effect, enforceable in accordance with its terms.
2.2 COUNTERPARTS.
------------
This Amendment may be executed in any number of counterparts, and each such
counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute one agreement.
2.3 GOVERNING LAW.
-------------
THIS AMENDMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
DOMESTIC LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF
LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK, OR ANY
OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE
STATE OF NEW YORK TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL
LAW OF THE STATE OF NEW YORK WILL CONTROL THE INTERPRETATION AND CONSTRUCTION
OF THIS AMENDMENT, EVEN IF UNDER SUCH JURISDICTION'S CHOICE OF LAW OR CONFLICT
OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY
APPLY. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AMENDMENT OR ANY
RELATED DOCUMENT MAY BE BROUGHT EXCLUSIVELY IN
7
<PAGE>
THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN
DISTRICT OF NEW YORK AND, BY EXECUTION AND DELIVERY OF THIS AMENDMENT, EACH
PARTY HERETO HEREBY IRREVOCABLY ACCEPTS FOR ITSELF OR HIMSELF AND IN RESPECT OF
ITS OR HIS PROPERTY AND ASSETS, GENERALLY AND UNCONDITIONALLY THE JURISDICTION
OF THE AFORESAID COURTS.
* * *
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first written above.
THE PURCHASER:
PALESTRA ACQUISITION CORP.
By: /s/ Josh Harris
-------------------------------
Name: Josh Harris
Title: Vice President
THE COMPANY:
CHEMICAL LEAMAN CORPORATION
By: /s/ David M. Boucher
-------------------------------
Name: David M. Boucher
Title: Sr. V.P. & Secretary
<PAGE>
DAVID R. HAMILTON
CATHARINE C. HAMILTON
CATHARINE ELIZABETH HAMILTON
TENNESSEE ALEXIS HAMILTON
HAMILTON FAMILY TRUST
SAMUEL C. HAMILTON
GEORGE MCFADDEN
JOHN H. MCFADDEN
TRUSTEES U/W/O ALEXANDER B.
MCFADDEN, DECEASED, F/B/O JOHN,
MARY AND GEORGE MCFADDEN
TRUSTEES U/W/O GEORGE MCFADDEN,
DECEASED, F/B/O GEORGE MCFADDEN
TRUSTEES U/W/O GEORGE MCFADDEN
DECEASED, F/B/O JOHN H. MCFADDEN
TRUSTEES U/W/O GEORGE MCFADDEN,
DECEASED, F/B/O MARY JOSEPHINE MCFADDEN
LESLEY TAYLOR
TRUSTEES F/B/O ELIZABETH CUTTING
MCFADDEN
EUGENE C. PARKERSON
DAVID M. BOUCHER
PHILIP J. RINGO
REUBEN M. ROSENTHAL
JACK H. ELROD
J. STEPHEN HAMILTON
LEON F. PALMER
DENNIS R. COPELAND
F.C. COLON-OSORIO
G. MICHAEL CRONK
KAREN SZABO LLOYD
FRANK LLOYD
By: /s/ David R. Hamilton
-------------------------
David R. Hamilton
Attorney-in-Fact
<PAGE>
DAVID R. HAMILTON
CATHARINE C. HAMILTON
CATHARINE ELIZABETH HAMILTON
TENNESSEE ALEXIS HAMILTON
HAMILTON FAMILY TRUST
SAMUEL C. HAMILTON
GEORGE MCFADDEN
JOHN H. MCFADDEN
TRUSTEES U/W/O ALEXANDER B.
MCFADDEN, DECEASED, F/B/O JOHN,
MARY AND GEORGE MCFADDEN
U/W/O GEORGE MCFADDEN,
DECEASED, F/B/O GEORGE MCFADDEN
TRUSTEES U/W/O GEORGE MCFADDEN
DECEASED, F/B/O JOHN H. MCFADDEN
TRUSTEES U/W/O GEORGE MCFADDEN,
DECEASED, F/B/O MARY JOSEPHINE
MCFADDEN
LESLEY TAYLOR
TRUSTEES F/B/O ELIZABETH CUTTING
MCFADDEN
EUGENE C. PARKERSON
DAVID M. BOUCHER
PHILIP J. RINGO
REUBEN M. ROSENTHAL
JACK H. ELROD
J. STEPHEN HAMILTON
LEON F. PALMER
DENNIS R. COPELAND
F.C. COLON-OSORIO
G. MICHAEL CRONK
KAREN SZABO LLOYD
FRANK LLOYD
By: /s/ George McFadden
---------------------------
George McFadden
Attorney-in-Fact
<PAGE>
EXHIBIT A
---------
<PAGE>
LETTER OF TRANSMITTAL
for the surrender of certificate(s) formerly representing shares of the Common
Stock
of
CHEMICAL LEAMAN CORPORATION
in connection with its merger with
PALESTRA ACQUISITION CORP.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF CHEMICAL LEAMAN CORPORATION SHARES SURRENDERED
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Name and Address of Registered Holders
If there is any error in the name or
address shown below, please make the
necessary corrections. Certificate(s) Surrendered
- -------------------------------------------------------------------------------------------------------------------------------
Certificate No. of Chemicals No. of
Number(s) Leaman Shares Chemical
Represented by Leaman Shares
Certificate(s) Surrendered
-------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
<PAGE>
Ladies and Gentlemen:
I, as the registered holder of the above described Chemical Leaman
Shares of Chemical Leaman Corporation ("Chemical Leaman"), hereby tender to the
surviving corporation (the "Surviving Corporation") of the merger of Palestra
Acquisition Corp. ("Palestra") with and into Chemical Leaman, such Chemical
Leaman Shares pursuant to the Agreement and Plan of Merger dated as of June ___,
1998 (the "Merger Agreement"), among Palestra, Chemical Leaman and the other
parties thereto.
I represent and warrant to the Surviving Corporation that I am the
true and lawful owner of the Chemical Leaman Shares, and have full capacity,
power and authority to exchange the Chemical Leaman Shares, free and clear of
all liens, restrictions and encumbrances of any kind whatsoever, and the
Chemical Leaman Shares will not be subject to any adverse claim. I hereby
surrender to the Surviving Corporation all right, title and interest in and to
the Chemical Leaman Shares and irrevocably constitute and appoint the Surviving
Corporation as my lawful attorney-in fact with full power of substitution, to
deliver such Chemical Leaman Shares, together with all accompanying evidence of
authority, to the Surviving Corporation and to effect the exchange and
cancellation of such Chemical Leaman Shares. I understand that the Surviving
Corporation may require additional documentation, and I agree, upon request, to
execute and deliver any additional documents or instruments deemed by the
Surviving Corporation necessary to complete the exchange of the Chemical Leaman
Shares.
The authority conferred in this Letter of Transmittal shall not be
affected by, and shall survive, my death or incapacity, and any obligation I
have hereunder shall be binding upon my successors, assigns, heirs, executors,
administrators, trustees in bankruptcy and personal and legal representatives. I
acknowledge that the tender of my Chemical Leaman Shares is irrevocable.
2
<PAGE>
- --------------------------------------------------------------------------------
PLEASE SIGN AND DATE BELOW AS INDICATED
THEN PLEASE COMPLETE SUBSTITUTE FOR W-9
Name on Stock Certificate:
______________________________________________________________________
Signatures:___________________________________________________________
Signatures:___________________________________________________________
Date:____________, 1996
Name(s):______________________________________________________________
(Please Print)
Capacity:_____________________________________________________________
(Full Title)
Address:______________________________________________________________
Address:______________________________________________________________
(Include Zip Code)
Area Code and Telephone Number:_______________________________________
Tax Identification or Social Security Number:_________________________
- --------------------------------------------------------------------------------
Must be signed by registered holder(s) exactly as name(s) appear(s) above or by
person(s) authorized to become registered holder(s) by certificate(s) and
documents transmitted. If signing is by an officer of a corporation, or by an
attorney, executor, administrator, trustee, guardian, agent or other person
acting in a fiduciary or representative capacity, please set forth full title.
See Instruction 1.
3
<PAGE>
EXHIBIT E
---------
<PAGE>
BANKERS TRUST COMPANY CREDIT SUISSE FIRST BOSTON
One Bankers Trust Plaza 11 Madison Avenue
New York, New York 10006 New York, New York 10010
July 20, 1998
MTL, Inc.
3108 Central Drive
Plant City, FL 33567
Attn: Dick Brandewie
Re: CLC Acquisition
Financing/Refinancing
Bank Commitment Letter
- ----------------------------------
Ladies and Gentlemen:
Reference is made to the Credit Agreement (as in effect on the date hereof,
the "Credit Agreement"), dated as of June 9, 1998, among MTL, Inc. ("MTL"), Levy
Transport, Ltd./Levy Transport Ltee. (the "Canadian Borrower"), various lending
institutions, Salomon Brothers Holding Company, as Documentation Agent ("SBHC"),
Bankers Trust Company, as Syndication Agent ("BTCo"), and Credit Suisse First
Boston, as Administrative Agent ("CSFB" and, together with BTCo, each, an
"Arranger" and collectively, the "Arrangers"). Capitalized terms used herein and
not otherwise defined herein shall have the respective meanings provided such
terms in the Credit Agreement.
You have advised us that MTL intends (i) to acquire all the capital stock
of Chemical Leaman Corporation ("CLC") by way of a one-step merger of a newly-
formed wholly-owned subsidiary of MTL ("MTL Newco") with and into CLC (the
"Merger"), with CLC as the surviving corporation of such merger and (ii) to
effect a refinancing of (x) certain existing indebtedness of CLC and its
subsidiaries consisting of "indebtedness" deemed to exist pursuant to CLC's
receivables securitization program and CLC's existing senior revolving credit
facility and (y) CLC's existing 10-3/8% Senior Notes in an aggregate principal
amount equal to $100.0 million (the "CLC Senior Notes") pursuant to the CLC
Tender Offer/Consent Solicitation referred to below (with the refinancing
transactions referred to in clauses (x) and (y) being herein collectively called
the "Refinancing"). You have further advised us that the total consideration to
be paid in connection with the Merger and the Refinancing shall equal
approximately $267.0 million (including assumed debt and preferred stock of CLC
(the "CLC Preferred Stock"), fees, the tender premium paid in connection with
the Refinancing, expenses, after-tax severance payments and other consolidation-
related costs incurred in connection therewith and the financing thereof).
<PAGE>
We understand that prior to the date of the consummation of the Merger (the
"Incremental Term Loan Borrowing Date"), CLC shall have commenced a tender
offer/consent solicitation (the "CLC Tender Offer/Consent Solicitation") with
respect to the CLC Senior Notes, pursuant to which (i) CLC shall offer to
purchase all of the outstanding CLC Senior Notes at a price acceptable to BTCo
and CSFB and (ii) consents shall be solicited to an amendment (the "CLC Senior
Notes Indenture Amendment") to the indenture relating to the CLC Senior Notes
(the "CLC Senior Notes Indenture"), on terms and conditions satisfactory to BTCo
and CSFB, which amendment would, inter alia, substantially eliminate the
----- ----
covenants currently contained in the CLC Senior Notes Indenture in a manner
satisfactory to the Arrangers (including, without limitation, any obligation of
CLC to make an offer to purchase outstanding CLC Senior Notes from holders of
CLC Senior Notes consenting to the CLC Senior Notes Indenture Amendment as a
result of the change of control of CLC occurring pursuant to the Merger). We
further understand that it shall be a condition to the Incremental Term Loan
Borrowing Date that the holders of at least a majority of the outstanding CLC
Senior Notes shall have tendered such CLC Senior Notes in connection with the
CLC Tender Offer/Consent Solicitation and the tender offer as described above
shall have been consummated and the CLC Senior Notes Indenture Amendment shall
have been entered into, in each case on or prior to such date.
We understand that the sources of funds needed to effect the Merger and the
Refinancing, to obtain the CLC Senior Notes Indenture Amendment and to pay all
fees and expenses incurred in connection therewith (including consent fees and
the tender premium payable pursuant to the CLC Tender Offer/Consent
Solicitation) shall be provided solely through (i) at least $27.0 million from
the issuance by MTL of equity to Apollo Management, L.P. (together, with its
affiliates, "Apollo") and certain other investors acceptable to the Arrangers
(which, in any event, may include existing shareholders of CLC) (such investors,
together with Apollo, the "Equity Investors") in a form, and on terms,
satisfactory to BTCo and CSFB in their sole discretion (the "CLC Equity
Financing"), with any issuance of preferred stock in connection with the CLC
Equity Financing to be in the form of pay-in-kind preferred stock (the "PIK
Preferred Stock") and (ii) the incurrence by MTL of the Incremental Senior Bank
Financing referred to below (the financing transactions described in preceding
clauses (i) and (ii) are herein collectively referred to as the "Financing
Transactions", with the Merger, the Refinancing, the CLC Tender Offer/Consent
Solicitation, the CLC Senior Notes Indenture Amendment, the Amendment and
Restatement referred to below and the Financing Transactions being herein
collectively called the "Transaction").
We further understand that the incremental senior secured bank financing
utilized to finance, in part, the Merger and the Refinancing and to pay the fees
and expenses incurred in connection with the Transaction shall be in the form of
(i) an add-on facility to the existing term loan tranche under the Credit
Agreement providing for an increase of $50.0 million in the Total Term Loan
Commitment as currently in effect under the Credit Agreement (the "Incremental A
Term Loan Facility"), to be made available to MTL pursuant to a single drawing
to be made on the date of the consummation of the Merger (the "Incremental Term
Loan Borrowing Date"), (ii) an additional term loan facility (the "B Term Loan
Facility") in the amount of $95.0 million, to be made available to MTL pursuant
to a single drawing to be made on the Incremental Term Loan Borrowing Date and
(iii) an additional term loan facility (the "C Term Loan Facility" and, together
with the Incremental A Term Loan Facility and the B Term Loan Facility, the
-2-
<PAGE>
"Incremental Senior Bank Financing", with the Incremental Senior Bank Financing
and extensions of credit pursuant to the Credit Agreement (after giving effect
to the Amendment and Restatement) being herein collectively called the "Senior
Bank Financing") in the amount of $90.0 million, to be made available to MTL
pursuant to a single drawing to be made on the Incremental Term Loan Borrowing
Date. The Incremental Senior Bank Financing will be made available pursuant to
an amendment and restatement of the Credit Agreement (the "Amendment and
Restatement") providing for, inter alia, (i) the continuation of the credit
----- ----
facilities currently provided therein, (ii) the Incremental A Term Loan
Facility, (iii) the B Term Loan Facility and (iv) the C Term Loan Facility,
which Amendment and Restatement and Incremental Senior Bank Financing would be
on the terms and conditions specified in the preliminary summary of certain
terms and conditions attached hereto as Exhibit A (the "Summary of Terms").
Each of BTCo and CSFB is pleased to advise you (i) of its commitment, on a
several basis and subject to the terms and conditions contained herein and in
the attached Summary of Terms, to provide (x) 50.0%, in the case of BTCo and (y)
50.0%, in the case of CSFB, of the Incremental Senior Bank Financing and (ii)
that each of the Arrangers shall vote (with respect to its Commitments and
outstanding Loans) in favor of the Amendment and Restatement. Based on our
understanding of the structure of the proposed Transaction as set forth herein
and in the Summary of Terms, we are pleased to confirm that we are highly
confident that the consent of the Required Banks to the Amendment and
Restatement will be obtained.
In connection with the Senior Bank Financing, CSFB shall act as the sole
administrative agent, BTCo shall act as sole syndication agent and SBHC shall
act as sole documentation agent, in each case on terms satisfactory to BTCo,
CSFB, SBHC, MTL and you. The Arrangers shall manage all aspects of the
syndication of the Incremental Senior Bank Financing and, in connection
therewith, reserve the right, prior to or after execution of the Amendment and
Restatement, to syndicate all or a part of the Incremental Senior Bank Financing
to one or more financial institutions (together with the Arrangers and the
Banks, the "Lenders") approved by MTL (which approval shall not be unreasonably
withheld or delayed) that will become parties to the Amendment and Restatement
pursuant to such syndication. You agree actively to assist the Arrangers in
achieving a syndication that is satisfactory to the Arrangers, MTL and you.
Such syndication will be accomplished by a variety of means, including direct
contact during the syndication between senior management and advisors of MTL and
CLC (including, without limitation, Apollo) and the proposed Lenders. To assist
the Arrangers in their syndication efforts, you hereby agree both before and
after the Incremental Term Loan Borrowing Date (i) to provide and cause your
advisors to provide the Arrangers and the other Lenders upon request with all
reasonable information deemed necessary by us to complete syndication, including
but not limited to, information and evaluation prepared by you, MTL and CLC and
your and their respective advisors and (ii) to assist the Arrangers upon request
in the preparation of an Information Memorandum to be used in connection with
the syndication of the Incremental Senior Bank Financing, including making
available officers of MTL, MTL Newco, CLC and their respective subsidiaries from
time to time to attend and make presentations regarding the business and
prospects of MTL, MTL Newco, CLC and their respective subsidiaries, as
appropriate, at a meeting or meetings of Lenders or prospective Lenders.
-3-
<PAGE>
Each of BTCo's and CSFB's commitment to provide a portion of the
Incremental Senior Bank Financing is expressly subject to (a) there not having
occurred since December 31, 1997 any material adverse change in the business,
properties, assets, operations, liabilities, condition (financial or otherwise)
or prospects of MTL and its subsidiaries taken as a whole, both before and after
giving effect to the Transaction, (b) there not having occurred since April 5,
1998 any material adverse change in the business, properties, assets,
operations, liabilities, condition (financial or otherwise) or prospects of CLC
and its subsidiaries taken as a whole, both before and after giving effect to
the Transaction and (c) the absence of any material adverse change after the
date hereof in the market for syndicated facilities similar in nature to the
Incremental Senior Bank Financing and the absence of any material disruption of
or a material adverse change in financial, banking or capital markets generally,
in each case as determined by BTCo and CSFB in their reasonable discretion.
To induce the Arrangers to issue this letter, you hereby agree that all
reasonable fees and expenses (including the reasonable fees and expenses of
counsel and consultants) of the Arrangers and their respective affiliates
arising in connection with the preparation, execution and delivery of this
letter, the Amendment and Restatement and the Incremental Senior Bank Financing
(and our due diligence and syndication efforts in connection therewith) and in
connection with the transactions described herein (the "Transaction Expenses")
shall be for your account in the event that the Merger and/or the Refinancing
are consummated; provided, however, that in the event you or any of your
-------- -------
affiliates receives any termination fee or expense reimbursement payable as a
result of the termination of the definitive agreements relating to the Merger,
you shall reimburse from the aggregate amount of such termination fee and
expense reimbursement so received the Arrangers' and their respective
affiliates' Transaction Expenses on a pro rata basis with all others (including
you and your affiliates) claiming expenses in connection with the transactions
described herein. You further agree, whether or not the Merger or the
Refinancing is consummated, the Incremental Senior Bank Financing is made
available or the Amendment and Restatement is executed, to indemnify and hold
harmless each Arranger, its affiliates and each director, officer, employee,
agent and representative thereof (each, an "indemnified person") from and
against any and all actions, suits, proceedings (including any investigations or
inquiries), claims, losses, damages, liabilities or expenses of any kind or
nature whatsoever (other than the Transaction Expenses, which shall be payable
as provided in the first sentence of this paragraph (and the proviso thereto))
which may be incurred by or asserted against or involve such Arranger, such
affiliate or any such indemnified person as a result of or arising out of or in
any way related to or resulting from the Transaction (or any element thereof),
this letter or the extension of the Incremental Senior Bank Financing
contemplated by this letter, or in any way arising from any use or intended use
of this letter or the proceeds of any of the Incremental Senior Bank Financing
contemplated by this letter and, upon demand, to pay and reimburse each
Arranger, each such affiliate and each indemnified person for any reasonable
legal or other out-of-pocket expenses incurred in connection with investigating,
defending or preparing to defend any such action, suit, proceeding (including
any inquiry or investigation) or claim (whether or not such Arranger, such
affiliate or any such indemnified person is a party to any action, suit or
proceeding out of which any such expenses arise and whether or not any such
action, suit or proceeding is between you and a Arranger or an indemnified
person or between a Arranger or an indemnified person and a third party or
otherwise); provided, however, that you shall not have to indemnify any
-------- -------
Arranger,
-4-
<PAGE>
any of its affiliates or any indemnified person against any loss, claim, damage,
expense or liability which resulted primarily from the gross negligence or
willful misconduct of such Arranger, such affiliate or such indemnified person.
This letter is issued for your benefit only and no other person or entity may
rely thereon. Neither any Arranger, any of its affiliates nor any other Lender
shall be responsible or liable to you or any other person for any consequential
damages which may be alleged as a result of this letter or any failure to
provide the Incremental Senior Bank Financing.
Each Arranger reserves the right to employ the services of its affiliates
(including, without limitation, in the case of BTCo, BT Alex. Brown Incorporated
("BTAB"), and, in the case of CSFB, Credit Suisse First Boston Corporation
("CSFBC")) in providing the services contemplated by this letter and to
allocate, in whole or in part, to such affiliates certain fees payable to the
Arrangers in such manner as the Arrangers and such affiliates may agree in their
sole discretion. You acknowledge that the Arrangers may share with any of their
respective affiliates (including BTAB and CSFBC), and such affiliates may share
with the Arrangers, any information relating to MTL, MTL Newco, CLC and their
respective affiliates and subsidiaries (including, without limitation, any non-
public customer information regarding the creditworthiness of such entities),
the Transaction, subject to the Arrangers' customary treatment of customer
confidential information. You also acknowledge that the Arrangers and/or any of
their respective affiliates may be providing other services and/or other
financing to you in connection with the Transaction and that this letter relates
only to the Senior Bank Financing, with all such other services and financing to
be agreed upon pursuant to other documentation.
You are not authorized to show or circulate this letter or any portion
thereof to any other person or entity (other than Apollo, CLC and your and their
legal and financial advisors in connection with your and their evaluation
hereof) until such time as you have accepted this letter as provided in the
penultimate paragraph hereof. In any event, neither you nor any of your
affiliates is authorized to disclose the terms of the related fee letter (the
"Fee Letter") without our prior written consent, unless (and then only to the
extent) required by law. If this letter is not accepted by you as provided in
the penultimate paragraph hereof, you are to immediately return this letter (and
any copies hereof) to the undersigned.
Except as otherwise expressly set forth herein, the provisions of the three
preceding paragraphs shall survive any termination of this letter.
Each of the Arrangers shall have the right to review and approve all public
announcements and filings relating to the Transaction which refer to BTCo, CSFB
or the other Lenders before they are made (such approval not to be unreasonably
withheld or delayed).
The willingness of each of BTCo and CSFB to provide their respective
commitments as set forth above will terminate on October 31, 1998, unless
definitive documentation evidencing the Incremental Senior Bank Financing,
satisfactory in form and substance to BTCo and CSFB, shall have been entered
into prior to such date and the Incremental Term Loan Borrowing Date shall have
occurred.
If you are in agreement with the foregoing, please sign and return to BTCo
and CSFB the enclosed copy of this letter, together with an executed copy of the
Fee Letter. This offer shall
-5-
<PAGE>
terminate at 5:00 P.M., New York time, on July 22, 1998 unless a signed copy of
this letter, together with a signed copy of the Fee Letter, has been delivered
to BTCo and CSFB (including by way of facsimile transmission) by such time.
-6-
<PAGE>
<PAGE>
This letter may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which counterparts
shall be an original, but all of which, when taken together, shall constitute
one agreement. THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES
GOVERNING CONFLICTS OF LAWS, AND ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY
CLAIM, ACTION, SUIT OR PROCEEDING ARISING OUT OF OR CONTEMPLATED BY THIS LETTER
IS HEREBY WAIVED. YOU HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE
FEDERAL AND NEW YORK STATE COURTS LOCATED IN THE CITY OF NEW YORK IN CONNECTION
WITH ANY DISPUTE RELATED TO THIS LETTER OR ANY MATTERS CONTEMPLATED HEREBY. This
letter and the Fee Letter represent the entire understanding of the parties with
respect to the matters addressed herein and may only be amended in writing.
Very truly yours,
BANKERS TRUST COMPANY
By: /s/ Calli S. Hayes
-----------------------------
Name: CALLI S. HAYES
CREDIT SUISSE FIRST BOSTON
By:_____________________________
Title:
By:_____________________________
Name:
Title:
Agreed to and Accepted this
_________ day of _________, 1998
MTL, INC.
By:_____________________
Title:
-7-
<PAGE>
This letter may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which counterparts
shall be an original, but all of which, when taken together, shall constitute
one agreement. THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES
GOVERNING CONFLICTS OF LAWS, AND ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY
CLAIM, ACTION, SUIT OR PROCEEDING ARISING OUT OF OR CONTEMPLATED BY THIS LETTER
IS HEREBY WAIVED. YOU HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE
FEDERAL AND NEW YORK STATE COURTS LOCATED IN THE CITY OF NEW YORK IN CONNECTION
WITH ANY DISPUTE RELATED TO THIS LETTER OR ANY MATTERS CONTEMPLATED HEREBY. This
letter and the Fee Letter represent the entire understanding of the parties with
respect to the matters addressed herein and may only be amended in writing.
Very truly yours,
BANKERS TRUST COMPANY
By:_______________________________
Name:
CREDIT SUISSE FIRST BOSTON
By: [SIGNATURE ILLEGIBLE]
-------------------------------
Title: Director
By: /s/ Christopher G. Cunningham
-------------------------------
Name: CHRISTOPHER G. CUNNINGHAM
Title: Director
Agreed to and Accepted this
_________ day of _________, 1998
MTL, INC.
By:_____________________
Title:
-7-
<PAGE>
This letter may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which counterparts
shall be an original, but all of which, when taken together, shall constitute
one agreement. THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES
GOVERNING CONFLICTS OF LAWS, AND ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY
CLAIM, ACTION, SUIT OR PROCEEDING ARISING OUT OF OR CONTEMPLATED BY THIS LETTER
IS HEREBY WAIVED. YOU HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE
FEDERAL AND NEW YORK STATE COURTS LOCATED IN THE CITY OF NEW YORK IN CONNECTION
WITH ANY DISPUTE RELATED TO THIS LETTER OR ANY MATTERS CONTEMPLATED HEREBY. This
letter and the Fee Letter represent the entire understanding of the parties with
respect to the matters addressed herein and may only be amended in writing.
Very truly yours,
BANKERS TRUST COMPANY
By:__________________________________
Name:
CREDIT SUISSE FIRST BOSTON
By:__________________________________
Title:
By:__________________________________
Name:
Title:
Agreed to and Accepted this
20/th/ day of July, 1998
MTL, INC.
By: /s/ Richard J. Brandewie
--------------------------------
Title: SVP CPO
-7-
<PAGE>
EXHIBIT A
---------
SUMMARY OF CERTAIN TERMS
AND CONDITIONS/1/
----------------------
1. Description of the Incremental Senior Bank Financing
----------------------------------------------------
A. Incremental Incremental term loan facility in an aggregate principal
A Term Loan amount of $50.0 million (the "Incremental A Term Loan
Facility: Facility").
Maturity: The Incremental A Term Loan Facility will mature on the
Final Maturity Date (as defined in the Credit
Agreement).
Amortizations: Annual amortization of the loans under the Incremental
A Term Loan Facility (the "Incremental A Term Loans",
with the Term Loans outstanding under the Credit
Agreement being herein called the "Existing A Term
Loans", and the Incremental A Term Loans and the
Existing A Term Loans being herein collectively called
the "A Term Loans") shall be required on a basis
consistent with the amortization currently provided for
the Existing A Term Loans under the Credit Agreement.
Use of Proceeds: Incremental A Term Loans shall be utilized by the U.S.
Borrower to finance the Merger and the Refinancing and
to pay fees and expenses incurred in connection with the
Transaction.
Availability: Incremental A Term Loans may only be incurred by the
U.S. Borrower on the date of the consummation of the
Merger (the "Incremental Term Loan Borrowing Date"). No
amount of Incremental A Term Loans once repaid may be
reborrowed.
B. B Term Loan Term loan facility in an aggregate principal amount of
Facility: $95.0 million (the "B Term Loan Facility").
Maturity: The B Term Loan Facility will mature on the date (the "B
Term Loan Facility Maturity Date") occurring seven years
after the initial Borrowing Date (as defined in the
Credit Agreement).
Amortizations: Annual amortization (payable in four equal quarterly
installments or, in the case payments pursuant to clause
(y) or (z) below, two quarterly installments) of the
loans under the B Term Loan Facility (the "B Term
Loans") shall be required (x) for each annual period
prior to the sixth anniversary of the Initial Borrowing
Date, in an amount equal to 1% of the initial aggregate
principal amount of the B Term Loan Facility, (y) for
the one-half year period commencing on the sixth
anniversary of the Initial Borrowing Date and ending on
the date occurring six
-----------------------
/1/ All capitalized terms used herein but not defined herein shall have
the meanings provided in the Commitment Letter attached hereto (the
"Commitment Letter").
<PAGE>
and one-half years after the Initial Borrowing Date, in an
amount equal to 1% of the initial aggregate principal amount
of the B Term Loan Facility and (z) for the one-half year
period commencing on the date occurring six and one-half
years after the Initial Borrowing Date and ending on the B
Term Loan Facility Maturity Date, in an amount equal to all
then remaining principal of the B Term Loans.
Use of Proceeds: B Term Loans shall only be utilized by the U.S. Borrower to
finance the Merger and the Refinancing and to pay fees and
expenses incurred in connection with the Transaction.
Availability: B Term Loans may only be incurred by the U.S. Borrower on
the Incremental Term Loan Borrowing Date. No amount of B
Term Loans once repaid may be reborrowed.
C. C Term Loan Term Loan Facility in an aggregate principal amount of $90.0
Facility: million (the "C Term Loan Facility").
Maturity: The C Term Loan Facility will mature on the date (the "C
Term Loan Facility Maturity Date") occurring seven and one-
half years after the Initial Borrowing Date.
Amortizations: Annual amortization (payable in four equal quarterly
installments or, in the case of the C Term Stub Period
referred to below, two quarterly installments) of the loans
under the C Term Loan Facility (the "C Term Loans" and,
together with the Incremental A Term Loans and the B Term
Loans, the "Incremental Term Loans" with the Incremental
Term Loans, the Existing A Term Loans and the Revolving
Loans (as defined in the Credit Agreement) being herein
called the "Loans") shall be required (x) for each annual
period prior to the seventh anniversary of the Initial
Borrowing Date, in an amount equal to 1% of the initial
aggregate principal amount of the C Term Loan Facility and
(y) for the one-half year period commencing on the seventh
anniversary of the Initial Borrowing Date and ending on the
C Term Loan Facility Maturity Date (the "C Term Stub
Period"), in an amount equal to all then remaining principal
of the C Term Loans.
Use of Proceeds: C Term Loans shall only be utilized by the U.S. Borrower to
finance the Merger and the Refinancing and to pay fees and
expenses incurred in connection with the Transaction.
Availability: C Term Loans may only be incurred by the U.S. Borrower on
the Incremental Term Loan Borrowing Date. No amount of C
Term Loans once repaid may be reborrowed.
-2-
<PAGE>
II. Certain Terms Applicable to the Incremental Senior Bank Financing and
---------------------------------------------------------------------
the Senior Bank Financing.
--------------------------
U.S. Borrower: MTL, Inc.
Arrangers: CSFB and BTCo.
Administrative Agent CSFB.
and Collateral Agent:
Syndication Agent: BTCo.
Documentation Agent: SBHC.
Lenders: The Arrangers and a syndicate of lenders (including the
Banks) formed by the Arrangers (collectively, the
"Lenders") and approved by the U.S. Borrower (which
approval shall not be unreasonably withheld or
delayed).
Guaranties: The U.S. Borrower (except with respect to amounts owing
by it under the Senior Bank Financing as a direct
obligor) and each direct and indirect wholly-owned
domestic subsidiary of the U.S. Borrower (including,
without limitation, CLC and each wholly-owned domestic
subsidiary of CLC acquired in connection with the
Merger) shall be required to provide an unconditional
guaranty of all amounts owing under the Senior Bank
Financing (collectively, the "U.S. Guaranties", with
each entity required to provide a Guaranty being herein
called a "U.S. Guarantor"). Without limiting the
foregoing, the Incremental Senior Bank Financing shall
be required to be guaranteed equally and ratably with
the Dollar Loans (as defined in the Credit Agreement)
which are part of the Senior Bank Financing.
The U.S. Guaranties shall contain terms and
conditions reasonably satisfactory to the Arrangers.
Security: The obligations of the U.S. Borrower and the U.S.
Guarantors shall be secured by (x) a first priority
perfected pledge of all capital stock and notes owned
by the U.S. Borrower and its subsidiaries, provided
--------
that no more than 65% of the voting stock of foreign
subsidiaries of the U.S. Borrower and the U.S.
Guarantors shall be required to be pledged to secure
the obligations of the U.S. Borrower under the Senior
Bank Financing unless such pledge may be effected
without giving rise to a "deemed dividend" tax
liability under applicable law or any other material
adverse tax consequence and (y) a first priority
perfected security interest in all other tangible and
intangible assets (including, without limitation,
receivables, contracts, contract rights, securities,
intellectual property, inventory, equipment and real
estate) of the U.S. Borrower and each U.S. Guarantor,
subject to customary exceptions for transactions of
this type. Without limiting the foregoing, the
Incremental Senior Bank Financing shall be
-3-
<PAGE>
required to be secured equally and ratably with the Dollar
Loans which are part of the Senior Bank Financing.
All documentation evidencing the security required pursuant
to the immediately preceding paragraph shall be in form and
substance satisfactory to the Arrangers, and shall
effectively create first priority security interests in the
property purported to be covered thereby.
Interest Rates: At the option of the U.S. Borrower, the Loans (including the
Incremental Term Loans) may be maintained from time to time
as (x) Base Rate Loans which shall bear interest at the
Applicable Margin in excess of the Base Rate in effect from
time to time or (y) Reserve Adjusted Eurodollar Loans which
shall bear interest at the Applicable Margin in excess of
the Eurodollar Rate (adjusted for maximum reserves) as
determined by the Administrative Agent for the respective
interest period, provided that until the earlier to occur of
--------
(x) the 90th day following the Incremental Term Loan
Borrowing Date (or, if later, the last day of the third
interest period described below) and (y) that date upon
which the Arrangers have determined (and notify the U.S.
Borrower) that the primary syndication of the Incremental
Senior Bank Financing (and the resultant addition of
institutions as Lenders) has been completed, Incremental
Term Loans maintained as Reserve Adjusted Eurodollar Loans
may only be incurred with three successive one-month
interest periods (and all Reserve Adjusted Eurodollar Loans
at any time outstanding during a period described above in
this proviso shall at all times have the same interest
period), with the first such interest period beginning
within five Business Days of the Incremental Term Loan
Borrowing Date, the second such interest period beginning on
the last day of the first interest period and the third
interest period beginning on the last day of the second
interest period.
"Base Rate" shall mean the higher of (x) 1/2 of 1% in excess
of the Federal Funds Rate and (y) the rate that the
Administrative Agent announces from time to time as its
prime lending rate, as in effect from time to time.
"Applicable Margin" shall mean initially the percentage per
annum equal to (i) in the case of A Term Loans and Revolving
Loans maintained as (x) Reserve Adjusted Eurodollar Loans,
2.000% and (y) Base Rate Loans, 1.000%, (ii) in the case of
B Term Loans maintained as (x) Reserve Adjusted Eurodollar
Loans, 2.250% and (y) Base Rate Loans, 1.250% and (iii) in
the case of C Term Loans maintained as (x) Reserve Adjusted
Eurodollar Loans, 2.500% and (y) Base Rate Loans, 1.500%;
provided that (i) the Applicable Margin in respect of the
--------
Loans will be subject to quarterly adjustments to
percentages to be determined (based upon the achievement of
certain financial ratios), with the first test date for any
downward adjustment to be in respect of the financial
statements delivered for the first fiscal quarter ending
after the six month anniversary of the Incremental Term Loan
Borrowing Date (based on the financial performance for the
four quarter period most recently ended), (ii) the
Applicable Margins set forth above (without giving effect to
any downward adjustment pursuant to clause (i) of this
proviso) shall apply at any time a
-4-
<PAGE>
default or event of default exists under the Senior Bank
Financing and (iii) in no event will the Applicable Margin
applicable to Revolving Loans and Existing A Term Loans
under the Amendment and Restatement be less than the
Applicable Margin applicable to such loans under the Credit
Agreement (prior to giving effect to the Amendment and
Restatement).
Interest periods of 1, 2, 3, 6 or, to the extent available
to each Lender with loans and/or commitments under the
Senior Bank Financing, 9 or 12 months, shall be available in
the case of Reserve Adjusted Eurodollar Loans.
The Senior Bank Financing shall include customary protective
provisions for such matters as defaulting banks, capital
adequacy, increased costs, actual reserves, funding losses,
illegality and withholding taxes.
Interest in respect of Base Rate Loans shall be payable
quarterly in arrears on the last business day of each fiscal
quarter. Interest in respect of Reserve Adjusted Eurodollar
Loans shall be payable in arrears at the end of the
applicable interest period and every three months in the
case of interest periods in excess of three months. Interest
will also be payable at the time of repayment of any Loans
and at maturity. All calculations of interest on Loans and
commitment fees shall be based on a 360-day year and actual
days elapse.
Default Interest: Overdue principal, interest and other amounts shall bear
interest at a rate per annum equal to the greater of (i) the
rate which is 2% in excess of the rate otherwise applicable
to Base Rate Loans from time to time and (ii) the rate
which is 2% in excess of the rate then borne by such
borrowings. Such interest shall be payable on demand.
Voluntary Voluntary prepayments of Incremental Term Loans shall be
Prepayments/ permitted on substantially the same basis as currently
Commitment provided for Existing A Term Loans in the Credit Agreement.
Reductions: In addition, all voluntary prepayments of (x) A Term Loans,
B Term Loans and C Term Loans shall be applied pro rata to
--- ----
reduce the then remaining scheduled installments of the
respective facilities and (y) A Term Loans, B Term Loans and
C Term Loans shall be allocated among such facilities on a
pro rata basis.
--- ----
Mandatory Mandatory repayments of Incremental Term Loans shall be
Repayments/ required on substantially the same basis as currently
Commitment provided for Existing A Term Loans in the Credit Agreement,
Reductions: with appropriate modifications thereto as shall be agreed.
All mandatory repayments of (x) A Term Loans, B Term Loans
and C Term Loans will be applied pro rata to reduce future
--- ----
scheduled amortization payments in respect of the respective
facilities and (y) A Term Loans, B Term Loans and C Term
Loans shall be applied on a pro rata basis among such
--- ----
facilities. In addition, (i) the Total Revolving Loan
Commitment under the Credit Agreement shall be required to
be permanently reduced to $75.0 million on the Incremental
Term Loan Borrowing Date and (ii) mandatory reductions to
the commitments under the C Term Loan Facility shall be
required on the Incremental Term Loan Borrowing Date in an
amount equal to the aggregate
-5-
<PAGE>
principal amount of the outstanding CLC Senior Notes after
giving effect to the Refinancing.
Commitment The commitments under the Commitment Letter shall terminate
Termination: on October 31, 1998 unless definitive Credit Documents (as
defined below) have been executed and delivered and the
Incremental Term Loan Borrowing Date has occurred prior to
such date.
Additional The Arrangers and the other Lenders shall receive such fees
Fees: as have been separately agreed upon.
Documentation: The Lenders' commitments will be subject to the negotiation,
execution and delivery of the Amendment and Restatement (and
related security documentation, guaranties, etc.)
(collectively, the "Credit Documents") reasonably consistent
with the terms of the Commitment Letter and this Summary of
Terms and otherwise in form and substance satisfactory to
the Arrangers, in each case prepared by White & Case,
counsel to the Arrangers. It is understood and agreed that
all such documentation shall be in substantially the same
form as, and (except as described herein) shall contain
substantially the same terms and provisions (including,
without limitation, representations and warranties,
covenants and events of default) as are contained in the
Credit Agreement and the Credit Documents (as defined in the
Credit Agreement), with such additions or modifications as
are described in this Term Sheet or as BTCo or CSFB
determines are necessary or desirable for transactions of
this type.
Conditions On substantially the same basis as contained in the Credit
Precedent: Agreement, with such modifications thereto as are typical
for this type of facility and any other conditions
appropriate in the context of the Transaction. Without
limiting the foregoing, the following conditions shall apply
to the effectiveness of the Amendment and Restatement, the
occurrence of the Incremental Term Loan Borrowing Date and
the borrowings under the Incremental Senior Bank Financing
to occur on such date:
(i) The structure and all terms of, and the documentation
for, the Transaction shall be reasonably satisfactory
to the Arrangers and the Required Lenders (including,
without limitation, the maturity, limitation on cash
dividends payable, dividend rate and redemption
provisions of any PIK Preferred Stock). The Agreement
and Plan of Merger (the "Merger Agreement"), dated as
of June 23, 1998, between CLC, Palestra Acquisition
Corp. and certain shareholders of CLC, shall be in the
form furnished to the Arrangers prior to the date of
the Commitment Letter, with such amendments,
modifications and waivers thereto (and the schedules
thereto) as shall be consented to by each Arranger.
All conditions in the documentation governing the
Transaction (including the accuracy of all
representations and warranties in all material
respects) shall have been satisfied to the reasonable
satisfaction of the Arrangers and not waived,
-6-
<PAGE>
except with the consent of each Arranger. The
Transaction shall have been consummated in accordance
with the documentation therefor and all applicable law.
After giving effect to the Transaction, MTL and its
subsidiaries shall have no outstanding indebtedness or
preferred stock other than pursuant to the Financing
Transactions, the Senior Subordinated Notes, the CLC
Senior Notes (to the extent not tendered pursuant to
the CLC Tender Offer/Consent Solicitation), the CLC
Preferred Stock with an aggregate stated amount not to
exceed $4.5 million and certain other indebtedness of
MTL, CLC and their respective subsidiaries acceptable
to the Arrangers existing on the Incremental Term Loan
Borrowing Date in an aggregate outstanding amount not
to exceed an amount to be mutually agreed upon.
(ii) CLC shall have commenced the CLC Tender Offer/Consent
Solicitation and the CLC Senior Notes Indenture
Amendment shall have been entered into on or prior to
the Incremental Term Loan Borrowing Date. The CLC
Tender Offer/Consent Solicitation and the CLC Senior
Notes Indenture Amendment (and all terms and conditions
thereof) shall be in form and substance satisfactory to
BTCo and CSFB and the period for tendering CLC Senior
Notes pursuant to the CLC Tender Offer/Consent
Solicitation shall have terminated. A majority of the
holders of outstanding CLC Senior Notes shall have
tendered such CLC Senior Notes pursuant to the CLC
Tender Offer/Consent Solicitation and the tender offer
pursuant thereto shall have been consummated on or
prior to the Incremental Term Loan Borrowing Date.
(iii) MTL shall have used the aggregate amount received from
the CLC Equity Financing (x) to make payments owing in
connection with the Merger and the Refinancing and (y)
to pay fees in connection with the Financing
Transactions, in each case before utilizing any
proceeds of Loans for any such purpose.
(iv) Since December 31, 1997, there shall have been no
material adverse change in the business, property,
assets, operations, liabilities, condition (financial
or otherwise) or prospects of MTL and its subsidiaries
taken as a whole, both before and after giving effect
to the Transaction, and since April 5, 1998, there
shall have been no material adverse change in the
business, property, assets, operations, liabilities,
condition (financial or otherwise) or prospects of CLC
and its subsidiaries taken as a whole, both before and
after giving effect to the Transaction.
(v) All Incremental Term Loans and other financing to the
U.S. Borrower and the Canadian Borrower shall be in
full compliance with all requirements of Regulations G,
T, U and X of the Board of Governors of the Federal
Reserve System.
-7-
<PAGE>
(vi) The Lenders shall have received such opinions and other
appropriate factual information and expert advice as
follows: (i) legal opinions from counsel, in form and
substance and covering matters, acceptable to the
Arrangers and the Required Lenders and (ii) a solvency
certificate from the chief financial officer of MTL with
respect to MTL and its subsidiaries (on a consolidated
basis), MTL (on a stand-alone basis), and the Canadian
Borrower (on a stand-alone basis), after giving effect to
the consummation of the Transaction and the financing
therefor, reasonably acceptable to the Arrangers and the
Required Lenders.
(vii) Each of the U.S. Guaranties shall have been executed and
delivered. The security agreements required as described
under the heading "Security" above shall have been
executed and delivered in form, scope and substance
reasonably satisfactory to the Arrangers, and the Lenders
shall have a first priority perfected security interest in
all assets as are required above.
(viii) There shall have been no material adverse change after the
date hereof to the syndication market for credit
facilities similar in nature to the Incremental Senior
Bank Financing contemplated herein and there shall not
have occurred and be continuing a material disruption of
or material adverse change in financial, banking or
capital markets that would have a material adverse effect
on the syndication, in each case as determined by the
Arrangers in their reasonable discretion.
(ix) All costs, fees, expenses (including, without limitation,
legal fees and expenses) and other compensation
contemplated hereby or any letter executed in connection
herewith and payable to the Lenders or the Arrangers (or
their respective affiliates) shall have been paid to the
extent due.
(x) Absence of material adverse change, absence of material
litigation, absence of default or unmatured default under
the Senior Bank Financing, continued accuracy of
representations and warranties in all material respects
and receipt of such documentation as shall be required by
the Arrangers.
(xi) The Total Revolving Loan Commitment under the Credit
Agreement shall have been permanently reduced to $75.0
million and the U.S. Borrower and/or the Canadian Borrower
shall have repaid outstanding Dollar Revolving Loans or
Canadian Dollar Revolving Loans, as the case may be, to
the extent required by the Credit Agreement as a result of
such reduction.
(xii) The Required Banks shall have entered into the Amendment
and Restatement, thereby consenting to the Amendment and
Restatement
-8-
<PAGE>
and the extension of the Incremental Senior Bank
Financing on the terms set forth herein.
Covenants: Substantially similar to those contained in the Credit
Agreement, with such modifications deemed necessary or
desirable by the Arrangers in the context of the
proposed transaction, including, without limitation,
restrictions on (x) dividends payable on PIK Preferred
Stock, (y) voluntary prepayments of the Senior
Subordinated Notes, the CLC Senior Notes (to the extent
any remain outstanding after giving effect to the
Refinancing) and other indebtedness and (z) amendments
of the Merger Agreement, the Senior Subordinated Notes,
the outstanding CLC Senior Notes (if any), any PIK
Preferred Stock and the CLC Preferred Stock.
Representations and Substantially identical to those contained in the
Warranties; Events of Credit Agreement, with such modifications deemed
Default: necessary or desirable by the Arrangers in the
context of the Transaction.
Assignments and Permitted by any Lender on substantially the same basis
Participations: as contained in the Credit Agreement, with appropriate
modifications thereto as are deemed necessary or
desirable by the Arrangers.
Governing Law: The rights and obligations of the parties under the
Credit Documents shall be construed in accordance with
and governed by the law of the State of New York.
Required Lenders: Majority.
-9-
<PAGE>
EXHIBIT 2.1(B)
TERMS OF NEW PREFERRED STOCK
----------------------------
- --------------------------------------------------------------------------------
ISSUER MTL Inc.
- --------------------------------------------------------------------------------
STATED VALUE $5,000,000. The stated value of the outstanding shares
of New Preferred Stock (including Initial PIK Shares
but excluding all other PIK Shares) will be reduced by
$1 for each $1 of Purchaser Losses; provided that the
--------
aggregate amount of such reduction will not exceed the
sum of (i) $2.5 million, plus (ii) the stated value of
all Initial PIK Shares. The stated value will be
further reduced by the stated value of all shares of
New Preferred Stock that reduced the L/C Cap pursuant
to clause (iii) of the definition of Preferred Stock
Adjustment Amount. Any setoff against Purchaser Losses
set forth above will reduce that L/C Cap.
Any setoff or reduction of PIK Shares issued will
result in an immediate, automatic and irrevocable loss
of any PIK shares issued as a dividend on such setoff
or reduced stock. The parties agree that the
Shareholders shall receive no credit for such loss
because the intention is that the Shareholders would
not have been entitled to receive such shares in any
event. To effectuate the foregoing, the parties further
agree that, at any time, the stated value of all PIK
Shares other than Initial PIK Shares will equal (i) the
aggregate stated value of all such PIK Shares
multiplied by (ii) a fraction, the numerator of which
is the aggregate amount following any such reduction of
the stated value of the Initial PIK Shares pursuant to
the preceding paragraph and the denominator of which is
the aggregate stated value of all Initial PIK Shares
(without giving effect to any reductions to the stated
value thereof).
- --------------------------------------------------------------------------------
DIVIDENDS 8% per annum, payable annually in arrears and payable
in kind at Issuer's option for three years from
issuance date. Dividends will be payable on the stated
value on the applicable payment date of all outstanding
shares of New Preferred Stock (including all shares
issued at the Effective Time in connection with the
Merger and all PIK Shares previously issued).
Dividends on shares of common stock will not be paid
unless all accrued dividends on New Preferred Stock
have been paid.
- --------------------------------------------------------------------------------
MATURITY Ninth anniversary from the Closing Date.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
OPTIONAL REDEMPTION Redeemable any time at Issuer's option at the following
prices (plus accrued and unpaid dividends):
<TABLE>
<CAPTION>
Premium to
Date Stated Value
---- ------------
<S> <C>
Closing Date to 42nd Month 100%
Beg. of 43rd month to end of 54th month 105%
Beg. of 55th month to end of 66th month 110%
Beg. of 67th month to end of 78th month 115%
Thereafter 120%
</TABLE>
- --------------------------------------------------------------------------------
CHANGE OF CONTROL Upon sale of Issuer to a non-affiliated third party or
other change of control to a non-affiliated third
party, shares of New Preferred Stock would be
mandatorily redeemable for the redemption value set
forth above.
- --------------------------------------------------------------------------------
IPO Up to 50% of net proceeds of primary offering to be
used to redeem shares of New Preferred Stock for the
redemption value set forth above.
- --------------------------------------------------------------------------------
LIQUIDATION PREFERENCE Upon liquidation, shares of New Preferred Stock would
be senior to common stock and would be entitled to
receive the redemption value set forth above.
- --------------------------------------------------------------------------------
EXCHANGEABILITY Shares of New Preferred Stock can be exchanged at the
Issuer's option for Junior Subordinated Debt of the
Issuer, which shall be subject to the same rights of
offset and adjustment. The Junior Subordinated Debt
will contain substantially similar terms and conditions
as the terms and conditions of the New Preferred Stock,
including terms and conditions relating to dividends,
maturity, optional redemption, change of control, IPO,
liquidation preference and voting rights.
- --------------------------------------------------------------------------------
VOTING RIGHTS Holders of shares of New Preferred Stock will be
entitled to a separate class vote for any amendment to
the Certificate of Designations in respect of the New
Preferred Stock to the extent that such amendment
adversely affects the holders of the New Preferred
Stock.
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 2.4
AMENDMENT NO. 2 dated as of August 25, 1998
(this "Amendment") to the AGREEMENT AND PLAN OF
---------
MERGER dated as of June 23, 1998, by and among
PALESTRA ACQUISITION CORP., a Delaware
corporation ("Purchaser"), CHEMICAL LEAMAN
---------
CORPORATION, a Pennsylvania corporation (the
"Company"), and THE SHAREHOLDERS OF THE COMPANY
--------
NAMED ON SCHEDULE I ATTACHED TO THE ORIGINAL
----------
AGREEMENT (each, a "Shareholder", and
-----------
collectively, the "Shareholders"), as amended by
------------
Amendment No. 1 dated July 27, 1998 (as so
amended, the "Original Agreement" and, as amended
------------------
by this Amendment, this "Agreement"). Capitalized
---------
terms used but not defined herein shall have the
meanings ascribed to them in the Original
Agreement.
WHEREAS, the Board of Directors of the Company has adopted resolutions
approving this Amendment and the transactions to which the Company is a party
contemplated hereby, and has agreed, upon the terms and subject to the
conditions set forth herein, to recommend that the Company's shareholders
approve this Amendment.
NOW, THEREFORE, in consideration of the premises and the mutual
benefits to be derived from this Amendment and the representations, warranties,
covenants, agreements and conditions hereinafter set forth, the parties hereto
hereby agree as follows:
ARTICLE I
AMENDMENTS
1.1 LETTERS OF TRANSMITTAL.
- --- ----------------------
(a) Section 2.2(b) of the Original Agreement is hereby amended by
deleting "(together with a letter of transmittal signed by such holder in
substantially the form of EXHIBIT A attached hereto)" and "and such letter of
---------
transmittal" therefrom.
(b) EXHIBIT D to the Original Agreement is hereby deleted in its
---------
entirety.
1.2 CONDITIONS.
- --- ----------
(a) Purchaser acknowledges and agrees that the conditions set forth in
Section 7.3(p) is hereby deemed waived or satisfied and any further compliance
thereunder is hereby waived.
<PAGE>
(b) Section 7.3(l) of the Original Agreement is hereby deleted in its
entirety and replaced with the following: Subject to Section 6.14, the Company
shall have filed a General Information Notice (GIN) with the NJDEP with respect
to the Real Property located in New Jersey."
1.3 INDEMNIFICATION.
- --- ---------------
(a) Section 8.4(e)(i) of the Original Agreement is hereby amended by
deleting the following therefrom: "rate of interest on the notes sold by the
Surviving Corporation or its Affiliates in connection with the consummation of
the transactions contemplated by this Agreement" and replacing it with "10%."
(b) Section 8.6(b) of the Original Agreement is hereby amended by
deleting the following therefrom: "the sum of (i) $8,250,000 (the "Cap"), plus
--- ----
(ii) an amount equal to the Indemnity Cap Adjustment Amount (as adjusted, the
"Adjusted Cap")" and replacing it with the following "the sum of (i) $10,750,000
- -------------
(the "Cap"), plus (ii) the stated value of all shares of New Preferred Stock
--- ----
issued at the Effective Time in connection with the Merger (the "Closing Date
------------
Shares"), plus (iii) the stated value of all shares of New Preferred Stock
- ------ ----
issued as a payment-in-kind dividend ("PIK Shares") that are issued or are
----------
required to be issued pursuant to the terms of the New Preferred Stock as a
payment-in-kind dividend on Closing Date Shares (the "Initial PIK Shares") (the
------------------
sum of (i), (ii) and (iii), the "Adjusted Cap")."
------------
(c) Section 8.7 of the Original Agreement is hereby amended by (i)
deleting the words "L/C Cap" and replacing it with the words "Cap" each time
"L/C Cap" appears therein and (ii) deleting the last sentence thereof in its
entirety and adding the following:
"With respect to any Purchaser Losses (including, without
limitation, payments referred to in Section 8.4) arising out of
conditions identified on Schedule 7.3(p)(2), the Purchaser shall only
------------------
draw upon the Qualified Letter of Credit and shall not reduce the
stated value of the outstanding shares of New Preferred Stock. With
respect to any payments referred to in Section 8.4 only (other than
those Purchaser Losses arising out of conditions identified on
Schedule 7.3(p)(2)), the Purchaser shall be entitled, in its sole
------------------
discretion, to either draw against the Qualified Letter of Credit or
reduce the stated value of the outstanding shares of New Preferred
Stock. In such event, Purchaser may make an election to draw against
the Qualified Letter of Credit by delivering a written notice to such
effect to the Shareholders' Representative. In the absence of such
notice, the Purchaser will be deemed to have elected to reduce the
stated value of the outstanding shares of New Preferred Stock.
Notwithstanding anything to the contrary contained in this Agreement,
David R. Hamilton and George McFadden shall be entitled to deliver the
Qualified Letters of Credit after the Effective Time. If the Purchaser
does not receive the Qualified Letters of Credit at the Effective
Time, it shall reduce the Cash Merger Consideration to be paid to each
Shareholder by the product of (x) such Shareholders Common Equity
2
<PAGE>
Percentage and (y) the amount of the Cap (the "Holdback Amount"). The
---------------
aggregate Holdback Amount shall be deposited by the Purchaser in a
segregated interest-bearing bank account and shall secure, in part,
the Shareholders' obligations pursuant to Article VIII. Purchaser
shall be entitled to withdraw amounts from such segregated bank
account to the same extent that it would have been entitled to draw
upon the Qualified Letters of Credit. Promptly after receipt of the
Qualified Letters of Credit, the Purchaser shall pay the Holdback
Amount to the Shareholders (together with interest earned thereon),
subject to any reductions pursuant to the immediately preceding
sentence.
Without limiting the foregoing, Mr. Hamilton and Mr. McFadden
agree to use their best efforts to obtain the Qualified Letters of
Credit within ninety days immediately following the Closing Date."
(d) Annex I to the Original Agreement is hereby amended by deleting
the definitions of "Indemnity Cap Adjustment Amount" and "Preferred Stock
Adjustment Amount" therefrom.
1.4 SETOFFS.
- --- -------
Section 8.8 of the Original Agreement is hereby deleted in its entirety and
replaced with the following: "Except as expressly contemplated by this Agreement
or the terms of the New Preferred Stock, sums due under this Article VIII shall
------------
not be set off against or subject to set-off by, other sums due to and from the
parties hereto."
1.5 NEW PREFERRED.
- --- -------------
Exhibit 2.1(b) to the Original Agreement is hereby amended by deleting
the first paragraph in the second column of the row entitled "Stated Value" and
replacing it with the following:
"$5,000,000. The stated value of the outstanding shares of New
Preferred Stock (including Initial PIK Shares but excluding all other
PIK Shares) will be reduced by $1 for each $1 of Purchaser Losses
(including, without limitation, payments referred to in Section 8.4)
in respect of which the Purchaser does not elect (if applicable) to
draw against the Qualified Letter of Credit in accordance with and as
limited by Section 8.7 of the Agreement.
In the event that any Person sells, transfers or otherwise
disposes of shares of New Preferred Stock to any Person (including the
Company) in accordance with the terms thereof, such Person shall
deposit simultaneously with such sale, transfer or other disposition
the then applicable Escrow Amount with an escrow agent selected by the
Company (the "Escrow Agent"). The Escrow Amount shall be held by the
------------
Escrow Agent pursuant to an escrow agreement that is satisfactory to
the Purchaser and the Shareholders' Representative. The Escrow Agent
shall pay to the Purchaser Indemnified Person such amounts and at such
times
3
<PAGE>
as the stated value of the sold, transferred or disposed of shares of
New Preferred Stock would have been reduced pursuant to the terms
thereof (together with interest earned thereon). The remaining Escrow
Amount shall be released to such Person upon resolution of the matters
referred to in Section 8.4 and payment of amounts due thereunder. For
purposes hereof, "Escrow Amount" shall mean the Stated Value of all
-------------
shares of New Preferred Stock that are being sold, transferred or
otherwise disposed of."
1.6 D&O INSURANCE.
- --- -------------
The Original Agreement is hereby amended by adding a new Section 6.18,
which shall read in its entirety as follows:
"6.18 D&O Insurance. Purchaser acknowledges that prior to the
-------------
Effective Time, the Company may obtain and pay for an insurance policy
pursuant to which the officers and directors of the Company and its
Subsidiaries shall have, for a period of six years following the Effective
Time, fully-paid and non-cancelable directors and officers insurance
relating to events occurring prior to the Closing Date. The parties agree
that the fees and expenses incurred or to be incurred in connection with
such insurance policy, including any premiums related thereto, shall
constitute Transaction Expenses. Purchaser agrees (a) not to cancel or
otherwise amend or modify the terms of such insurance and (b) to reasonably
cooperate with the Shareholders Representative, the Company issuing and
underwriting such insurance policy and the broker relating thereto as
necessary or appropriate from time to time in connection with such
insurance and/or claims thereunder (it being understood that after the
Effective Time, none of the Purchaser, the Company or any of their
respective Affiliates shall have any obligation to incur any expenses in
connection with any such cooperation). Nothing contained in this Section
6.18 shall limit or eliminate any existing indemnity obligation that the
Company currently has to its directors and officers under any
indemnification or employment agreement, under the Company's Articles of
Incorporation or By-laws (in each case, as disclosed to Purchaser pursuant
to this Agreement) each as in effect on the date hereof) or under
applicable law."
1.7 ARTICLES OF INCORPORATION.
- --- -------------------------
(a) EXHIBIT A and EXHIBIT B to the Original Agreement are hereby
--------- ---------
deleted in their entirety and replaced with EXHIBIT A and EXHIBIT B hereto,
--------- ---------
respectively.
(b) Section 1.4 of the Original Agreement is hereby amended by
deleting "and restated in their entirety to read as set forth in EXHIBIT C
---------
hereto" and replacing it with the following: "as set forth in the exhibit to
the Delaware Certificate of Merger."
(c) EXHIBIT C to the Original Agreement is hereby deleted in its
---------
entirety.
4
<PAGE>
ARTICLE II
MISCELLANEOUS PROVISIONS
2.1 AGREEMENT.
- --- ---------
Except as modified by this Amendment, the Original Agreement shall remain
in full force and effect, enforceable in accordance with its terms.
2.2 COUNTERPARTS.
- --- ------------
This Amendment may be executed in any number of counterparts, and each such
counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute one agreement.
2.3 GOVERNING LAW.
- --- -------------
THIS AMENDMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
DOMESTIC LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF
LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK, OR ANY
OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE
STATE OF NEW YORK TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL
LAW OF THE STATE OF NEW YORK WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF
THIS AMENDMENT, EVEN IF UNDER SUCH JURISDICTION'S CHOICE OF LAW OR CONFLICT OF
LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY
APPLY. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AMENDMENT OR ANY
RELATED DOCUMENT MAY BE BROUGHT EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW
YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK AND, BY
EXECUTION AND DELIVERY OF THIS AMENDMENT, EACH PARTY HERETO HEREBY IRREVOCABLY
ACCEPTS FOR ITSELF OR HIMSELF AND IN RESPECT OF ITS OR HIS PROPERTY AND ASSETS,
GENERALLY AND UNCONDITIONALLY THE JURISDICTION OF THE AFORESAID COURTS.
* * *
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first written above.
THE PURCHASER:
PALESTRA ACQUISITION CORP.
By: /s/ Charles J. O'Brien, Jr.
---------------------------------
Name: Charles J. O'Brien, Jr.
Title:
THE COMPANY:
CHEMICAL LEAMAN CORPORATION
By: /s/ David M. Boucher
---------------------------------
Name: David M. Boucher
Title: Senior Vice President &
Secretary
<PAGE>
DAVID R. HAMILTON
CATHARINE C. HAMILTON
CATHARINE ELIZABETH HAMILTON
TENNESSEE ALEXIS HAMILTON
HAMILTON FAMILY TRUST
SAMUEL C. HAMILTON
GEORGE MCFADDEN
JOHN H. MCFADDEN
TRUSTEES U/W/O ALEXANDER B.
MCFADDEN, DECEASED, F/B/O JOHN,
MARY AND GEORGE MCFADDEN
TRUSTEES U/W/O GEORGE MCFADDEN,
DECEASED, F/B/O GEORGE MCFADDEN
TRUSTEES U/W/O GEORGE MCFADDEN
DECEASED, F/B/O JOHN H. MCFADDEN
TRUSTEES U/W/O GEORGE MCFADDEN,
DECEASED, F/B/O MARY JOSEPHINE
MCFADDEN
LESLEY TAYLOR
TRUSTEES F/B/O ELIZABETH CUTTING
MCFADDEN
EUGENE C. PARKERSON
DAVID M. BOUCHER
PHILIP J. RINGO
REUBEN M. ROSENTHAL
JACK H. ELROD
J. STEPHEN HAMILTON
LEON F. PALMER
DENNIS R. COPELAND
F.C. COLON-OSORIO
G. MICHAEL CRONK
KAREN SZABO LLOYD
FRANK LLOYD
By: /s/ George McFadden
---------------------------------
George McFadden
Attorney-in-Fact
<PAGE>
DAVID R. HAMILTON
CATHARINE C. HAMILTON
CATHARINE ELIZABETH HAMILTON
TENNESSEE ALEXIS HAMILTON
HAMILTON FAMILY TRUST
SAMUEL C. HAMILTON
GEORGE MCFADDEN
JOHN H. MCFADDEN
TRUSTEES U/W/O ALEXANDER B.
MCFADDEN, DECEASED, F/B/O JOHN,
MARY AND GEORGE MCFADDEN
TRUSTEES U/W/O GEORGE MCFADDEN,
DECEASED, F/B/O GEORGE MCFADDEN
TRUSTEES U/W/O GEORGE MCFADDEN
DECEASED, F/B/O JOHN H. MCFADDEN
TRUSTEES U/W/O GEORGE MCFADDEN,
DECEASED, F/B/O MARY JOSEPHINE
MCFADDEN
LESLEY TAYLOR
TRUSTEES F/B/O ELIZABETH CUTTING
MCFADDEN
EUGENE C. PARKERSON
DAVID M. BOUCHER
PHILIP J. RINGO
REUBEN M. ROSENTHAL
JACK H. ELROD
J. STEPHEN HAMILTON
LEON F. PALMER
DENNIS R. COPELAND
F.C. COLON-OSORIO
G. MICHAEL CRONK
KAREN SZABO LLOYD
FRANK LLOYD
By: /s/ David R. Hamilton
---------------------------
David R. Hamilton
Attorney-in-Fact
<PAGE>
CERTIFICATE OF MERGER
OF
PALESTRA ACQUISITION CORP.
INTO
CHEMICAL LEAMAN CORPORATION
Pursuant to Section 252 of the
Delaware General Corporation Law
The undersigned corporation organized and existing under and by
virtue of the General Corporation Law of Delaware.
DOES HEREBY CERTIFY:
FIRST: That the name and state of incorporation of each of the
constituent corporations of the merger is as follows:
NAME State of Incorporation
---- ----------------------
PALESTRA ACQUISITION Delaware
CORP.
CHEMICAL LEAMAN Pennsylvania
CORPORATION
SECOND: That an Agreement and Plan of Merger between the parties to
the merger has been approved, adopted, certified, executed and acknowledged by
each of the constituent corporations in accordance with the requirements of
Section 252 of the General Corporation Law of Delaware.
THIRD: That the name of the surviving corporation of the merger is
Chemical Leaman Corporation.
FOURTH: That the existing Articles of Incorporation of the surviving
corporation shall be amended as set forth in Exhibit A attached hereto.
---------
FIFTH: That the executed Agreement and Plan of Merger is on file at
the principal place of business of the surviving corporation, the address of
which is 102 Pickering Way, Exton, PA 19341-0200.
SIXTH: That a copy of the Agreement and Plan of Merger will be
furnished by the surviving corporation, on request and without cost, to any
stockholder of any constituent corporation.
<PAGE>
SEVENTH: That the surviving corporation may be served with process in
the State of Delaware in any proceeding for enforcement of any obligation of the
constituent corporation of this State, as well as for enforcement of any
obligation of the surviving corporation arising from the merger, including any
suit or other proceeding to enforce the right of any stockholders as determined
in appraisal proceedings pursuant to the provisions of Section 262 of the
General Corporation Law of the State of Delaware, and irrevocably appoints the
Secretary of State of the State of Delaware as its agent to accept service of
process in any such suit or proceedings. The address to which a copy of such
process shall be mailed by the Delaware Secretary of State is 102 Pickering Way,
Exton, PA 19341-0200.
EIGHTH: That this Certificate of Merger shall be effective upon its
filing with the Secretary of State of Delaware.
* * * * * * * * * *
<PAGE>
Dated: August __, 1998
CHEMICAL LEAMAN CORPORATION
By:______________________
Name:
Title:
<PAGE>
(CHANGES) BUREAU USE ONLY:
DOCKETING STATEMENT DSCB: 15-134B (Rev 95) ___ REVENUE ____ LABOUR & INDUSTRY
___ OTHER ________________________
FILING FEE: NONE FILE CODE ________________________
FILED DATE _______________________
This form (file in triplicate) and all accompanying documents shall be mailed
to:
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE
CORPORATION BUREAU
P.O.BOX 8722
HARRISBURG, PA 17105-8722
<TABLE>
<S> <C>
Part I. COMPLETE FOR EACH FILING:
Current name of entity or registrant affected by the submittal to
which this statement relates: (survivor or new entity if merger or
consolidation)
Chemical Leaman Corporation
----------------------------------------------------------------------------------------------------------------------
Entity number, if known: 647190 NOTE: ENTITY NUMBER is the computer index number assigned to an entity upon initial
------
filing in the Department of State.
Incorporation/qualification date in Pa.: March 2, 1977 State of Incorporation: Pennsylvania
------------- ------------
Federal Identification Number: ___________________________________________________________
Specified effective date, if any: Upon filing
----------------------------------------------------------
Part II. COMPLETE FOR EACH FILING This statement is being submitted with (check proper box):
_____ AMENDMENT: complete Section A only
x MERGER, CONSOLIDATION OR DIVISION: complete Section B, C or D
-----
_____ CONSOLIDATION: complete Section C
_____ DIVISION: complete Section D
_____ CONVERSION: complete Section A and E only
_____ STATEMENT OF CORRECTION: complete Section A only
_____ STATEMENT OF TERMINATION: complete Section H
_____ STATEMENT OF REVIVAL: complete Section G
_____ DISSOLUTION BY SHAREHOLDERS OR INCORPORATORS BEFORE COMMENCEMENT OF BUSINESS: complete Section F only
PART III. COMPLETE IF APPROPRIATE: The delayed effective date of the accompanying submittal is:
___________________________________________________________________
month day year hour, if any
DSCB: 15-134B (Rev 95)-2
_____ Section A. CHANGES TO BE MADE TO THE ENTITY NAMED IN PART I: (Check box/boxes which pertain)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
______ Name: ____________________________________________________________________________________________________
______ Registered Office: _______________________________________________________________________________________
Number & street/RD number & box number City State Zip County
______ Purpose: _________________________________________________________________________________________________
______ Stock: aggregate number of shares authorized ______________________ (attach additional provisions, if any)
______ Term of Existence: _______________________________________________________________________________________
______ Other: ___________________________________________________________________________________________________
X SECTION B. MERGER (Complete Section A if any changes to surviving entity):
- ----
MERGING ENTITIES ARE: (List ONLY the MERGING ENTITIES-SURVIVOR IS LISTED IN PART 1)
1. Name: Chemical Leaman Corporation
--------------------------------------------------------------------------------------------------------
Entity Number, if known: 647190 Inc./quali. date in Pa.: 3/2/77 State of Incorporation: PA
--------------- --------------- -----
2. Name: Palestra Acquisition Corp.
--------------------------------------------------------------------------------------------------------
Entity Number, if known: _______________ Inc./quali. date in Pa.:_____________ State of Incorporation: DE
-------
Attach sheet containing above corporate information if there are any additional merging entities.
____ SECTION C. CONSOLIDATION (NEW entity information should be completed in Part 1. Also, complete and attach
DOCKETING STATEMENT DSCB:15-134A for the NEW entity formed.)
CONSOLIDATING ENTITIES ARE:
1. Name: ________________________________________________________________________________________________________
Entity Number, if known: _______________ Inc./quali. date in Pa.: _____________ State of Incorporation: ______
2. Name: ________________________________________________________________________________________________________
Entity Number, if known: _______________ Inc./quali. date in Pa.: _____________ State of Incorporation: ______
Attach sheet containing above corporate information if there additional consolidating entities.
</TABLE>
<PAGE>
_______ SECTION D. DIVISION (Forming NEW entity(s) named below. Also, complete
and attach DOCKETING STATEMENT DSCB:15-134A For EACH new
entity formed by division.)
_____________ 1. ______________________________________________________
Entity Number Name
_____________ 1. ______________________________________________________
Entity Number Name
Attach sheet if there are additional entities to be named:
CHECK ONE:
______ Entity named in Part I survives. (Any changes, complete Section
A)
______ Entity named in Part I does not survive.
_______ SECTION E. CONVERSION (Complete Section A)
CHECK ONE:
______ Converted from nonprofit to profit
______ Converted from profit to nonprofit
_______ SECTION F. DISSOLVED BY SHAREHOLDERS OR INCORPORATORS BEFORE
COMMMENCEMENT OF BUSINESS
_______ SECTION G. STATEMENT OF REVIVAL Entity named in Part I hereby revives
its charter or articles which were
forfeited by Proclamation or expired.
(Complete Section A if any changes
have been made to the revived
entity.)
_______ SECTION H. STATEMENT OF TERMINATION
_____________________ filed in the Department of State on
(type of filing made)
___________________________________ is/are hereby terminated.
month day year hour, if any
If merger, consolidation or division, list all entities involved, other
than that listed in Part I:
_____________ 1. ______________________________________________________
Entity Number Name
_____________ 2. ______________________________________________________
Entity Number Name
Attach sheet containing above information if there are additional
entities involved.
<PAGE>
Microfilm Number________ Filed with the Department of State on___________
Entity Number_____________
Secretary of the Commonwealth
ARTICLES OF MERGER-DOMESTIC BUSINESS CORPORATION
DSCB: 15-1926(Rev 90)
In compliance with the requirements of 15 Pa.C.S.(S) 1926 (relating to
articles of merger or consolidation), the undersigned business corporations,
desiring to effect a merger, hereby state that:
1. The name of the corporation surviving the merger is: Chemical Leaman
---------------
Corporation
-----------
2. (CHECK AND COMPLETE ONE OF THE FOLLOWING):
X The surviving corporation is a domestic business corporation and the
---
(a) ADDRESS of its current registered office in this Commonwealth or
(b) NAME of its commercial registered office provider and the county
of venue is (the Department is hereby authorized to correct the
following information to conform to the records of the Department):
(a)_________________________________________________________________________
Number and Street City State Zip County
<TABLE>
<S> <C>
(b) c/o: CT Corporation System, 1635 Market Street, Philadelphia, PA 19103 Philadelphia
-----------------------------------------------------------------------------------
Name of Commercial Registered Office Provider County
</TABLE>
For a corporation represented by a commercial registered office provider, the
county in (b) shall be deemed the county in which the corporation is located for
venue and official publication purposes.
_______ The surviving corporation is a qualified foreign business corporation
incorporated under the laws of _______________ and the (a) ADDRESS of its
current registered office in this Commonwealth or (b) NAME of its commercial
registered office provider and the county of venue is (the Department is hereby
authorized to correct the following information to conform to the records of the
Department):
(a)___________________________________________________________________
Number and Street City State Zip County
(b) c/o:______________________________________________________________
Name of Commercial Registered Office Provider County
For a corporation represented by a commercial registered office provider, the
county in (b) shall be deemed the county in which the corporation is located
for venue and official publication purposes.
______ The surviving corporation is a nonqualified foreign business corporation
incorporated under the laws of __________ and the address of its principal
office under the laws of such domiciliary jurisdiction is:
______________________________________________________________________
Number and Street City State Zip
3. The NAME and the ADDRESS of the registered office in this Commonwealth or
NAME of its commercial registered office provider and the county of venue
of each other domestic business corporation and qualified foreign business
corporation which is a party to the plan of merger are as follows:
<TABLE>
<S> <C>
NAME OF CORPORATION ADDRESS OF REGISTERED OFFICE OR NAME OF COMMERCIAL REGISTERED OFFICE PROVIDER COUNTY
C.T.Corporation System 1635 Market Street, Philadelphia, PA 19103 Philadelphia
------------------------------------------------------------------------------------------------------------------------
________________________________________________________________________________________________________________________
</TABLE>
<PAGE>
<TABLE>
<S> <C>
4. (CHECK, AND IF APPROPRIATE COMPLETE, ONE OF THE FOLLOWING):
X The plan of merger shall be effective upon filing these Articles of
----
Merger in the Department of State.
The plan of merger shall be effective on:__________________ at______________
----
Date Hour
5. The manner in which the plan of merger was adopted by each domestic corporation is as follows:
NAME OF CORPORATION MANNER OF ADOPTION
Chemical Leaman Corporation Adopted by the directors pursuant to 15 Pa. C.C.(S) 1924(a)
-----------------------------------------------------------------------------------------------
Palestra Acquisition Corp. Adopted by the directors pursuant to 15 Pa. C.C.(S) 1924(a)
-----------------------------------------------------------------------------------------------
6. (STRIKE OUT THIS PARAGRAPH IF NO FOREIGN CORPORATION IS A PARTY TO THE
MERGER). The plan was authorized, adopted or approved, as the case may be,
by the foreign business corporation (or each of the foreign business
corporations) party to the plan in accordance with the laws of the
jurisdiction in which it is incorporated.
7. (CHECK, AND IF APPROPRIATE COMPLETE, ONE OF THE FOLLOWING):
The plan of merger is set forth in full in Exhibit A attached hereto
and made a part hereof.
----
X Pursuant to 15 Pa.C.S.(S) 1901 (relating to omission of certain
----
provisions, if any, of the plan of merger that amend or constitute
the operative Articles of Incorporation of the surviving corporation
as in effect subsequent to the effective date of the plan are set
forth in full in Exhibit A attached hereto and made a part hereof.
The full text of the plan of merger is on file at the principal place of
business of the surviving corporation, the address of which is:
102 Pickering Way Exton Pennsylvania 19341-0200
------------------------------------------------------------------------------------------------------------------
Number and street City State Zip County
IN TESTIMONY WHEREOF, the undersigned corporation or each undersigned
corporation has caused these Articles of Merger to be signed by a duly
authorized officer thereof this________ day of __________, 19_____.
Chemical Leaman Corporation Palestra Acquisition Corp.
- --------------------------- -------------------------------
(Name of Corporation) (Name of Corporation)
BY:________________________ BY:____________________________
(Signature) (Signature)
TITLE:_____________________ TITLE:_________________________
</TABLE>
<PAGE>
EXHIBIT A
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE
CORPORATION BUREAU
________________
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
CHEMICAL LEAMAN CORPORATION
________________
In compliance with the Business Corporation Law of 1988 and pursuant
to authorizing resolutions of the board of directors, the articles of
incorporation of Chemical Leaman Corporation are hereby amended as follows:
A. The first paragraph of Section 5 of the Articles of Incorporation
is hereby deleted and replaced with the following:
"5. The aggregate number of shares which the Corporation shall have
authority to issue is Eleven Thousand (11,000) shares, of which One
Thousand (1,000) shares shall be shares of Preferred Stock without par
value, and Ten Thousand (10,000) shares shall be shares of Common Stock
with a par value of $0.01 per share. Nothing contained herein shall amend
or modify in any way the Statements With Respect to Shares relating to the
Corporation's outstanding shares of Preferred Stock or adversely affect in
any way the terms thereof."
B. The Articles of Incorporation are hereby amended by adding the
following new Paragraphs 8, 9 and 10 thereto:
"8. A director of the corporation shall not be personally liable to
the corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its shareholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, or (iii) for any transaction from which the director derived
any improper personal benefit. If the Business Corporation Law is amended after
the date of incorporation of the corporation to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of a director of the corporation shall be eliminated or limited to the
fullest extent permitted by the Business Corporation Law, as so amended.
<PAGE>
Any repeal or modification of the foregoing paragraph by the shareholders
of the corporation shall not adversely affect any right or protection of a
director of the corporation existing at the time of such repeal or modification.
9. For the management of the business and for the conduct of the affairs
of the corporation, and in further definition, limitation and regulation of the
powers of the corporation and of its directors and shareholders, it is further
provided:
(a) In furtherance and not in limitation of the powers conferred by the
laws of the Commonwealth of Pennsylvania, the Board of Directors is expressly
authorized and empowered:
(i) to make, alter, amend or repeal the By-laws in any manner not
inconsistent with the laws of the Commonwealth of Pennsylvania or these Articles
of Incorporation;
(ii) without the assent or vote of the shareholders, to authorize
and issue securities and obligations of the corporation, secured or unsecured,
and to include therein such provisions as to redemption, conversion or other
terms thereof as the Board of Directors in its sole discretion may determine,
and to authorize the mortgaging or pledging, as security therefor, of any
property of the corporation, real or personal, including after-acquired
property;
(iii) to determine whether any, and if any, what part, of the net
profits of the corporation or of its surplus shall be declared in dividends and
paid to the shareholders, and to direct and determine the use and disposition of
any such net profits or such surplus; and
(iv) to fix from time to time the amount of net profits of the
corporation or of its surplus to be reserved as working capital or for any other
lawful purpose.
In addition to the powers and authorities herein or by statute expressly
conferred upon it, the Board of Directors may exercise all such powers and do
all such acts and things as may be exercised or done by the corporation,
subject, nevertheless, to the provisions of the laws of the Commonwealth of
Pennsylvania, of these Articles of Incorporation and of the By-laws of the
corporation.
(b) Any director or any officer elected or appointed by the shareholders
or by the Board of Directors may be removed at any time in such manner as shall
be provided in the By-laws of the corporation.
-2-
<PAGE>
(c) From time to time any of the provisions of these Articles of
Incorporation may be altered, amended, or repealed, and other provisions
authorized by the laws of the Commonwealth of Pennsylvania at the time in force
may be added or inserted, in the manner and at the time prescribed by said laws,
and all rights at any time conferred upon the shareholders of the corporation by
these Articles of Incorporation are granted subject to the provisions of this
paragraph (c).
10. Whenever a compromise or arrangement is proposed between the
corporation and its creditors or any class of them and/or between the
corporation and its shareholders or any class of them, any court of equitable
jurisdiction within the Commonwealth of Pennsylvania may, on the application in
a summary way of the corporation or of any creditor or shareholder thereof or on
the application of any receiver or receivers appointed for the corporation or on
the application of trustees in dissolution, order a meeting of the creditors or
class of creditors, and/or of the shareholders or class of shareholders of the
corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the shareholders or class of
shareholders of the corporation, as the case may be, agree on any compromise or
arrangement and to any reorganization of the corporation as a consequence of
such compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the shareholders or class of shareholders, of the corporation, as the case
may be, and also on the corporation."
-3-
<PAGE>
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
MTL INC.
The undersigned incorporator hereby executes these Articles of
Incorporation for the purpose of forming a corporation for profit in accordance
with the laws of the State of Florida.
ARTICLE I
Name
The name of this corporation shall be:
MTL Inc.
ARTICLE II
Principal Office and Mailing Address
------------------------------------
The address of the principal office and the mailing address of this
corporation shall be:
3108 Central Drive
Plant City, Florida 33566
ARTICLE III
Business and Purposes
---------------------
The general purpose for which this corporation is organized is the
transaction of any and all lawful business for which corporations may be
incorporated under the Florida Business Corporation Act, and any amendments
thereto (the "Act"), and in connection therewith, this corporation shall have
and may exercise any and all powers conferred from time to time by law upon
corporations formed under such Act.
ARTICLE IV
Capital Stock
-------------
The total number of shares of capital stock of all classes which this
corporation shall have the authority to issue is twenty million (20,000,000)
shares, of which fifteen million (15,000,000) shares, par value $.01 per share,
shall be of a class designated as "Common Stock" and five million (5,000,000)
shares, par value $.01 per
<PAGE>
share, shall be of a class designated as "Preferred Stock". The consideration
for the issuance of shares of said stock may be paid in any manner permitted by
the laws of the State of Florida.
Each share of common stock shall entitle the holder thereof to one
vote at every annual or special meeting of the stockholders of this corporation.
There shall be no cumulative voting of the common stock of this corporation.
Shares of Preferred Stock may be issued from time to time, in one or
more series, with such designations, assigned values, preferences and relative,
participating, optional or other rights, qualifications, limitations or
restrictions thereof as shall be stated and expressed in the resolution or
resolutions providing for the issue of such series adopted by the Board of
Directors from time to time, pursuant to the authority herein given, a copy of
which resolution or resolutions shall have been set forth in a certificate made,
executed, acknowledged, filed and recorded in the manner required by the laws of
the State of Florida in order to make the same effective. Each series shall
consist of such number of shares as shall be stated and expressed in such
resolution or resolutions providing for the issuance of the stock of such
series. All shares of any one series of Preferred Stock shall be alike in every
particular.
No holder of shares of this corporation of any class, now or hereafter
authorized, shall have any preferential or preemptive right to subscribe for,
purchase or receive (i) any shares of stock of this corporation of any class,
now or hereafter authorized, (ii) any options or warrants for such shares, (iii)
any rights to subscribe to or purchase such shares, or (iv) any securities which
may at any time or from time to time be issued, sold or offered for sale by this
corporation.
ARTICLE V
Registered Office and Registered Agent
--------------------------------------
The initial registered office of this corporation shall be located at
Schifino & Fleischer, P.A., One Tampa City Center, Suite 2700, 201 N. Franklin
Street, Tampa, Florida 33602, and the initial registered agent of this
corporation at such office shall be William J. Schifino. This corporation shall
have the right to change such registered office and such registered agent from
time to time, as provided by law.
ARTICLE VI
Board of Directors
------------------
The Board of Directors of this corporation shall consist of not less
than one (1) nor more than nine (9) members, the exact number of directors to be
fixed from time to time by the stockholders or the by-laws. The business and
affairs of this corporation shall be managed by the Board of Directors, which
may exercise all such powers of this corporation and do all such lawful acts and
things as are not by law directed or required to be exercised or done only by
the stockholders. A quorum for the
2
<PAGE>
transaction of business at meetings of the directors shall be a majority of the
number of directors determined from time to time to comprise the Board of
Directors, and the act of a majority of the directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors. Subject to
the by-laws of this corporation, meetings of the directors may be held within or
without the State of Florida. Directors need not be stockholders. The
stockholders of this corporation may remove any director from office at any time
with or without cause.
ARTICLE VII
Initial Board of Directors
--------------------------
The Initial Board of Directors of this corporation shall consist of
five members, such members to hold office until his successors have been duly
elected and qualified. The names of the initial directors are as follows:
Elton E. Babbitt
Charles J. O'Brien, Jr.
Donald W. Burton
Walter J. Wilkinson, Jr.
Joseph L. Carrere
ARTICLE VIII
Incorporator
------------
The name and street address of the incorporator making these Articles
of Incorporation are:
Name Address
- ---- -------
William J. Schifino One Tampa City Center
Suite 2700
Tampa, Florida 33602
3
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed these Articles for
the uses and purposes therein stated.
__________________________________________
William J. Schifino, as Incorporator
DATE: April 18, 1994
4
<PAGE>
ACCEPTANCE OF SERVICE REGISTERED AGENT
FOR
MTL INC.
The undersigned, William J. Schifino, having been named as registered
agent to accept service of process for the above-named corporation, at the
registered office designated in the Articles of Incorporation, of said
corporation, hereby agrees and consents to act in that capacity. The
undersigned is familiar with and accepts the duties and obligations of Section
607.0505, Florida Statutes.
DATED this 18th day of April, 1994.
____________________________
William J. Schifino
5
<PAGE>
EXHIBIT 3.2
BY LAWS
OF
MTL INC.
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I. OFFICES...................................................... 1
SECTION A. PRINCIPAL OFFICE........................................... 1
SECTION B. OTHER OFFICES.............................................. 1
ARTICLE II. STOCKHOLDERS................................................ 1
SECTION A. ANNUAL MEETING............................................. 1
SECTION B. SPECIAL MEETINGS........................................... 1
SECTION C. PLACE OF MEETING........................................... 1
SECTION D. NOTICE OF MEETING.......................................... 2
SECTION E. NOTICE OF ADJOURNED MEETING................................ 2
SECTION F. WAIVER OF CALL AND NOTICE OF MEETING....................... 2
SECTION G. QUORUM..................................................... 2
SECTION H. ADJOURNMENT; QUORUM FOR ADJOURNED MEETING.................. 2
SECTION I. VOTING ON MATTERS OTHER THAN ELECTION OF DIRECTORS......... 3
SECTION J. VOTING FOR DIRECTORS....................................... 3
SECTION K. VOTING LISTS............................................... 3
SECTION L. VOTING OF SHARES........................................... 3
SECTION M. PROXIES.................................................... 3
SECTION N. INFORMAL ACTION BY STOCKHOLDERS............................ 3
SECTION O. PRESIDING OFFICER AND SECRETARY............................ 4
SECTION P. INSPECTORS................................................. 4
ARTICLE III. BOARD OF DIRECTORS......................................... 4
SECTION A. GENERAL POWERS............................................. 4
SECTION B. NUMBER, TENURE AND QUALIFICATIONS.......................... 4
SECTION C. ANNUAL MEETING............................................. 4
SECTION D. REGULAR MEETINGS........................................... 5
SECTION E. SPECIAL MEETINGS........................................... 5
SECTION F. NOTICE..................................................... 5
SECTION G. QUORUM..................................................... 5
SECTION H. ADJOURNMENT; QUORUM FOR ADJOURNED MEETING.................. 5
SECTION I. MANNER OF ACTING........................................... 5
SECTION J. RESIGNATION................................................ 6
SECTION K. REMOVAL.................................................... 6
SECTION L. VACANCIES.................................................. 6
SECTION M. COMPENSATION............................................... 6
SECTION N. PRESUMPTION OF ASSENT...................................... 6
SECTION O. INFORMAL ACTION BY BOARD................................... 6
SECTION P. MEETING BY TELEPHONE, ETC.................................. 7
<PAGE>
ARTICLE IV. OFFICERS................................................. 7
SECTION A. NUMBER................................................... 7
SECTION B. APPOINTMENT AND TERM OF OFFICE........................... 7
SECTION C. RESIGNATION.............................................. 7
SECTION D. REMOVAL.................................................. 7
SECTION E. VACANCIES................................................ 7
SECTION F. DUTIES OF THE CHAIRMAN OF THE BOARD...................... 7
SECTION G. DUTIES OF THE PRESIDENT.................................. 8
SECTION H. DUTIES OF VICE PRESIDENTS................................ 8
SECTION I. DUTIES OF THE SECRETARY.................................. 8
SECTION J. DUTIES OF THE TREASURER.................................. 8
SECTION K. DUTIES OF ASSISTANT SECRETARIES AND ASSISTANT
TREASURERS.............................................. 8
SECTION L. SALARIES................................................. 9
SECTION M. DELEGATION OF DUTIES..................................... 9
SECTION N. DISASTER EMERGENCY POWERS OF ACTING OFFICERS............. 9
ARTICLE V. EXECUTIVE AND OTHER COMMITTEES............................ 10
SECTION A. CREATION OF COMMITTEES................................... 10
SECTION B. EXECUTIVE COMMITTEE...................................... 10
SECTION C. COMPENSATION COMMITTEE................................... 10
SECTION D. AUDIT COMMITTEE.......................................... 10
SECTION E. OTHER COMMITTEES......................................... 11
SECTION F. REMOVAL OR DISSOLUTION................................... 11
SECTION G. VACANCIES ON COMMITTEES.................................. 11
SECTION H. MEETINGS OF COMMITTEES................................... 11
SECTION I. ABSENCE OF COMMITTEE MEMBERS............................. 11
SECTION J. QUORUM OF COMMITTEES..................................... 11
SECTION K. MANNER OF ACTING OF COMMITTEES........................... 12
SECTION L. MINUTES OF COMMITTEES.................................... 12
SECTION M. COMPENSATION............................................. 12
SECTION N. INFORMAL ACTION.......................................... 12
ARTICLE VI. INDEMNIFICATION OF DIRECTORS AND OFFICERS................ 12
SECTION A. GENERAL.................................................. 12
SECTION B. ACTIONS BY OR IN THE RIGHT OF THE CORPORATION............ 12
SECTION C. OBLIGATION TO INDEMNIFY.................................. 13
SECTION D. DETERMINATION THAT INDEMNIFICATION IS PROPER............. 13
SECTION E. EVALUATION AND AUTHORIZATION............................. 14
SECTION F. PREPAYMENT OF EXPENSES................................... 14
SECTION G. NONEXCLUSIVITY AND LIMITATIONS........................... 14
SECTION H. CONTINUATION OF INDEMNIFICATION RIGHT.................... 14
SECTION I. INSURANCE................................................ 15
ARTICLE VII. INTERESTED PARTIES...................................... 15
SECTION A. GENERAL.................................................. 15
ii
<PAGE>
SECTION B. DETERMINATION OF QUORUM AND APPROVAL..................... 15
SECTION C. APPROVAL BY STOCKHOLDERS................................. 15
ARTICLE VIII. CERTIFICATES OF STOCK.................................. 16
SECTION A. CERTIFICATES FOR SHARES.................................. 16
SECTION B. SIGNATURES OF PAST OFFICERS.............................. 16
SECTION C. TRANSFER AGENTS AND REGISTRARS........................... 16
SECTION D. TRANSFER OF SHARES....................................... 16
SECTION E. LOST CERTIFICATES........................................ 17
ARTICLE IX. RECORD DATE.............................................. 17
SECTION A. RECORD DATE FOR STOCKHOLDER ACTIONS...................... 17
SECTION B. RECORD DATE FOR DIVIDEND AND OTHER
DISTRIBUTIONS........................................... 17
ARTICLE X. DIVIDENDS................................................. 18
ARTICLE XI. FISCAL YEAR.............................................. 18
ARTICLE XII. SEAL.................................................... 18
ARTICLE XIII. STOCK IN OTHER CORPORATIONS............................ 18
ARTICLE XIV. AMENDMENTS.............................................. 19
ARTICLE XV. EMERGENCY BY-LAWS........................................ 19
SECTION A. SCOPE OF EMERGENCY BY-LAWS............................... 19
SECTION B. CALL AND NOTICE OF MEETING............................... 19
SECTION C. QUORUM AND VOTING........................................ 19
SECTION D. APPOINTMENT OF TEMPORARY DIRECTORS....................... 19
SECTION E. MODIFICATION OF LINES OF SUCCESSION...................... 20
SECTION F. CHANGE OF PRINCIPAL OFFICE............................... 20
SECTION G. LIMITATION OF LIABILITY.................................. 20
SECTION H. REPEAL AND CHANGE........................................ 20
iii
<PAGE>
BY-LAWS
OF
MTL INC.
ARTICLE I.
Offices
-------
SECTION A. PRINCIPAL OFFICE. The principal office of the corporation
----------------
shall be in Plant City, County of Hillsborough, and State of Florida.
SECTION B. OTHER OFFICES. The corporation may also have offices at
-------------
such other places both within and without the State of Florida as the Board of
Directors may from time to time determine or the business of the corporation may
require.
ARTICLE II.
Stockholders
------------
SECTION A. ANNUAL MEETING. A meeting of the stockholders shall be
--------------
held annually, within five months of the end of each fiscal year of the
corporation, for the purpose of electing directors and for the transaction of
such other proper business as may come before the meeting, the exact date to be
established by the Board of Directors from time to time.
SECTION B. SPECIAL MEETINGS. Special meetings of the stockholders
----------------
may be called, for any purpose or purposes, by the President or the Board of
Directors and shall be called by the President or the Secretary if the holders
of not less than 10 percent or more of all the votes entitled to be cast on any
issue proposed to be considered at such special meeting sign, date and deliver
to the corporation's Secretary one or more written demands for a special
meeting, describing the purpose(s) for which it is to be held. Notice and call
of any such special meeting shall state the purpose or purposes of the proposed
meeting, and business transacted at any special meeting of the stockholders
shall be limited to the purposes stated in the notice thereof.
SECTION C. PLACE OF MEETING. The Board of Directors may designate
----------------
any place, either within or without the State of Florida, as the place of
meeting for any annual or special meeting of the stockholders. A waiver of
notice signed by all stockholders entitled to vote at a meeting may designate
any place, either within or without the State of Florida, as the place for the
holding of such meeting. If no designation is made, the place of meeting shall
be the principal office of the corporation in the State of Florida.
<PAGE>
SECTION D. NOTICE OF MEETING. Written notice stating the place, day
-----------------
and hour of an annual or special meeting and the purpose or purposes for which
it is called shall be delivered not less than ten (10) nor more than sixty (60)
days before the date of the meeting to each stockholder entitled to vote at such
meeting, except that no notice of a meeting need be given to any stockholder for
which notice is not required to be given under applicable law. Notice may be
delivered personally, via first-class United States mail, telegraph, teletype,
facsimile or other electronic transmission, or by private mail carriers handling
nationwide mail services, by or at the direction of the President, the
Secretary, the Board of Directors, or the person(s) calling the meeting. If
mailed via first-class United States mail, addressed to the stockholder at the
stockholder's address as it appears on the stock transfer books of the
corporation, with postage thereon prepaid.
SECTION E. NOTICE OF ADJOURNED MEETING. If an annual or special
---------------------------
stockholders' meeting is adjourned to a different date, time, or place, notice
need not be given of the new date, time or place if the new date, time or place
is announced at the meeting before an adjournment is taken, and any business may
be transacted at the adjourned meeting that might have been transacted on the
original date of the meeting. If, however, a new record date for the adjourned
meeting is or must be fixed under law, notice of the adjourned meeting must be
given to persons who are stockholders as of the new record date of who are
otherwise entitled to notice of such meeting.
SECTION F. WAIVER OF CALL AND NOTICE OF MEETING. Call and notice of
------------------------------------
any stockholders' meeting may be waived by any stockholder before or after the
date and time stated in the notice. Such waiver must be in writing signed by the
stockholder and delivered to the corporation. Neither the business to be
transacted at nor the purpose of any special or annual meeting need be specified
in such waiver. A stockholder's attendance at a meeting (a) waives such
stockholder's ability to object to lack of notice or defective notice of the
meeting, unless the stockholder at the beginning of the meeting objects to
holding the meeting or transacting business at the meeting; and (b) waives such
stockholder's ability to object to consideration of a particular matter at the
meeting that is not within the purpose or purposes described in the meeting
notice, unless the stockholder objects to considering the matter when it is
presented.
SECTION G. QUORUM. Except as otherwise provided in these by-laws,
------
the Articles of Incorporation, or by law a majority of the outstanding shares of
the corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at any meeting of the stockholders. Once a share is
represented for any purpose at a meeting, it is deemed present for quorum
purposes for the meeting and for any adjournment of that meeting, unless a new
record date is or must be set for an adjourned meeting, and the withdrawal of
stockholders after a quorum has been established at a meeting shall not effect
the validity of any action taken at the meeting or any adjournment thereof.
SECTION H. ADJOURNMENT; QUORUM FOR ADJOURNED MEETING. If less than a
-----------------------------------------
majority of the outstanding shares is represented at a meeting, a majority of
the shares so represented may adjourn the meeting without further notice. At
such adjourned meeting at which a quorum shall be present or represented or
deemed
2
<PAGE>
to be present or represented, any business may be transacted which might have
been transacted at the meeting as originally noticed.
SECTION I. VOTING ON MATTERS OTHER THAN ELECTION OF DIRECTORS. At
--------------------------------------------------
any meeting at which a quorum is present, action on any matter other than the
election of directors shall be approved if the votes cast by the holders of
shares represented at the meeting and entitled to vote on the subject matter
favoring the action exceed the votes cast opposing the action, unless a greater
number of affirmative votes or voting by classes is required by these by-laws,
the Articles of Incorporation or by law.
SECTION J. VOTING FOR DIRECTORS. Directors shall be elected by a
--------------------
majority of the votes cast by the shares entitled to vote at a meeting at which
a quorum is present.
SECTION K. VOTING LISTS. At least ten (10) days prior to each
------------
meeting of stockholders, the officer or agent having charge of the stock
transfer books for shares of the corporation shall make cause to be made a
complete list of the stockholders entitled to vote at such meeting, or any
adjournment thereof, with the address and the number, class and series (if any)
of shares held by each, which list shall be subject to inspection by any
stockholder during normal business hours for at least ten (10) days prior to the
meeting. The list also shall be available at the meeting and shall be subject to
inspection by any stockholder at any time during the meeting or its adjournment.
The stockholders list shall be prima facie evidence as to who are the
stockholders entitled to examine such list or the transfer books or to vote at
any meeting of the stockholders.
SECTION L. VOTING OF SHARES. Each stockholder entitled to vote shall
----------------
be entitled at every meeting of the stockholders to one vote in person or by
proxy on each matter for each share of voting stock held by such stockholder.
Such right to vote shall be subject to the right of the Board of Directors for
voting stockholders as here after provided.
SECTION M. PROXIES. At all meetings of stockholders, a stockholder
-------
may vote by proxy, executed in writing and delivered to the corporation in the
original or transmitted via telegram, or as a photographic, photostatic or
equivalent reproduction of a written proxy by the stockholder or b the
stockholder's duly authorized attorney-in-fact; but, no proxy shall be valid
after eleven (11) months from its date, unless the proxy provides for a longer
period. Each proxy shall be filed with the Secretary of the corporation before
or at the time of the meeting. In the event that a proxy shall designate two or
more persons to act as proxies, a majority of such persons present at the
meeting, or, if only one is present, that one, shall have all of the powers
conferred by the proxy upon all the persons so designated, unless the instrument
shall provide otherwise.
SECTION N. INFORMAL ACTION BY STOCKHOLDERS. Unless otherwise
-------------------------------
provided in the Articles of Incorporation, any action required or permitted to
be taken at a meeting of the stockholders may be taken without a meeting,
without prior notice and without a vote if one or more consents in writing,
setting forth the action so taken, shall be signed by stockholders holding
shares representing not less than the
3
<PAGE>
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. No written consent shall be effective to take the corporate action
referred to therein unless, within sixty (60) days of the date of the earliest
dated consent delivered to the Secretary, written consent signed by the number
of stockholders required to take action is delivered to the Secretary. If
authorization of an action is obtained by one or more written consent but less
than all stockholders so consent, then within ten (10) days after obtaining the
authorization of such action by written consents, notice must be given to each
stockholder who did not consent in writing and to each stockholder who is not
entitled to vote on the action.
SECTION O. PRESIDING OFFICER AND SECRETARY. At every meeting of the
-------------------------------
stockholders, the President, or in his absence the Chairman of the Board, or in
his absence an individual appointed by the Board of Directors, shall act as the
presiding officer of the meeting. The Secretary, or in his absence an Assistant
Secretary, shall act as the secretary for the meeting.
SECTION P. INSPECTORS. For each meeting of the stockholders, the
----------
Board of Directors or the President may appoint two inspectors to supervise the
voting; and, if inspectors are so appointed, questions respecting the
qualification of any vote, the validity of any proxy, and the acceptance or
action of any vote shall be decided by such inspectors. Before acting at any
meeting, the inspectors shall take an oath to execute their duties with strict
impartiality and according to the best of their ability. If any inspector shall
fail to be present or shall decline to act, the presiding officer shall appoint
another inspector to act in his place. In case of a tie vote by the inspectors
on any question, the presiding officer shall decide the issue.
ARTICLE III.
Board of Directors
------------------
SECTION A. GENERAL POWERS. The business and affairs of the
--------------
corporation shall be its Board of Directors, which may exercise all such powers
of the corporation and do all acts and things as are not by law, the Articles of
Incorporation or these by-laws directed or required to be exercised or done only
by the stockholders.
SECTION B. NUMBER, TENURE AND QUALIFICATIONS. The number of
---------------------------------
directors of the corporation shall be not less than one (1) nor more than nine
(9). Each director shall hold office until the next annual meeting of
stockholders and until such director's successor shall have been duly elected
and shall have qualified, unless such director sooner dies, resigns or is
removed by the stockholders at any annual or special meeting. It shall not be
necessary for directors to be stockholders. All directors shall be natural
persons who are 18 years of age or older.
SECTION C. ANNUAL MEETING. After each annual meeting of
--------------
stockholders, the Board of Directors shall hold its annual meeting at the same
place as and, immediately, following such annual meeting of stockholders for the
purpose of the
4
<PAGE>
election of officers and the transaction of such other business as may come
before the meeting; and, if a majority of the directors are present at such
place and time, no prior notice of such meeting shall be required to be given to
the directors. The place and time of such meeting may be varied by written
consent of all the directors.
SECTION D. REGULAR MEETINGS. Regular meetings of the Board of
----------------
Directors may be held without notice at such time and at such place as shall be
determined from time to time by the Board of Directors.
SECTION E. SPECIAL MEETINGS. Special meetings of the Board of
----------------
Directors may be called by the Chairman of the Board or the President. The
person or persons authorized to call special meetings of the Board of Directors
may fix the place for holding any special meetings of the Board of Directors
called by him or them, as the case may be. If no such designation is made, the
place of meeting shall be the principal office of the corporation in the State
of Florida.
SECTION F. NOTICE. Whenever notice of a meeting is required, written
------
notice stating the place, day and hour of the meeting shall be delivered at
least two (2) days prior thereto to each director, either personally, or by
first-class United States mail, telegraph, teletype, facsimile or other form of
electronic communication, or by private mail carriers handling nationwide mail
services, to the director's business address. If notice is given by first-class
United States mail, such notice shall be deemed to be delivered five (5) days
after deposited in the United States mail so addressed with postage thereon
prepaid or when received, if such date is earlier. If notice is given by
telegraph, teletype, facsimile transmission or other form of electronic
communication or by private mail carriers handling nationwide mail services,
such notice shall be deemed to be delivered when received by the director. Any
director may waive notice of any meeting, either before, at or after such
meeting. The attendance of a director at a meeting shall constitute a waiver of
notice of such meeting, except where a director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened and so states at the beginning of the
meeting or promptly upon arrival at the meeting.
SECTION G. QUORUM. A majority of the total number of directors as
------
determined from time to time shall constitute a quorum.
SECTION H. ADJOURNMENT; QUORUM FOR ADJOURNED MEETING. If less than a
-----------------------------------------
majority of the total number of directors is present at a meeting, a majority of
the directors so present may adjourn the meeting without further notice. At any
adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally
noticed.
SECTION I. MANNER OF ACTING. If a quorum is present when a vote is
----------------
taken, the act of a majority of the directors present at the meeting shall be
the act of the Board of Directors.
5
<PAGE>
SECTION J. RESIGNATION. Any director may resign at any time either
-----------
orally at any meeting of the Board of Directors or by giving written notice to
the corporation. A director who resigns may postpone the effectiveness of his
resignation to a future date or upon the occurrence of a future event specified
in a written tender of resignation. If no time of effectiveness is specified
therein, the resignation shall be effective upon tender. A vacancy shall be
deemed to exist at the time a resignation is tendered, and the Board of
Directors may elect to appoint a successor to take office when the resignation
by its terms becomes effective.
SECTION K. REMOVAL. Any director may be removed by the stockholders
-------
with or without cause at any meeting of the stockholders called expressly for
that purpose, but such removal shall be without prejudice to the contract
rights, if any, of the person removed. This by-law shall not be subject to
change by the Board of Directors.
SECTION L. VACANCIES. Any vacancy occurring in the Board of
---------
Directors, including any vacancy created by reason of an increase in the number
of directors, may be filled by the affirmative vote of a majority of the
remaining directors, even though less than a quorum of the Board of Directors,
unless otherwise provided in the Articles of Incorporation. A director elected
to fill a vacancy shall hold office for the balance of the terms, except that,
in the case of an increase in the number of directors, such vacancy shall be
filled only until the next annual meeting of stockholders, at which time the
vacancy shall be filled by vote of the stockholders.
SECTION M. COMPENSATION. By resolution of the Board of Directors,
------------
the directors may be paid their expenses, if any, of attendance at each meeting
of the Board of Directors, and each committee thereof, and may be paid a fixed
sum for attendance at each meeting of the Board of Directors and each committee
thereof, or a stated salary as directors. No payment shall preclude any director
from serving the corporation in any other capacity and receiving compensation
therefor.
SECTION N. PRESUMPTION OF ASSENT. A director of the corporation who
---------------------
is present at a meeting of the Board of Directors at which action on any
corporate matter is taken shall be presumed to have assented to the action taken
unless such director objects at the beginning of the meeting (or promptly upon
his arrival) to the holding of the meeting or the transacting of specified
business at the meting or such director votes against such action or abstains
from voting in respect of such matter.
SECTION O. INFORMAL ACTION BY BOARD. Any action required or
------------------------
permitted to be taken by any provisions of law, the Articles of Incorporation or
these by-laws at any meeting of the Board of Directors or of any committee
thereof may be taken without a meeting if each and every member of the Board or
of such committee, as the case may be, signs a written consent thereto and such
written consent is filed in the minutes of the proceedings of the Board or such
committee, as the case may be. Action taken under this section is effective when
the last director signs the consent, unless the consent specifies a different
effective date, in which case it is effective on the date so specified.
6
<PAGE>
SECTION P. MEETING BY TELEPHONE, ETC. Directors or the members of
--------------------------
any committee shall be deemed present at a meeting of the Board of Directors or
of any such committee, as the case may be, if the meeting is conducted using a
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other at the same time.
ARTICLE IV.
Officers
--------
SECTION A. NUMBER. The officers of the corporation shall consist of
------
a President, a Secretary and a Treasurer, each of whom shall be appointed by the
Board of Directors. The Board of Directors may also appoint a Chairman of the
Board, who may also serve as an officer of the corporation, one or more Vice
Presidents, one or more Assistant Secretaries and Assistant Treasurers and such
other officers as the Board of Directors shall deem appropriate. The same
individual may simultaneously hold more than one office in the corporation.
SECTION B. APPOINTMENT AND TERM OF OFFICE. The officers of the
------------------------------
corporation shall be appointed annually by the Board of Directors at its annual
meeting. If the appointment of officers shall not be made at such meeting, such
appointment shall be made as soon thereafter as is convenient. A duly appointed
officer may appoint one or more officers or assistant officers if so authorized
by the Board of Directors. Each officer shall hold office until such officer's
successor shall have been duly appointed and qualified, unless such officer
sooner dies, resigns or is removed by the Board. In its discretion, the Board of
Directors may leave unfilled for any period of time it may fix, any office
except the office of President and Secretary. The appointment of an officer does
not itself create contract rights.
SECTION C. RESIGNATION. An officer may resign at any time by
-----------
delivering notice to the corporation. A resignation shall be effective when the
notice is delivered unless the notice specifies a later effective date. An
officer's resignation shall not affect the corporation's contract rights, if
any, with the officer.
SECTION D. REMOVAL. The Board of Directors may remove any officer at
-------
any time with or without cause. An officer's removal shall not affect the
officer's contract rights, if any, with the corporation.
SECTION E. VACANCIES. A vacancy in any office because of death,
---------
resignation, removal, disqualification or otherwise may be filled by the Board
of Directors for the unexpired portion of the term.
SECTION F. DUTIES OF THE CHARIMAN OF THE BOARD. The Chairman of the
-----------------------------------
Board shall preside at all meetings of the Board of Directors and, in the
absence of the President, shall preside at meetings of the stockholders. The
Chairman of the Board may be the chief executive officer of the Corporation and
may be appointed to
7
<PAGE>
such other office as the Board of Directors shall determine, and shall perform
such other duties as may be prescribed from time to time by the Board of
Directors.
SECTION G. DUTIES OF THE PRESIDENT. The President, unless otherwise
-----------------------
designated by the Board of Directors, shall be the chief executive officer of
the corporation and shall have the responsibility for the management of the
business and affairs of the corporation. The President shall preside at all
meetings of the stockholders and, in the absence of the Chairman of the Board,
shall preside at meetings of the Board of Directors. The President may sign,
execute and deliver in the name of the corporation powers of attorney,
contracts, bonds and other agreements and obligations. In addition to the
foregoing specific powers and duties, the President shall exercise such duties
as customarily pertain to the office of president of a corporation and shall
exercise such further powers and perform such other duties as may from time to
time be conferred or assigned by the Board of Directors.
SECTION H. DUTIES OF VICE PRESIDENTS. Each Vice President shall have
-------------------------
such powers and perform such duties as the Board of Directors or the President
may prescribe and shall perform such other duties as may be prescribed by these
by-laws. A Vice President may sign and execute contracts and other obligations
pertaining to the regular course of his or her duties. In the absence or
inability to act of the President, unless the Board of Directors shall otherwise
provide, the Vice President who has served in such capacity for the longest time
and who shall be present and able to act, shall perform all duties and may
exercise any of the powers of the President.
SECTION I. DUTIES OF THE SECRETARY. The Secretary shall give, or
-----------------------
cause to be given, notice of all meetings of the stockholders and of the Board
of Directors, and all other notices required by law or by these by-laws. The
Secretary shall keep a record of the minutes of the proceedings of meetings of
stockholders and Board of Directors. The Secretary shall have custody of all
books, records and papers of the corporation, except such as shall be in the
charge of the Treasurer, or of some other person authorized to have custody and
possession of such by a resolution of the Board of Directors. The Secretary may
sign or execute contracts with the President or a Vice President thereunto
authorized in the name of the corporation and affix the seal of the corporation
thereto. The Secretary shall perform such other duties as may be prescribed by
the President or the Board of Directors and shall perform such other duties as
may be prescribed by these by-laws.
SECTION J. DUTIES OF THE TREASURER. The Treasurer, unless otherwise
-----------------------
designated by the Board of Directors, shall be the Vice President-Finance and
chief financial officer of the corporation. The Treasurer shall have the general
custody of all the funds and securities of the corporation and shall be
responsible for the general supervision of the collection and disbursement of
funds of the corporation. The Treasurer shall endorse on behalf of the
corporation for collection checks, notes and other obligations, and shall
deposit the same to the credit of the corporation in banks or other
depositories. The Treasurer shall enter or cause to be entered regularly in the
books of the corporation full and accurate account of all moneys received and
paid on account of the corporation and shall render to the Board of Directors,
whenever required, an account
8
<PAGE>
of all transactions and information pertaining to the financial condition of the
corporation. The Treasurer shall have such other powers and perform such other
duties as are assigned by the President or the Board of Directors and shall
perform such other duties as may be prescribed by these by-laws.
SECTION K. DUTIES OF ASSISTANT SECRETARIES AND ASSISTANT TREASURERS.
--------------------------------------------------------
The Board of Directors may appoint one or more assistant secretaries and
assistant treasurers to perform such duties and to have such powers as shall be
assigned to them by the Secretary or Treasurer, respectively, or by the
President or the Board of Directors.
SECTION L. SALARIES. The salaries of the officers shall be fixed
--------
from time to time by the Board of Directors, based on the recommendations of the
Compensation Committee, and no officer shall be prevented from receiving a
salary by reason of the fact that the officer is also a director of the
corporation.
SECTION M. DELEGATION OF DUTIES. In the absence or disability of any
--------------------
officer of the corporation, or for any other reason deemed sufficient by the
Board of Directors, the Board of Directors may delegate the powers or duties of
such officer to any other officer or to any other director for such period of
time as the Board of Directors shall determine, for the time being.
SECTION N. DISASTER EMERGENCY POWERS OF ACTING OFFICERS. Unless
--------------------------------------------
otherwise expressly prescribed by action of the Board of Directors taken
pursuant to Article XV of these by-laws, if, as a result of some catastrophic
event, a quorum of the corporation's directors cannot readily be assembled and
the President is unable to perform the duties of the office of President and/or
other officers are unable to perform their duties, (a) the powers and duties of
President shall be held and performed by that officer of the corporation highest
on the list of successors (adopted by the Board of Directors for such purpose)
who shall be available and capable of holding and performing such powers and
duties; and, absent any such prior designation, by that Vice President who shall
be available and capable of holding and performing such powers and duties who
has served in such capacity for the longest time; or, if no Vice President is
available and capable of holding and performing such powers and duties, then by
the Secretary; or, if the Secretary is likewise unavailable, by the Treasurer;
(b) the officer so selected to hold and perform such powers and duties shall
serve as Acting President until the President again becomes capable of holding
and performing the powers and duties of President, or until the Board of
Directors shall have elected a new President or designated another individual as
Acting President; (c) such officer (or the President, if such person is still
serving) shall have the power, in addition to all other powers granted to the
President by law, the Articles of Incorporation, these by-laws and the Board of
Directors, to appoint acting officers to fill vacancies that may have occurred,
either permanently or temporarily, by reason of such disaster or emergency, each
of such acting appointees to serve in such capacity until the officer for whom
the acting appointee is acting is capable of performing the duties of such
office, or until the Board of Directors shall have designated another individual
to perform such duties or shall have elected or appointed another person to fill
such office; (d) each acting officer so appointed shall be entitled to
9
<PAGE>
exercise all powers invested by law, the Articles of Incorporation, these by-
laws and the Board of Directors in the office in which such person is serving;
and (e) anyone transacting business with the corporation may rely upon a
certificate signed by any two officers of the corporation that a specified
individual has succeeded to the powers and duties of the President or such other
specified office. Any person, firm, corporation or other entity to which such
certificate has been delivered by such officers may continue to rely upon it
until notified of a change by means of a writing signed by two officers of this
corporation.
ARTICLE V.
Executive and Other Committees
------------------------------
SECTION A. CREATION OF COMMITTEES The Board of Directors may
----------------------
designate an Executive Committee and one or more other committees, each to
consist of two (2) or more of the directors of the corporation.
SECTION B. EXECUTIVE COMMITTEE. The Executive Committee, if there
-------------------
shall be one, shall consult with and advise the officers of the corporation in
the management of its business, and shall have, and may exercise, except to the
extent otherwise provided in the resolution of the Board of Directors creating
such Executive Committee, such powers of the Board of Directors as can be
lawfully delegated by the Board of Directors.
SECTION C. COMPENSATION COMMITTEE. The Board of Directors may appoint
----------------------
a Compensation Committee consisting of three (3) or more directors, at least a
majority of whom shall be neither officers nor otherwise employed by the
corporation. The Board of Directors shall designate one director as Chairman of
the Compensation Committee. The Compensation Committee shall have the power to
fix from time to time the compensation of all principal officers of the
corporation (including the Chairman of the Board) subject to the approval of the
Board of Directors, and shall otherwise exercise such powers as may be
specifically delegated to it by the Board of Directors and act upon such matters
as may be referred to it from time to time for study and recommendation by the
President or the Board of Directors.
SECTION D. AUDIT COMMITTEE. The Board of Directors may appoint from
---------------
among its members an Audit Committee consisting of not less than three (3)
members, and shall designate one of such members as the Chairman of the Audit
Committee. The responsibilities of the Audit Committee shall be as follows:
(1) To recommend to the Board of Directors for approval by the
stockholders a firm of independent public accountants to audit the accounts
of the corporation and its subsidiaries;
(2) To meet jointly and/or separately with the chief financial
officer of the corporation and the independent public accountants before
commencement of the audit to (a) discuss the valuation of the adequacy and
effectiveness of the accounting
10
<PAGE>
procedures and internal controls of the corporation and its subsidiaries, (b)
approve the overall scope of the audit to be made and the fees to be charged,
(c) inquire and discuss recent Financial Accounting Standards Board, Securities
and Exchange Commission or other regulatory agency pronouncements, if any, which
might affect the corporation's financial statements;
(3) To meet jointly and/or separately with the chief financial
officer and the independent public accountants at the conclusion of the audit to
(a) review the audited financial statements of the corporation, (b) discuss the
results of the audit, (c) discuss any significant recommendations by the
independent public accountants for improvement of accounting systems and
controls of the corporation, and (d) discuss the quality and depth of staffing
in the accounting and financial departments of the corporation; and
(4) To meet and confer with such officers and employees of the
corporation as the Audit Committee shall deem appropriate in connection with
carrying out the foregoing responsibilities.
SECTION E. OTHER COMMITTEES. Such other committees, to the extent
----------------
provided in the resolution or resolutions creating them, shall have such
functions and may exercise such powers of the Board of Directors as can be
lawfully delegated.
SECTION F. REMOVAL OR DISSOLUTION. Any Committee of the Board of
----------------------
Directors may be dissolved by the Board at any meeting; and any member of such
committee may be removed by the Board of Directors with or without cause. Such
removal shall be without prejudice to the contract rights, if any, of the person
so removed.
SECTION G. VACANCIES ON COMMITTEES. Vacancies on any committee of the
-----------------------
Board of Directors shall be filled by the Board of Directors at any regular or
special meeting.
SECTION H. MEETINGS OF COMMITTEES. Regular meetings of any committee
----------------------
of the Board of Directors may be held without notice at such time and at such
place as shall from time to time be determined by such committee, and special
meetings of any such committee may be called by any member thereof upon two (2)
days notice of the date, time and place of the meeting given to each of the
other members of such committee, or on such shorter notice as may be agreed to
in writing by each of the other members of such committee, given either
personally or in the manner provided in Section F of Article III of these by-
laws (pertaining to notice for directors' meetings).
SECTION I. ABSENCE OF COMMITTEE MEMBERS. The Board of Directors may
----------------------------
designate one or more directors as alternate members of any committee of the
Board of Directors, who may replace at any meeting of such committee, any member
not able to attend.
SECTION J. OUORUM OF COMMITTEES. At all meetings of committees of the
--------------------
Board of Directors, a majority of the total number of members of the
11
<PAGE>
committee as determined from time to time shall constitute a quorum for the
transaction of business.
SECTION K. MANNER OF ACTING OF COMMITTEES. If a quorum is present
------------------------------
when a vote is taken, the act of a majority of the members of any committee of
the Board of Directors present at the meeting shall be the act of such
committee.
SECTION L. MINUTES OF COMMITTEES. Each committee of the Board of
---------------------
Directors shall keep regular minutes of its proceedings and report the same to
the Secretary, and, when required, to the Board of Directors when required.
SECTION M. COMPENSATION. Members of any committee of the Board of
------------
Directors may be paid compensation in accordance with the provisions of Section
M of Article III of these by-laws (pertaining to compensation of directors).
SECTION N. INFORMAL ACTION. Any committee of the Board of Directors
---------------
may take such informal action and hold such informal meetings as allowed by the
provisions of Sections O and P of Article III of these by-laws.
ARTICLE VI.
Indemnification of Directors and Officers
-----------------------------------------
SECTION A. GENERAL. To the fullest extent permitted by law, the
-------
corporation shall indemnify any person who is or was a party, or is threatened
to be made a party, to any threatened, pending or completed action, suit or
other type of proceeding (other than an action by or in the right of the
corporation), whether civil, criminal, administrative, investigative or
otherwise, and whether formal or informal, by reason of the fact that such
person is or was a director or officer of the corporation or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against judgments, amounts paid in settlement, penalties, fines (including an
excise tax assessed with respect to any employee benefit plan) and expenses
(including counsel fees) actually and reasonably incurred in connection with any
such action, suit or other proceeding, including any appeal thereof, if such
person acted in good faith and in a manner such person reasonably believed to be
in, or not opposed to, the best interests of the corporation and, with respect
to any criminal action or proceeding, had no reasonable cause to believe such
person's conduct was unlawful. The termination of any such action, suit or other
proceeding by judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner that such person reasonably
believed to be in, or not opposed to, the best interests of the corporation or,
with respect to any criminal action or proceeding, had reasonable cause to
believe that such person's conduct was unlawful.
SECTION B. ACTIONS BY OR IN THE RIGHT OF THE CORPORATION. To the
---------------------------------------------
fullest extent permitted by law, the corporation shall indemnify
12
<PAGE>
any person who is or was a party, or is threatened to be made a party, to any
threatened, pending or completed action, suit or other type of proceeding (as
further described in Section A of this Article VI) by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person is or was a director or officer of the corporation or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including counsel fees) and amounts paid in settlement not
exceeding, in the judgment of the Board of Directors, the estimated expenses of
litigating the action, suit or other proceeding to conclusion, actually and
reasonably incurred in connection with the defense or settlement of such action,
suit or other proceeding including any appeal thereof. Such indemnification
shall be authorized if such person acted in good faith and in a manner such
person reasonably believed to be in, or not opposed to, the best interests of
the corporation, except that no indemnification shall be made under this Section
B in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable unless, and only to the extent that, the court in
which such action, suit or other proceeding was brought, or any other court of
competent jurisdiction, shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnification for such expenses
that such court shall deem proper.
SECTION C. OBLIGATION TO INDEMNIFY. To the extent that a director or
-----------------------
officer has been successful on the merits or otherwise in defense of any action,
suit or other proceeding referred to in Section A or Section B of this Article
VI, or in the defense of any claim, issue or matter therein, such person shall,
upon application, be indemnified against expenses (including counsel fees)
actually and reasonably incurred by such person in connection therewith.
SECTION D. DETERMINATION THAT INDEMNIFICATION IS PROPER.
--------------------------------------------
Indemnification pursuant to Section A or Section B of this Article VI, unless
made under the provisions of Section C of this Article VI or unless otherwise
made pursuant to a determination by a court, shall be made by the corporation
only as authorized in the specific case upon a determination that the
indemnification is proper in the circumstances because the indemnified person
has met the applicable standard of conduct set forth in Section A or Section B
of this Article VI. Such determination shall be made either (1) by the Board of
Directors by a majority vote of a quorum consisting of directors who were not
parties to the action, suit or other proceeding to which the indemnification
relates; (2) if such a quorum is not obtainable or, even if obtainable, by
majority vote of a committee duly designated by the Board of Directors (the
designation being one in which directors who are parties may participate)
consisting solely of two or more directors not at the time parties to such
action, suit or other proceeding; (3) by independent legal counsel (i) selected
by the Board of Directors in accordance with the requirements of subsection (1)
or by a committee designated under subsection (2) or (ii) if a quorum of the
directors cannot be obtained and a committee cannot be designated, selected by
majority vote of the full Board of Directors (the vote being one in which
directors who are parties may participate); or (4) by the stockholders by a
majority vote of a quorum consisting of stockholders who were not parties to
such action, suit or other
13
<PAGE>
proceeding or, if no such quorum is obtainable, by a majority vote of
stockholders who were not parties to such action, suit or other proceeding.
SECTION E. EVALUATION AND AUTHORIZATION. Evaluation of the
----------------------------
reasonableness of expenses and authorization of indemnification shall be made in
the same manner as is prescribed in Section D of this Article VI for the
determination that indemnification is permissible; provided, however, that if
the determination as to whether indemnification is permissible is made by
independent legal counsel, the persons who selected such independent legal
counsel shall be responsible for evaluating the reasonableness of expenses and
may authorize indemnification.
SECTION F. PREPAYMENT OF EXPENSES. Expenses (including attorneys'
----------------------
fees, paralegals' fees and court costs) incurred by a director or officer in
defending a civil or criminal action, suit or other proceeding referred to in
Section A or Section B of this Article VI shall be paid by the corporation in
advance of the final disposition thereof upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if such person is
ultimately found not to be entitled to indemnification by the corporation
pursuant to this Article VI.
SECTION G. NONEXCLUSIVITY AND LIMITATIONS. The indemnification and
------------------------------
advancement of expenses provided pursuant to this Article VI shall not be deemed
exclusive of any other rights to which a person may be entitled under any law,
by-law, agreement, vote of stockholders or disinterested directors, or
otherwise, both as to action in such person's official capacity and as to action
in any other capacity while holding office with the corporation. The Board of
Directors may, at any time, approve indemnification of or advancement of
expenses to any other person that the corporation has the power by law to
indemnify, including, without limitation, employees and agents of the
corporation. In all cases not specifically provided for in this Article VI,
indemnification or advancement of expenses shall not be made to the extent that
such indemnification or advancement of expenses is expressly prohibited by law.
SECTION H. CONTINUATION OF INDEMNIFICATION RIGHT. Unless expressly
-------------------------------------
otherwise provided when authorized or ratified by this corporation,
indemnification and advancement of expenses as provided for in this Article VI
shall continue as to a person who has ceased to be a director, officer, employee
or agent and shall inure to the benefit of the heirs, executors, and
administrators of such person, unless otherwise provided when authorized or
ratified. For purposes of this Article VI, the term "corporation" includes, in
addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger, so that
any person who is or was a director or officer of a constituent corporation, or
is or was serving at the request of a constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, is in the same position under this Article VI with
respect to the resulting or surviving corporation as such person would have been
with respect to such constituent corporation if its separate existence had
continued.
14
<PAGE>
SECTION I. INSURANCE. The corporation may purchase and maintain
---------
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or who is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against such person and incurred by such person in any such capacity or
arising out of such person's status as such, whether or not the corporation
would have the power to indemnify such person against the liability under the
provision.
ARTICLE VII.
Interested Parties
------------------
SECTION A. GENERAL. No contract or other transaction between the
-------
corporation and any one or more of its directors or any other corporation, firm,
association or entity in which one or more of its directors are directors or
officers or are financially interested shall be either void or voidable because
of such relationship or interest, because such director or directors were
present at the meeting of the Board of Directors or of a committee thereof which
authorizes, approves or ratifies such contract or transaction or because such
director's or directors' votes are counted for such purpose if: (a) the fact of
such relationship or interest is disclosed or known to the Board of Directors or
committee which authorizes, approves or ratifies the contract or transaction by
a vote or consent sufficient for the purpose without counting the votes or
consents of such interested directors; (b) the fact of such relationship or
interest is disclosed or known to the stockholders entitled to vote on the
matter, and they authorize, approve or ratify such contract or transaction by
vote or written consent; or (c) the contract or transaction is fair and
reasonable as to the corporation at the time it is authorized by the Board of
Directors, a committee thereof or the stockholders.
SECTION B. DETERMINATION OF QUORUM AND APPROVAL. For purposes of
------------------------------------
Section A(a) only of this Article VII, a conflict of interest transaction is
authorized, approved or ratified if it receives the affirmative vote of a
majority of the directors of the Board of Directors, or on the committee, who
have no relationship or interest in the transaction described in Section A(a),
but a transaction may not be authorized, approved or ratified under this Section
B by a single director. If a majority of the directors who have no such
relationship or interest in the transaction vote to authorize, approve or ratify
the transaction, a quorum is present for the purpose of taking action under this
Section B. The presence of, or a vote cast by, a director with such relationship
or interest in the transaction does not affect the validity of any action taken
under Section A(a) if the transaction is otherwise authorized, approved or
ratified as provided in that subsection, but such presence or vote of those
directors may be counted for purposes of determining whether the transaction is
approved under other sections of the Corporation's by-laws and applicable law.
SECTION C. APPROVAL BY STOCKHOLDERS. For purposes of Section A(b) of
------------------------
this Article VII, a conflict of interest transaction shall be authorized,
approved or ratified if it receives the vote of a majority of the shares
entitled to be
15
<PAGE>
counted under this Section C. Shares owned by or voted under the control of a
director who has a relationship or interest in the transaction described in
Section A of this Article VII may not be counted in a vote of stockholders to
determine whether to authorize, approve or ratify a conflict of interest
transaction under Section A(b) of this Article VII. The vote of the shares owned
by or voted under the control of a director who has a relationship or interest
in the transaction described in Section A of this Article VII, shall be counted,
however, in determining whether the transaction is approved under other sections
of the corporation's by-laws and applicable law. A majority of those shares that
would be entitled, if present, to be counted in a vote on the transaction under
this Section C shall constitute a quorum for the purpose of taking action under
this Section C.
ARTICLE VIII.
Certificates of Stock
---------------------
SECTION A. CERTIFICATES FOR SHARES. Shares may but need not be
-----------------------
represented by certificates. The rights and obligations of stockholders shall be
identical whether or not their shares are represented by certificates. If shares
are represented by certificates, each certificate shall be in such form as the
Board of Directors may from time to time prescribe, signed (either manually or
in facsimile) by the President, a Vice President, the Secretary, or the
Treasurer and sealed with the seal of the corporation or its facsimile),
exhibiting the holder's name, certifying the number of shares owned and stating
such other matters as may be required by law. The certificates shall be numbered
and entered on the books of the corporation as they are issued. If shares are
not represented by certificates, then, within a reasonable time after issue or
transfer of shares without certificates, the corporation shall send the
stockholder a written statement in such form as the Board of Directors may from
time to time prescribe, certifying as to the number of shares owned by the
stockholder and as to such other information as would have been required to be
on certificates for such shares.
SECTION B. SIGNATURES OF PAST OFFICERS. If the person who signed
---------------------------
(either manually or in facsimile) a share certificate no longer holds office
when the certificate is issued, the certificate shall nevertheless be valid.
SECTION C. TRANSFER AGENTS AND REGISTRARS. The Board of Directors
------------------------------
may, in its discretion, appoint responsible banks or trust companies in such
city or cities as the Board may deem advisable from time to time to act as
transfer agents and registrars of the stock of the corporation; and, when such
appointments shall have been made, no stock certificate shall be valid until
countersigned by one of such transfer agents and registered by one of such
registrars.
SECTION D. TRANSFER OF SHARES. Transfers of shares of the
------------------
corporation shall be made upon its books by the holder of the shares in person
or by the holder's lawfully constituted representative, upon surrender of the
certificate of stock for cancellation if such shares are represented by a
certificate of stock or by delivery to the corporation of such evidence of
transfer as may be required by the corporation if such shares are not
represented by certificates. The person in whose name shares stand on the
16
<PAGE>
books of the corporation shall be deemed by the corporation to be the owner
thereof for all purposes and the corporation shall not be bound to recognize any
equitable or other claim to or interest in such share on the part of any other
person, whether or not it shall have express or other notice thereof, save as
expressly provided by the laws of the State of Florida.
SECTION E. LOST CERTIFICATES. The Board of Directors may direct a
-----------------
new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation and alleged to have been lost
or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost or destroyed certificate or certificates, or the owner's
legal representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost or destroyed.
ARTICLE IX.
Record Date
-----------
SECTION A. RECORD DATE FOR STOCKHOLDER ACTIONS. The Board of
-----------------------------------
Directors is authorized from time to time to fix in advance a date, not more
than sixty (60) nor less than ten (10) days before the date of any meeting of
the stockholders, a date in connection with the obtaining of the consent of
stockholders for any purpose, or the date of any other action requiring a
determination of the stockholders, as the record date for the determination of
the stockholders entitled to notice of and to vote at any such meeting and any
adjournment thereof (unless a new record date must be established by law for
such adjourned meeting), or of the stockholders entitled to give such consent or
take such action, as the case may be. In no event may a record date so fixed by
the Board of Directors precede the date on which the resolution establishing
such record date is adopted by the Board of Directors. Only those stockholders
listed as stockholders of record as of the close of business on the date so
fixed as the record date shall be entitled to notice of and to vote at such
meeting and any adjournment thereof, or to exercise such rights or to give such
consent, as the case may be, notwithstanding any transfer of any stock on the
books of the corporation after any such record date fixed as aforesaid. If the
Board of Directors fails to establish a record date as provided herein, the
record date shall be deemed to be the date ten (10) days prior to the date of
the stockholders' meeting.
SECTION B. RECORD DATE FOR DIVIDEND AND OTHER DISTRIBUTIONS. The
------------------------------------------------
Board of Directors is authorized from time to time to fix in advance a date, not
more than sixty (60) nor less than ten (10) days before the date of any dividend
or other distribution, as the record date for the determination of the
stockholders entitled to receive such dividend or other distribution. In no
event may a record date so fixed by the Board of Directors precede the date on
which the resolution establishing
17
<PAGE>
such record date is adopted by the Board of Directors. Only those stockholders
listed as stockholders of record as of the close of business on the date so
fixed as the record date shall be entitled to receive the dividend or other
distribution, as the case may be, notwithstanding any transfer of any stock on
the books of the corporation after any such record date fixed as aforesaid. If
the Board of Directors fails to establish a record date as provided herein, the
record date shall be deemed to be the date ten (10) days prior to the date of
distribution of the dividend or other distribution.
ARTICLE X.
Dividends
---------
The Board of Directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares of capital stock in the
manner and upon the terms and conditions provided by the Articles of
Incorporation and by law. Subject to the provisions of the Articles of
Incorporation and to law, dividends may be paid in cash or property, including
shares of stock or other securities of the corporation.
ARTICLE XI.
Fiscal Year
-----------
The fiscal year of the corporation shall begin on January 1 and end on
December 31 of each year, unless the Board of Directors specifically establishes
a different fiscal year.
ARTICLE XII.
Seal
----
The corporate seal shall have the name of the corporation, the word
"SEAL" and the year of incorporation inscribed thereon, and may be a facsimile,
engraved, printed or impression seal. An impression of said seal appears on the
margin hereof.
ARTICLE XIII.
Stock in Other Corporations
---------------------------
Shares of stock in other corporations held by the corporation shall be
voted by such officer or officers or other agent of the corporation as the Board
of Directors shall from time to time designate for the purpose or by a proxy
thereunto duly authorized by said Board.
18
<PAGE>
ARTICLE XIV.
Amendments
----------
These by-laws may be altered, amended or repealed and new by-laws may
be adopted by the Board of Directors; provided that any by-law or amendment
thereto as adopted by the Board of Directors may be altered, amended or repealed
by vote of the stockholders entitled to vote thereon, or a new by-law in lieu
thereof may be adopted by the stockholders, and the stockholders may prescribe
in any by-law made by them that such by-law shall not be altered, amended or
repealed by the Board of Directors.
ARTICLE XV.
Emergency By-laws
-----------------
SECTION A. SCOPE OF EMERGENCY BY-LAWS. The emergency by-laws
--------------------------
provided in this Article XV shall be operative during any emergency,
notwithstanding any different provision set forth in the preceding articles
hereof or the Articles of Incorporation. For purposes of the emergency by-law
provisions of this Article XV, an emergency shall exist if a quorum of the
corporation's directors cannot readily be assembled because of some catastrophic
event. To the extent not inconsistent with the provisions of this Article XV,
the provisions provided elsewhere herein shall remain in effect during such
emergency and upon termination of such emergency, these emergency by-laws shall
cease to be operative.
SECTION B. CALL AND NOTICE OF MEETING. During any emergency, a
--------------------------
meeting of the Board of Directors may be called by any officer or director of
the corporation. Notice of the date, time and place of the meeting shall be
given by the person calling the meeting to such of the directors as it may be
feasible to reach by any available means of communication. Such notice shall be
given at such time in advance of the meeting as circumstances permit in the
judgment of the person calling the meeting.
SECTION C. QUORUM AND VOTING. At any such meeting of the Board of
-----------------
Directors, a quorum shall consist of any one or more directors, and the act of
the majority of the directors present at such meeting shall be the act of the
corporation.
SECTION D. APPOINTMENT OF TEMPORARY DIRECTORS. The director or
----------------------------------
directors who are able to be assembled at a meeting of directors during an
emergency may assemble for the purpose of appointing, if such directors deem it
necessary, one or more temporary directors (the "Temporary Directors") to serve
as directors of the corporation during the term of any emergency.
1. The director or directors who are able to be assembled at a meeting
of directors during an emergency may assemble for the purpose of appointing, if
such directors deem it necessary, one or more temporary directors (the
"Temporary Directors") to serve as directors of the corporation during the term
of any emergency.
2. If no directors are able to attend a meeting of directors during an
emergency, then such stockholders as may reasonably be assembled shall have the
right, by majority vote of those assembled, to appoint Temporary Directors to
serve on the Board of Directors until the termination of the emergency.
19
<PAGE>
3. If no stockholders can reasonably be assembled in order to conduct
a vote for Temporary Directors, then the President or his successor, as
determined pursuant to Section N of Article IV herein shall be deemed a
Temporary Director of the corporation, and such President or his successor, as
the case may be, shall have the right to appoint additional Temporary Directors
to serve with him on the Board of Directors of the corporation during the term
of the emergency.
4. Temporary Directors shall have all of the rights, duties and
obligations of directors appointed pursuant to Article III hereof, provided,
however, that a Temporary Director may be removed from the Board of Directors at
any time by the person or persons responsible for appointing such Temporary
Director, or by vote of the majority of the stockholders present at any meeting
of the stockholders during an emergency, and, in any event, the Temporary
Director shall automatically be deemed to have resigned from the Board of
Directors upon the termination of the emergency in connection with which the
Temporary Director was appointed.
SECTION E. MODIFICATION OF LINES OF SUCCESSION. During any
-----------------------------------
emergency, the Board of Directors may provide, and from time to time modify,
lines of succession different from that provided in Section N of Article IV in
the event that during such an emergency any or all officers or agents of the
corporation shall for any reason be rendered incapable of discharging their
duties.
SECTION F. CHANGE OF PRINCIPAL OFFICE. The Board of Directors may,
--------------------------
either before or during any such emergency, and effective during such emergency,
change the principal office of the corporation or designate several alternative
head offices or regional offices, or authorize the officers of the corporation
to do so.
SECTION G. LIMITATION OF LIABILITY. No officer, director or employee
-----------------------
acting in accordance with these emergency by-laws during an emergency shall be
liable except for willful misconduct.
SECTION H. REPEAL AND CHANGE. These emergency by-laws shall be
-----------------
subject to repeal or change by further action of the Board of Directors or by
action of the stockholders, but no such repeal or change shall modify the
provisions of Section G of this Article XV with regard to actions taken prior to
the time of such repeal or change. Any amendment of these emergency by-laws may
make any further or different provision that may be practical or necessary under
the circumstances of the emergency.
20
<PAGE>
EXHIBIT 4.1
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
among
MTL. INC.,
LEVY TRANSPORT, LTD./LEVY TRANSPORT LTEE.,
ABN AMRO BANK,
THE BANK OF NOVA SCOTIA,
BHF-BANK AKTIENGESELLSCHAFT.
CREDITANSTALT CORPORATE FINANCE, INC.
and
ROYAL BANK OF CANADA,
AS CO-AGENTS,
VARIOUS LENDING INSTITUTIONS,
SALOMON BROTHERS HOLDING COMPANY, INC,
AS DOCUMENTATION AGENT,
BANKERS TRUST COMPANY,
AS SYNDICATION AGENT,
and
CREDIT SUISSE FIRST BOSTON,
AS ADMINISTRATIVE AGENT
_______________________________
Dated as of June 9, 1998
and
Amended and Restates as of August 28, 1998
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. Amount and Terms of Credit................................ 2
1.01 Commitments................................................ 2
1.02 Minimum Borrowing Amounts, etc............................. 8
1.03 Notice of Borrowing........................................ 8
1.04 Disbursement of Funds...................................... 9
1.05 Notes...................................................... 10
1.06 Conversions................................................ 13
1.07 Pro Rata Borrowings........................................ 15
1.08 Interest................................................... 15
1.09 Interest Periods........................................... 17
1.10 Increased Costs; Illegality; etc........................... 18
1.11 Compensation............................................... 21
1.12 Change of Lending Office................................... 22
1.13 Replacement of Banks....................................... 22
1.14 Provisions Regarding Bankers' Acceptances, Drafts, B/A
Equivalent Loans, etc..................................... 24
1.15 Special Provisions Regarding Canadian Dollar Revolving
Loans..................................................... 25
SECTION 2. Letters of Credit......................................... 27
2.01 Letters of Credit.......................................... 27
2.02 Letter of Credit Requests.................................. 30
2.03 Letter of Credit Participations............................ 30
2.04 Agreement to Repay Letter of Credit Drawings............... 33
2.05 Increased Costs............................................ 34
SECTION 3. Fees; Commitments......................................... 35
3.01 Fees....................................................... 35
3.02 Voluntary Termination or Reduction of Total Unutilized
Revolving Loan Commitment................................. 36
3.03 Mandatory Reduction of Commitments......................... 37
SECTION 4. Payments.................................................. 39
4.01 Voluntary Prepayments...................................... 39
4.02 Mandatory Repayments and Commitment Reductions............. 41
4.03 Method and Place of Payment................................ 51
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
4.04 Net Payments............................................... 52
SECTION 5. Conditions Precedent to Restatement Effective Date........ 55
5.01 Execution of Agreement; Notes.............................. 56
5.02 Officer's Certificate...................................... 56
5.03 Opinions of Counsel........................................ 56
5.04 Company Documents; Proceedings............................. 57
5.05 Adverse Change, etc........................................ 58
5.06 Litigation................................................. 58
5.07 Approvals.................................................. 58
5.08 Consummation of the CLC Merger, Financing Transactions,
etc....................................................... 59
5.09 CLC Refinancing............................................ 60
5.10 Security Documents; etc.................................... 62
5.11 U.S. Subsidiaries Guaranty................................. 65
5.12 Employee Benefit Plans; Shareholders' Agreements;
Management Agreements; Employment Agreements; Collective
Bargaining Agreements; Existing Indebtedness Agreements;
Material Contracts; Tax Allocation Agreements 66
5.13 Consent Letter............................................. 68
5.14 Solvency Certificate; Insurance Certificates;
Environmental Assessments................................. 68
5.15 Financial Statements; Pro Forma Balance Sheet; Projections. 69
5.16 Payment of Fees............................................ 69
5.17 Original Credit Agreement; etc............................. 69
5.18 Compliance With Senior Subordinated Notes Indenture........ 70
SECTION 6. Conditions Precedent to All Credit Events................. 70
6.01 No Default; Representations and Warranties................. 70
6.02 Notice of Borrowing; Letter of Credit Request.............. 71
SECTION 7. Representations and Warranties............................ 71
7.01 Company Status............................................. 72
7.02 Company Power and Authority................................ 72
7.03 No Violation............................................... 72
7.04 Litigation................................................. 72
7.05 Use of Proceeds; Margin Regulations........................ 73
7.06 Governmental Approvals..................................... 73
7.07 Investment Company Act..................................... 74
7.08 Public Utility Holding Company Act......................... 74
7.09 True and Complete Disclosure............................... 74
7.10 Financial Condition; Financial Statements.................. 74
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
7.11 Security Interests......................................... 76
7.12 Compliance with ERISA...................................... 77
7.13 Capitalization............................................. 79
7.14 Subsidiaries............................................... 79
7.15 Intellectual Property, etc................................. 79
7.16 Compliance with Statutes, etc.............................. 80
7.17 Environmental Matters...................................... 80
7.18 Properties................................................. 81
7.19 Labor Relations............................................ 81
7.20 Tax Returns and Payments................................... 82
7.21 Scheduled Existing Indebtedness............................ 82
7.22 Insurance.................................................. 82
7.23 Representations and Warranties in Other Documents.......... 82
7.24 Original Transaction and Transaction....................... 83
7.25 Special Purpose Corporation................................ 83
7.26 Subordination.............................................. 83
7.27 Year 2000 Representation................................... 83
SECTION 8. Affirmative Covenants..................................... 84
8.01 Information Covenants...................................... 84
8.02 Books, Records and Inspections............................. 88
8.03 Insurance.................................................. 89
8.04 Payment of Taxes........................................... 90
8.05 Corporate Franchises....................................... 90
8.06 Compliance with Statutes; etc.............................. 90
8.07 Compliance with Environmental Laws......................... 90
8.08 ERISA...................................................... 92
8.09 Good Repair................................................ 93
8.10 End of Fiscal Years; Fiscal Quarters....................... 94
8.11 Additional Security; Further Assurances.................... 94
8.12 Foreign Subsidiaries Security.............................. 95
8.13 Ownership of Subsidiaries.................................. 96
8.14 Permitted Acquisitions..................................... 96
8.15 Maintenance of Company Separateness........................ 98
8.16 Performance of Obligations................................. 99
8.17 Use of Proceeds............................................ 99
SECTION 9. Negative Covenants........................................ 99
9.01 Changes in Business........................................ 99
9.02 Consolidation; Merger; Sale or Purchase of Assets; etc..... 100
9.03 Liens...................................................... 105
</TABLE>
(iii)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
9.04 Indebtedness............................................... 108
9.05 Advances; Investments; Loans............................... 110
9.06 Dividends; etc............................................. 114
9.07 Transactions with Affiliates and Unrestricted Subsidiaries. 115
9.08 Designated Senior Debt..................................... 116
9.09 Consolidated Interest Coverage Ratio....................... 116
9.10 Adjusted Total Leverage Ratio.............................. 118
9.11 Capital Expenditures....................................... 119
9.12 Limitation on Voluntary Payments and Modifications of
Indebtedness; Modifications of Certificate of Incorporation,
By-Laws and Certain Other Agreements; Issuances of Capital
Stock; etc. 120
9.13 Limitation on Issuance of Capital Stock.................... 122
9.14 Limitation on Certain Restrictions on Subsidiaries......... 123
9.15 Limitation on the Creation of Subsidiaries, Joint Ventures
and Unrestricted Subsidiaries 124
SECTION 10. Events of Default........................................ 125
10.01 Payments.................................................. 125
10.02 Representations, etc...................................... 125
10.03 Covenants................................................. 126
10.04 Default Under Other Agreements............................ 126
10.05 Bankruptcy, etc........................................... 126
10.06 ERISA..................................................... 127
10.07 Security Documents........................................ 128
10.08 Guaranties................................................ 128
10.09 Judgments................................................. 128
10.10 Ownership................................................. 128
SECTION 11. Definitions.............................................. 129
SECTION 12. The Agents............................................... 183
12.01 Appointment............................................... 183
12.02 Delegation of Duties...................................... 183
12.03 Exculpatory Provisions.................................... 183
12.04 Reliance by Agents........................................ 184
12.05 Notice of Default......................................... 185
12.06 Nonreliance on Agents and Other Banks..................... 185
12.07 Indemnification........................................... 186
12.08 Agents in their Individual Capacities..................... 186
12.09 Holders................................................... 187
12.10 Resignation of the Agents................................. 187
</TABLE>
(iv)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
12.11 Special Provisions Regarding the Co-Agents................ 188
SECTION 13. Miscellaneous............................................ 188
13.01 Payment of Expenses, etc.................................. 188
13.02 Right of Setoff........................................... 189
13.03 Notices................................................... 189
13.04 Benefit of Agreement...................................... 189
13.05 No Waiver; Remedies Cumulative............................ 192
13.06 Payments Pro Rata......................................... 192
13.07 Calculations; Computations................................ 193
13.08 Governing Law; Submission to Jurisdiction; Venue.......... 194
13.09 Counterparts.............................................. 195
13.10 Effectiveness............................................. 195
13.11 Headings Descriptive...................................... 196
13.12 Amendment or Waiver; etc.................................. 196
13.13 Survival.................................................. 198
13.14 Domicile of Loans and Commitments......................... 198
13.15 Confidentiality........................................... 198
13.16 Waiver of Jury Trial...................................... 199
13.17 Register.................................................. 199
13.18 Limitation on Additional Amounts, etc..................... 199
13.19 Post-Closing Actions...................................... 200
13.20 Judgment Currency......................................... 201
13.21 Absence of Financial Assistance by Canadian Borrower...... 202
13.22 Additions of New Banks, etc............................... 202
SECTION 14. U.S. Borrower Guaranty................................... 203
14.01 The U.S. Borrower Guaranty................................ 203
14.02 Bankruptcy................................................ 203
14.03 Nature of Liability....................................... 204
14.04 Independent Obligation.................................... 204
14.05 Authorization............................................. 204
14.06 Reliance.................................................. 205
14.07 Subordination............................................. 205
14.08 Waiver.................................................... 206
14.09 Payment................................................... 207
</TABLE>
SCHEDULE I List of Banks and Commitments
SCHEDULE II Bank Addresses
SCHEDULE III Real Properties
(v)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SCHEDULE IV Scheduled Existing Indebtedness
SCHEDULE V Plans
SCHEDULE VI Existing Investments
SCHEDULE VII Subsidiaries
SCHEDULE VIII Insurance
SCHEDULE IX Existing Liens
SCHEDULE X Capitalization
SCHEDULE XI Program Affiliates
SCHEDULE XII Provisions Relating to Bankers' Acceptance Loans
and B/A Equivalent Loans
SCHEDULE XIII Tractor Trailers
SCHEDULE XIV Original Letters of Credit
SCHEDULE XV Consolidated EBITDA Adjustments
SCHEDULE XVI Affiliate Transactions
EXHIBIT A Form of Notice of Borrowing
EXHIBIT B-1 Form of Tranche A Term Note
EXHIBIT B-2 Form of Tranche B Term Note
EXHIBIT B-3 Form of Tranche C Term Note
EXHIBIT B-4 Form of Dollar Revolving Note
EXHIBIT B-5 Form of Canadian Dollar Revolving Note
EXHIBIT B-6 Form of Swingline Note
EXHIBIT B-7 Form of B/A Equivalent Note
EXHIBIT C Form of Letter of Credit Request
EXHIBIT D Form of Section 4.04(b)(ii) Certificate
EXHIBIT E-1 Form of Opinion of Dewey Ballantine LLP,
special New York counsel to the Credit Parties
EXHIBIT E-2 Form of Opinion of Pepper Hamilton, special
Pennsylvania counsel to the U.S. Credit Parties
EXHIBIT E-3 Form of Opinion of Robert R. Kasak, special
Florida counsel to the U.S. Credit Parties
EXHIBIT E-4 Form of Opinion of Ogilvey Renault, special
Canadian counsel to the Credit Parties
EXHIBIT F Form of Officers' Certificate
EXHIBIT G-1 Form of U.S. Pledge Agreement
EXHIBIT G-2 Form of Quebec Pledge Agreement
EXHIBIT G-3 Form of Canadian Pledge Agreement
EXHIBIT H-1 Form of U.S. Security Agreement
EXHIBIT H-2 Form of Canadian Security Agreement
EXHIBIT H-3 Form of Canadian Movable Hypothec
</TABLE>
(vi)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
EXHIBIT I-1 Form of U.S. Subsidiaries Guaranty
EXHIBIT I-2 Form of Canadian Subsidiaries Guaranty
EXHIBIT J Form of Consent Letter
EXHIBIT K Form of Solvency Certificate
EXHIBIT L Form of Assignment and Assumption Agreement
EXHIBIT M Form of Intercompany Note
EXHIBIT N Form of Shareholder Subordinated Note
</TABLE>
(vii)
<PAGE>
CREDIT AGREEMENT, dated as of June 9, 1998 and amended and restated as
of August 28, 1998, among MTL, INC., a Florida corporation (the "U.S.
Borrower"), LEVY TRANSPORT, LTD./LEVY TRANSPORT LTEE., a Quebec company and a
Wholly-Owned Subsidiary of the U.S. Borrower (the "Canadian Borrower"), the
Banks from time to time party hereto, ABN AMRO BANK, THE BANK OF NOVA SCOTIA,
BHF-BANK AKTIENGESELLSCHAFT, CREDITANSTALT CORPORATE FINANCE, INC. and ROYAL
BANK OF CANADA, as Co-Agents (in such capacity, each a "Co-Agent" and,
collectively, the "Co-Agents"), SALOMON BROTHERS HOLDING COMPANY INC, as
Documentation Agent (in such capacity, the "Documentation Agent"), BANKERS TRUST
COMPANY, as Syndication Agent (in such capacity, the "Syndication Agent"), and
CREDIT SUISSE FIRST BOSTON, as Administrative Agent (in such capacity, the
"Administrative Agent" and together with the Documentation Agent and the
Syndication Agent, each an "Agent," and collectively, the "Agents"). Unless
otherwise defined herein, all capitalized terms used herein and defined in
Section 11 are used herein as so defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the U.S. Borrower, the Canadian Borrower, the Original Banks,
Salomon Brothers Holding Company, Inc, as Documentation Agent, Bankers Trust
Company, as Syndication Agent, and Credit Suisse First Boston, as Administrative
Agent, are parties to a Credit Agreement, dated as of June 9, 1998 (as the same
has been amended, modified or supplemented to, but not including, the
Restatement Effective Date, the "Original Credit Agreement"); and
WHEREAS, the parties hereto wish to amend and restate the Original
Credit Agreement in the form of this Agreement to, inter alia, permit the CLC
----- ----
Merger and the financing therefor on the terms and subject to the conditions
provided herein and make available to the U.S. Borrower and the Canadian
Borrower the respective credit facilities provided for herein;
NOW, THEREFORE, the parties hereto agree that the Original Credit
Agreement shall be and hereby is amended and restated in its entirety as
follows:
<PAGE>
SECTION 1. Amount and Terms of Credit.
--------------------------
1.01 Commitments. (a) Subject to and upon the terms and conditions
-----------
set forth herein, (A) each Original Term Loan Bank severally agrees to continue,
on the Restatement Effective Date, the Original Term Loans made by such Original
Term Loan Bank to the U.S. Borrower pursuant to the Original Credit Agreement
and outstanding on the Restatement Effective Date (immediately prior to giving
effect thereto) as Tranche A Term Loans hereunder and (B) each Bank with a New
Tranche A Term Loan Commitment severally agrees to make, on the Restatement
Effective Date, a term loan or term loans (each, a "New Tranche A Term Loan"
and, collectively, the "New Tranche A Term Loans" and together with the Original
Term Loans continued pursuant to clause (A) above, the "Tranche A Term Loans")
to the U.S. Borrower, which Tranche A Term Loans:
(i) shall be denominated in U.S. Dollars;
(ii) except as hereinafter provided, shall, at the option of the U.S.
Borrower, be incurred and maintained as, and/or converted into, Base Rate
Loans or Eurodollar Loans, provided, that (x) except as otherwise
--------
specifically provided in Section 1.10(b), all Tranche A Term Loans made as
part of the same Borrowing shall at all times consist of Tranche A Term
Loans of the same Type and (y) unless the Agents have determined that the
Syndication Date has occurred (at which time this clause (y) shall no
longer be applicable), no more than three Borrowings of Tranche A Term
Loans to be maintained as Eurodollar Loans may be incurred prior to the
90th day after the Restatement Effective Date (or, if later, the last day
of the Interest Period applicable to the third Borrowing of Eurodollar
Loans referred to below), each of which Borrowings of Eurodollar Loans may
only have an Interest Period of one month, and the first of which
Borrowings may only be made on, or within five Business Days after, the
Restatement Effective Date, the second of which Borrowings may only be made
on the last day of the Interest Period of the first such Borrowing and the
third of which Borrowings may only be made on the last day of the Interest
Period of the second such Borrowing; and
(iii) shall not exceed for any Bank, in initial principal amount, that
amount which equals the sum of (x) the aggregate outstanding principal
amount of the Original Term Loans, if any, made by such Bank and
outstanding on the Restatement Effective Date (immediately prior to giving
effect thereto) as set forth on Part A of Schedule I and (y) the New
Tranche A Term Loan Commitment of such Bank (if any) as in effect on the
Restatement Effective Date (before giving effect to any reductions thereto
on such date pursuant to Section 3.03(b)).
Once repaid, Tranche A Term Loans incurred hereunder may not be reborrowed.
-2-
<PAGE>
(b) Subject to and upon the terms and conditions herein set forth,
(x) each RL Bank (other than a Canadian RL Bank in its capacity as such)
severally agrees to make a revolving loan or revolving loans to the U.S.
Borrower, which revolving loans shall be made and maintained in U.S. Dollars
(each, a "Dollar Revolving Loan" and, collectively, the "Dollar Revolving
Loans") and (y) each Canadian RL Bank severally agrees to make a revolving loan
or revolving loans to the Canadian Borrower, which revolving loans shall be made
and maintained in Canadian Dollars (each, a "Canadian Dollar Revolving Loan"
and, collectively, the "Canadian Dollar Revolving Loans", and with the revolving
loans made to the Borrowers pursuant to this Section 1.01(b) being each called,
a "Revolving Loan" and, collectively, the "Revolving Loans"), which Revolving
Loans:
(i) shall be made at any time and from time to time on and after the
Original Effective Date and prior to the A TL/RL Maturity Date;
(ii) shall, in the case of Dollar Revolving Loans, and at the option
of the U.S. Borrower, be incurred and maintained as, and/or converted into,
Base Rate Loans or Eurodollar Loans, provided that (x) except as otherwise
--------
specifically provided in Section 1.10(b), all Dollar Revolving Loans made
as part of the same Borrowing shall at all times be of the same Type;
(iii) shall, in the case of Canadian Dollar Revolving Loans, and at the
option of the Canadian Borrower, be made either by means of (x) Canadian
Prime Rate Loans in Canadian Dollars, (y) in the case of a B/A Bank, the
creation and discount of Bankers' Acceptances in Canadian Dollars on the
terms and conditions provided for herein and in Schedule XII hereto (the
terms and conditions of which shall be deemed incorporated by reference
into this Agreement) or (z) in a case of a Non-B/A Bank, the creation and
purchase of completed Drafts in Canadian Dollars and the exchange of such
Drafts for B/A Equivalent Notes, in each case on the terms and conditions
provided for herein and in Schedule XII hereto;
(iv) may be repaid and reborrowed in accordance with the provisions
hereof;
(v) shall not be made (or be required to be made) by any RL Bank on
any date if, after giving effect thereto, the Revolving Credit Exposure of
such RL Bank would exceed the Revolving Loan Commitment of such RL Bank at
such time;
(vi) shall not, in the case of Dollar Revolving Loans, be made (or be
required to be made) by any RL Bank on any date if, after giving effect
thereto, either (x) the U.S. Revolving Credit Exposure of such RL Bank
would exceed the Non-Canadian Revolving Loan Sub-Commitment of such RL Bank
at such time or
-3-
<PAGE>
(y) the Aggregate U.S. Revolving Credit Exposure would exceed the Total
Non-Canadian Revolving Loan Sub-Commitment as then in effect;
(vii) shall not, in the case of Canadian Dollar Revolving Loans, exceed
for any Canadian RL Bank at the time of the making of any such Canadian
Dollar Revolving Loans, and after giving effect thereto, that aggregate
principal amount or Face Amount, as the case may be, of such Canadian
Dollar Revolving Loans (for this purpose, using the Dollar Equivalent of
the principal amount or Face Amount, as the case may be, thereof) which,
when added to the Dollar Equivalent of the aggregate principal amount or
Face Amount, as the case may be, of all other Canadian Dollar Revolving
Loans then outstanding from such Canadian RL Bank, equals the Canadian
Revolving Loan Sub-Commitment of such Canadian RL Bank at such time;
(viii) shall not, in the case of Canadian Dollar Revolving Loans, exceed
for all Canadian RL Banks at the time of the making of any such Canadian
Dollar Revolving Loans, and after giving effect thereto, that aggregate
principal amount or Face Amount, as the case may be, of such Canadian
Dollar Revolving Loans (for this purpose, using the Dollar Equivalent of
the principal amount or Face Amount, as the case may be, thereof) which,
when added to the Dollar Equivalent of the aggregate principal amount or
Face Amount, as the case may be, of all other Canadian Dollar Revolving
Loans then outstanding, equals the Total Canadian Revolving Loan Sub-
Commitment at such time; and
(ix) shall not, in the case of all Revolving Loans, be made at any
time if, after giving effect thereto, the Aggregate Revolving Credit
Exposure would exceed the Total Revolving Loan Commitment at such time.
(c) Subject to and upon the terms and conditions herein set forth,
CSFB in its individual capacity agrees to make at any time and from time to time
on and after the Restatement Effective Date and prior to the Swingline Expiry
Date, a loan or loans to the U.S. Borrower (each, a "Swingline Loan" and,
collectively, the "Swingline Loans"), which Swingline Loans:
(i) shall be denominated in U.S. Dollars;
(ii) shall be made and maintained as Base Rate Loans;
(iii) may be repaid and reborrowed in accordance with the provisions
hereof;
-4-
<PAGE>
(iv) shall not be made (or be required to be made) on any date, if
after giving effect thereto, either (x) the Aggregate U.S. Revolving Credit
Exposure would exceed the Total Non-Canadian Revolving Loan Sub-Commitment
as then in effect or (y) the Aggregate Revolving Credit Exposure would
exceed the Total Revolving Loan Commitment at such time; and
(v) shall not exceed in aggregate principal amount at any time
outstanding the Maximum Swingline Amount.
CSFB shall not be obligated to make any Swingline Loans at a time when a Bank
Default exists unless CSFB has entered into arrangements satisfactory to it and
the U.S. Borrower to eliminate CSFB's risk with respect to the Defaulting Bank's
or Banks' participation in such Swingline Loans, including by cash
collateralizing such Defaulting Bank's or Banks' Dollar RL Percentage of the
outstanding Swingline Loans. CSFB will not make a Swingline Loan after it has
received written notice from any Borrower or the Required Banks stating that a
Default or an Event of Default exists until such time as CSFB shall have
received a written notice of (i) rescission of such notice from the party or
parties originally delivering the same or (ii) a waiver of such Default or Event
of Default from the Required Banks.
(d) On any Business Day, CSFB may, in its sole discretion, give
notice to the RL Banks that its outstanding Swingline Loans shall be funded with
a Borrowing of Dollar Revolving Loans (provided that each such notice shall be
--------
deemed to have been automatically given upon the occurrence of a Default or an
Event of Default under Section 10.05 or upon the exercise of any of the remedies
provided in the last paragraph of Section 10), in which case a Borrowing of
Dollar Revolving Loans constituting Base Rate Loans (each such Borrowing, a
"Mandatory Borrowing") shall be made on the immediately succeeding Business Day
by all RL Banks pro rata based on each RL Bank's Dollar RL Percentage or, if a
--- ----
Sharing Event then exists, pro rata based on each RL Bank's Sharing Percentage,
--- ----
and the proceeds thereof shall be applied directly to repay CSFB for such
outstanding Swingline Loans. Each RL Bank hereby irrevocably agrees to make
Dollar Revolving Loans upon one Business Day's notice pursuant to each Mandatory
Borrowing in the amount and in the manner specified in the preceding sentence
and on the date specified in writing by CSFB notwithstanding (i) that the amount
of the Mandatory Borrowing may not comply with the Minimum Borrowing Amount
otherwise required hereunder, (ii) whether any conditions specified in Section 5
or 6 are then satisfied, (iii) whether a Default or an Event of Default has
occurred and is continuing, (iv) the date of such Mandatory Borrowing and (v)
the amount of the Total Revolving Loan Commitment or such RL Bank's Revolving
Loan Commitment at such time. In the event that any Mandatory Borrowing cannot
for any reason be made on the date otherwise required above (including, without
limitation, as a result of the commencement of a proceeding under the Bankruptcy
Code or any other bankruptcy, reorganization, dissolution, insolvency,
-5-
<PAGE>
receivership, liquidation or similar law with respect to any Borrower), each RL
Bank (other than CSFB) hereby agrees that it shall forthwith purchase from CSFB
(without recourse or warranty) such assignment of the outstanding Swingline
Loans as shall be necessary to cause the RL Banks to share in such Swingline
Loans ratably based upon their respective Dollar RL Percentages or, if a Sharing
Event exists on the date otherwise required above, pro rata based upon their
--- ----
respective Sharing Percentages, provided that (x) all interest payable on the
--------
Swingline Loans shall be for the account of CSFB until the date the respective
assignment is purchased and, to the extent attributable to the purchased
assignment, shall be payable to the RL Bank purchasing same from and after such
date of purchase and (y) at the time any purchase of assignments pursuant to
this sentence is actually made, the purchasing RL Bank shall be required to pay
CSFB interest on the principal amount of assignment purchased for each day from
and including the day upon which the Mandatory Borrowing would otherwise have
occurred to but excluding the date of payment for such assignment, at the rate
otherwise applicable to Dollar Revolving Loans maintained as Base Rate Loans
hereunder for each day thereafter.
(e) Subject to and upon the terms and conditions set forth herein,
each Bank with a Tranche B Term Loan Commitment severally agrees to make, on the
Restatement Effective Date, a term loan or term loans (each, a "Tranche B Term
Loan" and, collectively, the "Tranche B Term Loans") to the U.S. Borrower, which
Tranche B Term Loans:
(i) shall be denominated in U.S. Dollars;
(ii) except as hereafter provided, shall, at the option of the U.S.
Borrower, be incurred and maintained as, and/or converted into, Base Rate
Loans or Eurodollar Loans, provided that (x) except as otherwise
--------
specifically provided in Section 1.10(b), all Tranche B Term Loans made as
part of the same Borrowing shall at all times consist of Tranche B Term
Loans of the same Type and (y) unless the Agents have determined that the
Syndication Date has occurred (at which time this clause (y) shall no
longer be applicable), no more than three Borrowings of Tranche B Term
Loans to be maintained as Eurodollar Loans may be incurred prior to the
90th day after the Restatement Effective Date (or, if later, the last day
of the Interest Period applicable to the third Borrowing of Eurodollar
Loans referred to below), each of which Borrowings of Eurodollar Loans may
only have an Interest Period of one month, and the first of which
Borrowings may only be made on the same date as the initial Borrowing of
New Tranche A Term Loans that are maintained as Eurodollar Loans, the
second of which Borrowings may only be made on the last day of the Interest
Period of the first such Borrowing and the third of which Borrowings may
only be made on the last day of the Interest Period of the second such
Borrowing; and
-6-
<PAGE>
(iii) shall not exceed for any Bank, in initial principal amount,
that amount which equals the Tranche B Term Loan Commitment of such Bank as
in effect on the Restatement Effective Date (before giving effect to any
reduction thereto on such date pursuant to Section 3.03(c)).
Once repaid, Tranche B Term Loans incurred hereunder may not be
reborrowed.
(f) Subject to and upon the terms and conditions set forth herein,
each Bank with a Tranche C Term Loan Commitment severally agrees to make, on the
Restatement Effective Date, a term loan or term loans (each, a "Tranche C Term
Loan" and, collectively, the "Tranche C Term Loans") to the U.S. Borrower, which
Tranche C Term Loans:
(i) shall be denominated in U.S. Dollars;
(ii) except as hereafter provided, shall, at the option of the U.S.
Borrower, be incurred and maintained as, and/or converted into, Base Rate
Loans or Eurodollar Loans, provided that (x) except as otherwise
--------
specifically provided in Section 1.10(b), all Tranche C Term Loans made as
part of the same Borrowing shall at all times consist of Tranche C Term
Loans of the same Type and (y) unless the Agents have determined that the
Syndication Date has occurred (at which time this clause (y) shall no
longer be applicable), no more than three Borrowings of Tranche C Term
Loans to be maintained as Eurodollar Loans may be incurred prior to the
90th day after the Restatement Effective Date (or, if later, the last day
of the Interest Period applicable to the third Borrowing of Eurodollar
Loans referred to below), each of which Borrowings of Eurodollar Loans may
only have an Interest Period of one month, and the first of which
Borrowings may only be made on the same date as the initial Borrowing of
New Tranche A Term Loans that are maintained as Eurodollar Loans, the
second of which Borrowings may only be made on the last day of the Interest
Period of the first such Borrowing and the third of which Borrowings may
only be made on the last day of the Interest Period of the second such
Borrowing; and
(iii) shall not exceed for any Bank, in initial principal amount,
that amount which equals the Tranche C Term Loan Commitment of such Bank as
in effect on the Restatement Effective Date (before giving effect to any
reduction thereto on such date pursuant to Section 3.03(d)).
Once repaid, Tranche C Term Loans incurred hereunder may not be
reborrowed.
-7-
<PAGE>
1.02 Minimum Borrowing Amounts, etc. The aggregate principal amount
-------------------------------
of each Borrowing of Loans under a respective Tranche shall not be less than the
Minimum Borrowing Amount applicable to such Loans under such Tranche, provided
--------
that Mandatory Borrowings shall be made in the amounts required by Section
1.01(d). More than one Borrowing may be incurred on any day, provided, that at
--------
no time shall there be outstanding more than (x) ten Borrowings of Eurodollar
Loans and (y) six different maturity dates in the aggregate for all outstanding
Bankers' Acceptance Loans and B/A Equivalent Loans.
1.03 Notice of Borrowing. (a) Whenever any Borrower desires to make
-------------------
a Borrowing hereunder (excluding (x) Borrowings of Swingline Loans, (y)
Mandatory Borrowings and (z) Borrowings of Canadian Prime Rate Loans to the
extent resulting from automatic conversions of Bankers' Acceptance Loans or B/A
Equivalent Loans as provided in clause (i) of Schedule XII), an Authorized
Officer of such Borrower shall give the Administrative Agent at its Notice
Office, prior to 12:00 Noon (New York time), at least three Business Days' prior
written notice (or telephonic notice promptly confirmed in writing) of each
Borrowing of Eurodollar Loans, Bankers' Acceptance Loans or B/A Equivalent Loans
and at least one Business Day's prior written notice (or telephonic notice
promptly confirmed in writing) of each Borrowing of Base Rate Loans or Canadian
Prime Rate Loans to be made hereunder. Each such notice (each, a "Notice of
Borrowing") shall, except as otherwise expressly provided in Section 1.10, be
irrevocable, and, in the case of each written notice and each confirmation of
telephonic notice, shall be in the form of Exhibit A, appropriately completed to
specify: (i) the aggregate principal amount (or Face Amount, as the case may be)
of the Loans to be made pursuant to such Borrowing (stated in the Applicable
Currency), (ii) the date of such Borrowing (which shall be a Business Day),
(iii) whether the respective Borrowing shall consist of Tranche A Term Loans,
Tranche B Term Loans, Tranche C Term Loans, Dollar Revolving Loans or Canadian
Dollar Revolving Loans, (iv) in the case of Dollar Loans, whether the respective
Borrowing shall consist of Base Rate Loans or, to the extent permitted
hereunder, Eurodollar Loans and, if Eurodollar Loans, the Interest Period to be
initially applicable thereto, (v) in the case of Canadian Dollar Revolving
Loans, whether the respective Borrowing shall consist of Canadian Prime Rate
Loans, Bankers' Acceptance Loans or B/A Equivalent Loans and, if Bankers'
Acceptance Loans or B/A Equivalent Loans, the term thereof (which shall comply
with the requirements of clause (a) of Schedule XII) and (vi) in the case of a
Borrowing of Dollar Revolving Loans the proceeds of which are to be utilized to
finance, in whole or in part, the purchase price of a Permitted Acquisition, (x)
a reference to the officer's certificate, if any, delivered in accordance with
Section 8.14, (y) the aggregate principal amount of such Dollar Revolving Loans
to be utilized in connection with such Permitted Acquisition and (z) the Total
Unutilized Revolving Loan Commitment then in effect after giving effect to the
respective Permitted Acquisition (and all payments to be made in connection
therewith). The Administrative Agent shall promptly give each Bank which is
required to make Loans of the Tranche specified in the respective Notice of
Borrowing, written notice (or telephonic notice promptly confirmed in writing)
of each
-8-
<PAGE>
proposed Borrowing, of such Bank's proportionate share thereof and of the other
matters required by the immediately preceding sentence to be specified in the
Notice of Borrowing.
(b) (i) Whenever the U.S. Borrower desires to incur Swingline Loans
here under, an Authorized Officer of the U.S. Borrower shall give CSFB not later
than 2:00 P.M. (New York time) on the day such Swingline Loan is to be made,
written notice (or telephonic notice promptly confirmed in writing) of each
Swingline Loan to be made here under. Each such notice shall be irrevocable and
shall specify in each case (x) the date of such Borrowing (which shall be a
Business Day) and (y) the aggregate principal amount of the Swingline Loan to be
made pursuant to such Borrowing.
(ii) Mandatory Borrowings shall be made upon the notice specified in
Section 1.01(d), with the U.S. Borrower irrevocably agreeing, by its incurrence
of any Swingline Loan, to the making of Mandatory Borrowings as set forth in
such Section 1.01(d).
(c) Without in any way limiting the obligation of any Borrower to
confirm in writing any telephonic notice permitted to be given hereunder, the
Administrative Agent or CSFB (in the case of a Borrowing of Swingline Loans) or
the respective Letter of Credit Issuer (in the case of the issuance of Letters
of Credit), as the case may be, may prior to receipt of written confirmation act
without liability upon the basis of such telephonic notice, believed by the
Administrative Agent, CSFB or such Letter of Credit Issuer, as the case may be,
in good faith to be from an Authorized Officer of such Borrower. In each such
case, the Administrative Agent's, CSFB's or the respective Letter of Credit
Issuer's, as the case may be, record of the terms of such telephonic notice
shall be conclusive evidence of the contents of such notice, absent manifest
error.
1.04 Disbursement of Funds. (a) Not later than 1:00 P.M. (New York
---------------------
time) on the date specified in each Notice of Borrowing (or (x) in the case of
Swingline Loans, not later than 3:00 P.M. (New York time) on the date specified
in Section 1.03(b)(i) or (y) in the case of Mandatory Borrowings, not later than
12:00 Noon (New York time) on the date specified in Section 1.01(d)), each Bank
with a Commitment of the respective Tranche will make available its pro rata
--- ----
share (determined in accordance with Section 1.07), if any, of each Borrowing
requested to be made on such date (or in the case of Swingline Loans, CSFB shall
make available the full amount thereof) in the manner pro vided below. All
amounts shall be made available to the Administrative Agent in U.S. Dollars (in
the case of Dollar Loans) or Canadian Dollars (in the case of Canadian Dollar
Revolving Loans), as the case may be, and in immediately available funds at the
Payment Office and the Administrative Agent promptly will make available to the
respective Borrower (or CSFB in the case of a Mandatory Borrowing) by
depositing to its account at the Payment Office the aggregate of the amounts so
made available in the type of funds received. Unless the Administrative Agent
shall have been notified by any Bank prior to the
-9-
<PAGE>
date of Borrowing that such Bank does not intend to make available to the
Administrative Agent its portion of the Borrowing or Borrowings to be made on
such date, the Administrative Agent may assume that such Bank has made such
amount available to the Administrative Agent on such date of Borrowing, and the
Administrative Agent, in reliance upon such assumption, may (in its sole
discretion and without any obligation to do so) make available to the relevant
Borrower a corresponding amount. If such corresponding amount is not in fact
made available to the Administrative Agent by such Bank and the Administrative
Agent has made available same to the Borrower, the Administrative Agent shall be
entitled to recover such corresponding amount on demand from such Bank. If such
Bank does not pay such corresponding amount forthwith upon the Administrative
Agent's demand therefor, the Administrative Agent shall promptly notify the
relevant Borrower, and the relevant Borrower shall immediately pay such
corresponding amount to the Administrative Agent. The Administrative Agent shall
also be entitled to recover on demand from such Bank or the relevant Borrower,
as the case may be, interest on such corresponding amount in respect of each day
from the date such corresponding amount was made available by the Administrative
Agent to the respective Borrower to the date such corresponding amount is
recovered by the Administrative Agent, at a rate per annum equal to (x) if paid
by such Bank, the overnight Federal Funds Rate (or, in the case of Canadian
Dollar Revolving Loans, the cost to the Administrative Agent of acquiring
overnight funds in Canadian Dollars) or (y) if paid by the respective Borrower,
the then applicable rate of interest, calculated in accordance with Section
1.08.
(b) Nothing in this Agreement shall be deemed to relieve any Bank
from its obligation to fulfill its commitments hereunder or to prejudice any
rights which the relevant Borrower may have against any Bank as a result of any
default by such Bank hereunder.
1.05 Notes. (a) Each Borrower's obligation to pay the principal of
-----
(and the Face Amount, as the case may be), and interest on, all the Loans made
to such Borrower by each Bank shall be set forth on the Register maintained by
the Administrative Agent pursuant to Section 13.17 and, subject to the
provisions of Section 1.05(i), shall be evidenced (i) if Tranche A Term Loans,
by a promissory note substantially in the form of Exhibit B-1 with blanks
appropriately completed in conformity herewith (each, a "Tranche A Term Note"
and, collectively, the "Tranche A Term Notes"), (ii) if Tranche B Term Loans, by
a promissory note substantially in the form of Exhibit B-2 with blanks
appropriately completed in conformity herewith (each, a "Tranche B Term Note"
and, collectively, the "Tranche B Term Notes"), (iii) if Tranche C Term Loans,
by a promissory note substantially in the form of Exhibit B-3 with blanks
appropriately completed in conformity herewith (each, a "Tranche C Term Note"
and, collectively, the "Tranche C Term Notes"), (iv) if Dollar Revolving Loans,
by a promissory note substantially in the form of Exhibit B-4 with blanks
appropriately completed in conformity herewith (each, a "Dollar Revolving Note"
and, collectively, the "Dollar Revolving Notes"), (v) if Canadian
-10-
<PAGE>
Dollar Revolving Loans, by a promissory note substantially in the form of
Exhibit B-5 with blanks appropriately completed in conformity herewith (each, a
"Canadian Dollar Revolving Note" and, collectively, the "Canadian Dollar
Revolving Notes") and (vi) if Swingline Loans, by a promissory note
substantially in the form of Exhibit B-6 with blanks appropriately completed in
conformity herewith (the "Swingline Note").
(b) The Tranche A Term Note issued to each Bank with a Tranche A Term
Loan Commitment and/or outstanding Tranche A Term Loans shall (i) be executed by
the U.S. Borrower, (ii) be payable to such Bank or its registered assigns and be
dated the date of issuance thereof, (iii) be in a stated principal amount equal
to the principal amount of the Tranche A Term Loans made and/or continued by
such Bank on the Restatement Effective Date (or, in the case of any Tranche A
Term Note issued after the Restatement Effective Date, in a stated principal
amount equal to the outstanding principal amount of the Tranche A Term Loan of
such Bank on the date of the issuance thereof) and be payable in the principal
amount of Tranche A Term Loans evidenced thereby from time to time, (iv) mature
on the A TL/RL Maturity Date, (v) bear interest as provided in the appropriate
clause of Section 1.08 in respect of the Base Rate Loans and Eurodollar Loans,
as the case may be, evidenced thereby, (vi) be subject to voluntary repayment as
provided in Section 4.01 and mandatory repayment as provided in Section 4.02 and
(vii) be entitled to the bene fits of this Agreement and the other Credit
Documents.
(c) The Tranche B Term Note issued to each Bank with a Tranche B Term
Loan Commitment and/or outstanding Tranche B Term Loans shall (i) be executed by
the U.S. Borrower, (ii) be payable to such Bank or its registered assigns and be
dated the date of issuance thereof, (iii) be in a stated principal amount equal
to the Tranche B Term Loan Commitment of such Bank on the Restatement Effective
Date (or, in the case of any Tranche B Term Note issued after the Restatement
Effective Date, in a stated principal amount equal to the outstanding principal
amount of the Tranche B Term Loan of such Bank on the date of the issuance
thereof) and be payable in the principal amount of Tranche B Term Loans
evidenced thereby from time to time, (iv) mature on the Tranche B Term Loan
Maturity Date, (v) bear interest as provided in the appropriate clause of
Section 1.08 in respect of the Base Rate Loans and Eurodollar Loans, as the case
may be, evidenced thereby, (vi) be subject to voluntary repayment as provided in
Section 4.01 and mandatory repayment as provided in Section 4.02 and (vii) be
entitled to the benefits of this Agreement and the other Credit Documents.
(d) The Tranche C Term Note issued to each Bank with a Tranche C Term
Loan Commitment and/or outstanding Tranche C Term Loans shall (i) be executed by
the U.S. Borrower, (ii) be payable to such Bank or its registered assigns and be
dated the date of issuance thereof, (iii) be in a stated principal amount equal
to the Tranche C Term Loan Commitment of such Bank on the Restatement Effective
Date (or, in the case of any Tranche C Term Note issued after the Restatement
Effective Date, in a stated principal
-11-
<PAGE>
amount equal to the outstanding principal amount of the Tranche C Term Loan of
such Bank on the date of the issuance thereof) and be payable in the principal
amount of Tranche C Term Loans evidenced thereby from time to time, (iv) mature
on the Tranche C Term Loan Maturity Date, (v) bear interest as provided in the
appropriate clause of Section 1.08 in respect of the Base Rate Loans and
Eurodollar Loans, as the case may be, evidenced thereby, (vi) be subject to
voluntary repayment as provided in Section 4.01 and mandatory repayment as
provided in Section 4.02 and (vii) be entitled to the benefits of this Agreement
and the other Credit Documents.
(e) The Dollar Revolving Note issued to each RL Bank shall (i) be
executed by the U.S. Borrower, (ii) be payable to such RL Bank or its registered
assigns and be dated the date of issuance thereof, (iii) be in a stated
principal amount equal to the Non-Canadian Revolving Loan Sub-Commitment of such
RL Bank and be payable in the principal amount of the outstanding Dollar
Revolving Loans evidenced thereby, (iv) mature on the A TL/RL Maturity Date, (v)
bear interest as provided in the appropriate clause of Section 1.08 in respect
of the Base Rate Loans and Eurodollar Loans, as the case may be, evidenced
thereby, (vi) be subject to voluntary prepayment as provided in Section 4.01 and
mandatory repayment as provided in Section 4.02 and (vii) be entitled to the
benefits of this Agreement and the other Credit Documents.
(f) The Canadian Dollar Revolving Note issued to each RL Bank that
has a Canadian Revolving Loan Sub-Commitment or outstanding Canadian Dollar
Revolving Loans shall (i) be executed by the Canadian Borrower, (ii) be payable
to the order of such Canadian RL Bank or its registered assigns and be dated the
date of issuance thereof, (iii) be in a stated principal amount (expressed in
Canadian Dollars) which equals the Canadian Dollar Equivalent (as of the date of
issuance) of the Canadian Revolving Loan Sub-Commitment of such Canadian RL
Bank, (iv) subject to Section 1.15, be payable in Canadian Dollars in the
outstanding principal amount of, and Face Amount of, as applicable, the Canadian
Dollar Revolving Loans evidenced thereby, (v) mature on the A TL/RL Maturity
Date, (vi) bear interest as provided in the appropriate clause of Section 1.08
in respect of the Canadian Prime Rate Loans evidenced thereby, (vii) be subject
to voluntary prepayment as provided in Section 4.01 and mandatory repayment as
provided in Section 4.02 and (viii) be entitled to the benefits of this
Agreement and the other Credit Documents.
(g) The Swingline Note issued to CSFB shall (i) be executed by the
U.S. Borrower, (ii) be payable to CSFB or its registered assigns and be dated
the Restatement Effective Date, (iii) be in a stated principal amount equal to
the Maximum Swingline Amount and be payable in the principal amount of the
outstanding Swingline Loans evidenced thereby, (iv) mature on the Swingline
Expiry Date, (v) bear interest as provided in Section 1.08 in respect of the
Base Rate Loans evidenced thereby, (vi) be subject to voluntary prepayment as
provided in Section 4.01 and mandatory repayment as provided
-12-
<PAGE>
in Section 4.02 and (vii) be entitled to the benefits of this Agreement and the
other Credit Documents.
(h) Each Bank will note on its internal records the amount of each
Loan made by it to each Borrower and each payment in respect thereof and will
prior to any transfer of any of its Notes endorse on the reverse side thereof
the outstanding principal amount of Loans (including, without limitation, the
Face Amount of any outstanding Bankers' Acceptances) evidenced thereby. Failure
to make any such notation or any error in such notation shall not affect the
respective Borrower's obligations in respect of such Loans.
(i) Notwithstanding anything to the contrary contained above or
elsewhere in this Agreement, Dollar Revolving Notes, Canadian Dollar Revolving
Notes and the Swingline Note shall only be delivered to Banks which at any time
specifically request the delivery of such Notes. No failure of any Bank to
request or obtain a Note evidencing its Loans to any Borrower shall affect or in
any manner impair the obligations of the respective Borrower to pay the Loans
(and all related Obligations) which would otherwise be evidenced thereby in
accordance with the requirements of this Agreement, and shall not in any way
affect the security or guaranties therefor provided pursuant to the various
Credit Documents. Any Bank which does not have a Note evidencing its
outstanding Loans shall in no event be required to make the notations otherwise
described in preceding clause (f). At any time when any Bank requests the
delivery of a Note to evidence any of its Loans, the respective Borrower shall
promptly execute and deliver to the respective Bank the requested Note or Notes
in the appropriate amount or amounts to evidence such Loans.
1.06 Conversions. (a) The U.S. Borrower shall have the option to
-----------
convert on any Business Day occurring on or after the Restatement Effective
Date, all or a portion at least equal to the applicable Minimum Borrowing Amount
of the outstanding principal amount of Dollar Loans (other than Swingline Loans
which shall at all times be maintained as Base Rate Loans) made pursuant to one
or more Borrowings of one or more Types of Dollar Loans under a single Tranche
into a Borrowing or Borrowings of another Type of Dollar Loan under such
Tranche; provided, that (i) except as otherwise provided in Section 1.10(b) or
--------
unless the U.S. Borrower pays all breakage costs and other amounts owing to each
Bank pursuant to Section 1.11 concurrently with any such conversion, Eurodollar
Loans may be converted into Base Rate Loans only on the last day of an Interest
Period applicable to the Loans being converted, and no partial conversion of a
Borrowing of Eurodollar Loans shall reduce the outstanding principal amount of
the Eurodollar Loans made pursuant to such Borrowing to less than the Minimum
Borrowing Amount applicable thereto, (ii) Base Rate Loans may only be converted
into Eurodollar Loans if no Default or Event of Default is in existence on the
date of the conversion, (iii) unless the Agents have determined that the
Syndication Date has occurred (at which time this clause (iii) shall no longer
be applicable), prior to the 90th day after the Restatement Effective Date,
-13-
<PAGE>
Tranche A Term Loans, Tranche B Term Loans and Tranche C Term Loans maintained
as Base Rate Loans may not be converted into Eurodollar Loans unless any such
conversion is effective on the first day of the first, second or third Interest
Period referred to in clause (y) of Section 1.01(a)(ii), 1.01(e)(ii) or
1.01(f)(ii), as the case may be, and so long as such conversion does not result
in a greater number of Borrowings of Eurodollar Loans prior to the 90th day
after the Restatement Effective Date than are permitted under Section
1.01(a)(ii), 1.01(e)(ii) or 1.01(f)(ii), as the case may be, and (iv) Borrowings
of Eurodollar Loans resulting from this Section 1.06 shall be limited in number
as provided in Section 1.02. Each such conversion shall be effected by the U.S.
Borrower by giving the Adminis trative Agent at its Notice Office, prior to
12:00 Noon (New York time), at least three Business Days' (or one Business Day's
in the case of a conversion into Base Rate Loans) prior written notice (or
telephonic notice promptly confirmed in writing) (each, a "Notice of
Conversion") specifying the Dollar Loans to be so converted, the Borrowing(s)
pursuant to which the Dollar Loans were made and, if to be converted into a
Borrowing of Euro dollar Loans, the Interest Period to be initially applicable
thereto. The Administrative Agent shall give each Bank prompt notice of any
such proposed conversion affecting any of its Dollar Loans. Upon any such
conversion, the proceeds thereof will be deemed to be applied directly on the
day of such conversion to prepay the outstanding principal amount of the Dollar
Loans being converted.
(b) Mandatory conversions of Bankers' Acceptance Loans and B/A
Equivalent Loans into Canadian Prime Rate Loans shall be made in the
circumstances, and to the extent, provided in clause (i) of Schedule XII.
Except as otherwise provided under Section 1.15, Bankers' Acceptance Loans and
B/A Equivalent Loans shall not be permitted to be converted into any other Type
of Loan prior to the maturity date of the respective Bankers' Acceptance or B/A
Equivalent Note, as the case may be.
(c) The Canadian Borrower shall have the option to convert on any
Business Day occurring on or after the Original Effective Date, all or a portion
at least equal to the applicable Minimum Borrowing Amount of the outstanding
principal amount of Canadian Prime Rate Loans made pursuant to one or more
Borrowings into a Borrowing or Borrowings of Bankers' Acceptance Loans and/or
B/A Equivalent Loans; provided, that (i) Canadian Prime Rate Loans may only be
converted into Bankers' Acceptance Loans and/or B/A Equivalent Loans if no
Default or Event of Default is in existence on the date of such conversion and
(ii) Borrowings of Bankers' Acceptance Loans and B/A Equivalent Loans resulting
from this Section 1.06 shall be limited in number as provided in Section 1.02.
Each such conversion shall be effected by the Canadian Borrower by giving the
Administrative Agent at its Notice Office, prior to 12:00 Noon (New York time),
at least three Business Days' prior to the date of the proposed conversion, a
Notice of Conversion specifying the Canadian Dollar Revolving Loans to be so
converted into Bankers' Acceptance Loans and/or B/A Equivalent Loans, the
Borrowing(s) pursuant to which such Canadian Dollar Revolving Loans were made
and the term of the proposed Borrowing of
-14-
<PAGE>
Bankers' Acceptance Loans and/or B/A Equivalent Loans (which, in each case,
shall comply with the requirements of clause (a) of Schedule XII). The
Administrative Agent shall give each Canadian RL Bank prompt notice of any such
proposed conversion affecting any of its Canadian Dollar Revolving Loans
maintained as Canadian Prime Rate Loans. Upon any such conversion, the proceeds
thereof will be deemed to be applied directly on the day of such conversion to
prepay the outstanding principal amount of the Canadian Dollar Revolving Loans
being converted.
1.07 Pro Rata Borrowings. All Borrowings of Tranche A Term Loans,
-------------------
Tranche B Term Loans and Tranche C Term Loans shall be incurred by the U.S.
Borrower from the Banks pro rata on the basis of such Banks' Tranche A Term Loan
--- ----
Borrowing Amounts, Tranche B Term Loan Commitments or Tranche C Term Loan
Commitments, as the case may be. Subject to the provisions of Section 1.15(c)
and, in the case of Mandatory Borrowings, Section 1.01(d), all Borrowings of
Dollar Revolving Loans under this Agreement (including Mandatory Borrowings)
shall be incurred by the U.S. Borrower from the RL Banks pro rata on the basis
--- ----
of their Dollar RL Percentages. All Borrowings of Canadian Dollar Revolving
Loans under this Agreement shall be incurred from the Canadian RL Banks pro rata
--- ----
on the basis of their Canadian RL Percentages. It is under stood that no Bank
shall be responsible for any default by any other Bank of its obligation to make
Loans hereunder and that each Bank shall be obligated to make the Loans to be
made by it hereunder, regardless of the failure of any other Bank to fulfill its
commitments hereunder.
1.08 Interest. (a) The U.S. Borrower agrees to pay interest in
--------
respect of the unpaid principal amount of each Base Rate Loan made to it from
the date of the Borrowing thereof until the earlier of (i) the maturity (whether
by acceleration or otherwise) of such Base Rate Loan and (ii) the conversion of
such Base Rate Loan to a Eurodollar Loan pursuant to Section 1.06, at a rate per
annum which shall at all times be the relevant Applicable Margin plus the Base
----
Rate, each as in effect from time to time.
(b) The U.S. Borrower agrees to pay interest in respect of the
unpaid principal amount of each Eurodollar Loan made to it from the date of the
Borrowing thereof until the earlier of (i) the maturity (whether by acceleration
or otherwise) of such Eurodollar Loan and (ii) the conversion of such Eurodollar
Loan to a Base Rate Loan pursuant to Section 1.06, 1.09 or 1.10(b), as
applicable, at a rate per annum which shall at all times be the relevant
Applicable Margin plus the Eurodollar Rate for such Interest Period, each as in
----
effect from time to time.
(c) The Canadian Borrower agrees to pay interest in respect of the
unpaid principal amount of each Canadian Prime Rate Loan made to it from the
date the proceeds thereof are made available to it (which shall, in the case of
a conversion pursuant to clause (i) of Schedule XII, be deemed to be the date
upon which a maturing Bankers' Acceptance
-15-
<PAGE>
or B/A Equivalent Note is converted into a Canadian Prime Rate Loan pursuant to
said clause (i), with the proceeds thereof to be equal to the full Face Amount
of such maturing Bankers' Acceptance or B/A Equivalent Note), until the earlier
of (i) the maturity thereof (whether by acceleration, or otherwise) and (ii) the
conversion of such Canadian Prime Rate Loan to a Bankers' Acceptance Loan or B/A
Equivalent Loan pursuant to Section 1.06(c), at a rate per annum which shall be
equal to the relevant Applicable Margin plus the Canadian Prime Rate, each as in
effect from time to time.
(d) With respect to Bankers' Acceptance Loans and B/A Equivalent
Loans, Drawing Fees shall be payable in connection therewith as provided in
clause (g) of Schedule XII. Until the maturity of the respective Bankers'
Acceptances or B/A Equivalent Notes, as the case may be, interest shall not
otherwise be payable with respect thereto.
(e) To the extent permitted by law, overdue principal and overdue
interest in respect of each Loan shall, in each case, bear interest at a rate
per annum (1) in the case of overdue principal of, and interest or other amounts
owing with respect to, Canadian Dollar Revolving Loans and any other amounts
owing in Canadian Dollars, equal to 2% per annum in excess of the Applicable
Margin for Canadian Prime Rate Loans plus the Canadian Prime Rate, each as in
effect from time to time, and (2) in all other cases, equal to the greater of
(x) the rate which is 2% in excess of the rate borne by such Loan immediately
prior to the respective payment default and (y) the rate which is 2% in excess
of the rate otherwise applicable to Base Rate Loans from time to time. Interest
which accrues under this Section 1.08(c) shall be payable on demand.
(f) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable (i) in respect of each Base Rate Loan and Canadian Prime Rate Loan,
quarterly in arrears on each Quarterly Payment Date, (ii) in respect of each
Eurodollar Loan, on (x) the date of any conversion into a Base Rate Loan
pursuant to Section 1.06, 1.09 or 1.10(b), as applicable (on the amount
converted) and (y) the last day of each Interest Period applicable thereto and,
in the case of an Interest Period in excess of three months, on each date
occurring at three month intervals after the first day of such Interest Period
and (iii)11-15 in respect of each Loan (other than Bankers' Acceptance Loans and
B/A Equivalent Loans), on (x) the date of any prepayment or repayment thereof
(on the amount prepaid or repaid), (y) at maturity (whether by acceleration or
otherwise) and (z) after such maturity, on demand.
(g) All computations of interest hereunder shall be made in
accordance with Section 13.07(c) and (d).
(h) Upon each Interest Determination Date, the Administrative Agent
shall determine the Eurodollar Rate for the respective Interest Period or
Interest Periods and shall
-16-
<PAGE>
promptly notify the U.S. Borrower and the Banks thereof. Each such
determination shall, absent manifest error, be final and conclusive and binding
on all parties hereto.
1.09 Interest Periods. At the time the U.S. Borrower gives a Notice
----------------
of Borrowing or Notice of Conversion in respect of the making of, or conversion
into, a Borrowing of Eurodollar Loans (in the case of the initial Interest
Period applicable thereto) or prior to 12:00 Noon (New York time) on the third
Business Day prior to the expiration of an Interest Period applicable to a
Borrowing of Eurodollar Loans (in the case of any sub sequent Interest Period),
the U.S. Borrower shall have the right to elect by giving the Administrative
Agent written notice (or telephonic notice promptly confirmed in writing) of the
Interest Period applicable to such Borrowing, which Interest Period shall, at
the option of the U.S. Borrower (but otherwise subject to clause (y) of the
proviso to Sections 1.01(a)(ii), 1.01(e)(ii) and 1.01(f)(ii) and to clause (iii)
of the proviso to Section 1.06(a)), be a one, two, three, six or, to the extent
available to each Bank with Loans and/or Commitments under the respective
Tranche, nine or twelve month period. Notwithstanding anything to the contrary
contained above:
(i) all Eurodollar Loans comprising a Borrowing shall at all times
have the same Interest Period;
(ii) the initial Interest Period for any Borrowing of Eurodollar
Loans shall commence on the date of such Borrowing (including the date of
any conversion from a Borrowing of Base Rate Loans) and each Interest
Period occurring thereafter in respect of such Borrowing shall commence on
the day on which the next preceding Interest Period applicable thereto
expires;
(iii) if any Interest Period for any Borrowing of Eurodollar Loans
begins on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period, such Interest Period
shall end on the last Business Day of such calendar month;
(iv) if any Interest Period would otherwise expire on a day which
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, provided, that if any Interest Period for any
--------
Borrowing of Eurodollar Loans would otherwise expire on a day which is not
a Business Day but is a day of the month after which no further Business
Day occurs in such month, such Interest Period shall expire on the next
preceding Business Day;
(v) no Interest Period for a Borrowing of Eurodollar Loans shall
be selected which would extend beyond the respective Final Maturity Date
for such Tranche;
-17-
<PAGE>
(vi) no Interest Period may be elected at any time when a Default
or an Event of Default is then in existence; and
(vii) no Interest Period in respect of any Borrowing of Tranche A
Term Loans, Tranche B Term Loans or Tranche C Term Loans shall be elected
which extends beyond any date upon which a Scheduled Repayment of such
Tranche of Term Loans will be required to be made under Section 4.02(b) if,
after giving effect to the election of such Interest Period, the aggregate
principal amount of such Tranche A Term Loans, Tranche B Term Loans or
Tranche C Term Loans, as the case may be, which have Interest Periods which
will expire after such date will be in excess of the aggregate principal
amount of such Tranche A Term Loans, Tranche B Term Loans or Tranche C Term
Loans, as the case may be, then out standing less the aggregate amount of
such required Scheduled Repayment.
If upon the expiration of any Interest Period applicable to a
Borrowing of Eurodollar Loans, the U.S. Borrower has failed to elect, or is not
permitted to elect, a new Interest Period to be applicable to the respective
Borrowing of Eurodollar Loans as provided above, the U.S. Borrower shall be
deemed to have elected to convert such Borrowing into a Borrowing of Base Rate
Loans effective as of the expiration date of such current Interest Period.
1.10 Increased Costs; Illegality; etc. (a) In the event that (x) in
---------------------------------
the case of clause (i) and (iv) below, the Administrative Agent or (y) in the
case of clauses (ii) and (iii) below, any Bank, shall have determined in good
faith (which determination shall, absent manifest error, be final and conclusive
and binding upon all parties hereto):
(i) on any Interest Determination Date, that, by reason of any
changes arising after the Restatement Effective Date affecting the
interbank Eurodollar market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in the
definition of Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any Eurodollar Loans because of (x) any change since the Restatement
Effective Date in any applicable law, governmental rule, regulation,
guideline, order or request (whether or not having the force of law), or in
the interpretation or administration thereof and including the introduction
of any new law or governmental rule, regulation, guide line, order or
request (other than, in each case, any such change with respect to taxes or
any similar charges), such as, for example, but not limited to, a change in
official reserve requirements, but, in all events, excluding reserves
required under Regulation D to the extent included in the computation of
the Eurodollar Rate and/or (y) other circumstances affecting such Bank, the
interbank Eurodollar market
-18-
<PAGE>
or the position of such Bank in such market (other than circumstances
relating to taxes or any similar charges); or
(iii) at any time since the Restatement Effective Date, that the
making or continuance of any Eurodollar Loan has become unlawful by
compliance by such Bank with any law, governmental rule, regulation,
guideline or order (or would conflict with any governmental rule,
regulation, guideline, request or order not having the force of law but
with which such Bank customarily complies even though the failure to comply
therewith would not be unlawful), or has become impracticable as a result
of a contingency occurring after the Restatement Effective Date which
materially and adversely affects the interbank Eurodollar market; or
(iv) at any time that Bankers' Acceptance Loans or B/A Equivalent
Loans are not available, as determined in good faith by the Administrative
Agent, to fund any Borrowing of Bankers' Acceptance Loans or B/A Equivalent
Loans, as the case may be, requested pursuant to Section 1.01(b);
then, and in any such event, such Bank (or the Administrative Agent in the case
of clauses (i) and (iv) above) shall promptly give notice (by telephone
confirmed in writing) to the respective Borrower or Borrowers and (except in the
case of clauses (i) and (iv)) to the Administrative Agent of such determination
(which notice the Administrative Agent shall promptly transmit to each of the
other Banks). Thereafter, (w) in the case of clause (i) above, Eurodollar Loans
shall no longer be available until such time as the Administrative Agent
notifies the U.S. Borrower and the Banks that the circumstances giving rise to
such notice by the Administrative Agent no longer exist, and any Notice of
Borrowing or Notice of Conversion given by the U.S. Borrower with respect to
Eurodollar Loans which have not yet been incurred (including by way of
conversion) shall be deemed rescinded by the U.S. Borrower, (x) in the case of
clause (ii) above, the U.S. Borrower agrees, subject to the provisions of
Section 13.18 (to the extent applicable), to pay to such Bank, upon written
demand therefor, such additional amounts (in the form of an increased rate of,
or a different method of calculating, interest or otherwise as such Bank in its
sole discretion shall deter mine) as shall be required to compensate such Bank
for such increased costs or reductions in amounts received or receivable
hereunder (a written notice as to the additional amounts owed to such Bank,
showing in reasonable detail the basis for the calculation thereof, prepared in
good faith and submitted to the U.S. Borrower by such Bank shall, absent
manifest error, be final and conclusive and binding upon all parties hereto,
although the failure to give any such notice shall not release or diminish any
of the U.S. Borrower's obligations to pay additional amounts pursuant to this
Section 1.10(a) upon the subsequent receipt of such notice), (y) in the case of
clause (iii) above, the U.S. Borrower shall take one of the actions specified in
Section 1.10(b) as promptly as possible and, in any event, within the time
period required by law and (z) in the case of clause (iv) above, Bankers'
Acceptance Loans and B/A Equivalent Loans (exclusive of Bankers' Acceptance
Loans and
-19-
<PAGE>
B/A Equivalent Loans which have theretofore been funded) shall no longer be
available until such time as the Administrative Agent notifies the Borrowers and
the Banks that the circumstances giving rise to such notice by the
Administrative Agent no longer exist, and any Notice of Borrowing given by the
Canadian Borrower with respect to such Bankers' Acceptance Loans which have not
been incurred shall be deemed rescinded by the Canadian Borrower.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the U.S. Borrower may
(and in the case of a Eurodollar Loan affected pursuant to Section 1.10(a)(iii),
the U.S. Borrower shall) either (i) if the affected Eurodollar Loan is then
being made pursuant to a Borrowing, cancel said Borrowing by giving the
Administrative Agent telephonic notice (confirmed promptly in writing) thereof
on the same date that the U.S. Borrower was notified by a Bank pursuant to
Section 1.10(a)(ii) or (iii)), or (ii) if the affected Eurodollar Loan is then
outstanding, upon at least three Business Days' notice to the Administrative
Agent, require the affected Bank to convert each such Eurodollar Loan into a
Base Rate Loan (which conversion, in the case of the circumstance described in
Section 1.10(a)(iii), shall occur no later than the last day of the Interest
Period then applicable to such Eurodollar Loan or such earlier day as shall be
required by applicable law); provided, that if more than one Bank is affected at
--------
any time, then all affected Banks must be treated the same pursuant to this
Section 1.10(b).
(c) If any Bank shall have determined that after the Restatement
Effective Date, the adoption or effectiveness of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Bank or any corporation
controlling such Bank with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on such Bank's or such other corporation's capital or assets as a consequence of
such Bank's Commitment or Commitments or its obligations hereunder to any
Borrower to a level below that which such Bank or such other corporation could
have achieved but for such adoption, effectiveness, change or compliance (taking
into consideration such Bank's or such other corporation's policies with respect
to capital adequacy), then from time to time, upon written demand by such Bank
(with a copy to the Administrative Agent), accompanied by the notice referred to
in the last sentence of this clause (c), such Borrower agrees, subject to the
provisions of Section 13.18 (to the extent applicable), to pay to such Bank such
additional amount or amounts as will compensate such Bank or such other
corporation for such reduction in the rate of return to such Bank or such other
corporation. Each Bank, upon determining in good faith that any additional
amounts will be payable pursuant to this Section 1.10(c), will give prompt
written notice thereof to the relevant Borrower (a copy of which shall be sent
by such Bank to the Administrative Agent), which notice shall set forth in
reasonable detail
-20-
<PAGE>
the basis of the calculation of such additional amounts, although the failure to
give any such notice shall not release or diminish such Borrower's obligation to
pay additional amounts pursuant to this Section 1.10(c) upon the subsequent
receipt of such notice. In determining any additional amounts owing under this
Section 1.10(c), each Bank will act reasonably and in good faith and will use
averaging and attribution methods which are reasonable; provided that such
--------
Bank's reasonable good faith determination of compensation owing under this
Section 1.10(c) shall, absent manifest error, be final and conclusive and
binding on all the parties hereto.
1.11 Compensation. The respective Borrower or Borrowers agree,
------------
subject to the provisions of Section 13.18 (to the extent applicable), to
compensate each Bank, promptly upon its written request (which request shall set
forth in reasonable detail the basis for requesting such compensation), for all
reasonable losses, expenses and liabilities (including, without limitation, any
loss, expense or liability incurred by reason of the liquidation or reemployment
of deposits or other funds required by such Bank to fund its Eurodollar Loans
but excluding any loss of anticipated profits) which such Bank may sustain: (i)
if for any reason (other than a default by such Bank or any Agent) a Borrowing
of, or conversion from or into, Eurodollar Loans does not occur on a date
specified there for in a Notice of Borrowing or Notice of Conversion given by
the U.S. Borrower (whether or not withdrawn by the U.S. Borrower or deemed
withdrawn pursuant to Section 1.10(a)); (ii) if any repayment (including any
repayment made pursuant to Section 4.01 or 4.02 or as a result of an
acceleration of the Loans pursuant to Section 10 or as a result of the
replacement of a Bank pursuant to Section 1.13 or 13.12(b)) or conversion of any
Euro dollar Loans of the U.S. Borrower occurs on a date which is not the last
day of an Interest Period applicable thereto; (iii) if any repayment (including
any repayment made pursuant to Section 4.01 or 4.02) of any Bankers' Acceptance
Loan or B/A Equivalent Loan occurs on a date which is not the maturity date of
the respective Bankers' Acceptance Loan or B/A Equivalent Loan, as the case may
be; (iv) if any prepayment of any Eurodollar Loans, Bankers' Acceptance Loans or
B/A Equivalent Loans is not made on any date specified in a notice of prepayment
given by the respective Borrower or Borrowers; or (v) as a con sequence of (x)
any other default by the U.S. Borrower to repay its Eurodollar Loans when
required by the terms of this Agreement or (y) an election made by the U.S.
Borrower pursuant to Section 1.10(b); provided that the Canadian Borrower shall
--------
not be obligated to compensate any Bank pursuant to this Section 1.11 unless
such compensation is payable in respect of any losses, expenses and liabilities
incurred in respect of Bankers' Acceptance Loans or B/A Equivalent Loans in the
circumstances described in clauses (iii) and (iv) above. Each Bank's
calculation of the amount of compensation owing pursuant to this Section 1.11
shall be made in good faith. A Bank's basis for requesting compensation pur-
suant to this Section 1.11 and a Bank's calculation of the amount thereof made
in accordance with the requirements of this Section 1.11, shall, absent manifest
error, be final and conclusive and binding on all parties hereto.
-21-
<PAGE>
1.12 Change of Lending Office. (a) Each Bank may at any time or
------------------------
from time to time designate, by written notice to the Administrative Agent to
the extent not already reflected on Schedule II, one or more lending offices
(which, for this purpose, may include Affiliates of the respective Bank) for the
various Loans made, and Letters of Credit participated in, by such Bank
(including by designating a separate lending office (or Affiliate) to act as
such with respect to Dollar Loans and Letter of Credit Outstandings versus
Canadian Dollar Revolving Loans); provided that, for designations made after the
Restatement Effective Date, to the extent such designation shall result in
increased costs under Section 1.10, 2.05 or 4.04 in excess of those which would
be charged in the absence of the designation of a different lending office
(including a different Affiliate of the respective Bank), then the Borrowers
shall not be obligated to pay such excess increased costs (although the
Borrowers, in accordance with and pursuant to the other provisions of this
Agreement, shall be obligated to pay the costs which would apply in the absence
of such designation and any subsequent increased costs of the type described
above resulting from changes after the date of the respective designation).
Each lending office and Affiliate of any Bank designated as provided above
shall, for all purposes of this Agreement, be treated in the same manner as the
respective Bank (and shall be entitled to all indemnities and similar provisions
in respect of its acting as such hereunder).
(b) Each Bank agrees that, upon the occurrence of any event giving
rise to the operation of Section 1.10(a)(ii) or (iii), 1.10(c), 2.05 or 4.04
with respect to such Bank, it will, if requested by the applicable Borrower or
Borrowers, use reasonable efforts (subject to overall policy considerations of
such Bank) to designate another lending office for any Loans or Letters of
Credit affected by such event; provided, that such designation is made on such
--------
terms that such Bank and its lending office suffer no economic, legal or
regulatory disadvantage, with the object of avoiding the consequences of the
event giving rise to the operation of any such Section. Nothing in this Section
1.12 shall affect or postpone any of the obligations of any Borrower or the
right of any Bank provided in Section 1.10, 2.05 or 4.04 (although each such
Bank shall nevertheless have an obligation to change its applicable lending
office subject to the terms set forth in the immediately preceding sentence).
1.13 Replacement of Banks. (x) If any Bank becomes a Defaulting
--------------------
Bank, (y) upon the occurrence of any event giving rise to the operation of
Section 1.10(a)(ii) or (iii), Section 1.10(c), Section 2.05 or Section 4.04 with
respect to any Bank which results in such Bank charging to any Borrower
increased costs in a material amount in excess of those being generally charged
by the other Banks or (z) in the case of a refusal by a Bank to consent to a
proposed change, waiver, discharge or termination with respect to this Agreement
which has been approved by the Required Banks as provided in Section 13.12(b),
each Borrower shall have the right, in accordance with Section 13.04(b), if no
Default or Event of Default then exists or would exist after giving effect to
such replacement, to replace such Bank (the "Replaced Bank") with one or more
other Eligible
-22-
<PAGE>
Transferee or Transferees, none of whom shall constitute a Defaulting Bank at
the time of such replacement (collectively, the "Replacement Bank") and each of
which shall be reason ably acceptable to the Administrative Agent or, at the
option of such Borrower, to replace only (a) the Revolving Loan Commitment (and
related Sub-Commitments and related outstandings pursuant thereto) of the
Replaced Bank with an identical Revolving Loan Commitment (and related Sub-
Commitments) provided by the Replacement Bank or (b) in the case of a
replacement as provided in Section 13.12(b) where the consent of the respective
Bank is required with respect to less than all Tranches of its Loans or
Commitments, the Commitments (and related Sub-Commitments) and/or outstanding
Loans (including the Face Amount of any outstanding Bankers' Acceptances and B/A
Equivalent Notes) of such Bank in respect of each Tranche where the consent of
such Bank would otherwise be individually required, with identical Commitments
(and Sub-Commitments) and/or Loans of the respective Tranche provided by the
Replacement Bank; provided that:
--------
(i) at the time of any replacement pursuant to this Section 1.13,
the Replacement Bank shall enter into one or more Assignment and Assumption
Agreements pursuant to Section 13.04(b) (and with all fees payable pursuant
to said Section 13.04(b) to be paid by the Replacement Bank) pursuant to
which the Replacement Bank shall acquire all of the Commitments (and
related Sub-Commitments) and outstanding Loans (or, in the case of the
replacement of only (a) the Revolving Loan Commitment, the Revolving Loan
Commitment (and related Sub-Commitments) and outstanding Revolving Loans
and participations in Letter of Credit Outstandings and/or (b) the
outstanding Term Loans of one or more Tranches, the outstanding Term Loans
of the respective Tranche or Tranches) of, and in each case (except for the
replacement of only the outstanding Term Loans of one or more Tranches of
the respective Bank) participations in Letters of Credit by, the Replaced
Bank and, in connection therewith, shall pay to (x) the Replaced Bank in
respect thereof an amount equal to the sum of (A) an amount equal to the
principal of, and all accrued interest on, all outstanding Loans (including
the Face Amount of any outstanding Bankers' Acceptances and B/A Equivalent
Notes) (or of the Loans of the respective Tranche or Tranches being
replaced) of the Replaced Bank, (B) an amount equal to all Unpaid Drawings
(unless there are no Unpaid Drawings with respect to the Tranche being
replaced) that have been funded by (and not reimbursed to) such Replaced
Bank, together with all then unpaid interest with respect thereto at such
time and (C) an amount equal to all accrued, but theretofore unpaid, Fees
owing to the Replaced Bank (but only with respect to the relevant Tranche,
in the case of the replacement of less than all Tranches of Loans then held
by the respective Replaced Bank) pursuant to Section 3.01, (y) except in
the case of the replacement of only the outstanding Term Loans of one or
more Tranches of Term Loans of a Replaced Bank, each Letter of Credit
Issuer an amount equal to such Replaced Bank's Dollar RL Percentage of any
Unpaid Drawing relating to Letters of Credit issued by such Letter of
Credit Issuer (which at such time remains
-23-
<PAGE>
an Unpaid Drawing) to the extent such amount was not theretofore funded by
such Replaced Bank and (z) in the case of any replacement of Revolving Loan
Commitments, CSFB an amount equal to such Replaced Bank's Dollar RL
Percentage of any Mandatory Borrowing to the extent such amount was not
theretofore funded by such Replaced Bank;
(ii) all obligations of the Borrowers then owing to the Replaced
Bank (other than those (a) specifically described in clause (i) above in
respect of which the assignment purchase price has been, or is concurrently
being, paid, but including all amounts, if any, owing under Section 1.11
or (b) relating to any Tranche of Loans and/or Commitments of the
respective Replaced Bank which will remain out standing after giving effect
to the respective replacement) shall be paid in full to such Replaced Bank
concurrently with such replacement; and
(iii) if the respective Replaced Bank has a related Canadian RL
Bank, or if the Replaced Bank is a Canadian RL Bank which has a related
Bank, all of the actions specified above in this Section 1.13 shall be
taken with respect to both the respective Bank and Canadian RL Bank (who
shall be treated collectively as a Replaced Bank).
Upon the execution of the respective Assignment and Assumption Agreements, the
payment of amounts referred to in clauses (i) and (ii) above, recordation of the
assignment on the Register by the Administrative Agent pursuant to Section 13.17
and, if so requested by the Replacement Bank, delivery to the Replacement Bank
of the appropriate Note or Notes executed by the respective Borrowers, (x) the
Replacement Bank shall become a Bank here under and, unless the respective
Replaced Bank continues to have outstanding Term Loans and/or a Revolving Loan
Commitment hereunder, the Replaced Bank shall cease to constitute a Bank
hereunder, except with respect to indemnification provisions under this
Agreement (including, without limitation, Sections 1.10, 1.11, 2.05, 4.04, 13.01
and 13.06), which shall survive as to such Replaced Bank and (y) except in the
case of the replacement of only outstanding Term Loans of one or more Tranches
of Term Loans, the Dollar RL Percentages of the RL Banks shall be automatically
adjusted at such time to give effect to such replacement.
1.14 Provisions Regarding Bankers' Acceptances, Drafts, B/A
------------------------------------------------------
Equivalent Loans, etc. The parties hereto agree that the provisions of Schedule
- ----------------------
XII shall apply to all Bankers' Acceptances, Bankers' Acceptance Loans, Drafts,
B/A Equivalent Loans and B/A Equivalent Notes created hereunder, and that the
provisions of Schedule XII shall be deemed incorporated by reference into this
Agreement as if such provisions were set forth in their entirety herein.
-24-
<PAGE>
1.15 Special Provisions Regarding Canadian Dollar Revolving Loans.
------------------------------------------------------------
(a) On the date of the occurrence of a Sharing Event, automatically (and
without the taking of any action) (x) all then outstanding Canadian Dollar
Revolving Loans shall be automatically converted into Dollar Revolving Loans (in
an amount equal to the Dollar Equivalent of the aggregate principal amount or
Face Amount, as the case may be, of the Canadian Dollar Revolving Loans on the
date such Sharing Event first occurred, which Dollar Revolving Loans (i) shall
be owed by the Canadian Borrower, (ii) shall thereafter be deemed to be Base
Rate Loans and (iii) shall be immediately due and payable on the date such
Sharing Event has occurred) and (y) all principal, accrued and unpaid interest
and other amounts owing with respect to such Canadian Dollar Revolving Loans
shall be immediately due and payable in U.S. Dollars, taking the Dollar
Equivalent of such principal, accrued and unpaid interest and other amounts.
(b) Upon the occurrence of a Sharing Event, each RL Bank shall (and
hereby unconditionally and irrevocably agrees to) purchase and sell (in each
case in U.S. Dollars) undivided participating interests in the Revolving Loans
outstanding to, and any Unpaid Drawings owing by, each Borrower in such amounts
so that each RL Bank shall have a share of the outstanding Revolving Loans and
Unpaid Drawings then owing by each Borrower equal to its Sharing Percentage
thereof. Upon any such occurrence the Administrative Agent shall notify each RL
Bank and shall specify the amount of U.S. Dollars required from such RL Bank in
order to effect the purchases and sales by the various RL Banks of participating
interests in the amounts required above (together with accrued interest with
respect to the period from the last interest payment date through the date of
the Sharing Event plus any additional amounts payable by any Borrower pursuant
to Section 4.04 in respect of such accrued but unpaid interest); provided, in
--------
the event that a Sharing Event shall have occurred, each RL Bank shall be deemed
to have purchased, automatically and without request, such participating
interests. Promptly upon receipt of such request, each RL Bank shall deliver to
the Administrative Agent (in immediately available funds in U.S. Dollars) the
net amounts as specified by the Administrative Agent. The Administrative Agent
shall promptly deliver the amounts so received to the various RL Banks in such
amounts as are needed to effect the purchases and sales of participations as
provided above. Promptly following receipt thereof, each RL Bank which has sold
participations in any of its Revolving Loans (through the Administrative Agent)
will deliver to each RL Bank (through the Administrative Agent) which has so
purchased a participating interest a participation certificate dated the date of
receipt of such funds and in such amount. It is understood that the amount of
funds delivered by each RL Bank shall be calculated on a net basis, giving
effect to both the sales and purchases of participations by the various RL Banks
as required above.
(c) Upon, and after, the occurrence of a Sharing Event (i) no
further Revolving Loans shall be made to any Borrower, (ii) all amounts from
time to time accruing with respect to, and all amounts from time to time payable
on account of,
-25-
<PAGE>
Canadian Dollar Revolving Loans (including, without limitation, any interest and
other amounts which were accrued but unpaid on the date of such purchase) shall
be payable in U.S. Dollars as if such Canadian Dollar Revolving Loan had
originally been made in U.S. Dollars and shall be distributed by the relevant RL
Banks (or their Affiliates) to the Administrative Agent for the account of the
RL Banks which made such Loans or are participating therein and (iii) the
Commitments (and all Sub-Commitments) of the RL Banks shall be automatically
terminated. Notwithstanding anything to the contrary contained above, the
failure of any RL Bank to purchase its participating interest in any Revolving
Loans and Unpaid Drawings upon the occurrence of a Sharing Event shall not
relieve any other RL Bank of its obligation hereunder to purchase its
participating interests in a timely manner, but no RL Bank shall be responsible
for the failure of any other RL Bank to purchase the participating interest to
be purchased by such other RL Bank on any date.
(d) If any amount required to be paid by any RL Bank pursuant to
Section 1.15(b) is paid to the Administrative Agent within one Business Day
following the date upon which such RL Bank receives notice from the
Administrative Agent of the amount of its participations required to be
purchased pursuant to said Section 1.15(b) (provided such notice is received
--------
prior to 2:00 P.M. (New York time)), such RL Bank shall also pay to the
Administrative Agent on demand an amount equal to the product of (i) the amount
so required to be paid by such RL Bank for the purchase of its participations
times (ii) the daily average Federal Funds Rate, during the period from and
including the date of request for payment to the date on which such payment is
immediately available to the Administrative Agent times (iii) a fraction the
numerator of which is the number of days that elapsed during such period and the
denominator of which is 360. If any such amount required to be paid by any RL
Bank pursuant to Section 1.15(b) is not in fact made available to the
Administrative Agent within three Business Days following the date upon which
such RL Bank receives notice from the Administrative Agent as to the amount of
participations required to be purchased by it, the Administrative Agent shall be
entitled to recover from such RL Bank on demand, such amount with interest
thereon calculated from such request date at the rate per annum applicable to
Dollar Revolving Loans maintained as Base Rate Loans hereunder. A certificate
of the Administrative Agent submitted to any RL Bank with respect to any amounts
payable under this Section 1.15 shall be conclusive in the absence of manifest
error. Amounts payable by any RL Bank pursuant to this Section 1.15 shall be
paid to the Administrative Agent for the account of the relevant RL Banks;
provided that, if the Administrative Agent (in its sole discretion) has elected
- --------
to fund on behalf of such RL Bank the amounts owing to such RL Banks, then the
amounts shall be paid to the Administrative Agent for its own account.
(e) Whenever, at any time after the relevant RL Banks have received
from any RL Banks purchases of participations in any Revolving Loans pursuant to
this Section 1.15, the RL Banks receive any payment on account thereof, such RL
Banks will distribute to the Administrative Agent, for the account of the
various RL Banks partici-
-26-
<PAGE>
pating therein, such RL Banks' participating interests in such amounts
(appropriately adjusted, in the case of interest payments, to reflect the period
of time during which such participations were outstanding) in like funds as
received; provided, however, that in the event that such payment received by any
-------- -------
RL Banks is required to be returned, the RL Banks who received previous
distributions in respect of their participating interests therein will return to
the respective RL Banks any portion thereof previously so distributed to them in
like funds as such payment is required to be returned by the respective RL
Banks.
(f) Each RL Bank's obligation to purchase participating interests
pursuant to this Section 1.15 shall be absolute and unconditional and shall not
be affected by any circumstance including, without limitation, (a) any setoff,
counterclaim, recoupment, defense or other right which such RL Bank may have
against any other RL Bank, the relevant Borrower or any other Person for any
reason whatsoever, (b) the occurrence or continuance of an Event of Default, (c)
any adverse change in the condition (financial or otherwise) of any Borrower or
any other Person, (d) any breach of this Agreement by any Borrower or any RL
Bank or any other Person, or (e) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing.
(g) Notwithstanding anything to the contrary contained elsewhere in
this Agreement, upon any purchase of participations as required above, each RL
Bank which has purchased such participations shall be entitled to receive from
the relevant Borrowers any increased costs and indemnities (including, without
limitation, pursuant to Sections 1.10, 1.11, 2.05 and 4.04) directly from the
Borrowers to the same extent as if it were the direct RL Bank as opposed to a
participant therein, which increased costs shall be calculated without regard to
Section 1.13, Section 13.04(a) or the last sentence of Section 13.04(b). Each
Borrower acknowledges and agrees that, upon the occurrence of a Sharing Event
and after giving effect to the requirements of this Section 1.15, increased
Taxes may be owing by it pursuant to Section 4.04, which Taxes shall be paid (to
the extent provided in Section 4.04) by the relevant Borrower, without any claim
that the increased Taxes are not payable because same resulted from the
participations effected as otherwise required by this Section 1.15.
SECTION 2. Letters of Credit.
-----------------
2.01 Letters of Credit. (a) Subject to and upon the terms and
-----------------
conditions herein set forth, the U.S. Borrower may request a Letter of Credit
Issuer at any time and from time to time after the Restatement Effective Date
and prior to the tenth Business Day (or the 30th day in the case of Trade
Letters of Credit) preceding the A TL/RL Maturity Date to issue on a sight
basis, (x) for the account of the U.S. Borrower and for the benefit of any
holder (or any trustee, agent or other similar representative for any such
holders) of L/C Supportable Indebtedness, irrevocable sight standby letters of
credit in a form customarily used by
-27-
<PAGE>
such Letter of Credit Issuer or in such other form as has been approved by such
Letter of Credit Issuer (each such standby letter of credit, a "Standby Letter
of Credit") in support of such L/C Supportable Indebtedness and (y) for the
account of the U.S. Borrower and for the benefit of sellers of goods and
materials to the U.S. Borrower or any of its Subsidiaries in the ordinary course
of business, irrevocable sight trade letters of credit in a form customarily
used by such Letter of Credit Issuer or in such other form as has been approved
by such Letter of Credit Issuer (each such trade letter of credit, a "Trade
Letter of Credit," and each such Standby Letter of Credit and Trade Letter of
Credit, a "Letter of Credit" and, collectively, the "Letters of Credit").
(b) Subject to and upon the terms and conditions set forth herein,
each Letter of Credit Issuer hereby agrees that it will, at any time and from
time to time after the Restatement Effective Date and prior to the tenth
Business Day (or the 30th day in the case of Trade Letters of Credit) preceding
the A TL/RL Maturity Date, following its receipt of the respective Letter of
Credit Request, issue for the account of the U.S. Borrower one or more Letters
of Credit, (x) in the case of Trade Letters of Credit, in support of trade
obligations of the U.S. Borrower or any of its Subsidiaries that arise in the
ordinary course of business or (y) in the case of Standby Letters of Credit, in
support of such L/C Support able Indebtedness as is permitted to remain
outstanding hereunder. Notwithstanding the foregoing, no Letter of Credit
Issuer shall be under any obligation to issue any Letter of Credit if at the
time of such issuance:
(i) any order, judgment or decree of any governmental authority or
arbitrator shall purport by its terms to enjoin or restrain such Letter of
Credit Issuer from issuing such Letter of Credit or any requirement of law
applicable to such Letter of Credit Issuer or any request or directive
(whether or not having the force of law) from any governmental authority
with jurisdiction over such Letter of Credit Issuer shall prohibit, or
request that such Letter of Credit Issuer refrain from, the issuance of
letters of credit generally or such Letter of Credit in particular or shall
impose upon such Letter of Credit Issuer with respect to such Letter of
Credit any restriction or reserve or capital requirement (for which such
Letter of Credit Issuer is not otherwise compensated) not in effect on the
Restatement Effective Date, or any unreimbursed loss, cost or expense which
was not applicable, in effect or known to such Letter of Credit Issuer as
of the Restatement Effective Date and which such Letter of Credit Issuer in
good faith deems material to it; or
(ii) such Letter of Credit Issuer shall have received written notice
from any Borrower or the Required Banks prior to the issuance of such
Letter of Credit of the type described in clause (vii) of Section 2.01(c)
or the last sentence of Section 2.02(b).
-28-
<PAGE>
(c) Notwithstanding the foregoing, (i) no Letter of Credit shall be
issued the Stated Amount of which, when added to the Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid on the date of, and
prior to the issuance of, the respective Letter of Credit) at such time, would
exceed $25,000,000; (ii) no Letter of Credit shall be issued, if, after giving
effect thereto, (x) the Aggregate U.S. Revolving Credit Exposure would exceed
the Total Non-Canadian Revolving Loan Sub-Commitment at such time or (y) the
U.S. Revolving Credit Exposure of any RL Bank would exceed its Non-Canadian
Revolving Loan Sub-Commitment as then in effect; (iii) (x) each Standby Letter
of Credit shall have an expiry date occurring not later than one year after such
Standby Letter of Credit's date of issuance, provided, that any such Standby
--------
Letter of Credit may be extendable for successive periods of up to one year, but
not beyond the tenth Business Day preceding the A TL/RL Maturity Date, on terms
acceptable to the Letter of Credit Issuer and (y) each Trade Letter of Credit
shall have an expiry date occurring not later than 180 days after such Trade
Letter of Credit's date of issuance; (iv) (x) no Standby Letter of Credit shall
have an expiry date occurring later than the tenth Business Day preceding the A
TL/RL Maturity Date and (y) no Trade Letter of Credit shall have an expiry date
occurring later than 30 days prior to the A TL/RL Maturity Date; (v) each Letter
of Credit shall be denominated in U.S. Dollars; (vi) the Stated Amount of each
Letter of Credit shall not be less than $100,000 or such lesser amount as is
acceptable to the respec tive Letter of Credit Issuer; and (vii) no Letter of
Credit Issuer will issue any Letter of Credit after it has received written
notice from any Borrower, any Agent or the Required Banks stating that a Default
or an Event of Default exists until such time as such Letter of Credit Issuer
shall have received a written notice of (x) rescission of such notice from the
party or parties originally delivering the same or (y) a waiver of such Default
or Event of Default by the Required Banks.
(d) Notwithstanding the foregoing, in the event a Bank Default
exists, no Letter of Credit Issuer shall be required to issue any Letter of
Credit unless the respective Letter of Credit Issuer has entered into
arrangements satisfactory to it and the U.S. Borrower to eliminate such Letter
of Credit Issuer's risk with respect to the participation in Letters of Credit
of the Defaulting Bank or Banks, including by cash collateralizing such
Defaulting Bank's or Banks' Dollar RL Percentage (or, after the occurrence of a
Sharing Event, such Defaulting Bank's or Banks' Sharing Percentage) of the
Letter of Credit Outstandings, as the case may be.
(e) Schedule XIV hereto contains a description of all letters of
credit issued pursuant to the Original Credit Agreement and outstanding on the
Restatement Effective Date. Each such letter of credit, including any extension
or renewal thereof (each, as amended from time to time in accordance with the
terms hereof and thereof, an "Original Letter of Credit") shall constitute a
"Letter of Credit" for all purposes of this Agreement, issued, for purposes of
Section 2.03(a), on the Restatement Effective Date. In addition, each letter of
credit designated as a "Standby Letter of Credit" or "Trade Letter of Credit"
-29-
<PAGE>
on Schedule XIV shall constitute a "Standby Letter of Credit" or "Trade Letter
of Credit", as the case may be, for all purposes of this Agreement. Any Bank
hereunder to the extent it has issued an Original Letter of Credit shall
constitute the "Letter of Credit Issuer" with respect to such Letter of Credit
for all purposes of this Agreement.
2.02 Letter of Credit Requests. (a) Whenever the U.S. Borrower
-------------------------
desires that a Letter of Credit be issued, the U.S. Borrower shall give the
Administrative Agent and the respective Letter of Credit Issuer written notice
thereof prior to 12:00 Noon (New York time) at least three Business Days (or
such shorter period as may be acceptable to the respective Letter of Credit
Issuer) prior to the proposed date of issuance (which shall be a Business Day)
which written notice shall be in the form of Exhibit C (each, a "Letter of
Credit Request"). Each Letter of Credit Request shall include any other
documents as such Letter of Credit Issuer customarily requires in connection
therewith.
(b) The making of each Letter of Credit Request shall be deemed to be
a representation and warranty by the U.S. Borrower that such Letter of Credit
may be issued in accordance with, and it will not violate the requirements of,
Section 2.01(c). Unless the respective Letter of Credit Issuer has received
notice from any Borrower, any Agent or the Required Banks before it issues a
Letter of Credit that one or more of the applicable conditions specified in
Section 5 or 6, as the case may be, are not then satisfied, or that the issuance
of such Letter of Credit would violate Section 2.01(c), then such Letter of
Credit Issuer may issue the requested Letter of Credit for the account of the
U.S. Borrower in accordance with such Letter of Credit Issuer's usual and
customary practice.
2.03 Letter of Credit Participations. (a) Immediately upon the
-------------------------------
issuance by a Letter of Credit Issuer of any Letter of Credit, such Letter of
Credit Issuer shall be deemed to have sold and transferred to each other RL
Bank, and each such RL Bank (each, a "Participant") shall be deemed irrevocably
and unconditionally to have purchased and received from such Letter of Credit
Issuer, without recourse or warranty, an undivided inter est and participation,
to the extent of such Participant's Dollar RL Percentage, in such Letter of
Credit, each substitute Letter of Credit, each drawing made thereunder and the
obligations of the U.S. Borrower under this Agreement with respect thereto
(although Letter of Credit Fees shall be payable directly to the Administrative
Agent for the account of the RL Banks as provided in Section 3.01(b) and the
Participants shall have no right to receive any portion of any Facing Fees with
respect to such Letters of Credit) and any security therefor or guaranty
pertaining thereto; provided that, upon the occurrence of a Sharing Event, the
--------
participations described above shall be automatically adjusted so that each RL
Bank shall have a participation in all then outstanding Letters of Credit, and
related obligations as described above, in a percentage equal to its Sharing
Percentage (which adjustment shall occur concurrently with the adjustments
described in Section 1.15). Upon any change in the Revolving Loan Commitments
or the Dollar RL Percentages of the RL Banks pursuant to Section 1.13 or
13.04(b) (or, in the circumstances provided in the
-30-
<PAGE>
proviso to the immediately preceding sentence, the Sharing Percentages of the RL
Banks pursuant to this Agreement) or as a result of a Bank Default, it is hereby
agreed that, with respect to all outstanding Letters of Credit and Unpaid
Drawings with respect thereto, there shall be an automatic adjustment to the
participations pursuant to this Section 2.03 to reflect the new Dollar RL
Percentages (or, in the circumstances provided in the proviso to the immediately
preceding sentence, the Sharing Percentages) of the assigning and assignee Bank
or of all RL Banks, as the case may be.
(b) In determining whether to pay under any Letter of Credit, no
Letter of Credit Issuer shall have any obligation relative to the Participants
other than to determine that any documents required to be delivered under such
Letter of Credit have been delivered and that they appear to substantially
comply on their face with the requirements of such Letter of Credit. Any action
taken or omitted to be taken by any Letter of Credit Issuer under or in
connection with any Letter of Credit issued by it if taken or omitted in the
absence of gross negligence or willful misconduct, shall not create for such
Letter of Credit Issuer any resulting liability.
(c) In the event that any Letter of Credit Issuer makes any payment
under any Letter of Credit issued by it and the U.S. Borrower shall not have
reimbursed such amount in full to the Letter of Credit Issuer pursuant to
Section 2.04(a), such Letter of Credit Issuer shall promptly notify the
Administrative Agent, and the Administrative Agent shall promptly notify each
Participant of such failure, and each such Participant shall promptly and
unconditionally pay to the Administrative Agent for the account of such Letter
of Credit Issuer, the amount of such Participant's Dollar RL Percentage (or,
after the occurrence of a Sharing Event, its Sharing Percentage) of such payment
in U.S. Dollars and in same day funds. If the Administrative Agent so notifies
any Participant required to fund a payment under a Letter of Credit prior to
11:00 A.M. (New York time) on any Business Day, such Participant shall make
available to the Administrative Agent at the Payment Office for the account of
the respective Letter of Credit Issuer such Participant's Dollar RL Percentage
(or, after the occurrence of a Sharing Event, its Sharing Percentage) of the
amount of such payment on such Business Day in same day funds (and, to the
extent such notice is given after 11:00 A.M. (New York time) on any Business
Day, such Participant shall make such payment on the immediately following
Business Day). If and to the extent such Participant shall not have so made its
Dollar RL Percentage (or, after the occurrence of a Sharing Event, its Sharing
Percentage) of the amount of such payment available to the Administrative Agent
for the account of the respective Letter of Credit Issuer, such Participant
agrees to pay to the Administrative Agent for the account of such Letter of
Credit Issuer, forthwith on demand such amount, together with interest thereon,
for each day from such date until the date such amount is paid to the
Administrative Agent for the account of the Letter of Credit Issuer at the
overnight Federal Funds Rate. The failure of any Participant to make available
to the Administrative Agent for the account of the respective Letter of Credit
Issuer its Dollar RL Percentage (or, after the occurrence of a
-31-
<PAGE>
Sharing Event, its Sharing Percentage) of any payment under any Letter of Credit
issued by it shall not relieve any other Participant of its obligation hereunder
to make available to the Administrative Agent for the account of such Letter of
Credit Issuer its Dollar RL Percentage (or, after the occurrence of a Sharing
Event, its Sharing Percentage) of any payment under any such Letter of Credit on
the date required, as specified above, but no Participant shall be responsible
for the failure of any other Participant to make available to the Administrative
Agent for the account of such Letter of Credit Issuer such other Participant's
Dollar RL Percentage (or, after the occurrence of a Sharing Event, its Sharing
Percentage) of any such payment.
(d) Whenever any Letter of Credit Issuer receives a payment of a reim
bursement obligation as to which the Administrative Agent has received for the
account of such Letter of Credit Issuer any payments from the Participants
pursuant to clause (c) above, such Letter of Credit Issuer shall pay to the
Administrative Agent and the Administrative Agent shall promptly pay to each
Participant which has paid its Dollar RL Percentage (or, after the occurrence of
a Sharing Event, its Sharing Percentage) thereof, in U.S. Dollars and in same
day funds, an amount equal to such Participant's Dollar RL Percentage (or, after
the occurrence of a Sharing Event, its Sharing Percentage) of the principal
amount thereof and interest thereon accruing after the purchase of the
respective participations.
(e) Each Letter of Credit Issuer shall, promptly after each issuance
of, or amendment or modification to, a Standby Letter of Credit issued by it,
give the Administrative Agent and the U.S. Borrower written notice of the
issuance of, or amendment or modification to, such Standby Letter of Credit,
which notice shall be accompanied by a copy of the Standby Letter of Credit or
Standby Letters of Credit issued by it and each such amendment or modification
thereto. Upon receipt of any such written notice from a Letter of Credit
Issuer, the Administrative Agent shall promptly forward a copy of such notice
and accompanying documentation to each Participant.
(f) Each Letter of Credit Issuer (other than CSFB) shall deliver to
the Administrative Agent, promptly on the first Business Day of each week, by
facsimile transmission, the aggregate daily Stated Amount available to be drawn
under the outstanding Trade Letters of Credit issued by such Letter of Credit
Issuer for the previous week. The Administrative Agent shall, within 10 days
after the last Business Day of each calendar month, deliver to each Participant
a report setting forth for such preceding calendar month the aggregate daily
Stated Amount available to be drawn under all outstanding Trade Letters of
Credit during such calendar month.
(g) The obligations of the Participants to make payments to the
Administrative Agent for the account of the respective Letter of Credit Issuer
with respect to Letters of Credit issued by it shall be irrevocable and not
subject to counterclaim, set-off or other
-32-
<PAGE>
defense or any other qualification or exception whatsoever and shall be made in
accordance with the terms and conditions of this Agreement under all
circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this Agreement or
any of the other Credit Documents;
(ii) the existence of any claim, set-off, defense or other right
which the U.S. Borrower or any of its Subsidiaries may have at any time
against a beneficiary named in a Letter of Credit, any transferee of any
Letter of Credit (or any Person for whom any such transferee may be
acting), any Agent, any Letter of Credit Issuer, any Bank, or any other
Person, whether in connection with this Agreement, any Letter of Credit,
the transactions contemplated herein or any unrelated transactions
(including any underlying transaction between the U.S. Borrower or any of
its Subsidiaries and the beneficiary named in any such Letter of Credit);
(iii) any draft, certificate or other document presented under the
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;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Credit
Documents; or
(v) the occurrence of any Default or Event of Default.
2.04 Agreement to Repay Letter of Credit Drawings. (a) The U.S.
--------------------------------------------
Borrower hereby agrees to reimburse each Letter of Credit Issuer, by making
payment to the Administrative Agent in U.S. Dollars and in immediately available
funds at the Payment Office, for any payment or disbursement made by such Letter
of Credit Issuer under any Letter of Credit issued by it (each such amount so
paid or disbursed until reimbursed, an "Unpaid Drawing") immediately after, and
in any event on the date of such payment or disbursement, with interest on the
amount so paid or disbursed by such Letter of Credit Issuer, to the extent not
reimbursed prior to 2:00 P.M. (New York time) on the date of such payment or
disbursement, from and including the date paid or disbursed to but not including
the date such Letter of Credit Issuer is reimbursed therefor at a rate per annum
which shall be the Applicable Margin for Dollar Revolving Loans maintained as
Base Rate Loans as in effect from time to time (plus an additional 2% per annum
if not reimbursed by the third Business Day after the date of such payment or
disbursement), such interest also to be pay able on demand. Each Letter of
Credit Issuer shall provide the U.S. Borrower prompt notice of any payment or
disbursement made by it under any Letter of Credit issued by it; provided, that
--------
(i) the notices referred to above shall not be required to be given if a Default
or an Event of Default under such Section 10.05 shall have occurred and be
continuing (in
-33-
<PAGE>
which case the Unpaid Drawings shall be due and payable immediately without
presentment, demand, protest or notice of any kind (all of which are hereby
waived by the U.S. Borrower) and (ii) the failure of, or delay in, giving any
such notice shall not release or diminish the obligations of the U.S. Borrower
under this Section 2.04(a) or under any other Section of this Agreement.
(b) The U.S. Borrower's obligation under this Section 2.04 to
reimburse the respective Letter of Credit Issuer with respect to drawings on
Letters of Credit (including, in each case, interest thereon) shall be absolute
and unconditional under any and all circumstances and irrespective of any
setoff, counterclaim or defense to payment which the U.S. Borrower or any of its
Subsidiaries may have or have had against such Letter of Credit Issuer, any
Agent or any Bank or other Person, including, without limitation, any defense
based upon the failure of any drawing under a Letter of Credit issued by it to
con form to the terms of the Letter of Credit or any nonapplication or
misapplication by the beneficiary of the proceeds of such drawing; provided,
--------
however, that the U.S. Borrower shall not be obligated to reimburse such Letter
- -------
of Credit Issuer for any wrongful payment made by such Letter of Credit Issuer
under a Letter of Credit issued by it as a result of acts or omissions
constituting willful misconduct or gross negligence on the part of such Letter
of Credit Issuer as determined by a court of competent jurisdiction; provided,
--------
further, that any reimbursement made by the U.S. Borrower shall be without
- -------
prejudice to any claim it may have against such Letter of Credit Issuer as a
result of acts or omissions constituting willful misconduct or gross negligence
on the part of such Letter of Credit Issuer.
2.05 Increased Costs. If after the Restatement Effective Date, any
---------------
Letter of Credit Issuer or any Participant determines that the adoption or
effectiveness of any applicable law, rule or regulation, order, guideline or
request or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Letter of Credit Issuer or any Participant with any request or directive
(whether or not having the force of law) by any such authority, central bank or
comparable agency shall either (i) impose, modify or make applicable any
reserve, deposit, capital adequacy or similar requirement against Letters of
Credit issued by such Letter of Credit Issuer or such Participant's
participation therein, or (ii) impose on any Letter of Credit Issuer or any
Participant any other conditions directly or indirectly affecting this
Agreement, any Letter of Credit or such Participant's participation therein; and
the result of any of the foregoing is to increase the cost to such Letter of
Credit Issuer or such Participant of issuing, maintaining or participating in
any Letter of Credit, or to reduce the amount of any sum received or receivable
by such Letter of Credit Issuer or such Participant hereunder or reduce the rate
of return on its capital (other than any increased costs or reduction in the
amount received or receivable resulting from the imposition of or a change in
the rate of taxes or any similar charges) with respect to Letters of Credit,
then, upon written demand to the U.S. Borrower by such Letter of Credit Issuer
or such Participant (a copy of which
-34-
<PAGE>
notice shall be sent by such Letter of Credit Issuer or such Participant to the
Administrative Agent), accompanied by the certificate described in the last
sentence of this Section 2.05, the U.S. Borrower agrees, subject to the
provisions of Section 13.18 (to the extent applicable), to pay to such Letter of
Credit Issuer or such Participant such additional amount or amounts as will
compensate such Letter of Credit Issuer or such Participant for such increased
cost or reduction. Any Letter of Credit Issuer or any Participant, upon
determining that any additional amounts will be payable pursuant to this Section
2.05, will give prompt written notice thereof to the U.S. Borrower, which notice
shall include a certificate submitted to the U.S. Borrower by such Letter of
Credit Issuer or such Participant, as the case may be (a copy of which
certificate shall be sent by such Letter of Credit Issuer or such Participant to
the Administrative Agent), setting forth in reasonable detail the basis for the
determination of such additional amount or amounts necessary to compensate such
Letter of Credit Issuer or such Participant as aforesaid and such certificate,
if delivered in good faith, shall be final and conclusive and binding on the
U.S. Borrower absent manifest error, although the failure to deliver any such
certificate shall not release or diminish the U.S. Borrower's obligations to pay
additional amounts pursuant to this Section 2.05 upon subsequent receipt of such
certificate.
SECTION 3. Fees; Commitments.
-----------------
3.01 Fees. (a) The U.S. Borrower shall pay to the Administrative
----
Agent for distribution to each Non-Defaulting Bank with a Revolving Loan
Commitment, a commitment fee (the "Commitment Fee") for the period from the
Restatement Effective Date to but not including the A TL/RL Maturity Date (or
such earlier date as the Total Revolving Loan Commitment shall have been
terminated), computed at a rate for each day equal to the relevant Applicable
Margin (as in effect from time to time) on the daily average Unutilized
Revolving Loan Commitment of such Non-Defaulting Bank. Accrued Commitment Fees
shall be due and payable quarterly in arrears on each Quarterly Payment Date and
on the A TL/RL Maturity Date (or such earlier date upon which the Total
Revolving Loan Commitment is terminated).
(b) The U.S. Borrower shall pay to the Administrative Agent for pro
---
rata distribution to each Non-Defaulting Bank with a Revolving Loan Commitment
- ----
(based on its Dollar RL Percentage or, for periods from and after the occurrence
of a Sharing Event, its Sharing Percentage), a fee in respect of each Letter of
Credit (the "Letter of Credit Fee") computed at a rate per annum equal to the
Applicable Margin for Dollar Revolving Loans maintained as Eurodollar Loans then
in effect on the daily Stated Amount of such Letter of Credit. Accrued Letter
of Credit Fees shall be due and payable quarterly in arrears on each Quarterly
Payment Date and upon the first day on or after the termination of the Total
Revolving Loan Commitment upon which no Letters of Credit remain outstanding.
-35-
<PAGE>
(c) The U.S. Borrower shall pay to each Letter of Credit Issuer a fee
in respect of each Letter of Credit issued by such Letter of Credit Issuer (the
"Facing Fee") computed at the rate of 1/4 of 1% per annum on the daily Stated
Amount of such Letter of Credit. Accrued Facing Fees shall be due and payable
quarterly in arrears on each Quarterly Payment Date and upon the first day on or
after the termination of the Total Revolving Loan Commitment upon which no
Letters of Credit remain outstanding.
(d) The U.S. Borrower shall pay directly to each Letter of Credit
Issuer upon each issuance of, payment under, and/or amendment of, a Letter of
Credit issued by such Letter of Credit Issuer such amount as shall at the time
of such issuance, payment or amendment be the administrative charge which such
Letter of Credit Issuer is generally charging for issuances of, payments under
or amendments of, letters of credit issued by it.
(e) Each Borrower shall pay to each Agent, for its own account, such
other fees as may be agreed to in writing from time to time between such
Borrower and such Agent, when and as due.
(f) At the time of the incurrence of each Bankers' Acceptance Loan
and each B/A Equivalent Loan, Drawing Fees shall be paid by the Canadian
Borrower as required by, and in accordance with, clause (g) of Schedule XII.
(g) All computations of Fees shall be made in accordance with Section
13.07(c) and (d).
3.02 Voluntary Termination or Reduction of Total Unutilized Revolving
----------------------------------------------------------------
Loan Commitment. (a) Upon at least three Business Days' prior notice to the
- ---------------
Administrative Agent at its Notice Office (which notice the Administrative Agent
shall promptly transmit to each of the Banks), the Borrowers shall have the
right, without premium or penalty, to terminate or partially reduce the Total
Unutilized Revolving Loan Commitment, in integral multiples of $1,000,000 in the
case of partial reductions to the Total Unutilized Revolving Loan Commitment.
Each reduction to the Total Unutilized Revolving Loan Commitment pursuant to
this Section 3.02(a) shall apply to permanently reduce the Revolving Loan
Commitments of the various RL Banks pro rata based on their respective Sharing
--- ----
Percentages. At the time of each reduction to the Revolving Loan Commitment of
any RL Bank pursuant to this Section 3.02(a), the Borrowers shall specify the
amount of such reduction to apply to the Canadian Revolving Loan Sub-Commitment
of such RL Bank and to the Non-Canadian Revolving Loan Sub-Commitment of such RL
Bank (the sum of which must equal the reduction to the Revolving Loan Commitment
of such RL Bank); provided that all RL Banks with Canadian Revolving Loan Sub-
--------
Commitments shall be treated in a consistent fashion (i.e., with no reductions,
----
or with proportionate reductions, to their respective Canadian Revolving Loan
Sub-Commitments) at the time of any reduction to the Total Unutilized Revolving
Loan Commitment pursuant
-36-
<PAGE>
to this Section 3.02(a). In the absence of a designation by the Borrowers
pursuant to this Section 3.02, the amount of any reduction to the Revolving Loan
Commitment of any RL Bank pursuant to this Section 3.02 shall apply (i) first,
to reduce the Non-Canadian Revolving Loan Sub-Commitment of the respective RL
Bank and (ii) second, to the extent in excess thereof, to reduce the Canadian
Revolving Loan Sub-Commitment of such RL Bank.
(b) In the event of certain refusals by a Bank to consent to certain
proposed changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Banks as provided in Section
13.12(b), the Borrowers shall have the right, subject to obtaining the consents
required by Section 13.12(b), upon five Business Days' prior written notice to
the Administrative Agent at its Notice Office (which notice the Administrative
Agent shall promptly transmit to each of the Banks), to terminate the entire
Revolving Loan Commitment (and any related Canadian Revolving Loan Sub-
Commitment) of such Bank, so long as all Loans, together with accrued and unpaid
interest, Fees and all other amounts, owing to such Bank (including all amounts,
if any, owing pursuant to Section 1.11 but excluding amounts owing in respect of
any Tranche of Term Loans maintained by such Bank, if such Term Loans are not
being repaid pursuant to Section 13.12(b)) are repaid concurrently with the
effectiveness of such termination (at which time Schedule I shall be deemed
modified to reflect such changed amounts) and at such time, unless the
respective Bank continues to have outstanding Term Loans of any Tranche
hereunder, such Bank shall no longer constitute a "Bank" for purposes of this
Agreement, except with respect to indemnifications under this Agreement
(including, with out limitation, Sections 1.10, 1.11, 2.05, 4.04, 13.01 and
13.06), which shall survive as to such repaid Bank.
3.03 Mandatory Reduction of Commitments. (a) Each of the Total New
----------------------------------
Tranche A Term Loan Commitment (and the New Tranche A Term Loan Commitment of
each Bank), the Total Tranche B Term Loan Commitment (and the Tranche B Term
Loan Commitment of each Bank) and the Total Tranche C Term Loan Commitment (and
the Tranche C Term Loan Commitment of each Bank) shall terminate in its entirety
on October 31, 1998 and the Original Credit Agreement shall continue in effect
unless the Restatement Effective Date has occurred on or before such date.
(b) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, the Total New Tranche A Term Loan Commitment (and the New
Tranche A Term Loan Commitment of each Bank) shall terminate in its entirety on
the Restatement Effective Date (after giving effect to the making of New Tranche
A Term Loans on such date).
(c) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, the Total Tranche B Term Loan Commitment (and the Tranche
B Term
-37-
<PAGE>
Loan Commitment of each Bank) shall terminate in its entirety on the Restatement
Effective Date (after giving effect to the making of Tranche B Term Loans on
such date).
(d) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, the Total Tranche C Term Loan Commitment (and the Tranche
C Term Loan Commitment of each Bank) shall (i) be reduced by an amount equal to
the outstanding principal amount of the CLC Senior Notes not tendered pursuant
to the CLC Tender Offer/Consent Solicitation on the Restatement Effective Date
(prior to the making of Tranche C Term Loans on such date) and (ii) terminate in
its entirety on the Restatement Effective Date (after giving effect to the
making of Tranche C Term Loans on such date).
(e) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, the Total Revolving Loan Commitment (and the Revolving
Loan Commitment, the Canadian Revolving Loan Sub-Commitment and the Non-Canadian
Revolving Loan Sub-Commitment of each RL Bank) shall terminate in its entirety
on the A TL/RL Maturity Date.
(f) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, the Total Revolving Loan Commitment shall be reduced from
time to time to the extent required by Section 4.02.
(g) Each reduction to the Total New Tranche A Term Loan Commitment,
the Total Tranche B Term Loan Commitment and the Total Tranche C Term Loan
Commitment pursuant to this Section 3.03 (or pursuant to Section 4.02) shall be
applied proportionately to reduce the New Tranche A Term Loan Commitment, the
Tranche B Term Loan Commitment or the Tranche C Term Loan Commitment, as the
case may be, of each Bank with such a Commitment.
(h) Each reduction to the Total Revolving Loan Commitment pursuant to
this Section 3.03 (or pursuant to Section 4.02) shall apply to proportionally
and permanently reduce the Revolving Loan Commitment of each RL Bank (based on
their Sharing Percentages). At the time of each reduction to the Revolving Loan
Commitment of any RL Bank pursuant to this Section 3.03, the Borrowers shall
specify the amount of such reduction to apply to the Canadian Revolving Loan
Sub-Commitment of such RL Bank and to the Non-Canadian Revolving Loan Sub-
Commitment of such RL Bank (the sum of which must equal the reduction to the
Revolving Loan Commitment of such RL Bank); provided that all RL Banks with
--------
Canadian Revolving Loan Sub-Commitments shall be treated in a consistent fashion
(i.e., with no reductions, or with proportionate reductions, to their respective
----
Canadian Revolving Loan Sub-Commitments) at the time of any reduction to the
Total Revolving Loan Commitment pursuant to this Section 3.03. In the absence
of a designation by the Borrowers pursuant to this Section 3.03, the amount of
any reduction to the Revolving Loan Commitment of any RL Bank pursuant to this
Section 3.03
-38-
<PAGE>
shall apply (i) first, to reduce the Non-Canadian Revolving Loan Sub-Commitment
of the respective RL Bank and (ii) second, to the extent in excess thereof, to
reduce the Canadian Revolving Loan Sub-Commitments of such RL Bank.
SECTION 4. Payments.
--------
4.01 Voluntary Prepayments. Each Borrower shall have the right to
---------------------
prepay the Loans, and the right to allocate such prepayments to Revolving Loans,
Swingline Loans, Tranche A Term Loans, Tranche B Term Loans and/or Tranche C
Term Loans made to such Borrower as such Borrower elects, in whole or in part,
without premium or penalty except as otherwise provided in this Agreement, from
time to time on the following terms and conditions:
(i) such Borrower shall give the Administrative Agent at its Notice
Office written notice (or telephonic notice promptly confirmed in writing)
of its intent to prepay the Loans, whether such Loans are Tranche A Term
Loans, Tranche B Term Loans, Tranche C Term Loans, Dollar Revolving Loans,
Canadian Dollar Revolving Loans or Swingline Loans, the amount of such
prepayment, the Types of Loans to be repaid and (in the case of Eurodollar
Loans, Bankers' Acceptance Loans and/or B/A Equivalent Loans) the specific
Borrowing(s) pursuant to which made, which notice (I) shall be given by the
Borrower prior to 12:00 Noon (New York time) (x) at least one Business Day
prior to the date of such prepayment in the case of Base Rate Loans or
Canadian Prime Rate Loans, (y) on the date of such prepayment in the case
of Swingline Loans and (z) at least three Business Days prior to the date
of such prepayment in the case of Eurodollar Loans and (II) shall, except
in the case of Swingline Loans, promptly be transmitted by the
Administrative Agent to each of the Banks;
(ii) each prepayment (other than prepayments in full of (I) all
outstanding Base Rate Loans or Canadian Prime Rate Loans or (II) any
outstanding Borrowing of Eurodollar Loans) shall be in an aggregate
principal amount of at least (w) Cdn.$ 500,000, in the case of Canadian
Dollar Revolving Loans, (x) $1,000,000, in the case of Eurodollar Loans,
(y) $500,000, in the case of Dollar Revolving Loans and Term Loans
maintained as Base Rate Loans and (z) $100,000, in the case of Swingline
Loans and, in each case, if greater, in integral multiples of $100,000,
provided, that no partial prepayment of Eurodollar Loans made pursuant to
--------
a Borrowing shall reduce the aggregate principal amount of the Eurodollar
Loans outstanding pursuant to such Borrowing to an amount less than the
Minimum Borrowing Amount applicable thereto;
-39-
<PAGE>
(iii) at the time of any prepayment of Eurodollar Loans pursuant to
this Section 4.01 on any date other than the last day of the Interest
Period applicable thereto, the U.S. Borrower shall pay the amounts required
pursuant to Section 1.11;
(iv) except as provided in clause (vii) below, each prepayment in
respect of any Loans made pursuant to a Borrowing shall be applied pro rata
--- ----
among such Loans, provided, that at such Borrower's election in connection
--------
with any prepayment of Revolving Loans pursuant to this Section 4.01, such
prepayment shall not be applied to any Revolving Loans of a Defaulting
Bank;
(v) prepayments of Bankers' Acceptance Loans and B/A Equivalent
Loans may not be made prior to the maturity date of the respective
underlying Bankers' Acceptances or B/A Equivalent Notes, as the case may
be;
(vi) each prepayment of principal of Tranche A Term Loans, Tranche
B Term Loans and Tranche C Term Loans pursuant to this Section 4.01 shall
be applied to reduce the then remaining Scheduled Repayments of the
respective Tranche in direct order of maturity (based upon the then
remaining principal amounts of the Scheduled Repayments of the respective
Tranche after giving effect to all prior reductions thereto);
(vii) in the event of certain refusals by a Bank to consent to
certain pro posed changes, waivers, discharges or terminations with respect
to this Agreement which have been approved by the Required Banks as
provided in Section 13.12(b), such Borrower may, upon five Business Days'
prior written notice to the Administrative Agent at its Notice Office
(which notice the Administrative Agent shall promptly transmit to each of
the Banks), repay all Loans of such Bank (including all amounts, if any,
owing pursuant to Section 1.11), together with accrued and unpaid interest,
Fees and all other amounts then owing to such Bank (or owing to such Bank
with respect to each Tranche which gave rise to the need to obtain such
Bank's individual consent) in accordance with said Section 13.12(b), so
long as (A) in the case of the repayment of Revolving Loans of any Bank
pursuant to this clause (vii), the Revolving Loan Commitment (and the
related Sub-Commitment(s)) of such Bank is (are) terminated concurrently
with such repayment (at which time Schedule I shall be deemed modified to
reflect the changed Revolving Loan Commitments and related Sub-Commitments)
and (B) the consents required by Section 13.12(b) in connection with the
repayment pursuant to this clause (vii) shall have been obtained; and
(viii) each prepayment of Term Loans pursuant to this Section 4.01
(except as provided in preceding clause (vii)) shall be applied to the
Tranche A Term Loans, the Tranche B Term Loans and the Tranche C Term Loans
on a pro
---
-40-
<PAGE>
rata basis (based upon the then outstanding principal amount of Tranche A
----
Term Loans, Tranche B Term Loans or Tranche C Term Loans, as the case may
be).
4.02 Mandatory Repayments and Commitment Reductions. (a) (i) If on
----------------------------------------------
any date the Dollar Equivalent of the aggregate outstanding principal amount (or
Face Amount, as the case may be) of Canadian Dollar Revolving Loans exceeds the
Total Canadian Revolving Loan Sub-Commitment as then in effect, the Canadian
Borrower shall prepay on such day the principal of outstanding Canadian Dollar
Revolving Loans (for this purpose, taking the Dollar Equivalent of payments in
Canadian Dollars made with respect to Canadian Dollar Revolving Loans) (other
than Bankers' Acceptance Loans and B/A Equivalent Loans where the underlying
Bankers' Acceptances or B/A Equivalent Notes, as the case may be, have not
matured) equal to such excess. If after giving effect to the prepayment of all
outstanding Canadian Dollar Revolving Loans (other than Bankers' Acceptance
Loans and B/A Equivalent Loans where the underlying Bankers' Acceptances or B/A
Equivalent Notes, as the case may be, have not yet matured), the sum of the
aggregate Face Amount of outstanding Bankers' Acceptance Loans and B/A
Equivalent Loans (for this purpose, using the Dollar Equivalent of the Face
Amounts thereof) exceeds the Total Canadian Revolving Loan Sub-Commitment as
then in effect, the Canadian Borrower shall pay to the Administrative Agent on
such day an amount in Canadian Dollars of cash or Cash Equivalents equal to the
amount of such excess (rounded up to the nearest integral multiple of
Cdn.$100,000), such cash and Cash Equivalents to be held as cash collateral for
the obligations of the Canadian Borrower to the Canadian RL Banks in respect of
an equivalent Face Amount of outstanding Bankers' Acceptances accepted, and
outstanding B/A Equivalent Notes held, by the Canadian RL Banks and which shall
be paid to and applied by the Canadian RL Banks, in satisfaction of the
obligations to the Canadian RL Banks of the Canadian Borrower in respect of such
Bankers' Acceptances and B/A Equivalent Notes, on the respective maturity dates
thereof.
(ii) If on any day the aggregate outstanding principal amount of
Dollar Revolving Loans and Swingline Loans made to the U.S. Borrower and the
aggregate amount of all Letter of Credit Outstandings at such time exceeds an
amount equal to the Total Non-Canadian Revolving Loan Sub-Commitment as then in
effect, the U.S. Borrower shall prepay on such day the principal of outstanding
Swingline Loans and, after all Swingline Loans have been repaid in full or if no
Swingline Loans are outstanding, principal of outstanding Dollar Revolving Loans
in an amount equal to such excess. If, after giving effect to the prepayment of
all such outstanding Swingline Loans and Dollar Revolving Loans, the sum of the
outstanding Letter of Credit Outstandings exceeds the Total Non-Canadian
Revolving Loan Sub-Commitment as then in effect, the U.S. Borrower shall pay to
the Administrative Agent cash and/or Cash Equivalents in an amount equal to such
excess (up to a maximum amount equal to the Letter of Credit Outstandings at
such time), such cash and/or Cash Equivalents to be held as security for all
obligations of the
-41-
<PAGE>
U.S. Borrower hereunder and under the other Credit Documents in a cash
collateral account to be established by the Administrative Agent.
(b) (i) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each date set forth below, the
U.S. Borrower shall be required to repay that principal amount of Tranche A Term
Loans, to the extent then outstanding, as is set forth opposite such date (each
such repayment, as the same may be reduced as provided in Sections 4.01 and
4.02(h), a "Tranche A Term Loan Scheduled Repayment"):
Tranche A Scheduled Repayment Date Amount
---------------------------------- ------
September 30, 1998 $225,000
December 31, 1998 $225,000
March 31, 1999 $225,000
June 30, 1999 $225,000
September 30, 1999 $225,000
December 31, 1999 $225,000
March 31, 2000 $225,000
June 30, 2000 $225,000
September 30, 2000 $225,000
December 31, 2000 $225,000
March 31, 2001 $225,000
June 30, 2001 $225,000
September 30, 2001 $225,000
December 31, 2001 $225,000
March 31, 2002 $225,000
June 30, 2002 $225,000
September 30, 2002 $225,000
December 31, 2002 $225,000
-42-
<PAGE>
March 31, 2003 $225,000
June 30, 2003 $225,000
September 30, 2003 $225,000
December 31, 2003 $225,000
March 31, 2004 $225,000
A TL/RL Maturity Date $84,825,000
(ii) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each date set forth below, the U.S.
Borrower shall be required to repay that principal amount of Tranche B Term
Loans, to the extent then outstanding, as is set forth opposite such date (each
such repayment, as the same may be reduced as provided in Sections 4.01 and
4.02(h), a "Tranche B Term Loan Scheduled Repayment"):
Tranche B Scheduled Repayment Date Amount
---------------------------------- ------
September 30, 1998 $262,500
December 31, 1998 $262,500
March 31, 1999 $262,500
June 30, 1999 $262,500
September 30, 1999 $262,500
December 31, 1999 $262,500
March 31, 2000 $262,500
June 30, 2000 $262,500
September 30, 2000 $262,500
December 31, 2000 $262,500
March 31, 2001 $262,500
June 30, 2001 $262,500
September 30, 2001 $262,500
December 31, 2001 $262,500
March 31, 2002 $262,500
June 30, 2002 $262,500
September 30, 2002 $262,500
December 31, 2002 $262,500
-43-
<PAGE>
March 31, 2003 $262,500
June 30, 2003 $262,500
September 30, 2003 $262,500
December 31, 2003 $262,500
March 31, 2004 $262,500
June 30, 2004 $262,500
September 30, 2004 $262,500
December 31, 2004 $262,500
March 31, 2005 $262,500
June 30, 2005 $48,956,250
Tranche B Term Loan Maturity Date $48,956,250
(iii) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each date set forth below, the
U.S. Borrower shall be required to repay that principal amount of Tranche C Term
Loans, to the extent then outstanding, as is set forth opposite such date (each
such repayment, as the same may be reduced as provided in Sections 4.01 and
4.02(h), a "Tranche C Term Loan Scheduled Repayment"):
Tranche C Scheduled Repayment Date Amount
---------------------------------- ------
September 30, 1998 $225,000
December 31, 1998 $225,000
March 31, 1999 $225,000
June 30, 1999 $225,000
September 30, 1999 $225,000
December 31, 1999 $225,000
March 31, 2000 $225,000
June 30, 2000 $225,000
September 30, 2000 $225,000
December 31, 2000 $225,000
March 31, 2001 $225,000
June 30, 2001 $225,000
September 30, 2001 $225,000
December 31, 2001 $225,000
-44-
<PAGE>
March 31, 2002 $225,000
June 30, 2002 $225,000
September 30, 2002 $225,000
December 31, 2002 $225,000
March 31, 2003 $225,000
June 30, 2003 $225,000
September 30, 2003 $225,000
December 31, 2003 $225,000
March 31, 2004 $225,000
June 30, 2004 $225,000
September 30, 2004 $225,000
December 31, 2004 $225,000
March 31, 2005 $225,000
June 30, 2005 $225,000
September 30, 2005 $225,000
December 31, 2005 $41,737,500
Tranche C Term Loan Maturity Date $41,737,500
In the event that less than $100.0 million of the outstanding principal amount
of the CLC Senior Notes are tendered and repurchased on the Restatement
Effective Date pursuant to the CLC Tender Offer/Consent Solicitation
Consummation, then the Tranche C Term Loan Scheduled Repayments set forth above
shall be reduced by an amount equal to the then outstanding principal amount of
CLC Senior Notes (after giving effect to the CLC Refinancing), with any such
reduction to be applied on a pro rata basis among such Tranche C Term Loan
--- ----
Scheduled Repayments (based upon the then remaining principal amount of such
Tranche C Term Loan Scheduled Repayments after giving effect to all prior
reductions thereto).
(c) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each date on or after the Original
Effective Date upon which the U.S. Borrower or any of its Subsidiaries receives
Net Sale Proceeds from any Asset Sale, an amount equal to the Applicable
Prepayment Percentage of the Net Sale Proceeds from such Asset Sale shall be
applied as a mandatory repayment and/or commitment reduction in accordance with
the requirements of Sections 4.02(h) and (i); provided that (I)(x) with respect
--------
to any such Net Sale Proceeds received by the U.S. Borrower or any of its
Subsidiaries in connection with a Tractor Trailer Replacement, such Net Sale
Proceeds shall not give rise to a mandatory repayment (and/or commitment
reduction, as the case may be) on such date to the extent that no Default or
Event of
-45-
<PAGE>
Default then exists and the U.S. Borrower delivers a certificate to the
Administrative Agent on or prior to such date stating that (i) an amount equal
to such Net Sale Proceeds has been used to purchase a replacement Tractor
Trailer within 180 days prior to the date of receipt of such Net Sale Proceeds
or (ii) such Net Sale Proceeds shall be used to purchase a replacement Tractor
Trailer within 180 days following the date of receipt of such Net Sale Proceeds
(which certificate shall set forth the amount of the proceeds so expended or the
estimates of the proceeds to be so expended, as the case may be) and (y) in the
case of any Tractor Trailer Replacement for which no replacement Tractor Trailer
has been purchased prior to the disposition of the Tractor Trailer to be
replaced pursuant to such Tractor Trailer Replacement, if all or any portion of
such Net Sale Proceeds referred to in preceding clause (x) (ii) are not so used
within such 180-day period, such remaining portion shall be applied on the last
day of such period as a mandatory repayment and/or commitment reduction as
provided above and (II)(x) with respect to no more than $7,500,000 in the
aggregate of such Net Sale Proceeds received by the U.S. Borrower or its
Subsidiaries in any fiscal year of the U.S. Borrower, such Net Sale Proceeds
shall not give rise to a mandatory repayment (and/or commitment reduction, as
the case may be) on such date to the extent that no Default or Event of Default
then exists and the U.S. Borrower delivers a certificate to the Administrative
Agent on or prior to such date stating that such Net Sale Proceeds shall be used
or contractually committed to be used to purchase assets used or to be used in
the businesses permitted pursuant to Section 9.01 (including, without limitation
(but only to the extent permitted by Section 9.02), the purchase of the capital
stock of a Person engaged in such businesses) within 270 days following the date
of receipt of such Net Sale Proceeds from such Asset Sale (which certificate
shall set forth the estimates of the proceeds to be so expended) and (y)(i) if
all or any portion of such Net Sale Proceeds are not so used (or contractually
committed to be used) within such 270-day period, such remaining portion shall
be applied on the last day of such period as a mandatory repayment and/or
commitment reduction as provided above and (ii) if all or any portion of such
Net Sale Proceeds are not so used within such 270-day period referred to in
clause (i) of this clause (II)(y) because such amount is contractually committed
to be used and subsequent to such date such contract is terminated or expires
without such portion being so used, such remaining portion shall be applied on
the date of such termination or expiration as a mandatory repayment and/or
commitment reduction as provided above.
(d) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each date on or after the Original
Effective Date on which the U.S. Borrower or any of its Subsidiaries receives
any cash proceeds from any incurrence of Indebtedness (other than Indebtedness
permitted to be incurred pursuant to Section 9.04 as in effect on the
Restatement Effective Date) or issuance of Preferred Stock (other than (x)
Disqualified Preferred Stock to the extent the proceeds therefrom are used to
effect Permitted Acquisitions, (y) Qualified Preferred Stock and (z) PIK
Preferred Stock issued on the Restatement Effective Date in accordance with the
requirements of Section 5.08(b)) by the U.S. Borrower or any of its
Subsidiaries, an amount equal to the Applicable
-46-
<PAGE>
Prepayment Percentage of the Net Cash Proceeds of the respective incurrence of
Indebtedness or issuance of Preferred Stock shall be applied as a mandatory
repayment and/or commitment reduction in accordance with the requirements of
Sections 4.02(h) and (i).
(e) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each date on or after the Original
Effective Date on which the U.S. Borrower or any of its Subsidiaries receives
any cash proceeds from any sale or issuance of Qualified Preferred Stock or
common equity of (or cash capital contributions to) the U.S. Borrower or any of
its Subsidiaries (other than proceeds received from (t) the CLC Equity
Financing, (u) the Original Common Equity Issuance, (v) issuances of U.S.
Borrower Common Stock to management of the U.S. Borrower and its Subsidiaries
(including as a result of the exercise of any options or Convertible
Subordinated Notes with respect thereto) in an aggregate amount not to exceed
$2,500,000 in any fiscal year of the U.S. Borrower, (w) equity contributions to
any Subsidiary of the U.S. Borrower made by the U.S. Borrower or any other
Subsidiary of the U.S. Borrower, (x) any issuance of Qualified Preferred Stock
or U.S. Borrower Common Stock to the extent the proceeds therefrom are used to
effect Permitted Acquisitions, (y) any issuance of U.S. Borrower Common Stock to
the extent the proceeds therefrom are used to repurchase Senior Subordinated
Notes in accordance with the provisions of Section 9.12(ii) and (z) additional
issuances of U.S. Borrower Common Stock and Qualified Preferred Stock, to the
extent that the aggregate proceeds excluded pursuant to this clause (z) after
the Restatement Effective Date (and clause (z) of Section 4.02(e) of the
Original Credit Agreement after the Original Effective Date) do not exceed
$2,500,000), an amount equal to the Applicable Prepayment Percentage of the Net
Cash Proceeds of the respective equity issuance or capital contribution shall be
applied as a mandatory repayment and/or commitment reduction in accordance with
the requirements of Sections 4.02(h) and (i); provided that Net Cash Proceeds
--------
received by the U.S. Borrower from additional sales or issuances of U.S.
Borrower Common Stock or Qualified Preferred Stock shall not be required to be
applied as a mandatory repayment (and/or commitment reduction, as the case may
be) on the date of receipt thereof, to the extent that (x) no Default or Event
of Default then exists and (y) the U.S. Borrower delivers a certificate to the
Administrative Agent on or prior to such date stating that such Net Cash
Proceeds shall be used or contractually committed to be used to make Capital
Expenditures and/or effect Permitted Acquisitions within 270 days following the
date of receipt of such Net Cash Proceeds (which certificate shall set forth the
estimates of the proceeds to be so expended), and provided further, that (i) if
-------- -------
all or any portion of such Net Cash Proceeds are not so used (or contractually
committed to be used) within such 270-day period, such remaining portion shall
be applied on the last day of such period as a mandatory repayment and/or
commitment reduction as provided above and (ii) if all or any portion of such
Net Cash Proceeds are not so used within such 270-day period referred to in
clause (i) above because such amount is contractually committed to be used and
subsequent to such date such contract is terminated or expires without such
portion
-47-
<PAGE>
being so used, such remaining portion shall be applied on the date of such
termination or expiration as a mandatory repayment and/or commitment reduction
as provided above.
(f) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, within 10 days following each date on
or after the Original Effective Date on which the U.S. Borrower or any of its
Subsidiaries receives any proceeds from any Recovery Event (other than proceeds
from any Excluded Recovery Event), an amount equal to 100% of the proceeds of
such Recovery Event (net of reasonable costs (including, without limitation,
legal costs and expenses) and taxes incurred in connection with such Recovery
Event and the amount of such proceeds required to be used to repay any
Indebtedness (other than Indebtedness of the Banks pursuant to this Agreement)
which is secured by the respective assets subject to such Recovery Event) shall
be applied as a mandatory repayment and/or commitment reduction in accordance
with the requirements of Sections 4.02(h) and (i); provided that (x) so long as
--------
no Default or Event of Default then exists and such proceeds do not exceed
$4,000,000, such proceeds shall not be required to be so applied on such date to
the extent that an Authorized Officer of the U.S. Borrower has delivered a
certificate to the Administrative Agent on or prior to such date stating that
such proceeds shall be used or shall be committed to be used to replace or
restore any properties or assets in respect of which such proceeds were paid
within 360 days following the date of such Recovery Event (which certificate
shall set forth the estimates of the proceeds to be so expended) and (y) so
long as no Default or Event of Default then exists and to the extent that (a)
the amount of such proceeds exceeds $4,000,000, (b) the amount of such proceeds,
together with other cash available to the U.S. Borrower and its Subsidiaries and
permitted to be spent by them on Capital Expenditures during the relevant
period, equals at least 100% of the cost of replacement or restoration of the
properties or assets in respect of which such proceeds were paid as determined
by the U.S. Borrower and as supported by such estimates or bids from contractors
or subcontractors or such other supporting information as the Administrative
Agent may reasonably accept, (c) an Authorized Officer of the U.S. Borrower has
delivered to the Administrative Agent a certificate on or prior to the date the
application would otherwise be required pursuant to this Section 4.02(f) in the
form described in clause (x) above and also certifying its determination as
required by preceding clause (b) and certifying the sufficiency of business
interruption insurance as required by succeeding clause (d), and (d) an
Authorized Officer of the U.S. Borrower has delivered to the Administrative
Agent such evidence as the Administrative Agent may reasonably request in form
and substance reasonably satisfactory to the Administrative Agent establishing
that the U.S. Borrower has sufficient business interruption insurance and that
the U.S. Borrower will receive payment thereunder in such amounts and at such
times as are necessary to satisfy all obligations and expenses of the Borrowers
(including, without limitation, all debt service requirements, including
pursuant to this Agreement), without any delay or extension thereof, for the
period from the date of the respective casualty, condemnation or other event
giving rise to the Recovery Event and continuing through the completion of the
replacement or restoration of respective properties
-48-
<PAGE>
or assets, then the entire amount of the proceeds of such Recovery Event and not
just the portion in excess of $4,000,000 shall be deposited with the
Administrative Agent pursuant to a cash collateral arrangement reasonably
satisfactory to the Administrative Agent whereby such proceeds shall be
disbursed to the U.S. Borrower from time to time as needed to pay or reimburse
the U.S. Borrower or such Subsidiary actual costs incurred by it in connection
with the replacement or restoration of the respective properties or assets
(pursuant to such certification requirements as may be established by the
Administrative Agent), provided further, that at any time while an Event of
----------------
Default has occurred and is continuing, the Required Banks may direct the
Administrative Agent (in which case the Administrative Agent shall, and is
hereby authorized by each Borrower to, follow said directions) to apply any or
all proceeds then on deposit in such collateral account to the repayment of
Obligations hereunder in the same manner as proceeds would be applied pursuant
to the U.S. Security Agreement, and provided further, that if all or any portion
----------------
of such proceeds not required to be applied as a mandatory repayment and/or
commitment reduction pursuant to the second preceding proviso (whether pursuant
to clause (x) or (y) thereof) are either (A) not so used or committed to be so
used within 360 days after the date of the respective Recovery Event or (B) if
committed to be used within 360 days after the date of receipt of such net
proceeds and not so used within 18 months after the date of respective Recovery
Event then, in either such case, such remaining portion not used or committed to
be used in the case of preceding clause (A) and not used in the case of
preceding clause (B) shall be applied on the date occurring 360 days after the
date of the respective Recovery Event in the case of clause (A) above or the
date occurring 18 months after the date of the respective Recovery Event in the
case of clause (B) above as a mandatory repayment and/or commitment reduction in
accordance with the requirements of Sections 4.02(h) and (i).
(g) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each Excess Cash Flow Payment Date,
an amount equal to the Applicable Excess Cash Flow Percentage of the Adjusted
Excess Cash Flow for the relevant Excess Cash Flow Payment Period shall be
applied as a mandatory repayment and/or commitment reduction in accordance with
the requirements of Sections 4.02(h) and (i).
(h) Each amount required to be applied pursuant to Sections 4.02(c),
(d), (e), (f) and (g) in accordance with this Section 4.02(h) shall be applied
(i) first, to repay the outstanding principal amount of Term Loans, with each
such amount required to be applied to repay outstanding Term Loans to be applied
pro rata to each Tranche of Term Loans based upon the then remaining principal
- --- ----
amounts of the respective Tranches (with each Tranche of Term Loans to be
allocated that percentage of the amount to be applied as is equal to a fraction
(expressed as a percentage), the numerator of which is equal to the then
outstanding principal amount of such Tranche of Term Loans and the denominator
of which is equal to the then outstanding principal amount of all Term Loans)
and (ii) second,
-49-
<PAGE>
to the extent in excess of the amounts required to be applied pursuant to the
preceding clause (i), to reduce the Total Revolving Loan Commitment in the
manner provided in Section 3.03(f) (it being understood and agreed that (x) the
amount of any reduction to the Total Revolving Loan Commitment as provided in
immediately preceding clause (ii) shall be deemed to be an application of
proceeds for purposes of this Section 4.02(h) even though cash is not actually
applied and (y) any cash received by the U.S. Borrower or any of its
Subsidiaries will be retained by such Person except to the extent that such cash
is otherwise required to be applied as provided in Section 4.02(a) as a result
of any reduction to the Total Revolving Loan Commitment). All repayments of
outstanding Term Loans pursuant to Sections 4.02(c), (d), (e), (f) or (g) shall
be applied to reduce the then remaining Scheduled Repayments of the respective
Tranche of Term Loans on a pro rata basis (based upon the then remaining
--- ----
Scheduled Repayments of the respective Tranche after giving effect to all prior
reductions thereto). For purposes of greater clarity, the parties hereto
acknowledge and agree that any amount applied pursuant to Section 4.02(c), (d),
(e) or (f) as a mandatory repayment in accordance with this Section 4.02(h) need
not represent the actual proceeds received by the U.S. Borrower or any of its
Subsidiaries in connection with the respective Asset Sale, debt incurrence,
equity issuance or Recovery Event, as the case may be.
(i) With respect to each repayment of Loans required by this Section
4.02, the respective Borrower may designate the Types of Loans of the respective
Tranche which are to be repaid and, in the case of Eurodollar Loans, Bankers'
Acceptance Loans and B/A Equivalent Loans, the specific Borrowing or Borrowings
of the respective Tranche pursuant to which made, provided that: (i) repayments
--------
of Eurodollar Loans pursuant to this Section 4.02 may only be made on the last
day of an Interest Period applicable thereto unless (x) all Eurodollar Loans of
the respective Tranche with Interest Periods ending on such date of required
repayment and all Base Rate Loans of the respective Tranche have been paid in
full and/or (y) concurrently with such repayment, the relevant Borrower pays all
breakage costs and other amounts owing to each Bank pursuant to Section 1.11;
(ii) if any repayment of Eurodollar Loans made pursuant to a single Borrowing
shall reduce the out standing Eurodollar Loans made pursuant to such Borrowing
to an amount less than the Minimum Borrowing Amount applicable thereto, such
Borrowing shall be converted at the end of the then current Interest Period into
a Borrowing of Base Rate Loans; and (iii) each repayment of any Tranche of Loans
made pursuant to a Borrowing shall be applied pro rata among such Tranche of
--- ----
Loans. In the absence of a designation by the respective Borrower as described
in the preceding sentence, the Administrative Agent shall, subject to the above,
make such designation in its sole discretion with a view, but no obligation, to
minimize breakage costs owing under Section 1.11. Notwithstanding the foregoing
provisions of this Section 4.02, if at any time the mandatory repayment of Loans
pursuant to Section 4.02(c), (d), (e), (f) or (g) would result, after giving
effect to the procedures set forth in this clause (i) above, in the U.S.
Borrower incurring breakage costs under Section 1.11 as a result of Eurodollar
Loans being repaid other than on the last day of an Interest Period applicable
-50-
<PAGE>
thereto (any such Eurodollar Loans, "Affected Loans"), the U.S. Borrower may
elect, by written notice to the Administrative Agent, to have the provisions of
the following sentence be applicable. At the time any Affected Loans are
otherwise required to be prepaid the U.S. Borrower may elect to deposit 100% (or
such lesser percentage elected by the U.S. Borrower as not being repaid) of the
principal amounts that otherwise would have been paid in respect of the Affected
Loans with the Administrative Agent to be held as security for the obligations
of the U.S. Borrower hereunder pursuant to a cash collateral agreement to be
entered into in form and substance satisfactory to the Administrative Agent,
with such cash collateral to be released from such cash collateral account (and
applied to repay the principal amount of such Eurodollar Loans) upon each
occurrence thereafter of the last day of an Interest Period applicable to
Eurodollar Loans of the respective Facility (or such earlier date or dates as
shall be requested by the U.S. Borrower), with the amount to be so released and
applied on the last day of each Interest Period to be the amount of such
Eurodollar Loans to which such Interest Period applies (or, if less, the amount
remaining in such cash collateral account).
(j) Notwithstanding anything to the contrary contained elsewhere in
this Agreement, (i) all then outstanding Swingline Loans shall be repaid in full
on the Swingline Expiry Date and (ii) all other then outstanding Loans shall be
repaid in full on the respective Final Maturity Date for such Loans.
4.03 Method and Place of Payment. Except as otherwise specifically
---------------------------
provided herein, all payments under this Agreement or any Note shall be made to
the Administrative Agent for the ratable account of the Bank or Banks entitled
thereto not later than 12:00 Noon (New York time) on the date when due and shall
be made in (x) U.S. Dollars in immediately available funds at the appropriate
Payment Office of the Administrative Agent in respect of any obligation of the
Borrowers under this Agreement except as otherwise provided in the immediately
following clause (y) and (y) subject to the provisions of Section 1.15, Canadian
Dollars in immediately available funds at the appropriate Payment Office of the
Administrative Agent, if such payment is made in respect of (i) principal of,
the Face Amount of or interest on Canadian Dollar Revolving Loans, or (ii) any
increased costs, indemnities or other amounts owing with respect to Canadian
Dollar Revolving Loans, in the case of this clause (ii) to the extent the
respective Bank which is charging same denominates the amounts owing in Canadian
Dollars. Any payments under this Agreement or under any Note which are made
later than 12:00 Noon (New York time) on any Business Day shall be deemed to
have been made on the next succeeding Business Day. Whenever any payment to be
made hereunder or under any Note shall be stated to be due on a day which is not
a Business Day, the due date thereof shall be extended to the next succeeding
Business Day and, with respect to payments of principal, interest shall be
payable during such extension at the applicable rate in effect immediately prior
to such extension.
-51-
<PAGE>
4.04 Net Payments. (a) All payments made by any Borrower hereunder
------------
(including, in the case of the U.S. Borrower, in its capacity as guarantor
pursuant to Section 14) or under any Note will be made without setoff,
counterclaim or other defense. Except as provided in Sections 4.04(b) and (f),
all such payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction or by any political subdivision or taxing authority thereof or
therein with respect to such payments (but excluding, in the case of each Bank,
except as provided in the second succeeding sentence, any tax, including any
income, branch profits, franchise or similar tax, which in each case is imposed
on or measured by the net income, net profits or capital of such Bank pursuant
to the laws of the jurisdiction in which such Bank is organized or the
jurisdiction in which the principal office or applicable lending office of such
Bank is located or any political subdivision or taxing authority thereof or
therein) and all interest, penalties or similar liabilities with respect to such
nonexcluded taxes, levies, imposts, duties, fees, assessments or other charges
(all such nonexcluded taxes, levies, imposts, duties, fees, assessments or other
charges being referred to collectively as "Taxes"). If any Taxes are so levied
or imposed, the relevant Borrower agrees to pay the full amount of such Taxes,
and such additional amounts as may be necessary so that every payment of all
amounts due by such Borrower under this Agreement or under any Note, after
withholding or deduction for or on account of any Taxes, will not be less than
the amount provided for herein or in such Note. If any amounts are payable in
respect of Taxes pursuant to the preceding sentence (any such amounts, the
"Gross-Up Amount"), the relevant Borrower agrees to reimburse each Bank, upon
the written request of such Bank, for the net amount, if any, of any taxes such
Bank shall determine are incurred by such Bank (taking into account in
calculating such net amount any allowable credit, deduction or other benefit
available as a result of, or with respect to, the payment by the relevant
Borrower to such Bank of (i) the Gross-Up Amount or (ii) any amount paid
pursuant to this sentence) that would not have been incurred in the absence of
the payment by such Borrower of (i) the Gross-Up Amount or (ii) any amount paid
pursuant to this sentence. The relevant Borrower will furnish to the
Administrative Agent within 45 days after the date the payment of any Taxes is
due pursuant to applicable law certified copies of tax receipts evidencing such
payment by such Borrower. Each Borrower agrees to indemnify and hold harmless
each Bank, and reimburse such Bank upon its written request, for the amount of
any Taxes so levied or imposed and paid by such Bank in respect of any payments
by or on behalf of such Borrower.
(b) Each U.S. Bank party to this Agreement on the Restatement
Effective Date hereby represents that, as of the Restatement Effective Date, all
payments of principal, interest, and fees to be made to it by the U.S. Borrower
pursuant to this Agreement will be totally exempt from withholding of United
States federal tax. Each U.S. Bank that is not a United States person (as such
term is defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax
purposes agrees to deliver to the U.S. Borrower and the
-52-
<PAGE>
Administrative Agent on or prior to the Restatement Effective Date, or in the
case of a U.S. Bank that is an assignee or transferee of an interest under this
Agreement pursuant to Section 1.13 or 13.04, on the date of such assignment or
transfer to such U.S. Bank, (i) two accurate and complete original signed copies
of Internal Revenue Service Form 4224 or 1001 (or successor forms) certifying to
such U.S. Bank's entitlement to a complete exemption from United States
withholding tax with respect to payments to be made under this Agreement and
under any Note, or (ii) if the U.S. Bank is not a "bank" within the meaning of
Section 881(c)(3)(A) of the Code and cannot deliver either Internal Revenue
Service Form 1001 or 4224 pursuant to clause (i) above, (x) a certificate
substantially in the form of Exhibit D (any such certificate, a "Section
4.04(b)(ii) Certificate") and (y) two accurate and complete original signed
copies of Internal Revenue Service Form W-8 (or successor form) certifying to
such U.S. Bank's entitlement to a complete exemption from United States
withholding tax with respect to payments of interest to be made under this
Agreement and under any Note. In addition, each U.S. Bank agrees that (a) from
time to time after the Restatement Effective Date, when a lapse in time or
change in circumstances renders the previous certification obsolete or
inaccurate in any material respect, and (b) upon the U.S. Borrower's reasonable
request after the occurrence of any other event requiring the delivery of a Form
1001, Form 4224, Form W-8, or any successor form in addition to or in
replacement of the forms previously delivered, it will deliver to the U.S.
Borrower and the Administrative Agent two new accurate and complete original
signed copies of Internal Revenue Service Form 4224, 1001, Form W-8 and a
Section 4.04(b)(ii) Certificate, or any successor form, as the case may be, and
such other forms as may be required in order to confirm or establish the
entitlement of such U.S. Bank to a continued exemption from or reduction in
United States withholding tax with respect to payments under this Agreement and
any Note, or it shall immediately notify the U.S. Borrower and the
Administrative Agent of its inability to deliver any such form or certificate in
which case such U.S. Bank shall not be required to deliver any such form or
certificate pursuant to this Section 4.04(b). Notwithstanding anything to the
contrary contained in Section 4.04(a), but subject to the immediately succeeding
sentence, (x) the U.S. Borrower shall be entitled, to the extent it is required
to do so by law, to deduct or withhold income or similar taxes imposed by the
United States (or any political subdivision or taxing authority thereof or
therein) from interest, fees or other amounts payable hereunder for the account
of any U.S. Bank which is not a United States person (as such term is defined in
Section 7701(a)(30) of the Code) for U.S. federal income tax purposes to the
extent that such U.S. Bank has not provided to the U.S. Borrower U.S. Internal
Revenue Service forms that establish a complete exemption from such deduction or
withholding and (y) the U.S. Borrower shall not be obligated pursuant to Section
4.04(a) hereof to gross-up payments to be made to such U.S. Bank, or to
indemnify and hold harmless or reimburse such U.S. Bank, in respect of income or
similar taxes imposed by the United States if (I) such U.S. Bank has not
provided to the U.S. Borrower the Internal Revenue Service forms required to be
provided to the U.S. Borrower pursuant to this Section 4.04(b) or (II) in the
case of a payment, other than interest, to a U.S. Bank described in clause (ii)
above, to the extent
-53-
<PAGE>
that such forms do not establish a complete exemption from withholding of such
taxes. Notwithstanding anything to the contrary contained in the preceding
sentence or elsewhere in this Section 4.04 and except as set forth in Section
13.04(b), the U.S. Borrower agrees to pay additional amounts and to indemnify
each U.S. Bank in the manner set forth in Section 4.04(a) (without regard to the
identity of the jurisdiction requiring the deduction or withholding) in respect
of any Taxes deducted or withheld by it as described in the immediately
preceding sentence as a result of any changes after the Restatement Effective
Date (or, if later, after the date such U.S. Bank became a party to this
Agreement) in any applicable law, treaty, governmental rule, regulation,
guideline or order, or in the interpretation thereof, relating to the deducting
or withholding of such Taxes. For purposes of the immediately preceding
sentence, the final U.S. Treasury regulations that were issued October 6, 1997
with respect to the withholding of United States Federal income tax (the "New
Withholding Regulations") shall not be considered to constitute a change after
the Restatement Effective Date, or otherwise, in any applicable law, treaty,
governmental rule, regulation, guideline or order, or in the interpretation
thereof, relating to the deducting or withholding of Taxes, notwithstanding that
the New Withholding Regulations generally are only effective for payments made
after December 31, 1999. The U.S. Borrower shall not be required to pay any
additional amounts or indemnification under Section 4.04(a) to any U.S. Bank to
the extent that the obligation to pay such additional amounts or indemnification
would not have arisen but for the representation set forth in the first sentence
of Section 4.04(b) above made by the U.S. Bank not being true.
(c) If any Borrower pays any additional amount under this Section
4.04 with respect to taxes imposed on any payments made to or on behalf of a
Bank and such Bank determines in its sole discretion that it has actually
received or realized in connection therewith any refund of tax, or any reduction
of, or credit against, its tax liabilities (a "Tax Benefit"), such Bank shall
pay to such Borrower an amount that the Bank shall, in its sole discretion,
determine is equal to the net benefit, after tax, which was obtained by the Bank
as a consequence of such refund, reduction or credit; provided, however, that
-------- -------
(i) any Bank may determine, in its sole discretion consistent with the policies
of such Bank, whether to seek a Tax Benefit and (ii) nothing in this Section
4.04(c) shall require the Bank to disclose any confidential information to any
Borrower (including, without limitation, its tax returns).
(d) Each Bank shall use reasonable efforts (consistent with legal and
regulatory restrictions and subject to overall policy considerations of such
Bank) (i) to file any certificate or document or to furnish any information as
reasonably requested by any Borrower pursuant to any applicable treaty, law or
regulation or (ii) to designate a different applicable lending office of such
Bank, if the making of such filing or the furnishing of such information or the
designation of such other lending office would avoid the need for or reduce the
amount of any additional amounts payable by any Borrower and would not, in the
sole discretion of such Bank, be disadvantageous to such Bank.
-54-
<PAGE>
(e) The provisions of this Section 4.04 are subject to the
provisions of Section 13.18 (to the extent applicable).
(f) Each Bank party to this Agreement that is a Canadian RL Bank on
the Restatement Effective Date hereby represents that, as of the Restatement
Effective Date, it is a resident of Canada for the purposes of the Income Tax
Act (Canada) (the "Tax Act") and that all payments of principal, interest, and
fees to be made to it by the Canadian Borrower pursuant to this Agreement will
be totally exempt from withholding of Canadian federal tax. In addition, each
such Canadian RL Bank agrees that from time to time after the Restatement
Effective Date, when a change in circumstances renders the representation
provided for in this Section 4.04(f) inaccurate in any material respect, it
shall immediately notify the Canadian Borrower and the Administrative Agent of
this fact. Notwithstanding anything to the contrary contained in Section
4.04(a), but subject to the immediately succeeding sentence, (x) the Canadian
Borrower shall be entitled, to the extent it is required to do so by law, to
deduct or withhold income or similar taxes imposed by Canada (or any political
subdivision or taxing authority thereof or therein) from interest, fees or other
amounts payable hereunder for the account of any Canadian RL Bank which is not a
resident of Canada for the purposes of the Tax Act and (y) the Canadian Borrower
shall not be obligated pursuant to Section 4.04(a) hereof to gross-up payments
to be made to a Canadian RL Bank, or to indemnify and hold harmless or reimburse
such Canadian RL Bank, in respect of income or similar taxes imposed by Canada,
if a representation required to be made with respect to such Canadian RL Bank
pursuant to this Section 4.04(f) has not been made or, if made, is inaccurate as
of the date it is made. Notwithstanding anything to the contrary contained in
the preceding sentence or elsewhere in this Section 4.04 and except as set forth
in Section 13.04(b), the Canadian Borrower agrees to pay additional amounts and
to indemnify each Canadian RL Bank in the manner set forth in Section 4.04(a)
(without regard to the identity of the jurisdiction requiring the deduction or
withholding) in respect of any Taxes deducted or withheld by them as described
in the immediately preceding sentence as a result of any change after the
Restatement Effective Date (or, if later, after the date such Canadian RL Bank
became a party to this Agreement) in any applicable law, treaty, governmental
rule, regulation, guideline or order, or in the interpretation thereof, relating
to the deducting or withholding of such Taxes.
SECTION 5. Conditions Precedent to Restatement Effective Date. The
--------------------------------------------------
occurrence of the Restatement Effective Date pursuant to Section 13.10, and the
obligation of each Bank to continue and/or make Loans hereunder, and the
obligation of the Letter of Credit Issuer to issue Letters of Credit hereunder,
in each case on the Restatement Effective Date, are subject at the time of the
occurrence of the Restatement Effective Date to the satisfaction of the
following conditions:
-55-
<PAGE>
5.01 Execution of Agreement; Notes. On or prior to the Restatement
-----------------------------
Effective Date, (i) this Agreement shall have been executed and delivered as
provided in Section 13.10 and (ii) there shall have been delivered to the
Administrative Agent for the account of each Bank the appropriate Tranche A Term
Note, Tranche B Term Note and Tranche C Term Note and B/A Equivalent Notes and
to CSFB the Swingline Note, in each case executed by the appropriate Borrower
and in the amount, maturity and as otherwise provided herein.
5.02 Officer's Certificate. On the Restatement Effective Date, the
---------------------
Administrative Agent shall have received a certificate dated such date signed
by an appropriate officer of the U.S. Borrower stating that all of the
applicable conditions set forth in Sections 5.05 through 5.09, inclusive, and
6.01 (other than such conditions that are subject to the satisfaction of the
Agents and/or the Required Banks), have been satisfied on such date.
5.03 Opinions of Counsel. On the Restatement Effective Date, the
-------------------
Administrative Agent shall have received opinions, addressed to each Agent, the
Collateral Agent and each of the Banks and dated the Restatement Effective Date,
from (i) Dewey Ballantine, LLP, special New York counsel to the Credit Parties,
which opinion shall cover the matters contained in Exhibit E-1 and such other
matters incident to the transactions contemplated herein as the Agents and the
Required Banks may reasonably request and be in form and substance reasonably
satisfactory to the Agents and the Required Banks, (ii) Pepper Hamilton, special
Pennsylvania counsel to the U.S. Credit Parties, which opinion shall cover the
matters contained in Exhibit E-2 and such other matters incident to the
transactions contemplated herein as the Agents and the Required Banks may
reasonably request (including an opinion as to non-contravention with the
provisions of the CLC Preferred Stock Documents) and be in form and substance
reasonably satisfactory to the Agents and the Required Banks, (iii) Robert R.
Kasak, special Florida counsel to the U.S. Borrower, which opinion shall cover
the matters contained in Exhibit E-3 and such other matters incident to the
transactions contemplated herein as the Agents and the Required Banks may
reasonably request and be in form and substance reasonably satisfactory to the
Agents and the Required Banks, (iv) Ogilvey Renault, special Canadian counsel to
the Canadian Credit Parties, which opinion shall cover the matters set forth in
Exhibit E-4 and such other matters incident to the transactions contemplated
herein as the Agents and the Required Banks may reasonably request and be in
form and substance reasonably satisfactory to the Agents and the Required Banks,
(v) counsel rendering such opinions, reliance letters addressed to each Agent
and each of the Banks and dated the Restatement Effective Date with respect to
all legal opinions delivered in connection with the Transaction, which opinions
shall cover such matters as the Agents may reasonably request and be in form
and substance reasonably satisfactory to the Agents and (vi) local counsel to
the Credit Parties and/or the Agents reasonably satisfactory to the Agents,
which opinions (x) shall be addressed to each Agent, the Collateral Agent and
each of the Banks and be dated the Restatement Effective Date, (y) shall cover
the perfection of the security
-56-
<PAGE>
interests granted pursuant to the Security Documents and such other matters
incident to the transactions contemplated herein as the Agents may reasonably
request and (z) shall be in form and substance reasonably satisfactory to the
Agents.
5.04 Company Documents; Proceedings. (a) On the Restatement
------------------------------
Effective Date, the Administrative Agent shall have received from the U.S.
Borrower and each New Credit Party a certificate, dated the Restatement
Effective Date, signed by the chairman, a vice-chairman, the president or any
vice-president of such New Credit Party, and attested to by the secretary or any
assistant secretary of such New Credit Party, in the form of Exhibit F with
appropriate insertions, together with copies of the certificate of
incorporation, by-laws or equivalent organizational documents of such New Credit
Party and the resolutions of such New Credit Party referred to in such
certificate and all of the foregoing (including each such certificate of
incorporation, by-laws or other organizational document) shall be reasonably
satisfactory to the Agents.
(b) On the Restatement Effective Date, the Administrative Agent
shall have received a certificate from each Credit Party (other than the New
Credit Parties) (x) certifying that there were no changes, or providing the
text of any changes, to the certificate of incorporation, by-laws or equivalent
organizational documents of such Credit Party as delivered pursuant to Section
5.04 of the Original Credit Agreement, (y) to the effect that such Credit Party
is in good standing in its respective state of organization and in those states
where such Credit Party conducts business and (z) providing the resolutions
adopted by such Credit Party with respect to the actions contemplated by this
Agreement (including, without limitation, with respect to the CLC Merger, the
amendment and restatement of this Agreement, and the obligations of such Credit
Party with respect to the increased extensions of credit pursuant hereto), and
all of the foregoing shall be acceptable to the Agents.
(c) On the Restatement Effective Date, all Company and legal
proceedings and all instruments and agreements in connection with the
transactions contemplated by this Agreement and the other Documents shall be
reasonably satisfactory in form and substance to the Agents, and the
Administrative Agent shall have received all information and copies of all
certificates, documents and papers, including good standing certificates, bring-
down certificates and any other records of Company proceedings and governmental
approvals, if any, which any Agent reasonably may have requested in connection
therewith, such documents and papers, where appropriate, to be certified by
proper Company or governmental authorities.
(d) On the Restatement Effective Date and after giving effect to the
Transaction, the capital structure (including, without limitation, the terms of
any capital stock, options, warrants or other securities issued by the U.S.
Borrower or any of its Subsidiaries), and management of the U.S. Borrower and
its Subsidiaries shall be in form and substance satisfactory to the Agents.
-57-
<PAGE>
5.05 Adverse Change, etc. (a) On the Restatement Effective Date,
--------------------
since December 31, 1997, nothing shall have occurred which (i) the Required
Banks or either Agent shall reasonably determine has had, or could reasonably be
expected to have, a material adverse effect on the rights or remedies of the
Banks or the Agents, or on the ability of any Credit Party to perform its
obligations to them hereunder or under any other Credit Document or (ii) has had
a material adverse effect on the Transaction or a Material Adverse Effect.
(b) On the Restatement Effective Date, there shall not have occurred
and be continuing any material adverse change to the syndication market for
credit facilities similar in nature to this Agreement and there shall not have
occurred and be continuing a material disruption or a material adverse change in
financial, banking or capital markets that would have a material adverse effect
on the syndication, in each case as determined by the Agents in their reasonable
discretion.
5.06 Litigation. On the Restatement Effective Date, there shall be
----------
no actions, suits, proceedings or investigations pending or threatened (a) with
respect to this Agreement or any other Document or the Transaction, (b) with
respect to any Existing Indebtedness or (c) which either the Agent or the
Required Banks shall determine could reasonably be expected to have (i) a
Material Adverse Effect or (ii) a material adverse effect on the Transaction,
the rights or remedies of the Banks or the Agents hereunder or under any other
Credit Document or on the ability of any Credit Party to perform its respective
obligations to the Banks or the Agents hereunder or under any other Credit
Document.
5.07 Approvals. On the Restatement Effective Date, (i) all necessary
---------
governmental (domestic and foreign), regulatory and third party approvals in
connection with any Existing Indebtedness, the Transaction, the transactions
contemplated by the Documents and otherwise referred to herein or therein shall
have been obtained and remain in full force and effect and evidence thereof
shall have been provided to the Administrative Agent, and (ii) all applicable
waiting periods shall have expired without any action being taken by any
competent authority which restrains, prevents or imposes materially adverse
conditions upon the consummation of the Transaction, the making of the Loans and
the transactions contemplated by the Documents or otherwise referred to herein
or therein. Additionally, there shall not exist any judgment, order, injunction
or other restraint issued or filed or a hearing seeking injunctive relief or
other restraint pending or notified prohibiting or imposing materially adverse
conditions upon, or materially delaying, or making economically unfeasible, the
consummation of the Transaction or the making of the Loans.
5.08 Consummation of the CLC Merger, Financing Transactions, etc.
------------------------------------------------------------
(a) On the Restatement Effective Date, (i) there shall have been delivered to
the Administrative Agent a true and correct copy of the CLC Merger Agreement,
certified as such by an appropriate officer of the U.S. Borrower, which shall be
in the form previously provided
-58-
<PAGE>
to the Administrative Agent with such amendments, modifications and waivers
thereto (and the schedules thereto) as shall be in form and substance
satisfactory to the Agents, (ii) the CLC Merger, including all of the terms and
conditions thereof, shall have been duly approved by the requisite boards of
directors and (if required by applicable law) the requisite shareholders of the
U.S. Borrower, CLC Acquisition Corp. and CLC and all CLC Merger Documents shall
have been duly executed and delivered by the parties thereto and be in full
force and effect, (iii) the representations and warranties set forth in the CLC
Merger Documents shall be true and correct in all material respects as if made
on and as of the Restatement Effective Date, (iv) each of the conditions
precedent to the consummation of the CLC Merger as set forth in the CLC Merger
Documents shall have been satisfied, and not waived except with the consent of
each Agent and the Required Banks, to the satisfaction of each Agent and the
Required Banks, (v) all Liens or Indebtedness to be incurred or assumed in
connection with the CLC Merger shall otherwise be permitted under this Agreement
(including, without limitation, Sections 9.01 and 9.04), and (vi) the CLC Merger
shall have been consummated in accordance with the CLC Merger Documents and all
applicable law.
(b) On the Restatement Effective Date, (i) the U.S. Borrower shall
have received cash proceeds in an amount equal to at least $12,000,000 from the
issuance of U.S. Borrower Common Stock to the Equity Investors, (ii) the U.S.
Borrower shall have received gross cash proceeds of $5,000,000 from the issuance
of Seller PIK Preferred Stock and (iii) the U.S. Borrower shall have received
gross cash proceeds of $10,000,000 from the issuance of Apollo PIK Preferred
Stock to Apollo Investment Fund, L.P.
(c) On the Restatement Effective Date, the U.S. Borrower shall have
utilized the full amount of the cash proceeds received by it from the CLC Equity
Financing to make payments owing in connection with the Transaction prior to
utilizing any proceeds of Loans for such purpose.
(d) On the Restatement Effective Date, the Administrative Agent shall
have received true and correct copies of all CLC Merger Documents and CLC Equity
Financing Documents and all terms and conditions of the foregoing Documents
(including, without limitation, in the case of PIK Preferred Stock, maturity,
limitation on cash dividends payable, dividend rate and redemption provisions)
shall be in form and substance satisfactory to the Agents and the Required
Banks. All conditions precedent to the consummation of the Transaction as set
forth in the CLC Merger Documents and the CLC Equity Financing Documents shall
have been satisfied and not waived unless consented to by the Agents and the
Required Banks. The CLC Equity Financing shall have been consummated in
accordance with the terms and conditions of the applicable Documents and all
applicable law.
-59-
<PAGE>
5.09 CLC Refinancing. (a) On or prior to the Restatement Effective
---------------
Date and prior to the Credit Events then occurring, the U.S. Borrower shall have
commenced a tender offer/consent solicitation with respect to the outstanding
CLC Senior Notes (the "CLC Tender Offer/Consent Solicitation"), pursuant to
which (i) the U.S. Borrower shall offer, subject to the terms and conditions
contained in the CLC Tender Offer/Consent Solicitation, to purchase all of the
outstanding CLC Senior Notes at a cash price equal to $1,051.88 per $1000
principal amount, plus accrued and unpaid interest thereon and (ii) consents
shall be solicited to a proposed amendment (the "CLC Senior Notes Indenture
Amendment") to the CLC Senior Notes Indenture, on terms and conditions
satisfactory to the Agents, which amendment shall provide for the substantial
elimination of the covenants contained in the CLC Senior Notes Indenture
(including, without limitation, limitations on restricted payments, dividends,
transactions with affiliates, indebtedness and guarantees by subsidiaries). All
terms and conditions of the CLC Tender Offer/Consent Solicitation shall be
satisfactory to the Agents, and the period for tendering CLC Senior Notes
pursuant thereto shall terminate on or prior to the Restatement Effective Date.
On or prior to the Restatement Effective Date (and, in the case of clause (z)
below, concurrently with the Credit Events then occurring), (x) holders (the
"CLC Noteholders") of a majority of the outstanding CLC Senior Notes shall have
provided their "Consent" pursuant to, and in accordance with the requirements
of, the CLC Tender Offer/Consent Solicitation, (y) CLC and the trustee under the
CLC Senior Notes Indenture shall have duly executed and delivered the CLC Senior
Notes Indenture Supplement and same shall have become effective in accordance
with its terms and the terms of the CLC Senior Notes Indenture and (z) the U.S.
Borrower shall have purchased the CLC Senior Notes tendered, and not theretofore
withdrawn, pursuant to the CLC Tender Offer/Consent Solicitation (with the
taking of the actions specified in preceding clauses (y) and (z) on or prior to
the Restatement Effective Date being herein called the "CLC Tender Offer/Consent
Solicitation Consummation").
(b) On the Restatement Effective Date (after having given effect to
the CLC Merger) and concurrently with the incurrence of Loans on such date,
approximately $53,306,617.99 of indebtedness of CLC and its Subsidiaries
consisting of "indebtedness" deemed to exist pursuant to the Existing CLC
Receivables Documents and all outstanding Indebtedness under the Existing CLC
Credit Agreement shall have been repaid in full, together with all fees and
other amounts owing thereon (the "CLC Refinanced Indebtedness") and the total
commitments under the Existing CLC Credit Agreement and the Existing CLC
Receivables Documents shall have been terminated.
(c) On the Restatement Effective Date and concurrently with the
incurrence of Loans on such date, all security interests in respect of, and
Liens securing, the CLC Refinanced Indebtedness shall have been terminated and
released, and the Administrative Agent shall have received all such releases as
may have been requested by the Administrative Agent, which releases shall be in
form and substance satisfactory to the
-60-
<PAGE>
Agents and the Required Banks. Without limiting the foregoing, there shall have
been delivered to the Administrative Agent (w) proper termination statements,
financing change statements and applications for registration (Form UCC-3, Form
PPSA-2C or the appropriate equivalent) for filing under the UCC, PPSA or
equivalent statute or regulation of each jurisdiction where a financing
statement or application for registration (Form UCC-1, PPSA Form 1-C or the
appropriate equivalent) was filed with respect to CLC or any of its Subsidiaries
in connection with the security interests created with respect to the CLC
Refinanced Indebtedness and the documentation related thereto, (x) terminations
or reassignments of any security interest in, or Lien on, any patents,
trademarks, copyrights, or similar interests of CLC or any of its Subsidiaries
on which filings have been made, (y) terminations of all mortgages, leasehold
mortgages, hypothecs and deeds of trust created with respect to property of CLC
or any of its Subsidiaries, in each case, to secure the obligations under the
CLC Refinanced Indebtedness, all of which shall be in form and substance
satisfactory to the Agents and the Required Banks, and (z) all collateral owned
by CLC or any of its Subsidiaries in the possession of any agent, collateral
agent or trustee for the creditors under the Existing CLC Credit Agreement, the
Existing CLC Receivables Documents or any related security document.
(d) On the Restatement Effective Date and after giving effect to the
Transaction, the U.S. Borrower and its Subsidiaries shall have no Indebtedness
or Preferred Stock outstanding other than (i) the Loans, (ii) the Senior
Subordinated Notes, (iii) the PIK Preferred Stock, (iv) the CLC Preferred Stock,
(v) the CLC Senior Notes and (vi) certain other indebtedness existing on the
Restatement Effective Date as listed on Schedule IV in an aggregate outstanding
principal amount not to exceed $800,000 (with the Indebtedness described in this
sub-clause (vi) being herein called the "Scheduled Existing Indebtedness" and
the Scheduled Existing Indebtedness, together with the Senior Subordinated
Notes, being herein called the "Existing Indebtedness"). On and as of the
Restatement Effective Date, all of the Existing Indebtedness shall remain
outstanding after giving effect to the Transaction and the other transactions
contemplated hereby without any default or event of default existing thereunder
or arising as a result of the Transaction and the other transactions
contemplated hereby (except to the extent amended or waived by the parties
thereto on terms and conditions satisfactory to the Agents and the Required
Banks), and there shall not be any amendments or modifications to the Existing
Indebtedness Agreements other than as requested or approved by the Agents or the
Required Banks.
(e) The Administrative Agent shall have received evidence in form,
scope and substance satisfactory to the Agents and the Required Banks that the
matters set forth in this Section 5.09 have been satisfied on the Restatement
Effective Date.
5.10 Security Documents; etc. (a) On the Restatement Effective
------------------------
Date, each of the U.S. Credit Parties shall have duly authorized, executed and
delivered an Amended and Restated Pledge Agreement in the form of Exhibit G-1
(as amended,
-61-
<PAGE>
amended and restated, modified or supplemented from time to time in accordance
with the terms thereof and hereof, the "U.S. Pledge Agreement") and shall have
delivered to the Collateral Agent, as pledgee thereunder, all of the Pledged
Securities referred to therein then owned by such U.S. Credit Parties and
required to be pledged pursuant to the terms thereof, endorsed in blank in the
case of promissory notes or accompanied by executed and undated stock powers in
the case of capital stock, along with evidence that all other actions necessary
or, in the reasonable opinion of the Collateral Agent, desirable, to perfect the
security interests purported to be created by the U.S. Pledge Agreement have
been taken, and the U.S. Pledge Agreement shall be in full force and effect.
(b) On the Restatement Effective Date, the U.S. Borrower shall have
duly authorized, executed and delivered an Amended and Restated Pledge Agreement
in the form of Exhibit G-2 (as amended, amended and restated, modified or
supplemented from time to time in accordance with the terms thereof and hereof,
the "Quebec Pledge Agreement") and shall have delivered to the Collateral Agent,
as pledgee thereunder, all of the pledged securities referred to therein then
owned by the U.S. Borrower and required to be pledged pursuant to the terms
thereof, endorsed in blank in the case of promissory notes or accompanied by
executed and undated stock powers in the case of capital stock, along with
evidence that all other actions necessary or, in the reasonable opinion of the
Collateral Agent, desirable, to render enforceable as against third parties the
security interests purported to be created by the Quebec Pledge Agreement have
been taken, and the Quebec Pledge Agreement shall be in full force and effect.
(c) On the Restatement Effective Date, each of the U.S. Credit
Parties shall have duly authorized, executed and delivered an Amended and
Restated Security Agreement in the form of Exhibit H-1 (as amended, amended and
restated, modified or supplemented from time to time in accordance with the
terms thereof and hereof, the "U.S. Security Agreement") covering all of the
U.S. Security Agreement Collateral, together with:
(A) executed copies of Financing Statements (Form UCC-1) or
appropriate local equivalent in appropriate form for filing under the UCC
or appropriate local equivalent of each jurisdiction as may be necessary
or, in the reasonable opinion of the Collateral Agent, desirable to perfect
the security interests purported to be created by the U.S. Security
Agreement;
(B) certified copies of Requests for Information or Copies (Form UCC-
11), or equivalent reports, each of a recent date listing all effective
financing statements that name CLC or any of its Subsidiaries as debtor and
that are filed in the jurisdictions referred to in clause (A) above,
together with copies of such financing statements (none of which shall
cover the Collateral except (x) those with respect to which appropriate
termination statements executed by the secured lender
-62-
<PAGE>
thereunder have been delivered to the Administrative Agent and (y) to the
extent evidencing Permitted Liens);
(C) evidence of the completion of all other recordings and filings
of, or with respect to, the U.S. Security Agreement as may be necessary or,
in the reasonable opinion of the Collateral Agent, desirable, to perfect
the security interests purported to be created by the U.S. Security
Agreement; and
(D) evidence that all other actions necessary or, in the reasonable
opinion of the Collateral Agent, desirable, to perfect the security
interests purported to be created by the U.S. Security Agreement have been
taken;
and the U.S. Security Agreement shall be in full force and effect.
(d) On the Restatement Effective Date, the Canadian Borrower shall
have duly authorized, executed and delivered a Pledge Agreement in the form of
Exhibit G-2 (each, as amended, amended and restated, modified and/or
supplemented from time to time in accordance with the terms thereof and hereof,
a "Canadian Pledge Agreement" and, collectively, the "Canadian Pledge
Agreements") and shall have delivered to the Collateral Agent, as pledge
thereunder, all of the pledged securities referred to therein then owned by the
Canadian Borrower and required to be pledged pursuant to the terms thereof,
endorsed in blank in the case of promissory notes or accompanied by executed and
undated stock powers in the case of capital stock, along with evidence that all
other actions necessary or, in the reasonable opinion of the Collateral Agent,
desirable, to perfect and render enforceable as against third parties the
security interests purported to be created by such Canadian Pledge Agreement
have been taken, and such Canadian Pledge Agreement shall be in full force and
effect.
(e) On the Restatement Effective Date, the Canadian Borrower,
Montgomery Tank, Chemical Tank and Transplastics shall have duly authorized,
executed and delivered a General Security Agreement in the form of Exhibit H-2
(each, as amended, amended and restated, modified and/or supplemented from time
to time, a "Canadian Security Agreement" and, collectively, the "Canadian
Security Agreements") covering all of such Credit Party's present and future
Canadian Security Agreement Collateral, together with:
(i) proper financing statements (PPSA Form 1-C or such other financing
statements or similar notices as shall be required by local law), fully
executed for filing under the PPSA in Ontario and each other jurisdiction
as may be necessary or, in the opinion of the Collateral Agent, desirable
to perfect the security interests purported to be created by the Canadian
Security Agreements;
-63-
<PAGE>
(ii) PPSA inquiry response certificates certified by the Ontario
Registrar of Personal Property or any other equivalent certificate or
search report in any other province or territory, listing all judgment
liens or effective financing statements that name CLC or any of its
Subsidiaries, or a division or other operating unit of any such Person, as
debtor and that are filed in the jurisdictions referred to in said clause
(i), together with evidence of the discharge (by a PPSA Form 2-C or such
other termination statements as shall be required by local law) of all
Liens other than Permitted Liens;
(iii) evidence of the completion of all other recordings and filings
of, or with respect to, the Canadian Security Agreements as may be
necessary or, in the opinion of the Collateral Agent, desirable to perfect
the security interests intended to be created by the Canadian Security
Agreements; and
(iv) evidence that all other actions necessary or, in the opinion of
the Collateral Agent, desirable to perfect and protect the security
interests purported to be created by the Canadian Security Agreements have
been taken;
and the Canadian Security Agreements shall be in full force and effect.
(f) On the Restatement Effective Date, the Canadian Borrower,
Montgomery Tank, Chemical Tank and Transplastics shall have duly authorized,
executed and delivered a Movable Hypothec in the form of Exhibit H-3 (each, as
amended, amended and restated, modified and/or supplemented from time to time, a
"Canadian Movable Hypothec" and, collectively, the "Canadian Movable Hypothecs")
covering all of such Credit Party's Canadian Security Agreement Collateral,
together with:
(i) evidence of the completion of all other recordings and filings of,
or with respect to, the Canadian Movable Hypothecs as may be necessary or,
in the opinion of the Collateral Agent, desirable to render enforceable as
against third parties the security interests intended to be created by the
Canadian Movable Hypothecs (including all certified statements issued by
the Registrar of Personal Movable Real Rights); and
(ii) evidence that all other actions necessary or, in the opinion of
the Collateral Agent, desirable to protect and render enforceable as
against third parties the security interests purported to be created by the
Canadian Movable Hypothecs have been taken;
and the Canadian Movable Hypothecs shall be in full force and effect.
-64-
<PAGE>
(g) On the Restatement Effective Date (but subject to Section
13.19(e)), the Collateral Agent shall have received:
(i) fully executed counterparts of Mortgages in form and substance
satisfactory to the Collateral Agent, which Mortgages shall cover such of
the Real Property owned by the U.S. Borrower or any of its Subsidiaries
(after giving effect to the Transaction) as are designated on Schedule III
as a Mortgaged Property, together with evidence that counterparts of the
Mortgages have been delivered to the title insurance company insuring the
lien of such Mortgage for recording in all places to the extent necessary
or, in the opinion of the Collateral Agent, desirable to effectively create
a valid and enforceable first priority mortgage lien or immovable hypothec
on each Mortgaged Property in favor of the Collateral Agent (or such other
trustee as may be required or desired under local law) for the benefit of
the Secured Creditors;
(ii) Mortgage Policies on each Mortgaged Property issued by such
title insurers satisfactory to the Collateral Agent in amounts satisfactory
to the Administrative Agent and the Required Banks assuring the Collateral
Agent that the Mortgages on such Mortgaged Properties are valid and
enforceable first priority mortgage liens or immovable hypothecs on the
respective Mortgaged Properties, free and clear of all defects and
encumbrances except Permitted Encumbrances and such Mortgage Policies shall
otherwise be in form and substance satisfactory to the Administrative Agent
and the Required Banks and shall include, as appropriate, an endorsement
for future advances under this Agreement and the Notes and for any other
matter that the Collateral Agent may request, shall not include an
exception for mechanics' liens or creditors' rights, and shall provide for
affirmative insurance and such reinsurance (including direct access
agreements) as the Collateral Agent may request;
(iii) surveys, in form and substance satisfactory to the
Collateral Agent of each Mortgaged Property designated as a "Surveyed
Property" on Schedule III hereto, dated a recent date acceptable to the
Collateral Agent and certified in a manner satisfactory to the Collateral
Agent by a licensed professional surveyor satisfactory to the
Administrative Agent; and
(iv) duly authorized, fully executed, acknowledged and delivered
subordination, nondisturbance and attornment agreements, assignment of
leases, landlord consents, tenant estoppel certificates and such other
documents relating to the Mortgages that the Collateral Agent may request.
5.11 U.S. Subsidiaries Guaranty. On the Restatement Effective Date,
--------------------------
each U.S. Subsidiary Guarantor shall have duly authorized, executed and
delivered an Amended
-65-
<PAGE>
and Restated Subsidiaries Guaranty in the form of Exhibit I-1 (as amended,
amended and restated, modified or supplemented from time to time in accordance
with the terms thereof and hereof, the "U.S. Subsidiaries Guaranty"), and the
U.S. Subsidiaries Guaranty shall be in full force and effect.
5.12 Employee Benefit Plans; Shareholders' Agreements; Management
------------------------------------------------------------
Agreements; Employment Agreements; Collective Bargaining Agreements; Existing
- -----------------------------------------------------------------------------
Indebtedness Agreements; Material Contracts; Tax Allocation Agreements. (a) On
- ----------------------------------------------------------------------
or prior to the Restatement Effective Date, there shall have been delivered to
the Administrative Agent true and correct copies, certified as true and complete
by an appropriate officer of the U.S. Borrower of the following documents (in
each case except to the extent already delivered to or made available for review
by the Administrative Agent on or prior to the Original Effective Date), in each
case as same will be in effect on the Restatement Effective Date after the
consummation of the Transaction:
(i) all Plans (and for each Plan that is required to file an annual
report on Internal Revenue Service Form 5500-series, a copy of the most
recent such report (including, to the extent required, the related
financial and actuarial statements and opinions and other supporting
statements, certifications, schedules and information), and for each Plan
that is a "single-employer plan," as defined in Section 4001(a)(15) of
ERISA, the most recently prepared actuarial valuation therefor) and any
other "employee benefit plans," as defined in Section 3(3) of ERISA, and
any other material agreements, plans or arrangements, with or for the
benefit of current or former employees of the U.S. Borrower or any of its
Subsidiaries or any ERISA Affiliate (provided that the foregoing shall
apply in the case of any Multiemployer Plan, only to the extent that any
document described therein is in the possession of the U.S. Borrower or any
Subsidiary of the U.S. Borrower or any ERISA Affiliate) (collectively,
together with any agreements, plans or arrangements referred to in Section
5.12(i) of the Original Credit Agreement and any amendments thereto
referred to in Section 5.12(b), the "Employee Benefit Plans");
(ii) all agreements (including, without limitation, shareholders'
agreements, subscription agreements and registration rights agreements)
entered into by the U.S. Borrower or any of its Subsidiaries governing the
terms and relative rights of its capital stock and any agreements entered
into by shareholders relating to any such entity with respect to its
capital stock (collectively, together with any agreements referred to in
Section 5.12(ii) of the Original Credit Agreement and any amendments
thereto referred to in Section 5.12(b), the "Shareholders' Agreements");
(iii) all material agreements with members of, or with respect to,
the management of the U.S. Borrower or any of its Subsidiaries after giving
effect to
-66-
<PAGE>
the Transaction (collectively, together with any agreements referred to in
Section 5.12(iii) of the Original Credit Agreement and any amendments
thereto referred to in Section 5.12(b), the "Management Agreements");
(iv) any material employment agreements entered into by the U.S.
Borrower or any of its Subsidiaries after giving effect to the Transaction
(collectively, together with any agreements referred to in Section 5.12(iv)
of the Original Credit Agreement and any amendments thereto referred to in
Section 5.12(b), the "Employment Agreements");
(v) all collective bargaining agreements applying or relating to
any employee of the U.S. Borrower or any of its Subsidiaries after giving
effect to the Transaction (collectively, together with any agreements
referred to in Section 5.12(v) of the Original Credit Agreement and any
amendments thereto referred to in Section 5.12(b), the "Collective
Bargaining Agreements");
(vi) all agreements evidencing or relating to Existing
Indebtedness of the U.S. Borrower or any of its Subsidiaries after giving
effect to the CLC Refinancing (collectively, together with any agreements
referred to in Section 5.12(vi) of the Original Credit Agreement and any
amendments thereto referred to in Section 5.12(b), the "Existing
Indebtedness Agreements") ;
(vii) all other material contracts and licenses (other than
certificates of need) of the U.S. Borrower and any of its Subsidiaries
after giving effect to the Transaction (collectively, together with any
agreements referred to in Section 5.12(vii) of the Original Credit
Agreement and any amendments thereto referred to in Section 5.12(b), the
"Material Contracts"); and
(viii) any tax sharing or tax allocation agreements entered into by
the U.S. Borrower or any of its Subsidiaries (collectively, together with
any agreements referred to in Section 5.12(viii) of the Original Credit
Agreement and any amendments thereto referred to in Section 5.12(b), the
"Tax Allocation Agreements");
all of which Employee Benefit Plans, Shareholders' Agreements, Management
Agreements, Employment Agreements, Collective Bargaining Agreements, Existing
Indebtedness Agreements, Material Contracts and Tax Allocation Agreements shall
be in form and substance satisfactory to the Agents and the Required Banks and
shall be in full force and effect on the Restatement Effective Date.
(b) On or prior to the Restatement Effective Date, the Administrative
Agent shall have received (i) a certification from the appropriate officer of
the U.S. Borrower that all agreements and plans referenced in Section 5.12 of
the Original Credit Agreement,
-67-
<PAGE>
previously delivered (or made available) to the Administrative Agent by each
Credit Party, remain in full force and effect (or specifying which of such
agreements and plans do not remain in full force and effect) and (ii) any
amendments to the agreements and plans referred to in Section 5.12 of the
Original Credit Agreement to the extent not delivered pursuant to Section
5.12(a).
5.13 Consent Letter. On the Restatement Effective Date, the
--------------
Administrative Agent shall have received a letter from CT Corporation System,
presently located at 1633 Broadway, New York, New York 10019, substantially in
the form of Exhibit J, indicating its consent to its appointment by each Credit
Party as its agent to receive service of process as specified in Section 13.08
or the relevant Subsidiaries Guaranty, as the case may be.
5.14 Solvency Certificate; Insurance Certificates; Environmental
-----------------------------------------------------------
Assessments. On or before the Restatement Effective Date, the Administrative
- -----------
Agent shall have received:
(a) a solvency certificate in the form of Exhibit K from the chief
financial officer of the U.S. Borrower, dated the Restatement Effective
Date, and supporting the conclusion that, after giving effect to the
Transaction and the incurrence of all financings contemplated herein, the
U.S. Borrower (on a stand-alone basis), the U.S. Borrower and its
Subsidiaries (on a consolidated basis), the Canadian Borrower (on a stand-
alone basis) and the Canadian Borrower and its Subsidiaries (on a
consolidated basis), in each case, are not insolvent and will not be
rendered insolvent by the indebtedness incurred in connection herewith,
will not be left with unreasonably small capital with which to engage in
its or their respective businesses and will not have incurred debts beyond
its or their ability to pay such debts as they mature and become due;
(b) evidence of insurance complying with the requirements of Section
8.03 for the business and properties of the U.S. Borrower and its
Subsidiaries (including, without limitation, CLC and its Subsidiaries), in
scope, form and substance reasonably satisfactory to the Agents and the
Required Banks and naming the Collateral Agent as an additional insured
and/or loss payee, and stating that such insurance shall not be cancelled
or revised without at least 30 days' prior written notice by the insurer to
the Collateral Agent; and
(c) environmental assessments from Environ Corporation and other
environmental consultants satisfactory to the Administrative Agent and in
form, scope and substance reasonably satisfactory to the Agents, together
with reliance letters with respect thereto.
-68-
<PAGE>
5.15 Financial Statements; Pro Forma Balance Sheet; Projections. (a)
----------------------------------------------------------
On or prior to the Restatement Effective Date, there shall have been delivered
to the Administrative Agent (i) true and correct copies of the financial
statements referred to in Section 7.10(b) and (ii) an unaudited pro forma
--- -----
consolidated balance sheet of the U.S. Borrower and its Subsidiaries as of June
30, 1998 and, after giving effect to the Original Transaction, the Transaction
and the incurrence of all Indebtedness (including, without limitation, the Loans
and the Senior Subordinated Notes) contemplated herein and prepared in
accordance with GAAP (the "New Pro Forma Balance Sheet"), together with a
--- -----
related funds flow statement, which financial statements, New Pro Forma Balance
--- -----
Sheet and funds flow statement shall be reasonably satisfactory to the Agents
and the Required Banks.
(b) On or prior to the Restatement Effective Date, there shall have
been delivered to the Administrative Agent detailed projected consolidated
financial statements of the U.S. Borrower and its Subsidiaries certified by the
chief financial officer of the U.S. Borrower for the six fiscal years ended
after the Restatement Effective Date (the "Projections"), which Projections (x)
shall reflect the forecasted consolidated financial conditions and income and
expenses of the U.S. Borrower and its Subsidiaries after giving effect to the
Original Transaction, the Transaction and the related financing thereof and the
other transactions contemplated hereby and (y) shall be reasonably satisfactory
in form and substance to the Agents and the Required Banks.
5.16 Payment of Fees. On the Restatement Effective Date, all costs,
---------------
fees and expenses, and all other compensation due to the Agents or the Banks
(including, without limitation, legal fees and expenses) shall have been paid to
the extent due.
5.17 Original Credit Agreement; etc. (a) On the Restatement
-------------------------------
Effective Date (but immediately prior to giving effect thereto), (i) the Total
Revolving Loan Commitment under, and as defined in, the Original Credit
Agreement shall have been reduced to $75.0 million in accordance with the
requirements of Section 3.02(a) of the Original Credit Agreement and Section
13.22(b) and (ii) the U.S. Borrower and/or the Canadian Borrower shall have
repaid any outstanding Revolving Loans under the Original Credit Agreement
required as a result of such reduction pursuant to Section 4.02(a) of the
Original Credit Agreement.
(b) On the Restatement Effective Date, (i) all Original Term Loans
being continued as described in Section 1.01(a)(A) which were outstanding as
Eurodollar Loans shall be converted into Base Rate Loans or borrowed as
Eurodollar Loans in accordance with the requirements of Section 1.01(a), it
being understood and agreed that the U.S. Borrower shall (x) take all such
actions as may be necessary to ensure that the Banks participate in each
Borrowing of outstanding Tranche A Term Loans pro rata on the basis of their
--- ----
respective Tranche A Term Loan Borrowing Amounts and (y) pay breakage or similar
costs in accordance with the provisions of Section 1.11 of the Original Credit
-69-
<PAGE>
Agreement in connection therewith, (ii) all outstanding Swingline Loans shall be
repaid in full on the Restatement Effective Date, (iii) CSFB shall have received
payment in full of all amounts (including any accrued and unpaid interest and
fees) then due and owing to it under the Original Credit Agreement in respect of
the Swingline Loans being repaid, (iv) all accrued interest on all outstanding
extensions of credit pursuant to the Original Credit Agreement, and all
regularly accruing fees pursuant to the Original Credit Agreement, shall be
repaid in full on, and through, the Restatement Effective Date (whether or not
same would otherwise be then due and payable pursuant to the Original Credit
Agreement) and (v) the Administrative Agent shall have received evidence in
form, scope and substance satisfactory to it that the matters set forth in this
Section 5.17 have been satisfied on such date.
5.18 Compliance With Senior Subordinated Notes Indenture. On the
----------------------------------------------------
Restatement Effective Date, the U.S. Borrower shall have delivered to the
Administrative Agent an officer's certificate signed by an appropriate officer
of the U.S. Borrower (which certificate may be incorporated into the applicable
Notice of Borrowing), in form and substance satisfactory to the Agents, (x)
establishing that each Credit Event occurring on such date complies with the
terms of the Senior Subordinated Notes Indenture and (y) containing a
representation and warranty that (i) all Revolving Loans, Swingline Loans,
Letters of Credit and Tranche A Term Loans (other than New Tranche A Term Loans)
are, and when incurred will be, permitted pursuant to Section 4.04 of the Senior
Subordinated Notes Indenture by virtue of the application of clause (ii) of the
definition of "Permitted Indebtedness" contained therein, (ii) all New Tranche A
Term Loans, Tranche B Term Loans and Tranche C Term Loans are permitted pursuant
to the proviso to Section 4.04 of the Senior Subordinated Notes Indenture and
(iii) the Indebtedness incurred pursuant to each such Credit Event (and each
Credit Event occurring after the Restatement Effective Date) constitutes, or
will constitute, as the case may be, "Senior Debt" and "Designated Senior Debt"
under the Senior Subordinated Notes Indenture, together with financial
calculations (in form and substance reasonably satisfactory to the Agents)
establishing compliance (after giving effect to the Transaction) with a
Consolidated Fixed Charge Coverage Ratio (as defined in the Senior Subordinated
Notes Indenture) of greater than 1.90:1.0 as required by the proviso to Section
4.4 of the Senior Subordinated Notes Indenture.
SECTION 6. Conditions Precedent to All Credit Events. The obligation
-----------------------------------------
of each Bank to make Loans (including Loans made on the Restatement Effective
Date but excluding Mandatory Borrowings made thereafter, which shall be made as
provided in Section 1.01(d)), and the obligation of a Letter of Credit Issuer
to issue any Letter of Credit, is subject, at the time of each such Credit Event
(except as hereinafter indicated), to the satisfaction of the following
conditions:
6.01 No Default; Representations and Warranties. At the time of each
------------------------------------------
such Credit Event and also after giving effect thereto (i) there shall exist no
Default or Event of Default and (ii) all representations and warranties
contained herein or in any other Credit
-70-
<PAGE>
Document shall be true and correct in all material respects with the same effect
as though such representations and warranties had been made on the date of such
Credit Event (it being understood and agreed that any representation or warranty
which by its terms is made as of a specified date shall be required to be true
and correct in all material respects only as of such specified date).
6.02 Notice of Borrowing; Letter of Credit Request. (a) Prior to
---------------------------------------------
the making of each Loan (excluding Swingline Loans and Mandatory Borrowings),
the Administrative Agent shall have received a Notice of Borrowing meeting the
requirements of Section 1.03(a). Prior to the making of any Swingline Loan,
CSFB shall have received the notice required by Section 1.03(b)(i).
(b) Prior to the issuance of each Letter of Credit, the
Administrative Agent and the respective Letter of Credit Issuer shall have
received a Letter of Credit Request meeting the requirements of Section 2.02(a).
The occurrence of the Restatement Effective Date and the acceptance of
the benefits or proceeds of each Credit Event shall constitute a representation
and warranty by each Borrower to each of the Agents and each of the Banks that
all the conditions specified in Section 5 and in this Section 6 and applicable
to such Credit Event (other than such conditions that are subject to the
satisfaction of the Agents and/or the Required Banks) exist as of that time. All
of the Notes, certificates, legal opinions and other documents and papers
referred to in Section 5 and in this Section 6, unless otherwise specified,
shall be delivered to the Administrative Agent at the Notice Office for the
account of each of the Banks and, except for the Notes, in sufficient
counterparts or copies for each of the Banks and shall be in form and substance
satisfactory to the Banks.
SECTION 7. Representations and Warranties. In order to induce the
------------------------------
Banks to enter into this Agreement and to make the Loans and issue and/or
participate in the Letters of Credit provided for herein, each Borrower makes
the following representations and warranties to the Banks, in each case after
giving effect to the Transaction, all of which shall survive the execution and
delivery of this Agreement, the making of the Loans and the issuance of the
Letters of Credit (with the occurrence of the Restatement Effective Date and
each Credit Event on and after the Restatement Effective Date being deemed to
constitute a representation and warranty by each Borrower that the matters
specified in this Section 7 are true and correct in all material respects on and
as of the Restatement Effective Date and the date of each such Credit Event,
unless stated to relate to a specific earlier date in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date):
-71-
<PAGE>
7.01 Company Status. Each Borrower and each of its Subsidiaries (i)
--------------
is a duly organized and validly existing Company in good standing under the laws
of the jurisdiction of its organization, (ii) has the Company power and
authority to own its property and assets and to transact the business in which
it is engaged and presently proposes to engage and (iii) is duly qualified and
is authorized to do business and is in good standing in all jurisdictions where
it is required to be so qualified and where the failure to be so qualified would
have a Material Adverse Effect.
7.02 Company Power and Authority. Each Credit Party has the Company
---------------------------
power and authority to execute, deliver and carry out the terms and provisions
of the Documents to which it is a party and has taken all necessary Company
action to authorize the execution, delivery and performance of the Documents to
which it is a party. Each Credit Party has duly executed and delivered each
Document to which it is a party and each such Document constitutes the legal,
valid and binding obligation of such Credit Party enforce able in accordance
with its terms, except to the extent that the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law).
7.03 No Violation. Neither the execution, delivery or performance by
------------
any Credit Party of the Documents to which it is a party, nor compliance by any
Credit Party with the terms and provisions thereof, nor the consummation of the
transactions contemplated herein or therein, (i) will contravene any material
provision of any applicable law, statute, rule or regulation, or any order,
writ, injunction or decree of any court or govern mental instrumentality, (ii)
will conflict or be inconsistent with or result in any breach of, any of the
terms, covenants, conditions or provisions of, or constitute a default under, or
(other than pursuant to the Security Documents) result in the creation or
imposition of (or the obligation to create or impose) any Lien upon any of the
property or assets of such Credit Party or any of its Subsidiaries pursuant to
the terms of any indenture, mortgage, deed of trust, loan agreement, credit
agreement or any other material agreement or instrument to which such Credit
Party or any of its Subsidiaries is a party or by which it or any of its
property or assets are bound or to which it may be subject (including, without
limitation, the Senior Subordinated Notes Indenture, the CLC Senior Notes
Indenture and the other Existing Indebtedness), in each case after giving effect
to each element of the CLC Refinancing (other than the CLC Tender Offer/Consent
Solicitation Consummation) or (iii) will violate any provision of the
certificate of incorporation, by-laws, certificate of partnership, partnership
agreement, certificate of limited liability company, limited liability company
agreement or equivalent organizational document, as the case may be, of such
Credit Party or any of its Subsidiaries.
7.04 Litigation. There are no actions, suits, proceedings or
----------
investigations pending or, to the best knowledge of each Borrower, threatened
(i) with respect to any
-72-
<PAGE>
Credit Document, (ii) with respect to the Original Transaction, the Transaction
or any other Document that could reasonably be expected to have a Material
Adverse Effect, or (iii) with respect to such Borrower or any of its
Subsidiaries (x) that are likely to have a Material Adverse Effect (after giving
effect to projected reserves for remediation expenses, the anticipated timing of
remediation expenses, potential insurance and indemnification recoveries and tax
savings) or (y) that could reasonably be expected to have a material adverse
effect on the rights or remedies of the Agents or the Banks or on the ability of
any Credit Party to perform its respective obligations to the Agents or the
Banks hereunder and under the other Credit Documents to which it is, or will be,
a party. Additionally, there does not exist any judgment, order or injunction
prohibiting or imposing material adverse conditions upon the occurrence of any
Credit Event.
7.05 Use of Proceeds; Margin Regulations. (a) The proceeds of all
-----------------------------------
Original Term Loans have been utilized by the U.S. Borrower to (x) finance the
Recapitalization, (y) effect the Original Refinancing (including by way of the
investment permitted pursuant to Section 9.05(r)) and (z) pay the fees and
expenses incurred in connection with the Original Transaction.
(b) The proceeds of all New Tranche A Term Loans, all Tranche B Term
Loans and all Tranche C Term Loans shall be utilized by the U.S. Borrower to
finance the CLC Merger and the CLC Refinancing and to pay the fees and expenses
incurred in connection with the Transaction.
(c) The proceeds of all Revolving Loans and Swingline Loans shall be
utilized for the general corporate and working capital purposes of the Borrowers
and their respective Subsidiaries (including, but not limited to, Permitted
Acquisitions and the prepayment of the Senior Subordinated Notes and the other
Existing Indebtedness in accordance with the terms of Section 9.12(ii));
provided, however, that (i) proceeds of Dollar Revolving Loans and Swingline
- -------- -------
Loans in an amount not to exceed $5,000,000 may be used for the purposes
described in Section 7.05(a) above and (ii) proceeds of Canadian Dollar
Revolving Loans in an amount not to exceed the Canadian Dollar Equivalent of
$10,000,000 may be used to effect the Original Refinancing.
(d) Neither the making of any Loan, nor the use of the proceeds
thereof, nor the occurrence of any other Credit Event, will violate or be
inconsistent with the pro visions of Regulation T, U or X of the Board of
Governors of the Federal Reserve System and no part of any Credit Event (or the
proceeds thereof) will be used to purchase or carry any Margin Stock or to
extend credit for the purpose of purchasing or carrying any Margin Stock.
7.06 Governmental Approvals. Except as may have been obtained or
----------------------
made on or prior to the Restatement Effective Date (and which remain in full
force and effect on
-73-
<PAGE>
the Restatement Effective Date), no order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
exemption by, any foreign or domestic governmental or public body or authority,
or any subdivision thereof, is required to authorize or is required in
connection with (i) the execution, delivery and performance of any Document or
(ii) the legality, validity, binding effect or enforceability of any Document.
7.07 Investment Company Act. Neither the U.S. Borrower nor any of
----------------------
its Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
7.08 Public Utility Holding Company Act. Neither the U.S. Borrower
----------------------------------
nor any of its Subsidiaries is a "holding company," or a "subsidiary company" of
a "holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
7.09 True and Complete Disclosure. All factual information (taken as
----------------------------
a whole) heretofore or contemporaneously furnished by or on behalf of the U.S.
Borrower or any of its Subsidiaries in writing to any Agent or any Bank
(including, without limitation, all information contained in the Documents) for
purposes of or in connection with this Agreement or any transaction contemplated
herein or therein is, and all other such factual information (taken as a whole)
hereafter furnished by or on behalf of any such Persons in writing to any Agent
or any Bank will be, true and accurate in all material respects on the date as
of which such information is dated or certified and not incomplete by omitting
to state any material fact necessary to make such information (taken as a whole)
not misleading at such time in light of the circumstances under which such
information was provided, it being understood and agreed that for purposes of
this Section 7.09, such factual information shall not include the Projections or
any pro forma financial information.
--- -----
7.10 Financial Condition; Financial Statements. (a) On and as of
-----------------------------------------
the Original Effective Date and the Restatement Effective Date, on a pro forma
--- -----
basis after giving effect to the Original Transaction or the Original
Transaction and the Transaction, as the case may be, and to all Indebtedness
(including the Loans and the Senior Subordinated Notes) incurred, and to be
incurred, and Liens created, and to be created, by each Credit Party in
connection therewith, with respect to the U.S. Borrower (on a stand-alone
basis), the U.S. Borrower and its Subsidiaries (on a consolidated basis), the
Canadian Borrower (on a stand-alone basis), the Canadian Borrower and its
Subsidiaries (on a consolidated basis) (x) the sum of the assets, at a fair
valuation, of the U.S. Borrower (on a stand-alone basis), the U.S. Borrower and
its Subsidiaries (on a consolidated basis), the Canadian Borrower (on a stand-
alone basis), the Canadian Borrower and its Subsidiaries (on a consolidated
basis) will exceed its or their debts, (y) it has or they have not incurred nor
-74-
<PAGE>
intended to, nor believes or believe that it or they will, incur debts beyond
its or their ability to pay such debts as such debts mature and (z) it or they
will have sufficient capital with which to conduct its or their business. For
purposes of this Section 7.10, "debt" means any liability on a claim, and
"claim" means (i) right to payment, whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, un matured,
disputed, undisputed, legal, equitable, secured or unsecured or (ii) right to an
equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured. The amount of contingent liabilities at any time shall be
computed as the amount that, in the light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
(b)(I)(i) The consolidated balance sheets of the U.S. Borrower and
its consolidated Subsidiaries at December 31, 1995, December 31, 1996, December
31, 1997 and June 30, 1998, and the related statements of income and cash flows
and changes in shareholders' equity of the U.S. Borrower for the fiscal years or
three-month period, as the case may be, ended as of said dates, and (ii) the
Original Pro-Forma Balance Sheet, in each case furnished to each Original Bank
prior to the Original Effective Date pursuant to Section 5.15 of the Original
Credit Agreement, present fairly in all material respects the respective
consolidated financial condition of the U.S. Borrower and its consolidated
Subsidiaries at the dates of said financial statements and the results for the
periods covered thereby (or, in the case of the Original Pro Forma Balance
--- -----
Sheet, presents a good faith estimate of the consolidated pro forma financial
--- -----
condition of the U.S. Borrower and its consolidated Subsidiaries (after giving
effect to the Original Transaction at the date thereof), subject, in the case of
unaudited financial statements, to normal year-end adjustments. All such
financial statements (other than the aforesaid Original Pro Forma Balance Sheet)
--- -----
have been prepared in accordance with GAAP consistently applied except to the
extent provided in the notes to said financial statements and subject, in the
case of the three-month statements, to normal year-end audit adjustments (all of
which are of a recurring nature and none of which, individually or in the
aggregate, would be material) and the absence of footnotes.
(II) The consolidated balance sheets of CLC and its Subsidiaries at
December 31, 1996, December 31, 1997 and June 30, 1998 and the related
statements of income and cash flows and changes in shareholders' equity of CLC
for the fiscal years or three-month period, as the case may be, ended as of said
dates, in each case furnished to the Banks prior to the Restatement Effective
Date, present fairly in all material respects the consolidated financial
condition of CLC and its Subsidiaries at the dates of said financial statements
and the results for the periods covered thereby, subject, in the case of
unaudited financial statements, to normal year-end adjustments. All of such
financial statements have been prepared in accordance with GAAP consistently
applied except to the extent provided
-75-
<PAGE>
in the notes to said financial statements and subject, in the case of the three-
month statements, to normal year-end audit adjustments (all of which are of a
recurring nature and none of which, individually or in the aggregate, would be
material) and the absence of footnotes.
(III) The New Pro Forma Balance Sheet furnished to each Bank prior to
--- -----
the Restatement Effective Date pursuant to Section 5.16 presents a good faith
estimate of the consolidated pro forma financial condition of the U.S. Borrower
--- -----
and its consolidated Subsidiaries (after giving effect to the Transaction at the
date thereof).
(c) Since December 31, 1997 (but after giving effect to the Original
Transaction and the Transaction as if same had occurred prior thereto), nothing
has occurred that has had or could reasonably be expected to have a Material
Adverse Effect.
(d) Except as fully reflected in the financial statements described
in Section 7.10(b) and the Indebtedness incurred under this Agreement and the
Senior Subordinated Notes, (i) there were as of the Original Effective Date and
as of the Restatement Effective Date (and after giving effect to any Loans made
on each such date), no liabilities or obligations (excluding current
obligations incurred in the ordinary course of business and commitments to
purchase Tractor Trailers) with respect to the U.S. Borrower or any of its
Subsidiaries of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether or not due) which, either individually or in the
aggregate, could reasonably be expected to be material to the U.S. Borrower and
its Subsidiaries taken as a whole and (ii) no Borrower knows of any basis for
the assertion against it or any of its Subsidiaries of any such liability or
obligation which, either individually or in the aggregate, are or would be
reasonably likely to have, a Material Adverse Effect.
(e) The Projections have been prepared on a basis consistent with the
financial statements referred to in Section 7.10(b), and have been prepared in
good faith and are based on reasonable assumptions under the then known facts
and circumstances. On the Restatement Effective Date, the management of the U.S.
Borrower believes that the Projections are reasonable and attainable based upon
the then known facts and circumstances (it being understood that nothing
contained in this Section 7.10(e) shall constitute a representation that the
results forecasted in such Projections will in fact be achieved). There is no
fact known to either Borrower or any of its Subsidiaries which could reasonably
be expected to have a Material Adverse Effect, which has not been disclosed
herein or in such other documents, certificates and statements furnished to the
Banks for use in connection with the transactions contemplated hereby.
7.11 Security Interests. On and after the Restatement Effective
------------------
Date, each of the Security Documents creates (or after the execution and
delivery thereof will create), as security for the Obligations, a valid and
enforceable perfected security interest in and
-76-
<PAGE>
Lien on all of the Collateral subject thereto (and, in the case of a security
interest created pursuant to the Canadian Security Documents, enforceable as
against third parties), superior to and prior to the rights of all third
Persons, and subject to no other Liens (except that (i) the Security Agreement
Collateral may be subject to Permitted Liens relating thereto, (ii) the Pledge
Agreement Collateral may be subject to the Liens described in clauses (a) and
(e) of Section 9.03 and (iii) the security interest and mortgage lien created in
the Mortgaged Properties may be subject to the Permitted Encumbrances related
thereto), in favor of the Collateral Agent. No filings or recordings are
required in order to perfect and/or render enforceable as against third parties
the security interests created under any Security Document except for filings or
recordings required in connection with any such Security Document which shall
have been made on or prior to the Restatement Effective Date as contemplated by
Section 5.10 or on or prior to the execution and delivery thereof as
contemplated by Sections 8.11, 8.12 and 9.15.
7.12 Compliance with ERISA. (a) Part A of Schedule V sets forth each
---------------------
Plan and each Multiemployer Plan; each Plan (and each related trust, insurance
contract or fund) is in substantial compliance with its terms and with all
applicable laws, including without limitation ERISA and the Code; each Plan (and
each related trust, if any) which is intended to be qualified under Section
401(a) of the Code has received a determination letter from the Internal Revenue
Service to the effect that it meets the requirements of Sections 401(a) and
501(a) of the Code; no Reportable Event has occurred; to the best knowledge of
each Borrower after due inquiry, no Multiemployer Plan is insolvent or in
reorganization; except as described in items (i) and (ii) set forth on Part B
of Schedule V, no Plan has an Unfunded Current Liability; no Plan which is
subject to Section 412 of the Code or Section 302 of ERISA has an accumulated
funding deficiency, within the meaning of such sections of the Code or ERISA, or
has applied for or received a waiver of an accumulated funding deficiency or an
extension of any amortization period, within the meaning of Section 412 of the
Code or Section 303 or 304 of ERISA; except as described in item (iii) set forth
on Part B of Schedule V, all contributions required to be made with respect to a
Plan, a Multiemployer Plan and a Foreign Pension Plan have been timely made by
each Borrower and each Subsidiary of each Borrower; neither the U.S. Borrower
nor any Subsidiary of the U.S. Borrower has incurred any material liability
(including any indirect, contingent or secondary liability) to or on account of
a Plan pursuant to Section 409, 502(i) or 502(l) of ERISA or Section 401(a)(29),
4971 or 4975 of the Code or expects to incur any such liability under any of the
foregoing sections with respect to any Plan; neither the U.S. Borrower nor any
Subsidiary of the U.S. Borrower nor any ERISA Affiliate has incurred any
material liability (including any indirect, contingent or secondary liability)
to or on account of a Plan pursuant to Section 4062, 4063, 4064 or 4069 of ERISA
or Section 401(a)(29) or 4971 of the Code or expects to incur any such liability
under any of the foregoing sections with respect to any Plan; to the knowledge
of the U.S. Borrower and its Subsidiaries, neither the U.S. Borrower nor any
Subsidiary of the U.S. Borrower nor any ERISA Affiliate has incurred any
material liability (including any indirect, contingent or
-77-
<PAGE>
secondary liability) to or on account of a Multiemployer Plan pursuant to
Section 515, 4201, 4204, or 4212 of ERISA; no condition exists which presents a
material risk to the U.S. Borrower or any Subsidiary of the U.S. Borrower or any
ERISA Affiliate of incurring a liability to or on account of a Plan or, to the
best knowledge of each Borrower after due inquiry, a Multiemployer Plan pursuant
to the foregoing provisions of ERISA and the Code; no proceedings have been
instituted to terminate or appoint a trustee to administer any Plan which is
subject to Title IV of ERISA; no action, suit, proceeding, hearing, audit or
investigation with respect to the administration, operation or the investment
of assets of any Plan (other than routine claims for benefits) is pending,
expected or, to the best knowledge of each Borrower after due inquiry,
threatened; using actuarial assumptions and computation methods consistent with
Part 1 of subtitle E of Title IV of ERISA, the aggregate liabilities of the U.S.
Borrower and its Subsidiaries and its ERISA Affiliates to all Multiemployer
Plans in the event of a complete withdrawal therefrom, as of the close of the
most recent fiscal year of each such Multiemployer Plan ended prior to the date
of the most recent Credit Event, would not exceed an amount that could
reasonably be expected to have a Material Adverse Effect; each group health plan
(as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code)
maintained by any Borrower or any Subsidiary which covers or has covered
employees or former employees of the U.S. Borrower, any Subsidiary of the U.S.
Borrower or any ERISA Affiliate has at all times been operated in compliance
with the provisions of Part 6 of subtitle B of Title I of ERISA and Section
4980B of the Code; no lien imposed under the Code or ERISA on the assets of the
U.S. Borrower or any Subsidiary of the U.S. Borrower or any ERISA Affiliate
exists or is likely to arise on account of any Plan; and, except as described in
item (iv) set forth on Part B of Schedule V, the U.S. Borrower and its
Subsidiaries may cease contributions to or terminate any employee benefit plan
maintained by any of them without incurring any material liability.
(b) Each Foreign Pension Plan has been maintained in substantial
compliance with its terms and with the requirements of any and all applicable
laws, statutes, rules, regulations and orders and has been maintained, where
required, in good standing with applicable regulatory authorities. Neither the
U.S. Borrower nor any of its Subsidiaries has incurred any liability in
connection with the termination of or withdrawal from any Foreign Pension Plan
that has not been accrued or otherwise properly reserved on the U.S. Borrower's
or such Subsidiary's balance sheet. With respect to each Foreign Pension Plan
that is required by applicable local law or by its terms to be funded through a
separate funding vehicle, the present value of the accrued benefit liabilities
(whether or not vested) under each such Foreign Pension Plan, determined as of
the latest valuation date for such Foreign Pension Plan on the basis of
actuarial assumptions, each of which is reasonable, did not exceed the current
value of the assets of such Foreign Pension Plan allocable to such benefit
liabilities by an amount which, when added to the aggregate amount of the
accrued benefit liabilities with respect to all other Foreign Pension Plans,
could reasonably be expected to have a Material Adverse Effect.
-78-
<PAGE>
7.13 Capitalization. On the Restatement Effective Date and after
--------------
giving effect to the Original Transaction and the Transaction, the authorized
capital stock of the U.S. Borrower shall consist of (i) 15,000,000 shares of
common stock, $.01 par value per share (such authorized shares of common stock,
together with any subsequently authorized shares of common stock of the U.S.
Borrower, the "U.S. Borrower Common Stock"), 1,700,000 of which shares shall be
issued and outstanding and (ii) 5,000,000 shares of preferred stock, $.01 par
value per share, (x) 250,000 of which shares shall be Apollo PIK Preferred
Stock, of which 105,000 shares shall be issued and outstanding and (y) 100,000
of which shares shall be Seller PIK Preferred Stock, of which 50,000 shares
shall be issued and outstanding. All such outstanding shares have been duly and
validly issued, are fully paid and nonassessable and have been issued free of
preemptive rights. Except as set forth on Schedule X hereto, the U.S. Borrower
does not have outstanding any securities convertible into or exchangeable for
its capital stock or outstanding any rights to subscribe for or to purchase, or
any options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to, its capital stock.
7.14 Subsidiaries. (a) Prior to the consummation of the
------------
Transaction, CLC Acquisition Corp. has no Subsidiaries.
(b) On and as of the Restatement Effective Date and after giving
effect to the Original Transaction and the Transaction, the U.S. Borrower has no
Subsidiaries other than those Subsidiaries listed on Schedule VII. Schedule VII
correctly sets forth, as of the Restatement Effective Date and after giving
effect to the Original Transaction and the Transaction, the percentage ownership
(direct and indirect) of the U.S. Borrower in each class of capital stock or
other equity interests of each of its Subsidiaries and also identifies the
direct owner thereof. All outstanding shares of capital stock of each Subsidiary
of the U.S. Borrower have been duly and validly issued, are fully paid and non-
assessable and have been issued free of preemptive rights. Except as set forth
on Schedule X hereto, no Subsidiary of the U.S. Borrower has outstanding any
securities convertible into or exchangeable for its capital stock or outstanding
any right to subscribe for or to purchase, or any options or warrants for the
purchase of, or any agreement providing for the issuance (contingent or
otherwise) of or any calls, commitments or claims of any character relating to,
its capital stock or any stock appreciation or similar rights.
7.15 Intellectual Property, etc. Each of the U.S. Borrower and each
---------------------------
of its Subsidiaries owns all patents, trademarks, permits, service marks, trade
names, copyrights, licenses, franchises and other rights with respect to the
foregoing reasonably necessary for the conduct of its business, without any
known conflict with the rights of others which, or the failure to obtain which,
as the case may be, would result in a Material Adverse Effect.
-79-
<PAGE>
7.16 Compliance with Statutes, etc. Each of the U.S. Borrower and
------------------------------
each of its Subsidiaries is in compliance with all applicable statutes,
regulations, rules and orders of, and all applicable restrictions imposed by,
all governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property, except such non-compliance as is not
reasonably likely to, individually or in the aggregate, have a Material Adverse
Effect.
7.17 Environmental Matters. (a) Each of the U.S. Borrower, its
---------------------
Subsidiaries and the Program Affiliates has complied with, and on the date of
each Credit Event is in material compliance with, all applicable Environmental
Laws and the requirements of any permits issued under such Environmental Laws
and none of the U.S. Borrower, any of its Subsidiaries or any Program Affiliate
is liable for any material penalties, fines or forfeitures for failure to comply
with any of the foregoing. There are no pending unresolved past or, to the best
knowledge of the U.S. Borrower after due inquiry, threatened Environmental
Claims against the U.S. Borrower, any of its Subsidiaries or any Program
Affiliate, or against any Real Property owned or operated by the U.S. Borrower,
any of its Subsidiaries or any Program Affiliate. There are no facts,
circumstances, conditions or occurrences with respect to the business or
operations of the U.S. Borrower, any of its Subsidiaries or any Program
Affiliate or any Real Property at any time owned or operated by the U.S.
Borrower, any of its Subsidiaries or any Program Affiliate that would reasonably
be expected (i) to form the basis of an Environmental Claim against the U.S.
Borrower or any of its Subsidiaries or any of their currently owned or operated
Real Property or (ii) to cause any such currently owned or operated Real
Property to be subject to any restrictions on the ownership, occupancy, use or
transferability of such Real Property by the U.S. Borrower or any of its
Subsidiaries under any applicable Environmental Law.
(b) Hazardous Materials have not at any time been generated, used,
treated or stored on, or transported by the U.S. Borrower or any of its
Subsidiaries or by any Person acting for or under contract to the U.S. Borrower
or any of its Subsidiaries or, to the knowledge of the U.S. Borrower, by any
other Person, to or from any Real Property owned or operated by the U.S.
Borrower, any of its Subsidiaries or any Program Affiliate except in material
compliance with all applicable Environmental Laws and as reasonably required in
connection with the operation, use and maintenance of such Real Property or by
the U.S. Borrower's, such Subsidiary's or such Program Affiliate's business.
Hazardous Materials have not at any time been Released by the U.S. Borrower or
any of its Subsidiaries or by any Person acting for or under contract to the
U.S. Borrower or any of its Subsidiaries or, to the knowledge of the U.S.
Borrower, by any other Person on or from any Real Property owned or operated by
the U.S. Borrower, any of its Subsidiaries or any Program Affiliate, except in
compliance with all applicable Environmental Laws and as reasonably required in
connection with the operation, use and maintenance of such Real Property or by
the U.S. Borrower's, such Subsidiary's or such Program Affiliate's
-80-
<PAGE>
business. There are not now any underground storage tanks owned or operated by
the U.S. Borrower or any of its Subsidiaries, or to the knowledge of the U.S.
Borrower, by any other Person, located on any Real Property owned or operated by
the U.S. Borrower, any of its Subsidiaries or any Program Affiliate.
(c) Notwithstanding anything to the contrary in this Section 7.17,
the representations made in this Section 7.17 shall only be untrue if the
aggregate effect of all conditions, failures, noncompliances, Environmental
Claims, Releases and presence of underground storage tanks, in each case of the
types described above, would reasonably be expected to have a Material Adverse
Effect (after giving effect to projected reserves for remediation expenses, the
anticipated timing of remediation expenses, potential insurance and
indemnification recoveries and tax savings).
7.18 Properties. All Real Property owned by the U.S. Borrower or any
----------
of its Subsidiaries and all material Leaseholds leased by the U.S. Borrower or
any of its Subsidiaries, in each case as of the Restatement Effective Date and
after giving effect to the Original Transaction and the Transaction, and the
nature of the interest therein, is correctly set forth in Schedule III. All
Tractor Trailers owned or leased by the U.S. Borrower or any of its Subsidiaries
(including CLC and its Subsidiaries) as of the Restatement Effective Date are
correctly set forth in Schedule XIII. Each of the U.S. Borrower and each of its
Subsidiaries has good and marketable title to, or a validly subsisting leasehold
interest in, all material properties owned or leased by it, including all Real
Property reflected in Schedule III and in the financial statements (including
the Original Pro Forma Balance Sheet and the New Pro Forma Balance Sheet)
--- ----- --- -----
referred to in Section 7.10(b) (except such properties sold in the ordinary
course of business since the dates of the respective financial statements
referred to therein), free and clear of all Liens, other than Permitted Liens.
7.19 Labor Relations. Neither the U.S. Borrower nor any of its
---------------
Subsidiaries is engaged in any unfair labor practice that could reasonably be
expected to have a Material Adverse Effect. There is (i) no unfair labor
practice complaint pending against the U.S. Borrower or any of its Subsidiaries
or, to the best knowledge of the U.S. Borrower and its Subsidiaries, threatened
against any of them, before the National Labor Relations Board, and no grievance
or arbitration proceeding arising out of or under any collective bargaining
agreement is so pending against the U.S. Borrower or any of its Subsidiaries or,
to the best knowledge of the U.S. Borrower and its Subsidiaries, threatened
against any of them, (ii) no strike, labor dispute, slowdown or stoppage pending
against the U.S. Borrower or any of its Subsidiaries or, to the best knowledge
of the U.S. Borrower and its Subsidiaries, threatened against the U.S. Borrower
or any of its Subsidiaries and (iii) no union representation question existing
with respect to the employees of the U.S. Borrower or any of its Subsidiaries
and, to the best knowledge of the U.S. Borrower and its Subsidiaries, no union
organizing activities are taking place, except (with respect to any
-81-
<PAGE>
matter specified in clause (i), (ii) or (iii) above, either individually or in
the aggregate) such as is not reasonably likely to have a Material Adverse
Effect.
7.20 Tax Returns and Payments. Each of the U.S. Borrower and each of
------------------------
its Subsidiaries has filed all federal income tax returns and all other material
tax returns, domestic and foreign, required to be filed by it and has paid all
material taxes and assessments payable by it which have become due, except for
those contested in good faith and fully provided for on the financial statements
of the U.S. Borrower and its Subsidiaries in accordance with generally accepted
accounting principles. Each of the U.S. Borrower and each of its Subsidiaries
has provided adequate reserves (in the good faith judgment of the management of
the U.S. Borrower) for the payment of all federal, state and foreign income
taxes which have not yet become due. There is no material action, suit,
proceeding, investigation, audit, or claim now pending or, to the knowledge of
the U.S. Borrower or any of its Subsidiaries, threatened by any authority
regarding any taxes relating to the U.S. Borrower or any of its Subsidiaries.
Neither the U.S. Borrower nor any of its Subsidiaries has entered into an
agreement or waiver or been requested to enter into an agreement or waiver
extending any statute of limitations relating to the payment or collection of
taxes of the U.S. Borrower or any of its Subsidiaries, or is aware of any
circumstances that would cause the taxable years or other taxable periods of the
U.S. Borrower or any of its Subsidiaries not to be subject to the normally
applicable statute of limitations, in each case except to the extent the
liability of the U.S. Borrower or such Subsidiary giving rise to any extension
of any such normally applicable statute of limitation is not material.
7.21 Scheduled Existing Indebtedness. Schedule IV sets forth a true
-------------------------------
and complete list of all Scheduled Existing Indebtedness of the U.S. Borrower
and its Subsidiaries as of the Restatement Effective Date after giving effect to
the Original Transaction and the Transaction, in each case showing the aggregate
principal amount thereof and the name of the respective borrower and any other
entity which directly or indirectly guaranteed such debt.
7.22 Insurance. Set forth on Schedule VIII hereto is a true, correct
---------
and complete summary of all insurance carried by each Credit Party on and as of
the Restatement Effective Date, with the amounts insured set forth therein.
7.23 Representations and Warranties in Other Documents. All
-------------------------------------------------
representations and warranties set forth in the other Documents were true and
correct in all material respects at the time as of which such representations
and warranties were made (or deemed made) and shall be true and correct in all
material respects as of the Restatement Effective Date as if such
representations or warranties were made on and as of such date, unless stated to
relate to a specific earlier date, in which case such representations or
warranties shall be true and correct in all material respects as of such earlier
date.
-82-
<PAGE>
7.24 Original Transaction and Transaction. At the time of
------------------------------------
consummation thereof, each of the Original Transaction and the Transaction shall
have been consummated in all material respects in accordance with the terms of
the relevant Documents therefor and all applicable laws. At the time of
consummation thereof, all material consents and approvals of, and filings and
registrations with, and all other actions in respect of, all governmental
agencies, authorities or instrumentalities required in order to make or con
summate the Original Transaction and the Transaction in accordance with the
terms of the relevant Documents therefor and all applicable laws have been
obtained, given, filed or taken and are or will be in full force and effect (or
effective judicial relief with respect thereto has been obtained). All
applicable waiting periods with respect thereto have or, prior to the time when
required, will have, expired without, in all such cases, any action being taken
by any competent authority which restrains, prevents, or imposes material
adverse conditions upon the Original Transaction or the Transaction.
Additionally, there does not exist any judgment, order or injunction prohibiting
or imposing material adverse conditions upon any element of the Original
Transaction, the Transaction, the occurrence of any Credit Event, or the
performance by the U.S. Borrower and its Subsidiaries of their respective
obligations under the Documents and all applicable laws.
7.25 Special Purpose Corporation. CLC Acquisition Corp. was formed
---------------------------
to effect the CLC Merger. Prior to the consummation of the Transaction, CLC
Acquisition Corp. had no significant assets or liabilities (other than those
liabilities under the CLC Merger Documents and such other liabilities arising in
connection with the Transaction).
7.26 Subordination. The subordination provisions contained in the
-------------
Senior Subordinated Note Documents are (and, on and after the execution and
delivery thereof, any agreements or instruments relating to Additional Senior
Subordinated Note Indebtedness, Convertible Subordinated Notes, Shareholder
Subordinated Notes, Permitted Subordinated Refinancing Indebtedness and
Permitted Subordinated Indebtedness, will be) enforceable against the U.S.
Borrower, the U.S. Subsidiary Guarantors and the holders of the Senior
Subordinated Notes, except to the extent that the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law), and all
Obligations hereunder and under the other Credit Documents (including without
limitation, pursuant to the Subsidiaries Guaranties) are within the definitions
of "Senior Debt" and "Designated Senior Debt" included in such subordination
provisions.
7.27 Year 2000 Representation. Any reprogramming required to permit
------------------------
the proper functioning, in and following the year 2000, of (i) the U.S.
Borrower's and its Subsidiaries' computer systems and (ii) equipment containing
embedded microchips (including systems and equipment supplied by others or with
which the U.S. Borrower's and its Subsidiaries' systems interface) and the
testing of all such systems and equipment,
-83-
<PAGE>
as so reprogrammed, will be completed by December 31, 1999, except to the extent
the failure to complete such reprogramming could not reasonably be expected to
result in a Default, an Event of Default or a Material Adverse Effect. The cost
to the U.S. Borrower and its Subsidiaries of such reprogramming and testing and
of the reasonably foreseeable consequences of year 2000 to the U.S. Borrower and
its Subsidiaries (including, without limitation, reprogramming errors and the
failure of others' systems or equipment) could not reasonably be expected to
result in a Default, an Event of Default or a Material Adverse Effect. Except
for such of the reprogramming referred to in the preceding sentence as may be
necessary, the computer and management information systems of the U.S. Borrower
and its Subsidiaries are and, with ordinary course upgrading and maintenance,
will continue for the term of this Agreement to be, sufficient to permit the
U.S. Borrower and its Subsidiaries to conduct their respective businesses
without a Material Adverse Effect.
SECTION 8. Affirmative Covenants. Each Borrower hereby covenants and
---------------------
agrees that as of the Restatement Effective Date and thereafter for so long as
this Agreement is in effect and until the Total Commitment has terminated, no
Letters of Credit or Notes are outstanding and the Loans and Unpaid Drawings,
together with interest, Fees and all other Obligations (other than any
indemnities described in Section 13.13 which are not then due and payable)
incurred hereunder, are paid in full:
8.01 Information Covenants. The U.S. Borrower will furnish to each
---------------------
Bank:
(a) Quarterly Financial Statements. Within 45 days after the close
------------------------------
of the first three quarterly accounting periods in each fiscal year of the
U.S. Borrower, (i) the consolidated balance sheet of the U.S. Borrower and
its Subsidiaries as at the end of such quarterly accounting period and the
related consolidated statements of income and retained earnings and of cash
flows for such quarterly accounting period and for the elapsed portion of
the fiscal year ended with the last day of such quarterly accounting
period and the budgeted figures for such quarterly period as set forth in
the respective budget delivered pursuant to Section 8.01(c) and (ii)
management's discussion and analysis of significant operational and
financial developments during such quarterly period, all of which shall be
in reasonable detail and certified by the chief financial officer or other
Authorized Officer of the U.S. Borrower that they fairly present in all
material respects the financial condition of the U.S. Borrower and its
Subsidiaries as of the dates indicated and the results of their operations
and changes in their cash flows for the periods indicated, subject to
normal year-end audit adjustments and the absence of footnotes.
(b) Annual Financial Statements. Within 90 days after the close of
---------------------------
each fiscal year of the U.S. Borrower, the consolidated balance sheet of
the U.S. Borrower and its Subsidiaries as at the end of such fiscal year
and the related
-84-
<PAGE>
consolidated statements of income and retained earnings and of cash flows
for such fiscal year and setting forth comparative consolidated figures for
the preceding fiscal year and comparable budgeted figures for such fiscal
year as set forth in the respective budget delivered pursuant to Section
8.01(c) and (except for such comparable budgeted figures) certified by
Price Waterhouse, LLP or such other independent certified public
accountants of recognized national standing as shall be reasonably
acceptable to the Administrative Agent, in each case to the effect that
such statements fairly present in all material respects the financial
condition of the U.S. Borrower and its Subsidiaries as of the dates
indicated and the results of their operations and changes in financial
position for the periods indicated in conformity with GAAP applied on a
basis consistent with prior years, together with a certificate of such
accounting firm stating that in the course of its regular audit of the
business of the U.S. Borrower and its Subsidiaries, which audit was
conducted in accordance with generally accepted auditing standards, no
Default or Event of Default which has occurred and is continuing has come
to their attention or, if such a Default or an Event of Default has come to
their attention, a statement as to the nature thereof.
(c) Budgets, etc. Not more than 60 days after the commencement of
-------------
each fiscal year of the U.S. Borrower, consolidated budgets of the U.S.
Borrower and its Subsidiaries (x) in reasonable detail for each of the four
fiscal quarters of such fiscal year and (y) in summary form for each of the
five fiscal years immediately following such fiscal year, in each case as
customarily prepared by management for its internal use setting forth, with
appropriate discussion, the principal assumptions upon which such budgets
are based. Together with each delivery of financial statements pursuant to
Sections 8.01(a) and (b), a comparison of the current year to date
financial results against the budgets required to be submitted pursuant to
this clause (c) shall be presented.
(d) Officer's Certificates. At the time of the delivery of the
----------------------
financial state ments provided for in Sections 8.01(a) and (b), a
certificate of the chief financial officer or other Authorized Officer of
the U.S. Borrower to the effect that, to the best of such officer's
knowledge, no Default or Event of Default exists or, if any Default or
Event of Default does exist, specifying the nature and extent thereof,
which certificate shall, if delivered in connection with the financial
statements in respect of a period ending on the last day of a fiscal
quarter or fiscal year of the U.S. Borrower, set forth (x) the calculations
required to establish whether the U.S. Borrower and its Subsidiaries were
in compliance with the provisions of Sections 4.02, 9.02, 9.04(d), (g), (k)
and (l), 9.05(a), (g), (l) and (s), 9.09 and 9.10 as at the end of such
fiscal quarter or year, as the case may be, and (y) the calculation of the
Total Leverage Ratio, the Adjusted Total Leverage Ratio and the Adjusted
Senior Leverage Ratio as at the last day of the respective fiscal quarter
or fiscal year of the U.S. Borrower, as the case may be. In addition, at
the time of the
-85-
<PAGE>
delivery of the financial statements provided for in Section 8.01(b), a
certificate of the chief financial officer or other Authorized Officer of
the U.S. Borrower setting forth (in reasonable detail) (i) the amount of,
and calculations required to establish the amount of, Adjusted Excess Cash
Flow for the Excess Cash Flow Period ending on the last day of the
respective fiscal year and (ii) the calculations required to establish
whether the U.S. Borrower and its Subsidiaries were in compliance with
Section 4.02(c) for the respective fiscal year.
(e) Notice of Default or Litigation. Promptly, and in any event
-------------------------------
within three Business Days after an officer of any Borrower or any of its
Subsidiaries obtains actual knowledge thereof, notice of (i) the occurrence
of any event which constitutes a Default or an Event of Default, which
notice shall specify the nature and period of existence thereof and what
action the respective Borrower or Borrowers propose to take with respect
thereto, (ii) any litigation or proceeding pending or threatened (x)
against the U.S. Borrower or any of its Subsidiaries which could reasonably
be expected to have a Material Adverse Effect, (y) with respect to any
material Indebtedness of the U.S. Borrower or any of its Subsidiaries or
(z) with respect to any Document (other than such Documents referred to in
clause (vi) of the definition thereof), (iii) any governmental
investigation pending or threatened against the U.S. Borrower or any of its
Subsidiaries and (iv) any other event which could reasonably be expected to
have a Material Adverse Effect.
(f) Auditors' Reports. Promptly upon receipt thereof, a copy of each
-----------------
report or "management letter" submitted to the U.S. Borrower or any of its
Subsidiaries by its independent accountants in connection with any annual,
interim or special audit made by them of the books of the U.S. Borrower or
any of its Subsidiaries.
(g) Environmental Matters. Promptly after an officer of the U.S.
---------------------
Borrower or any of its Subsidiaries obtains actual knowledge of any of the
following (but only to the extent that any of the following, either
individually or in the aggregate, could reasonably be expected to (x) have
a Material Adverse Effect, (y) result in a remedial cost to the U.S.
Borrower or any of its Subsidiaries not previously disclosed to the Agents
and the Banks prior to the Restatement Effective Date in excess of $500,000
or (z) result in a remedial cost to the U.S. Borrower or any of its
Subsidiaries in excess of $1,000,000 over and above the established reserve
for remediation costs as set forth in the Projections), written notice of:
(i) any pending or threatened Environmental Claim against the
U.S. Borrower or any of its Subsidiaries or any Program Affiliate or
any Real Property owned or operated by the U.S. Borrower or any of its
Subsidiaries or any Program Affiliate;
-86-
<PAGE>
(ii) any condition or occurrence on any Real Property at any
time owned or operated by the U.S. Borrower or any of its Subsidiaries
or any Program Affiliate that (x) results in noncompliance by the
U.S. Borrower or any of its Subsidiaries or any Program Affiliate with
any applicable Environmental Law or (y) could reasonably be
anticipated to form the basis of an Environmental Claim against the
U.S. Borrower or any of its Subsidiaries or any Program Affiliate or
any such Real Property;
(iii) any condition or occurrence on any Real Property
currently owned or operated by the U.S. Borrower or any of its
Subsidiaries that could reasonably be anticipated to cause such Real
Property to be subject to any restrictions on the ownership,
occupancy, use or transferability by the U.S. Borrower or such
Subsidiary, as the case may be, of its interest in such Real Property
under any Environmental Law; and
(iv) the taking of any removal or remedial action in response
to the actual or alleged presence of any Hazardous Material on any
Real Property owned or operated by the U.S. Borrower or any of its
Subsidiaries or any Program Affiliate.
All such notices shall describe in reasonable detail the nature of the
claim, investigation, condition, occurrence or removal or remedial action
and the relevant Borrower's response or proposed response thereto. In
addition, the U.S. Borrower agrees to provide the Banks with copies of all
material communications by the U.S. Borrower or any of its Subsidiaries
with any Person, government or governmental agency relating to
Environmental Laws or to any of the matters set forth in clauses (i)-(iv)
above, and such reasonably detailed reports relating to any of the matters
set forth in clauses (i)-(iv) above as may reasonably be requested by the
Administrative Agent or the Required Banks.
(h) Annual Meetings with Banks. At the written request of the
--------------------------
Administrative Agent, the U.S. Borrower shall within 120 days after the
close of each of its fiscal years, hold a meeting (at a mutually agreeable
location and time) open to all of the Banks at which meeting shall be
reviewed the financial results of the previous fiscal year and the
financial condition of the U.S. Borrower and its Subsidiaries and the
budgets presented for the current fiscal year of the U.S. Borrower and its
Subsidiaries.
(i) Notice of Commitment Reductions and Mandatory Repayments. On or
--------------------------------------------------------
prior to the date of any reduction to the Total Revolving Loan Commitment
or any mandatory repayment of outstanding Term Loans of any Tranche
pursuant to any of Sections 4.02(c) through (g), inclusive, the U.S.
Borrower shall provide written
-87-
<PAGE>
notice of the amount of the respective reduction or repayment, as the case
may be, to each of the Total Revolving Loan Commitment or the outstanding
Term Loans of the respective Tranche, as applicable, and the calculation
thereof (in reasonable detail).
(j) Special Reports Relating to Tractor Trailers. Commencing with
--------------------------------------------
the fiscal quarter ended September 30, 1998, at the time of the delivery of
the financial statements provided for in Section 8.01(a) and (b), a
schedule of all of the Tractor Trailers owned or leased by the U.S.
Borrower or any of its Subsidiaries as of the fiscal quarter most recently
ended, which schedule shall specify (i) whether the respective Tractor
Trailer is leased or owned by the U.S. Borrower or such Subsidiary, (ii)
the state or province in which the respective Tractor Trailer is registered
or titled, (iii) whether a security interest has been recorded on the
certificate of title for the respective Tractor Trailer in favor of the
Collateral Agent for the benefit of the Secured Creditors, (iv) whether the
certificate of title for the respective Tractor Trailer (as modified to
reflect the security interest in favor of the Collateral Agent) has been
reregistered with the appropriate state or provincial governmental agency
(and, if not, the date by which such reregistration must be accomplished in
accordance with the terms of the relevant Security Agreement), (v) in the
case of Tractor Trailers registered or operated in Canada, whether a
financing statement or hypothec registration has been filed, (vi) the date
of the acquisition of each new Tractor Trailer acquired on or after the
Original Effective Date, and (vii) each Tractor Trailer listed thereon
acquired since the date of the delivery of the previous schedule pursuant
to this Section 8.01(j).
(k) Other Information. Promptly upon transmission thereof, copies of
-----------------
any filings and registrations with, and reports to, the SEC by the U.S.
Borrower or any of its Subsidiaries and copies of all financial statements,
proxy statements, notices and reports as the U.S. Borrower or any of its
Subsidiaries shall send generally to analysts and the holders of their
capital stock (including, in the case of the U.S. Borrower, PIK Preferred
Stock and, in the case of CLC, the CLC Preferred Stock) or of the Senior
Subordinated Notes, the CLC Senior Notes or any Permitted Debt in their
capacity as such holders (to the extent not theretofore delivered to the
Banks pursuant to this Agreement) and, with reasonable promptness, such
other infor mation or documents (financial or otherwise) as any Agent on
its own behalf or on behalf of the Required Banks may reasonably request
from time to time.
8.02 Books, Records and Inspections. Each Borrower will, and will
------------------------------
cause each of its Subsidiaries to, keep proper books of record and account in
which full, true and correct entries in conformity with GAAP and all
requirements of law shall be made of all dealings and transactions in relation
to its business and activities. Each Borrower will, and will cause each of its
Subsidiaries to, permit, upon reasonable notice to the chief financial
-88-
<PAGE>
officer or other Authorized Officer of such Borrower, officers and designated
representatives of either Agent or the Required Banks to visit and inspect
under the guidance of officers of such Borrower any of the properties or assets
of such Borrower and any of its Subsidiaries in whomsoever's possession, and to
examine the books of account of such Borrower and any of its Subsidiaries and
discuss the affairs, finances and accounts of such Borrower and of any of its
Subsidiaries with, and be advised as to the same by, their officers and
independent accountants, all at such reasonable times and intervals and to such
reasonable extent as such Agent or the Required Banks may desire, provided that
--------
so long as no Default or Event of Default is then in existence, the Borrowers
shall have the right to participate in any discussions of the Agents or the
Banks with any independent accountants of the Borrowers.
8.03 Insurance. (a) Each Borrower will, and will cause each of its
---------
Subsidiaries to (i) maintain, with financially sound and reputable insurance
companies, insurance on all its property in at least such amounts and against at
least such risks as is consistent and in accordance with industry practice and
(ii) furnish to the Administrative Agent and each of the Banks, upon request,
full information as to the insurance carried. In addition to the requirements of
the immediately preceding sentence, the U.S. Borrower will at all times cause
insurance of the types described in Schedule VIII to be maintained (with the
same scope of coverage as that described in Schedule VIII) at levels which are
consistent with its practices immediately before the Restatement Effective Date,
taking into account the age and fair market value of equipment. Such insurance
shall include physical damage insurance on all real and personal property
(whether now owned or hereafter acquired) on an all risk basis and business
interruption insurance. The provisions of this Section 8.03 shall be deemed
supplemental to, but not duplicative of, the provisions of any Security
Documents that require the maintenance of insurance.
(b) Each Borrower will, and will cause each of its Subsidiaries to,
at all times keep the respective property of such Borrower and its Subsidiaries
(except real or personal property leased or financed through third parties in
accordance with this Agreement) insured in favor of the Collateral Agent, and
all policies (including Mortgage Policies) or certificates with respect to such
insurance (and any other insurance maintained by, or on behalf of, such Borrower
or any Subsidiary of such Borrower) (i) shall be endorsed to the Collateral
Agent's satisfaction for the benefit of the Collateral Agent (including, without
limitation, by naming the Collateral Agent as certificate holder, mortgagee and
loss payee with respect to real property, certificate holder and loss payee with
respect to personal property, additional insured with respect to general
liability and umbrella liability coverage and certificate holder with respect to
workers' compensation insurance), (ii) shall state that such insurance policies
shall not be cancelled or materially changed without at least 30 days' prior
written notice thereof by the respective insurer to the Collateral Agent and
(iii) shall, upon the request of the Collateral Agent, be deposited with the
Collateral Agent.
-89-
<PAGE>
(c) If any Borrower or any of its Subsidiaries shall fail to maintain
all insurance in accordance with this Section 8.03, or if any Borrower or any
of its Subsidiaries shall fail to so name the Collateral Agent as an additional
insured, mortgagee or loss payee, as the case may be, or so deposit all
certificates with respect thereto, the Administrative Agent and/or the
Collateral Agent shall have the right (but shall be under no obligation) to
procure such insurance, and the Credit Parties agree to jointly and severally
reimburse the Administrative Agent or the Collateral Agent, as the case may be,
for all costs and expenses of procuring such insurance.
8.04 Payment of Taxes. Each Borrower will pay and discharge, and
----------------
will cause each of its Subsidiaries to pay and discharge, all material taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any material properties belonging to it, prior to the
date on which penalties attach thereto, and all material lawful claims for sums
that have become due and payable which, if unpaid, might become a Lien not
otherwise permitted under Section 9.03(a); provided, that neither any Borrower
--------
nor any of its Subsidiaries shall be required to pay any such tax, assessment,
charge, levy or claim which is being contested in good faith and by proper
proceedings if it has maintained adequate reserves with respect thereto in
accordance with GAAP.
8.05 Corporate Franchises. Each Borrower will do, and will cause
--------------------
each of its Subsidiaries to do, or cause to be done, all things necessary to
preserve and keep in full force and effect its existence and its material
rights, franchises, authority to do business, licenses and patents, except for
rights, franchises, authority to do business, licenses and patents the loss of
which (individually or in the aggregate) could not reasonably be expected to
have a Material Adverse Effect; provided, however, that any transaction
-------- -------
permitted by Section 9.02 will not constitute a breach of this Section 8.05.
8.06 Compliance with Statutes; etc. Each Borrower will, and will
------------------------------
cause each of its Subsidiaries to, comply with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property, except for such noncompliances as
would not, either individually or in the aggregate, have a Material Adverse
Effect or a material adverse effect on the ability of any Credit Party to
perform its obligations under any Credit Document to which it is a party.
8.07 Compliance with Environmental Laws. (a) (i) Each Borrower will
----------------------------------
comply, and will cause each of its Subsidiaries to comply, and will use its best
efforts to induce each Program Affiliate to comply, in all material respects
with all Environmental Laws applicable to their businesses or the ownership or
use of its Real Property now or hereafter owned or operated by such Borrower,
any of its Subsidiaries or any Program Affiliate, will promptly pay or, with
respect to any of its Subsidiaries, cause to be paid all costs and expenses
incurred in connection with such compliance, and will keep or cause to
-90-
<PAGE>
be kept all such Real Property free and clear of any Liens imposed pursuant to
such Environmental Laws and (ii) none of any Borrower or any of its Subsidiaries
will generate, use, treat, store, Release or dispose of, or permit the
generation, use, treatment, storage, release or disposal of, Hazardous Materials
on any Real Property owned or operated by such Borrower, any of its Subsidiaries
or any Program Affiliate other than in compliance with Environmental Laws and as
required in connection with the normal business operations of such Borrower, its
Subsidiaries and the Program Affiliates, or transport or permit the
transportation of Hazardous Materials other than in compliance with
Environmental Laws and as required in connection with the normal business
operations of such Borrower, its Subsidiaries and the Program Affiliates, unless
the failure to comply with the requirements specified in clause (i) or (ii)
above, either individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect. If any Borrower or any of its Subsidiaries
or any tenant or occupant of any Real Property owned or operated by such
Borrower or any of its Subsidiaries causes or permits any intentional or
unintentional act or omission resulting in the presence or Release of any
Hazardous Material in a quantity or concentration sufficient to require
reporting or to trigger an obligation to undertake clean-up, removal or remedial
action under applicable Environmental Laws, such Borrower agrees to undertake,
and/or to cause any of its Subsidiaries, tenants or occupants to undertake, at
their sole expense, any clean up, removal, remedial or other action required
pursuant to Environmental Laws to remove and clean up any Hazardous Materials
from any Real Property except where the failure to do so would not reasonably be
expected to have a Material Adverse Effect; provided that none of any Borrower
--------
or any of its Subsidiaries shall be required to comply with any such order or
directive which is being contested in good faith and by proper proceedings so
long as it has maintained adequate reserves with respect to such compliance to
the extent required in accordance with GAAP. Notwithstanding any provision of
this Section 8.07(a), no Borrower shall be required by this Section to exercise
any degree of control over the operations of any of its Subsidiaries or any
Program Affiliate that could reasonably be construed under applicable
Environmental Law to make such Borrower liable for Environmental Claims arising
from or causally related to the Real Property or operations of such Subsidiary
or Program Affiliate as an owner or an operator or upon any other basis.
(b) At the written request of the Administrative Agent or the
Required Banks, which request shall specify in reasonable detail the basis
therefor, at any time and from time to time, each Borrower will provide, at its
sole cost and expense, an environmental site assessment report concerning any
Real Property now or hereafter owned or operated by such Borrower, any of its
Subsidiaries or any Program Affiliate, prepared by an environmental consulting
firm approved by the Administrative Agent, addressing the matters in clause (i),
(ii) or (iii) below which gives rise to such request (or, in the case of a
request pursuant to following clause (i), addressing such matter as may be
requested by the Administrative Agent or the Required Banks) and estimating the
range of the potential costs of any removal, remedial or other corrective action
in connection with any such
-91-
<PAGE>
matter, provided that in no event shall such request be made unless (i) an Event
of Default has occurred and is continuing, (ii) the Banks receive notice under
Section 8.01(g) for any event for which notice is required to be delivered for
any such Real Property or (iii) the Administrative Agent or the Required Banks
reasonably believe that there was a breach of any representation, warranty or
covenant contained in Section 7.17 or 8.07(a), and provided further that, with
respect to any Real Property owned or operated by any Program Affiliate, a
Borrower shall be required only to use its best efforts to gain access to such
property for the purpose of providing the report. If any Borrower fails to
provide the same within 60 days after such request was made, the Administrative
Agent may order the same, and each Borrower shall grant and hereby grants, to
the Administrative Agent and the Banks and their Administrative Agents access to
such Real Property owned or operated by any Borrower or any of its Subsidiaries,
and specifically grants the Administrative Agent and the Banks and their agents
an irrevocable non-exclusive license, subject to the rights of tenants, to
undertake such an assessment, all at such Borrower's expense. Notwithstanding
any provision of this Section 8.01(b), no Borrower shall be required by this
Section to undertake any site assessment of any Real Property of any Subsidiary
or Program Affiliate if such activity could reasonably be construed to be a
sufficient exercise of control over such entity or Real Property to make any
such Borrower liable for any Environmental Claims resulting from the presence of
Hazardous Materials on such Real Property.
8.08 ERISA. As soon as possible and, in any event, within ten
-----
Business Days after the U.S. Borrower or any Subsidiary of the U.S. Borrower or
any ERISA Affiliate knows or has reason to know of the occurrence of any of the
following, the U.S. Borrower will deliver to each of the Banks a certificate of
the chief financial officer of the U.S. Borrower setting forth the full details
as to such occurrence and the action, if any, that the U.S. Borrower, such
Subsidiary or an ERISA Affiliate is required or proposes to take, together with
any notices required or proposed to be given to or filed with or by the U.S.
Borrower, the Subsidiary, the ERISA Affiliate, the PBGC or any other
governmental agency, a Plan or, to the extent received by a Borrower,
Multiemployer Plan participant or the Plan or Multiemployer Plan administrator
with respect thereto: that a Reportable Event has occurred (except to the
extent that the U.S. Borrower has previously delivered to the Banks a
certificate and notices (if any) concerning such event pursuant to the next
clause hereof); that a contributing sponsor (as defined in Section 4001(a)(13)
of ERISA) of a Plan subject to Title IV of ERISA is subject to the advance
reporting requirement of PBGC Regulation Section 4043.61 (without regard to
subparagraph (b)(1) thereof), and an event described in subsection .62, .63,
.64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 is reasonably expected
to occur within the following 30 days; that an accumulated funding deficiency,
within the meaning of Section 412 of the Code or Section 302 of ERISA, has been
incurred or an application has been made or is reasonably expected to be made
for a waiver or modification of the minimum funding standard (including any
required installment payments) or an extension of any amortization period under
Section 412 of the Code or Section 303 or 304 of ERISA with respect to a Plan;
that any
-92-
<PAGE>
contribution required to be made by any Borrower, any Subsidiary or any ERISA
Affiliate with respect to a Plan, a Multiemployer Plan or Foreign Pension Plan
has not been timely made; that a Plan or a Multiemployer Plan has been or is
reasonably expected to be terminated, reorganized, partitioned or declared
insolvent under Title IV of ERISA; that a Plan has an Unfunded Current
Liability; that proceedings have been or are reasonably expected to be
instituted to terminate or appoint a trustee to administer a Plan or a
Multiemployer Plan which is subject to Title IV of ERISA; that a proceeding has
been instituted against any Borrower, any Subsidiary of any Borrower or any
ERISA Affiliate pursuant to Section 515 of ERISA to collect a delinquent
contribution to a Multiemployer Plan; that the U.S. Borrower, any Subsidiary of
the U.S. Borrower or any ERISA Affiliate will or is reasonably expected to incur
any liability (including any indirect, contingent, or secondary liability) to or
on account of the termination of or withdrawal from a Plan or a Multi employer
Plan under Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with
respect to a Plan under Section 401(a)(29), 4971 or 4980 of the Code or with
respect to a group health plan (as defined in Section 607(1) of ERISA or Section
4980B(g)(2) of the Code) under Section 4980B of the Code; that any Borrower or
any Subsidiary of such Borrower will or is reasonably expected to incur any
liability (including any indirect, contingent, or secondary liability) with
respect to a Plan under Section 4975 of the Code or Section 409, 502 (i) or
502(1) of ERISA; or that the U.S. Borrower or any Subsidiary of the U.S.
Borrower will or is reasonably expected to incur any material liability pursuant
to any employee welfare benefit plan (as defined in Section 3(1) of ERISA) that
provides benefits to retired employees or other former employees (other than as
required by Section 601 of ERISA) or any Plan. The U.S. Borrower will deliver to
each of the Banks (i) at the request of any Bank on ten Business Days' notice a
complete copy of the annual report (on Internal Revenue Service Form 5500-
series) of each Plan (including, to the extent required, the related financial
and actuarial statements and opinions and other supporting statements,
certifications, schedules and information) required to be filed with the
Internal Revenue Service and (ii) copies of any records, documents or other
information that must be furnished to the PBGC with respect to any Plan pursuant
to Section 4010 of ERISA. In addition to any certificates or notices delivered
to the Banks pursuant to the first sentence hereof, copies of any material
documents or other information required to be furnished to the PBGC, and any
material notices received by the U.S. Borrower, any Subsidiary of the U.S.
Borrower or any ERISA Affiliate with respect to any Plan, Multiemployer Plan or
Foreign Pension Plan shall be delivered to the Banks no later than ten Business
Days after the date such documents and/or information has been furnished to the
PBGC or such notice has been received by the U.S. Borrower, such Subsidiary or
such ERISA Affiliate, as applicable.
8.09 Good Repair. Each Borrower will, and will cause each of its
-----------
Subsidiaries to, ensure that its material properties and equipment used in its
business are kept in good repair, working order and condition, ordinary wear and
tear excepted, and that from time to time there are made in such properties and
equipment all needful and proper
-93-
<PAGE>
repairs, renewals, replacements, extensions, additions, betterments and
improvements thereto, to the extent and in the manner useful or customary for
companies in similar businesses.
8.10 End of Fiscal Years; Fiscal Quarters. Each Borrower will, for
------------------------------------
financial reporting purposes, cause (i) each of its, and each of its
Subsidiaries', fiscal years to end on December 31 of each year and (ii) each of
its, and each of its Subsidiaries', fiscal quarters to end on March 31, June 30,
September 30 and December 31 of each year.
8.11 Additional Security; Further Assurances. (a) Each Borrower
---------------------------------------
will, and will cause each of its Wholly-Owned Subsidiaries to, grant to the
Collateral Agent security interests and mortgages in such assets and real
property of such Borrower and its Subsidiaries which are of the type required to
be pledged, assigned or hypothecated pursuant to the original Security Documents
and as are not covered by such original Security Documents, in each case to the
extent requested from time to time by the Administrative Agent or the Required
Banks (collectively, the "Additional Security Documents"). All such security
interests and mortgages shall be granted pursuant to documentation reasonably
satisfactory in form and substance to the Collateral Agent and shall constitute
valid and enforceable perfected security interests, hypothecations and mortgages
superior to and prior to the rights of all third Persons and enforceable as
against third parties and subject to no other Liens except for Permitted Liens.
The Additional Security Documents or instruments related thereto shall have been
duly recorded or filed in such manner and in such places as are required by law
to establish, perfect, preserve and protect the Liens in favor of the Collateral
Agent required to be granted pursuant to the Additional Security Documents and
all taxes, fees and other charges payable in connection therewith shall have
been paid in full.
(b) Each Borrower will, and will cause each of its Subsidiaries to,
at the expense of such Borrower, make, execute, endorse, acknowledge, file
and/or deliver to the Collateral Agent from time to time such vouchers,
invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, real
property surveys, reports and other assurances or instruments and take such
further steps relating to the Collateral covered by any of the Security
Documents as the Collateral Agent may reasonably require (including, without
limitation, reregistering the certificate of title of any Tractor Trailer in any
state in which such Tractor Trailer primarily operates, to the extent the
Collateral Agent determines, in its reasonable discretion, that such action is
required to ensure the perfection or the enforceability as against third parties
of its security interest in such Collateral). Furthermore, each Borrower shall
cause to be delivered to the Collateral Agent such opinions of counsel, title
insurance and other related documents as may be reasonably requested by the
Collateral Agent to assure itself that this Section 8.11 has been complied with.
-94-
<PAGE>
(c) Each Borrower agrees that each action required above by this
Section 8.11 shall be completed as soon as possible, but in no event later than
90 days after such action is either requested to be taken by the Administrative
Agent, the Collateral Agent or the Required Banks or required to be taken by the
Borrowers and their respective Subsidiaries pursuant to the terms of this
Section 8.11; provided that in no event will any Borrower or any of its
--------
Subsidiaries be required to take any action, other than using its commercially
reasonable efforts, to obtain consents from third parties with respect to its
compliance with this Section 8.11.
(d) In the event that the Administrative Agent or the Required Banks
at any time after the Restatement Effective Date determine in their sole
discretion (whether as a result of a position taken by an applicable bank
regulatory agency or official, or other wise) that real estate appraisals
satisfying the requirements set forth in 12 C.F.R., Part 34-Subpart C, or any
successor or similar statute, rule, regulation, guideline or order (any such
appraisal a "Required Appraisal") are or were required to be obtained, or should
be obtained, in connection with any Mortgaged Property or Mortgaged Properties,
then, within 90 days after receiving written notice thereof from the
Administrative Agent or the Required Banks, as the case may be, the relevant
Borrower shall cause such Required Appraisal to be delivered, at the expense of
such Borrower, to the Administrative Agent, which Required Appraisal, and the
respective appraiser, shall be satisfactory to the Administrative Agent.
8.12 Foreign Subsidiaries Security. If following a change in the
-----------------------------
relevant sections of the Code or the regulations, rules, rulings, notices or
other official pronounce ments issued or promulgated thereunder, counsel for the
U.S. Borrower reasonably acceptable to the Administrative Agent does not within
30 days after a request from the Administrative Agent or the Required Banks
deliver evidence, in form and substance mutually satisfactory to the
Administrative Agent and the U.S. Borrower, with respect to any Foreign
Subsidiary (and in the case of clause (i) below, any Foreign Unrestricted
Subsidiary) of the U.S. Borrower which has not already had all of its stock
pledged pursuant to the U.S. Pledge Agreement or the Quebec Pledge Agreement,
as applicable, to secure all of the Obligations (as defined in the respective
Pledge Agreement) that (i) a pledge of 66-2/3% or more of the total combined
voting power of all classes of capital stock of such Foreign Subsidiary entitled
to vote, (ii) the entering into by such Foreign Subsidiary of a security
agreement in substantially the form of the U.S. Security Agreement, (iii) the
entering into by such Foreign Subsidiary of a U.S. Pledge Agreement in sub-
stantially the form of the U.S. Pledge Agreement and (iv) the entering into by
such Foreign Subsidiary of a guaranty in substantially the form of the U.S.
Subsidiaries Guaranty, in any such case could reasonably be expected to cause
(I) the undistributed earnings of such Foreign Subsidiary as determined for
Federal income tax purposes to be treated as a deemed dividend to such Foreign
Subsidiary's United States parent for Federal income tax purposes or (II) other
material adverse Federal income tax consequences to the Credit
-95-
<PAGE>
Parties, then in the case of a failure to deliver the evidence described in
clause (i) above, that portion of such Foreign Subsidiary's (or Foreign
Unrestricted Subsidiary, as the case may be) outstanding capital stock so issued
by such Foreign Subsidiary (or Foreign Unrestricted Subsidiary, as the case may
be), in each case not theretofore pledged pursuant to the U.S. Pledge Agreement
or the Quebec Pledge Agreement, as applicable, to secure all of the Obligations
(as defined in the respective Pledge Agreement), shall be pledged to the
Collateral Agent for the benefit of the Secured Creditors pursuant to the U.S.
Pledge Agreement or the Quebec Pledge Agreement, as applicable (or another
pledge agreement in substantially similar form, if needed), and in the case of a
failure to deliver the evidence described in clause (ii) or (iii) above, such
Foreign Subsidiary (to the extent same is a Wholly-Owned Foreign Subsidiary)
shall execute and deliver the U.S. Security Agreement (or another security
agreement in substantially similar form, if needed) or the U.S. Pledge Agreement
(or another pledge agreement in substantially similar form, if needed), as the
case may be, granting to the Collateral Agent for the benefit of the Secured
Creditors a security interest in all of such Foreign Subsidiary's assets or the
capital stock and promissory notes owned by such Foreign Subsidiary, as the case
may be, and securing the Obligations of the U.S. Borrower under the Credit
Documents and under any Interest Rate Protection Agreement or Other Hedging
Agreement and, in the event the U.S. Subsidiaries Guaranty shall have been
executed by such Foreign Subsidiary, the obligations of such Foreign Subsidiary
thereunder, and in the case of a failure to deliver the evidence described in
clause (iv) above, such Foreign Subsidiary (to the extent same is a Wholly-Owned
Foreign Subsidiary) shall execute and deliver the U.S. Subsidiaries Guaranty (or
another guaranty in substantially similar form, if needed), guaranteeing the
Obligations of the U.S. Borrower under the Credit Documents and under any
Interest Rate Protection Agreement or Other Hedging Agreement, in each case to
the extent that the entering into of such U.S. Security Agreement, U.S. Pledge
Agreement or U.S. Subsidiaries Guaranty is permitted by the laws of the
respective foreign jurisdiction and with all documents delivered pursuant to
this Section 8.12 to be in form and substance reasonably satisfactory to the
Administrative Agent and/or the Collateral Agent.
8.13 Ownership of Subsidiaries. Except to the extent expressly
-------------------------
permitted herein or as otherwise expressly consented in writing by the Required
Banks, each Credit Party shall directly or indirectly own 100% of the capital
stock or other equity interests of each of their respective Subsidiaries (or, in
the case of Leaman Logistics, Inc., 85% of the capital stock of such
Subsidiary).
8.14 Permitted Acquisitions. (a) Subject to the provisions of this
----------------------
Section 8.14 and the requirements contained in the definition of Permitted
Acquisition, the U.S. Borrower and any of its Wholly-Owned Domestic Subsidiaries
may from time to time effect Permitted Acquisitions, so long as (in each case
except to the extent the Required Banks otherwise specifically agree in writing
in the case of a specific Permitted Acquisition): (i) no Default or Event of
Default shall be in existence at the time of the consummation of
-96-
<PAGE>
the proposed Permitted Acquisition or immediately after giving effect thereto;
(ii) the U.S. Borrower shall have given the Administrative Agent and the Banks
at least 5 Business Days' prior written notice of any Permitted Acquisition;
(iii) calculations are made by the U.S. Borrower of compliance with the
covenants contained in Sections 9.09 and 9.10 (in each case, giving effect to
the last sentence appearing therein) for the period of four consecutive fiscal
quarters (taken as one accounting period) most recently ended prior to the date
of such Permitted Acquisition (each, a "Calculation Period"), on a Pro Forma
--- -----
Basis as if the respective Permitted Acquisition (as well as all other Permitted
Acquisitions there tofore consummated after the first day of such Calculation
Period) had occurred on the first day of such Calculation Period, and such
recalculations shall show that such financial covenants would have been complied
with if the Permitted Acquisition had occurred on the first day of such
Calculation Period (for this purpose, if the first day of the respective
Calculation Period occurs prior to the Restatement Effective Date, calculated as
if the covenants contained in said Sections 9.09 and 9.10 (in each case, giving
effect to the last sentence appearing therein) had been applicable from the
first day of the Calculation Period); (iv) based on good faith projections
prepared by the U.S. Borrower for the period from the date of the consummation
of the Permitted Acquisition to the date which is one year thereafter, the level
of financial performance measured by the covenants set forth in Sections 9.09
and 9.10 (in each case, giving effect to the last sentence appearing therein)
shall be better than or equal to such level as would be required to provide that
no Default or Event of Default would exist under the financial covenants
contained in Sections 9.09 and 9.10 (in each case, giving effect to the last
sentence appearing therein) of this Agreement as compliance with such covenants
would be required through the date which is one year from the date of the
consummation of the respective Permitted Acquisition; (v) calculations are made
by the U.S. Borrower demonstrating compliance with an Adjusted Senior Leverage
Ratio not to exceed 3.75:1.0 on the last day of the relevant Calculation Period,
on a Pro Forma Basis as if the respective Permitted Acquisition (as well as all
--- -----
other Permitted Acquisitions theretofore consummated after the first day of such
Calculation Period) had occurred on the first day of such Calculation Period;
(vi) all representations and warranties contained herein and in the other Credit
Documents shall be true and correct in all material respects with the same
effect as though such representations and warranties had been made on and as of
the date of such Permitted Acquisition (both before and after giving effect
thereto), unless stated to relate to a specific earlier date, in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date; (vii) the U.S. Borrower provides to the
Administrative Agent and the Banks as soon as available but not later than 5
Business Days after the execution thereof, a copy of any executed purchase
agreement or similar agreement with respect to such Permitted Acquisition;
(viii) after giving effect to each Permitted Acquisition (and the payment of all
post-closing purchase price adjustments required (in the good faith
determination of the U.S. Borrower) in connection therewith and all capital
expenditures (and the financing thereof) reasonably anticipated by the U.S.
Borrower to be made in the business acquired pursuant to such Permitted
Acquisition within 90 days following such Permitted
-97-
<PAGE>
Acquisition), the Total Unutilized Revolving Loan Commitment shall equal or
exceed $10,000,000; and (ix) the U.S. Borrower shall have delivered to the
Administrative Agent an officer's certificate executed by an Authorized Officer
of the U.S. Borrower, certifying to the best of his knowledge, compliance with
the requirements of preceding clauses (i) through (vi), inclusive, and (viii)
and containing the calculations required by the preceding clauses (iii), (iv),
(v) and (viii); provided however, that so long as (x) the aggregate
-------- -------
consideration (including, without limitation, cash, assumed debt and the
principal amount of all issued promissory notes) payable in connection with the
proposed Permitted Acquisition does not exceed $5,000,000 and (y) the aggregate
consideration paid in connection with the proposed Permitted Acquisition, when
combined with the aggregate consideration paid in connection with all other
Permitted Acquisitions consummated in the same fiscal quarter as such proposed
Permitted Acquisition, does not exceed $10,000,000, the U.S. Borrower shall not
be required to comply with clauses (ii) and (vii) above in connection with such
Permitted Acquisition and the officer's certificate otherwise required to be
delivered pursuant to clause (ix) above shall instead be delivered to the
Administative Agent within 45 days following the end of the fiscal quarter in
which such Permitted Acquisition is consummated.
(b) At the time of each Permitted Acquisition involving the creation
or acquisition of a Subsidiary, or the acquisition of capital stock or other
equity interest of any Person, the capital stock or other equity interests
thereof created or acquired in connection with such Permitted Acquisition shall
be pledged for the benefit of the Secured Creditors pursuant to the relevant
Pledge Agreement in accordance with the requirements of Section 9.15.
(c) The U.S. Borrower shall cause each Subsidiary which is formed to
effect, or is acquired pursuant to, a Permitted Acquisition to comply with, and
to execute and deliver, all of the documentation required by, Sections 8.11 and
9.15, to the satisfaction of the Administrative Agent.
(d) The consummation of each Permitted Acquisition shall be deemed to
be a representation and warranty by the U.S. Borrower that the certifications by
the U.S. Borrower (or by one or more of its Authorized Officers) pursuant to
Section 8.14(a) are true and correct and that all conditions thereto have been
satisfied and that same is permitted in accordance with the terms of this
Agreement, which representation and warranty shall be deemed to be a
representation and warranty for all purposes hereunder, including, without
limitation, Sections 6 and 10.
8.15 Maintenance of Company Separateness. Each Borrower will, and
-----------------------------------
will cause each of its Subsidiaries and Unrestricted Subsidiaries to, satisfy
customary Company formalities, including, as applicable, the holding of regular
board of directors' and shareholders' meetings or action by directors or
shareholders without a meeting and the
-98-
<PAGE>
maintenance of Company offices and records. Neither any Borrower nor any of its
Subsidiaries shall make any payment to a creditor of any Unrestricted Subsidiary
in respect of any liability of any Unrestricted Subsidiary, and no bank account
of any Unrestricted Subsidiary shall be commingled with any bank account of any
Borrower or any of its Subsidiaries. Any financial statements distributed to any
creditors of any Unrestricted Subsidiary shall clearly establish or indicate the
Company separateness of such Unrestricted Subsidiary from each Borrower and its
Subsidiaries. Finally, neither any Borrower nor any of its Subsidiaries shall
take any action, or conduct its affairs in a manner, which is likely to result
in the Company existence of the such Borrower or any of its Subsidiaries or
Unrestricted Subsidiaries being ignored, or in the assets and liabilities of the
such Borrower or any of its Subsidiaries being substantively consolidated with
those of any other such Person or any Unrestricted Subsidiary in a bankruptcy,
reorganization or other insolvency proceeding.
8.16 Performance of Obligations. Each Borrower will, and will cause
--------------------------
each of its Subsidiaries to, perform all of its obligations under the terms of
each mortgage, deed of trust, indenture, loan agreement or credit agreement and
each other material agreement, contract or instrument by which it is bound,
except such non-performances as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
8.17 Use of Proceeds. All proceeds of the Loans shall be used as
---------------
provided in Section 7.05.
SECTION 9. Negative Covenants. Each Borrower hereby covenants and
------------------
agrees that as of the Restatement Effective Date and thereafter for so long as
this Agreement is in effect and until the Total Commitment has terminated, no
Letters of Credit or Notes are outstanding and the Loans, together with
interest, Fees and all other Obligations (other than any indemnities described
in Section 13.13 which are not then due and payable) incurred hereunder, are
paid in full:
9.01 Changes in Business. (a) No Borrower will, nor will any
-------------------
Borrower permit any of its Subsidiaries to, engage directly or indirectly in any
business other than a Permitted Business.
(b) No Unrestricted Subsidiary shall engage (directly or indirectly)
in any business other than a Permitted Business.
(c) Notwithstanding the foregoing or anything to the contrary
contained in this Agreement, the U.S. Borrower will not permit MTL Investments
to engage in any significant business or to own any assets other than cash
contributed to MTL Investments by the U.S. Borrower in accordance with
provisions of Section 9.05 to the extent (and only
-99-
<PAGE>
to the extent) such cash is promptly loaned and/or contributed as a common
equity contribution by MTL Investments to the Canadian Borrower in accordance
with the requirements of Section 9.05.
9.02 Consolidation; Merger; Sale or Purchase of Assets; etc. No
-------------------------------------------------------
Borrower will, nor will any Borrower permit any of its Subsidiaries to, wind up,
liquidate or dissolve its affairs or enter into any transaction of merger,
amalgamation or consolidation, or convey, sell, lease or otherwise dispose of
all or any part of its property or assets (other than inventory in the ordinary
course of business), or enter into any sale-leaseback transactions, or purchase
or otherwise acquire (in one or a series of related transactions) any part of
the property or assets (other than purchases or other acquisitions of inventory,
materials, general intangibles and equipment in the ordinary course of business)
of any Person or agree to do any of the foregoing at any future time, except
that the following shall be permitted:
(a) the U.S. Borrower and its Subsidiaries may, as lessee, enter into
operating leases in the ordinary course of business with respect to real,
personal, movable or immovable property;
(b) Capital Expenditures by the U.S. Borrower and its Subsidiaries to
the extent not in violation of Section 9.11;
(c) Investments permitted pursuant to Section 9.05 and the
disposition or liquidation of Cash Equivalents in the ordinary course of
business;
(d) the U.S. Borrower and any of its Subsidiaries may sell or
otherwise dispose of assets (excluding capital stock of, or other equity
interests in, Subsidiaries, Joint Ventures, Unrestricted Subsidiaries and
Tractor Trailers) which, in the reasonable opinion of such Person, are
obsolete, uneconomic or no longer useful in the conduct of such Person's
business, provided that except with respect to asset dispositions or
--------
transfers arising out of, or in connection with, the events described in
clauses (i) and (ii) of the definition of Recovery Event, (w) each such
sale or disposition shall be for an amount at least equal to the fair
market value thereof (as determined in good faith by senior management of
the U.S. Borrower), (x) each such sale or disposition (I) results in
consideration at least 80% of which (taking the amount of cash, the
principal amount of any promissory notes and the fair market value, as
determined by the U.S. Borrower in good faith, of any other consideration)
shall be in the form of cash or (II) results in the assumption of all of
the Capitalized Lease Obligations or other purchase money obligations of
the U.S. Borrower or such Subsidiary in respect of such asset by the
purchaser thereof, (y) the aggregate Net Sale Proceeds from all assets sold
or otherwise disposed of pursuant to this clause (d) (and clause (d) of
Section 9.02 of the Original Credit
-100-
<PAGE>
Agreement), when added to the aggregate amount of all Capitalized Lease
Obligations and all other purchase money obligations assigned in connection
with all assets sold or otherwise disposed of pursuant to this clause (d)
(and clause (d) of Section 9.02 of the Original Credit Agreement), shall
not exceed $8,000,000 in the aggregate in any fiscal year of the U.S.
Borrower and (z) the Net Sale Proceeds therefrom are either applied to
repay Term Loans (or reduce the Total Revolving Loan Commitment) as
provided in Section 4.02(c) or reinvested in replacement assets or retained
to the extent permitted by Section 4.02(c) and/or the other relevant
provisions of this Agreement;
(e) any Subsidiary of the U.S. Borrower may convey, lease, license,
sell or otherwise transfer all or any part of its business, properties and
assets to the U.S. Borrower or to any U.S. Subsidiary Guarantor, so long as
any security interests granted to the Collateral Agent for the benefit of
the Secured Creditors pursuant to the Security Documents in the assets so
transferred shall remain in full force and effect and perfected (to at
least the same extent as in effect immediately prior to such transfer) and
all actions required to maintain said perfected status have been taken;
(f) any Subsidiary of the U.S. Borrower may merge with and into, or
be dissolved or liquidated into, the U.S. Borrower or any U.S. Subsidiary
Guarantor, so long as (i) the U.S. Borrower or such U.S. Subsidiary
Guarantor is the surviving corporation of any such merger, dissolution or
liquidation and (ii) any security interests granted to the Collateral Agent
for the benefit of the Secured Creditors pursuant to the Security Documents
in the assets of such Subsidiary shall remain in full force and effect and
perfected (to at least the same extent as in effect immediately prior to
such merger, dissolution or liquidation) and all actions required to
maintain said perfected status have been taken;
(g) any Foreign Subsidiary may be merged or amalgamated with and
into, or be dissolved or liquidated into, or transfer any of its assets to,
the Canadian Borrower or any other Wholly-Owned Foreign Subsidiary of the
U.S. Borrower, so long as (i) the Canadian Borrower or, in the case of any
such transaction not involving the Canadian Borrower, a Wholly-Owned
Foreign Subsidiary of the U.S. Borrower is the surviving corporation of any
such merger, amalgamation, dissolution or liquidation and (ii) any security
interests granted to the Collateral Agent for the benefit of the Secured
Creditors pursuant to the Security Documents in the assets of the Canadian
Borrower or such Wholly-Owned Foreign Subsidiary and such Foreign
Subsidiary shall remain in full force and effect and perfected (to at least
the same extent as in effect immediately prior to such merger,
amalgamation, dissolution, liquidation or transfer) and all actions
required to maintain said perfected status have been taken;
-101-
<PAGE>
(h) the U.S. Borrower and its Wholly-Owned Domestic Subsidiaries
shall be permitted to make Permitted Acquisitions, so long as such
Permitted Acquisitions are effected in accordance with the requirements of
Section 8.14;
(i) the CLC Merger shall be permitted in accordance with the
requirements of this Agreement;
(j) the U.S. Borrower and its Subsidiaries may, in the ordinary
course of business, license, as licensor or licensee, patents, trademarks,
copyrights and know-how to or from third Persons or one another, so long as
each such license is permitted to be assigned pursuant to the relevant
Security Agreement (to the extent that a security interest in such patents,
trademarks, copyrights and know-how is granted thereunder) and does not
otherwise prohibit the granting of a Lien by the U.S. Borrower or any of
its Subsidiaries pursuant to the relevant Security Agreement in the
intellectual property covered by such license;
(k) the U.S. Borrower and its Domestic Subsidiaries may transfer
assets to Wholly-Owned Foreign Subsidiaries, so long as (x) no Default or
Event of Default exists as the time of the respective transfer and (y) the
aggregate fair market value of all such assets so transferred (determined
in good faith by the Board of Directors or senior management of the U.S.
Borrower) to all such Foreign Subsidiaries on and after the Original
Effective Date does not exceed the sum of (i) $12,000,000 plus (ii) the
----
aggregate fair market value of all assets of Foreign Subsidiaries of the
U.S. Borrower (as determined in good faith by senior management of the U.S.
Borrower) transferred by such Foreign Subsidiaries to the U.S. Borrower and
any U.S. Subsidiary Guarantor pursuant to Section 9.02(e) of the Original
Credit Agreement after the Original Effective Date and Section 9.02(e)
after the Restatement Effective Date;
(l) the U.S. Borrower and any of its Subsidiaries may sell Tractor
Trailers (but not pursuant to Permitted Program Affiliate Transactions)
which, in the reasonable opinion of such Person, are obsolete, uneconomic
or no longer useful in the conduct of such Person's business or otherwise
require upgrading, provided that (i) any such sale shall be for an amount
--------
at least equal to the fair market value thereof (as determined in good
faith by senior management of the U.S. Borrower), (ii) such sale (x)
results in consideration at least 80% of which (taking the amount of cash,
the principal amount of any promissory notes and the fair market value, as
determined by the U.S. Borrower in good faith, of any other consideration)
shall be in the form of cash or (y) results in the assumption of all of the
Capitalized Lease Obligations of the U.S. Borrower or such Subsidiary in
respect of such Tractor Trailer by the purchaser thereof, (iii) the Net
Sale Proceeds from, or the amount of Capitalized Lease Obligations assigned
in connection with, any such sale,
-102-
<PAGE>
when added to the aggregate Net Sale Proceeds received from, and the
aggregate amount of all Capitalized Lease Obligations assigned in
connection with, all other Tractor Trailers sold pursuant to clause (l) of
Section 9.02 of the Original Credit Agreement after the Original Effective
Date and this clause (l) after the Restatement Effective Date, shall not
exceed $30,000,000 and (iv) any Net Sale Proceeds from any such sale are
applied to repay Term Loans (or reduce the Total Revolving Loan Commitment)
as provided in Section 4.02(c) or reinvested in replacement assets or
retained to the extent permitted by Section 4.02(c) and/or the other
relevant provisions of this Agreement;
(m) the U.S. Borrower and any of its Subsidiaries may effect Tractor
Trailer Replacements, provided that (i) any disposition of a Tractor
--------
Trailer pursuant to a Tractor Trailer Replacement shall be for an amount
(including any credits towards the purchase of a replacement Tractor
Trailer) at least equal to the fair market value thereof (as determined in
good faith by senior management of the U.S. Borrower) and (ii) the Net Sale
Proceeds from any such disposition are applied to repay Term Loans (or
reduce the Total Revolving Loan Commitment) as provided in Section 4.02(c)
or reinvested in replacement Tractor Trailers or retained to the extent
permitted by Section 4.02(c);
(n) the U.S. Borrower and its Subsidiaries may lease, as lessor, or
sublease, as sublessor, equipment, machinery or Real Property in the
ordinary course of business, so long as (x) such lease is for fair
consideration (determined in good faith by the Board of Directors or senior
management of the U.S. Borrower) and (y) the security interests granted to
the Collateral Agent for the benefit of the Secured Creditors pursuant to
the Security Documents in the assets so leased shall remain in full force
and effect and perfected (to at least the same extent as in effect
immediately prior to such transfer) and all actions required to maintain
said perfected status have been taken;
(o) the U.S. Borrower and any of its Subsidiaries may sell or
otherwise dispose of the capital stock of, or other equity interests in,
any of their respective Subsidiaries, Unrestricted Subsidiaries and Joint
Ventures which, in the reasonable opinion of such Person, are uneconomic or
no longer useful in the conduct of such Person's business, provided that
--------
(v) in the case of a sale or other disposition of the capital stock or
other equity interests of any Wholly-Owned Subsidiary of the U.S. Borrower,
100% of the capital stock or other equity interests of such Subsidiary
shall be so sold or disposed of, (w) each such sale or disposition shall be
for an amount at least equal to the fair market value thereof (as
determined in good faith by senior management of the U.S. Borrower), (x)
each such sale results in consideration at least 80% of which (taking the
amount of cash, the principal amount of any promissory notes and the fair
market value, as determined by the U.S.
-103-
<PAGE>
Borrower in good faith, of any other consideration) shall be in the form of
cash, (y) the aggregate Net Sale Proceeds of all assets sold or otherwise
disposed of pursuant to clause (o) of Section 9.02 of the Original Credit
Agreement after the Original Effective Date and this clause (o) after the
Restatement Effective Date shall not exceed $20,000,000 in the aggregate
and (z) the Net Sale Proceeds therefrom are either applied to repay Term
Loans (or reduce the Total Revolving Loan Commitment) as provided in
Section 4.02(c) or reinvested in replacement assets or retained to the
extent permitted by Section 4.02(c) and/or the other relevant provisions of
this Agreement;
(p) the U.S. Borrower and its Subsidiaries may enter into agreements
to effect acquisitions and dispositions of stock or assets, so long as the
respective transaction is permitted pursuant to the provisions of this
Section 9.02; provided that the U.S. Borrower and its Subsidiaries may
--------
enter into agreements to effect acquisitions and dispositions of capital
stock or assets in transactions not permitted by the provisions of this
Section 9.02 at the time the respective agreement is entered into, so long
as in the case of each such agreement, such agreement shall be expressly
conditioned upon obtaining the requisite consent of the Required Banks
under this Agreement or the repayment of all Obligations hereunder as a
condition precedent to the consummation of the respective transaction and,
if for any reason the transaction is not consummated because of a failure
to obtain such consent, the aggregate liability of the U.S. Borrower and
its Subsidiaries under any such agreement shall not exceed $5,000,000;
(q) the U.S. Borrower and any of its Subsidiaries may effect
Permitted Program Affiliate Transactions, so long as the Capitalized Lease
Obligations and recourse obligations of the U.S. Borrower and its
Subsidiaries arising under such Permitted Program Affiliate Transactions
are permitted by Section 9.04(k);
(r) the U.S. Borrower and any of its Subsidiaries may (x) purchase
fuel, insurance, tires and various other types of trucking equipment on
behalf of Program Affiliates and/or (y) purchase fuel, insurance, tires and
various other types of trucking equipment and sell the same to Program
Affiliates, in each case in accordance with the past practices of the U.S.
Borrower or such Subsidiary, as in effect on the Restatement Effective
Date, so long as in any such case the U.S. Borrower or such Subsidiary
deducts the amount of such purchases from the weekly settlement paid to
such Program Affiliate pursuant to its Affiliate Billing Program; and
(s) the U.S. Borrower or any of its Subsidiaries may effect Permitted
Sale-Leaseback Transactions in accordance with the definition thereof;
provided that the aggregate amount of all proceeds received by the U.S.
--------
Borrower and its
-104-
<PAGE>
Subsidiaries from all Permitted Sale-Leaseback Transactions consummated on
and after the Original Effective Date shall not exceed $20,000,000.
To the extent the Required Banks waive the provisions of this Section 9.02 with
respect to the sale or other disposition of any Collateral, or any Collateral is
sold or otherwise disposed of as permitted by this Section 9.02, such Collateral
(unless transferred to the U.S. Borrower or a Subsidiary thereof) shall (except
as otherwise provided above) be sold or otherwise disposed of free and clear of
the Liens created by the Security Documents and the Administrative Agent shall
take such actions (including, without limitation, directing the Collateral Agent
to take such actions) as are appropriate in connection therewith.
9.03 Liens. No Borrower will, nor will any Borrower permit any of its
-----
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of any kind (real or personal, tangible or
intangible, movable or immovable) of such Borrower or any of its Subsidiaries,
whether now owned or hereafter acquired, or sell any such property or assets
subject to an understanding or agreement, contingent or otherwise, to repurchase
such property or assets (including sales of accounts receivable or notes with
recourse to such Borrower or any of its Subsidiaries) or assign any right to
receive income, except for the following (collectively, the "Permitted Liens"):
(a) inchoate Liens for taxes, assessments or governmental charges or
levies not yet due and payable or Liens for taxes, assessments or
governmental charges or levies being contested in good faith and by
appropriate proceedings for which adequate reserves have been established
in accordance with GAAP;
(b) Liens in respect of property or assets of the U.S. Borrower or
any of its Subsidiaries imposed by law which were incurred in the ordinary
course of business and which have not arisen to secure Indebtedness for
borrowed money, such as carriers', materialmen's, warehousemen's and
mechanics' Liens, statutory and common law landlord's Liens, and other
similar Liens arising in the ordinary course of business, and which either
(x) do not in the aggregate materially detract from the value of such
property or assets or materially impair the use thereof in the operation of
the business of the U.S. Borrower or any of its Subsidiaries or (y) are
being contested in good faith by appropriate proceedings, which proceedings
have the effect of preventing the forfeiture or sale of the property or
asset subject to such Lien;
(c) Liens created by or pursuant to this Agreement and the Security
Documents;
-105-
<PAGE>
(d) Liens in existence on the Restatement Effective Date which are
listed, and the property subject thereto described, in Schedule IX, without
giving effect to any extensions or renewals thereof;
(e) Liens arising from judgments, decrees, awards or attachments in
circumstances not constituting an Event of Default under Section 10.09,
provided that the amount of cash and property (determined on a fair market
--------
value basis) deposited or delivered to secure the respective judgment or
decree or subject to attachment shall not exceed $5,000,000 at any time;
(f) Liens (other than any Lien imposed by ERISA) (x) incurred or
deposits made in the ordinary course of business of the U.S. Borrower and
its Subsidiaries in connection with workers' compensation, unemployment
insurance and other types of social security, (y) to secure the performance
by the U.S. Borrower and its Subsidiaries of tenders, statutory obligations
(other than excise taxes), surety, stay, customs and appeal bonds,
statutory bonds, bids, leases, government contracts, trade contracts,
performance and return of money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money) or (z) to
secure the performance by the U.S. Borrower and its Subsidiaries of leases
of Real Property, to the extent incurred or made in the ordinary course of
business consistent with past practices, provided that the aggregate amount
--------
of deposits at any time pursuant to sub-clause (y) and sub-clause (z) shall
not exceed $5,000,000 in the aggregate;
(g) licenses, sublicenses, leases or subleases granted to third
Persons in the ordinary course of business not interfering in any material
respect with the business of the U.S. Borrower or any of its Subsidiaries;
(h) easements, rights-of-way, restrictions, minor defects or
irregularities in title, encroachments and other similar charges or
encumbrances, in each case not securing Indebtedness and not interfering in
any material respect with the ordinary conduct of the business of the U.S.
Borrower or any of its Subsidiaries;
(i) Liens arising from precautionary UCC financing statements
regarding operating leases;
(j) Liens created pursuant to Capital Leases permitted pursuant to
Section 9.04(d), provided that (x) such Liens only serve to secure the
--------
payment of Indebtedness arising under such Capitalized Lease Obligation
(and other Indebtedness permitted by Section 9.04(d) and incurred from the
same Person as such Indebtedness) and (y) the Lien encumbering the asset
giving rise to the Capitalized Lease Obligation does not encumber any other
asset of the U.S.
-106-
<PAGE>
Borrower or any of its Subsidiaries (other than other assets subject to
Capitalized Lease Obligations and/or Indebtedness incurred pursuant to
Section 9.04(d), in each case owing to the same Person as such Capitalized
Lease Obligation);
(k) Permitted Encumbrances;
(l) Liens arising pursuant to purchase money mortgages or security
interests securing Indebtedness representing the purchase price (or
financing of the purchase price within 90 days after the respective
purchase) of assets acquired after the Original Effective Date, provided
--------
that (i) any such Liens attach only to the assets so purchased, upgrades
thereon and, if the asset so purchased is an upgrade, the original asset
itself (and such other assets financed by the same financing source), (ii)
the Indebtedness (other than Indebtedness incurred from the same financing
source to purchase other assets and excluding Indebtedness representing
obligations to pay installation and delivery charges for the property so
purchased) secured by any such Lien does not exceed 100%, nor is less than
80%, of the lesser of the fair market value or the purchase price of the
property being purchased at the time of the incurrence of such Indebtedness
and (iii) the Indebtedness secured thereby is permitted to be incurred
pursuant to Section 9.04(d);
(m) Liens on property or assets acquired pursuant to a Permitted
Acquisition, or on property or assets of a Subsidiary of the U.S. Borrower
in existence at the time such Subsidiary is acquired pursuant to a
Permitted Acquisition, provided that (i) any Indebtedness that is secured
--------
by such Liens is permitted to exist under Section 9.04(d), and (ii) such
Liens are not incurred in connection with, or in contemplation or
anticipation of, such Permitted Acquisition and do not attach to any other
asset of the U.S. Borrower or any of its Subsidiaries;
(n) Liens arising out of consignment or similar arrangements for the
sale of goods entered into by the U.S. Borrower or any of its Subsidiaries
in the ordinary course of business;
(o) Liens on any interest of the U.S. Borrower or any of its
Subsidiaries in the equipment subject to a Permitted Program Affiliate
Transaction securing Capitalized Lease Obligations and recourse obligations
of the U.S. Borrower or such Subsidiary arising pursuant to a Permitted
Program Affiliate Transaction, to the extent such obligations are permitted
under Section 9.04(k); and
(p) additional Liens incurred by the U.S. Borrower and its
Subsidiaries, so long as the value of the property subject to such Liens,
and the Indebtedness and other obligations secured thereby, do not exceed
$4,500,000.
-107-
<PAGE>
9.04 Indebtedness. No Borrower will, nor will any Borrower permit any
------------
of its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement and the other
Credit Documents;
(b) Scheduled Existing Indebtedness outstanding on the Restatement
Effective Date and listed on Schedule IV (as reduced by any repayments
thereof before, on or after the Restatement Effective Date), without giving
effect to any subsequent extension, renewal or refinancing thereof;
(c) Indebtedness under (i) Interest Rate Protection Agreements
entered into to protect any Borrower against fluctuations in interest rates
in respect of the Obligations otherwise permitted under this Agreement or
(ii) Other Hedging Agreements providing protection against fluctuations in
currency values in connection with any Borrower's or any of its
Subsidiaries' operations, so long as management of such Borrower or such
Subsidiary, as the case may be, has determined that the entering into of
any such Other Hedging Agreement is a bona fide hedging activity (and is
not for speculative purposes) and is in the ordinary course of business and
consistent with its past practices;
(d) (x) Indebtedness of a Subsidiary acquired pursuant to a Permitted
Acquisition (or Indebtedness assumed by the U.S. Borrower or any Wholly-
Owned Domestic Subsidiary pursuant to a Permitted Acquisition as a result
of a merger or consolidation or the acquisition of an asset securing such
Indebtedness) (the "Permitted Acquired Debt"), so long as (i) such
Indebtedness was not incurred in connection with, or in anticipation or
contemplation of, such Permitted Acquisition and (ii) such Indebtedness
does not constitute debt for borrowed money (except to the extent such
Indebtedness cannot be repaid in accordance with its terms at the time of
its assumption pursuant to such Permitted Acquisition and the aggregate
principal amount of all such Indebtedness for borrowed money permitted
pursuant to this parenthetical does not exceed $15,000,000), it being
understood and agreed that Capitalized Lease Obligations and purchase money
Indebtedness shall not constitute debt for borrowed money for purposes of
this clause (ii) and (y) Capitalized Lease Obligations and Indebtedness of
the U.S. Borrower and its Subsidiaries representing purchase money
Indebtedness secured by Liens permitted pursuant to Section 9.03(l),
provided, that the sum of (I) the aggregate principal amount of all
--------
Permitted Acquired Debt at any time outstanding plus (II) the aggregate
----
amount of Capitalized Lease Obligations incurred on and after the Original
Effective Date and outstanding at any time (including Indebtedness
evidenced by Capitalized Lease Obligations arising from Permitted Sale-
Leaseback
-108-
<PAGE>
Transactions) plus (III) the aggregate principal amount of all such
----
purchase money Indebtedness incurred on and after the Original Effective
Date and outstanding at any time, shall not exceed $30,000,000;
(e) Indebtedness constituting Intercompany Loans to the extent
permitted by Section 9.05(f);
(f) Permitted Subordinated Refinancing Indebtedness, so long as no
Default or Event of Default is in existence at the time of any incurrence
thereof and immediately after giving effect thereto;
(g) unsecured Indebtedness of the U.S. Borrower and the U.S.
Subsidiary Guarantors incurred under the Senior Subordinated Notes and the
other Senior Subordinated Note Documents in an aggregate principal amount
not to exceed $140,000,000 less the amount of any repayments of principal
----
thereof after the Original Effective Date;
(h) Indebtedness of the U.S. Borrower or any of its Subsidiaries
which may be deemed to exist in connection with agreements providing for
indemnification, purchase price adjustments and similar obligations in
connection with acquisitions or sales of assets and/or businesses effected
in accordance with the requirements of this Agreement (so long as any such
obligations are those of the Person making the respective acquisition or
sale, and are not guaranteed by any other Person);
(i) Contingent Obligations of (x) the U.S. Borrower or any of its
Subsidiaries as a guarantor of the lessee under any lease pursuant to which
the U.S. Borrower or any of its Wholly-Owned Subsidiaries is the lessee so
long as such lease is otherwise permitted hereunder, (y) the U.S. Borrower
or any of its Subsidiaries as a guarantor of any Capitalized Lease
Obligation to which a Joint Venture or Unrestricted Subsidiary is a party
or any contract entered into by such Joint Venture or Unrestricted
Subsidiary in the ordinary course of business; provided that the maximum
--------
liability of the U.S. Borrower or any of its Subsidiaries in respect of any
obligations as described pursuant to preceding clause (y) is permitted as
an Investment on such date pursuant to the requirements of Section 9.05(l)
and (z) any Borrower which may be deemed to exist pursuant to acquisition
agreements entered into in connection with Permitted Acquisitions
(including any obligation to pay the purchase price therefor and any
indemnification, purchase price adjustment and similar obligations);
(j) Indebtedness with respect to performance bonds, surety bonds,
appeal bonds or customs bonds required in the ordinary course of business
or in connection with the enforcement of rights or claims of the U.S.
Borrower or any of its
-109-
<PAGE>
Subsidiaries or in connection with judgments that do not result in a
Default or an Event of Default, provided that the aggregate outstanding
--------
amount of all such performance bonds, surety bonds, appeal bonds and
customs bonds permitted by this subsection (j) shall not at any time exceed
$2,000,000;
(k) Indebtedness consisting of (x) the recourse obligations of the
U.S. Borrower and its Subsidiaries to financial institutions in connection
with Permitted Program Affiliate Transactions for lease obligations owing
to such financial institutions by Program Affiliates and (y) Capitalized
Lease Obligations of the U.S. Borrower and its Subsidiaries arising under
such Permitted Program Affiliate Transactions, so long as the aggregate
amount of such recourse obligations and Capitalized Lease Obligations do
not exceed $20,000,000 at any time outstanding; and
(l) prior to the CLC Senior Notes Retirement Date, unsecured
Indebtedness of CLC under the CLC Senior Notes in an aggregate principal
amount not to exceed $100,000,000 less the amount of any repayments of
----
principal thereof after the Restatement Effective Date, so long as the U.S.
Borrower (as the holder of the CLC Senior Notes immediately after giving
effect to the CLC Tender Offer/Consent Solicitation Consummation) pledges
all of the CLC Senior Notes to the Collateral Agent pursuant to the U.S.
Pledge Agreement;
(m) unsecured Indebtedness of the U.S. Borrower incurred in
connection with a Permitted Insurance Program and owing to an Approved
Insurance FinanceCo in an aggregate amount not to exceed $16.0 million less
----
the amount of any premium payments made by the U.S. Borrower to such
Approved Insurance FinanceCo;
(n) (x) Additional Senior Subordinated Note Indebtedness of the U.S.
Borrower and the U.S. Subsidiary Guarantors (as guarantors) incurred in
accordance with the requirements of the definition thereof, (y) Permitted
Subordinated Indebtedness incurred in accordance with the requirements of
the definition thereof and (z) additional unsecured Indebtedness of the
U.S. Borrower and its Subsidiaries not otherwise permitted pursuant to this
Section 9.04, so long as the aggregate principal amount of all Indebtedness
permitted by this clause (l), when added to the aggregate liquidation
preference for all Disqualified Preferred Stock issued after the Original
Effective Date pursuant to Section 9.13(c) of the Original Credit Agreement
and Section 9.13(c), does not exceed $25,000,000 at any time outstanding.
-110-
<PAGE>
9.05 Advances; Investments; Loans. No Borrower will, nor will any
----------------------------
Borrower permit any of its Subsidiaries to, lend money or extend credit or make
advances to any Person, or purchase or acquire any stock, obligations or
securities of, or any other interest in, or make any capital contribution to,
any Person, or purchase or own a futures contract or otherwise become liable for
the purchase or sale of currency or other commodities at a future date in the
nature of a futures contract, or hold any cash or Cash Equivalents (any of the
foregoing, an "Investment"), except:
(a) the U.S. Borrower and its Subsidiaries may invest in cash and
Cash Equivalents, provided that during any time that Revolving Loans and/or
--------
Swingline Loans are outstanding, the aggregate amount of cash and Cash
Equivalents held by the U.S. Borrower and its Subsidiaries shall not exceed
$10,000,000 for any period of three consecutive Business Days;
(b) the U.S. Borrower and its Subsidiaries may acquire and hold
receivables owing to it, if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary trade
terms (including the dating of receivables) of the U.S. Borrower or such
Subsidiary;
(c) the U.S. Borrower and its Subsidiaries may acquire and own
investments (including debt obligations and equity securities) received in
connection with the bankruptcy or reorganization of suppliers and customers
and in settlement of delinquent obligations of, and other disputes with,
customers and suppliers arising in the ordinary course of business;
(d) Interest Rate Protection Agreements and Other Hedging Agreements
entered into in compliance with Section 9.04(c) shall be permitted;
(e) advances, loans and investments in existence on the Original
Effective Date and listed on Schedule VI shall be permitted, without giving
effect to any additions thereto or replacements thereof, it being
understood that any additional Investments made with respect to such
existing Investments shall be permitted only if independently justified
under the other provisions of this Section 9.04;
(f) any Credit Party may make intercompany loans and advances to any
other Credit Party and any U.S. Credit Party may make intercompany loans
and advances to any Foreign Subsidiary that is not a Credit Party
(collectively, "Intercompany Loans"), provided, that (w) at no time shall
--------
the aggregate outstanding principal amount of all Intercompany Loans made
pursuant to this clause (f) by the U.S. Credit Parties to Foreign
Subsidiaries, when added to the amount of contributions, capitalizations
and forgiveness theretofore made pursuant to Section 9.05(p) (and Section
9.05(p) of the Original Credit Agreement), exceed
-111-
<PAGE>
$10,000,000 (determined without regard to any write-downs or write-offs of
such loans and advances), (x) each Intercompany Loan shall be evidenced by
an Inter-company Note, (y) each Intercompany Loan made by a Canadian Credit
Party to a U.S. Credit Party shall contain the subordination provisions
attached as Annex A to the Intercompany Note and (z) each such Intercompany
Note shall be pledged to the Collateral Agent pursuant to the relevant
Pledge Agreement;
(g) loans and advances by the U.S. Borrower and its Subsidiaries to
employees of the U.S. Borrower and its Subsidiaries in connection with
relocations, purchases by such employees of U.S. Borrower Common Stock or
options or similar rights to purchase U.S. Borrower Common Stock and other
ordinary course of business purposes (including travel and entertainment
expenses) shall be permit ted, so long as the aggregate principal amount
thereof at any time outstanding (determined without regard to any write-
downs or write-offs of such loans and advances) shall not exceed
$5,000,000;
(h) the U.S. Borrower may acquire and hold obligations of one or more
officers or other employees of the U.S. Borrower or its Subsidiaries in
connection with such officers' or employees' acquisition of shares of U.S.
Borrower Common Stock, so long as no cash is actually advanced by the U.S.
Borrower or any of its Subsidiaries to such officers or employees in
connection with the acquisition of any such obligations;
(i) the CLC Merger shall be permitted;
(j) the U.S. Borrower and any of its Wholly-Owned Domestic
Subsidiaries may make Permitted Acquisitions in accordance with the
relevant requirements of Section 8.14 and the component definitions as used
therein;
(k) the U.S. Borrower and its Subsidiaries may own the capital stock
of their respective Subsidiaries created or acquired in accordance with the
terms of this Agreement;
(l) so long as no Default or Event of Default exists or would exist
immediately after giving effect to the respective Investment, the U.S.
Borrower and its Wholly-Owned Domestic Subsidiaries shall be permitted to
make Investments in (x) any Joint Venture on any date in an amount not to
exceed the Available Basket Amount on such date and (y) any Unrestricted
Subsidiary on any date in an amount not to exceed the Available Basket Sub-
Limit on such date (after giving effect to all prior and contemporaneous
adjustments thereto, except as a result of such Investment), it being
understood and agreed that (i) any such Investment may be in the form of a
contribution of a Tractor Trailer or Tractor Trailers to such Joint
-112-
<PAGE>
Venture or Unrestricted Subsidiary and (ii) to the extent the U.S. Borrower
or one or more other U.S. Credit Parties (after the respective Investment
has been made) receives a cash return from the respective Joint Venture or
Unrestricted Subsidiary of amounts previously invested pursuant to this
clause (l) or clause (l) of Section 9.05 of the Original Credit Agreement
(which cash return may be made by way of repayment of principal in the case
of loans and cash equity returns (whether as a distribution, dividend or
redemption) in the case of equity investments) or a return in the form of
an asset distribution from the respective Joint Venture or Unrestricted
Subsidiary of any asset previously contributed pursuant to this clause (l)
or clause (l) of Section 9.05 of the Original Credit Agreement, then the
amount of such cash return of investment or the fair market value of such
distributed asset (as determined in good faith by senior management of the
U.S. Borrower), as the case may be, shall, upon the Administrative Agent's
receipt of a certification of the amount of the return of investment from
an Authorized Officer, apply to increase the Available Basket Amount and/or
the Available Basket Sub-Limit, as applicable, provided that the aggregate
--------
amount of increases to the Available Basket Amount and/or the Available
Basket Sub-Limit described above shall not exceed the amount of returned
investment and, in no event, shall the amount of the increases made to the
Available Basket Amount and/or the Available Basket Sub-Limit in respect of
any Investment exceed the amount previously invested pursuant to this
clause (l) or clause (l) of Section 9.05 of the Original Credit Agreement;
(m) the U.S. Borrower and its Subsidiaries may receive and hold
promissory notes and other non-cash consideration received in connection
with any asset sale permitted by Sections 9.02(d), (l), (m) and (o);
(n) the U.S. Borrower and its Subsidiaries may convey, lease,
license, sell or otherwise transfer assets and properties to the extent
permitted by Sections 9.02(e), (g), (k), (n), (q), (r) and (s);
(o) the U.S. Borrower and its Subsidiaries may (i) make advances in
the form of a prepayment of expenses, so long as such expenses were
incurred in the ordinary course of business and are being paid in
accordance with customary trade terms of the U.S. Borrower or such
Subsidiary and (ii) extend credit to Program Affiliates in connection with
purchases on behalf of Program Affiliates to the extent permitted by
Section 9.02(r);
(p) the U.S. Borrower and its Domestic Subsidiaries may make cash
capital contributions to Foreign Subsidiaries, and may capitalize or
forgive any Indebtedness owed to them by a Foreign Subsidiary and
outstanding under clause (f) of this Section 9.05, provided that the
--------
aggregate amount of such contributions, capitalizations and forgiveness on
and after the Original Effective Date, when added
-113-
<PAGE>
to the aggregate outstanding principal amount of Intercompany Loans made to
Foreign Subsidiaries under such clause (f) (determined without regard to
any write-downs or write-offs thereof) shall not exceed an amount equal to
$10,000,000;
(q) the U.S. Borrower and any U.S. Subsidiary Guarantor may make cash
equity contributions to any U.S. Subsidiary Guarantor and the Canadian
Borrower and any Canadian Subsidiary Guarantor may make cash equity
contributions to any Canadian Subsidiary Guarantor;
(r) the U.S. Borrower may make a cash equity contribution to MTL
Investments on the Original Effective Date in an aggregate amount not to
exceed $4,000,000 with the proceeds of Original Term Loans, so long as (i)
MTL Investments promptly uses the proceeds of such contribution to make an
inter-company loan and/or cash equity contribution to the Canadian
Borrower, which, in turn, shall use the proceeds of such intercompany loan
and/or contribution to repay outstandings under its Existing Credit
Agreement (as defined in the Original Credit Agreement) pursuant to the
Original Refinancing and (ii) any such intercompany loan shall be evidenced
by an Intercompany Note which shall be pledged to the Collateral Agent
pursuant to the relevant Pledge Agreement; and
(s) in addition to investments permitted by clauses (a) through (r)
of this Section 9.05, the U.S. Borrower and its Subsidiaries may make
additional loans, advances and Investments to or in a Person in an
aggregate amount for all loans, advances and Investments made pursuant to
this clause (s) and clause (s) of Section 9.05 of the Original Credit
Agreement (determined without regard to any write-downs or write-offs
thereof), net of cash repayments of principal in the case of loans, sale
proceeds in the case of Investments in the form of debt instruments and
cash equity returns (whether as a distribution, dividend, redemption or
sale) in the case of equity investments, not to exceed $20,000,000.
9.06 Dividends; etc. No Borrower will, nor will any Borrower permit
---------------
any of its Subsidiaries to, declare or pay any dividends (other than dividends
payable solely in common stock of such Borrower or any such Subsidiary, as the
case may be) or return any capital to, its stockholders or authorize or make any
other distribution, payment or delivery of property or cash to its stockholders
as such, or redeem, retire, purchase or otherwise acquire, directly or
indirectly, for a consideration, any shares of any class of its capital stock,
now or hereafter outstanding (or any warrants for or options or stock
appreciation rights in respect of any of such shares), or set aside any funds
for any of the foregoing purposes, and no Borrower will permit any of its
Subsidiaries to purchase or otherwise acquire for consideration any shares of
any class of the capital stock of such Borrower or any other Subsidiary, as the
case may be, now or hereafter outstanding (or any options or warrants
-114-
<PAGE>
or stock appreciation rights issued by such Person with respect to its capital
stock) (all of the foregoing "Dividends"), except that:
(i) any Subsidiary of the U.S. Borrower may pay Dividends to the
U.S. Borrower or any U.S. Subsidiary Guarantor and any Foreign Subsidiary
may pay Dividends to the Canadian Borrower or any Canadian Subsidiary
Guarantor;
(ii) the U.S. Borrower may redeem or purchase shares of U.S.
Borrower Common Stock or options to purchase U.S. Borrower Common Stock, as
the case may be, held by former employees of the U.S. Borrower or any of
its Subsidiaries following the termination of their employment (by death,
disability or otherwise), provided that (w) the only consideration paid by
--------
the U.S. Borrower in respect of such redemptions and/or purchases shall be
cash, forgiveness of liabilities and/or Shareholder Subordinated Notes, (x)
the sum of (A) the aggregate amount paid by the U.S. Borrower in cash in
respect of all such redemptions and/or purchases plus (B) the aggregate
amount of liabilities so forgiven and (C) the aggregate amount of all cash
principal and interest payments made on Shareholder Subordinated Notes, in
each case after the Original Effective Date, shall not exceed $5,000,000,
and (y) at the time of any cash payment or forgiveness of liabilities
permitted to be made pursuant to this Section 9.06(ii), including any cash
payment under a Shareholder Subordinated Note, no Default or Event of
Default shall then exist or result therefrom;
(iii) so long as no Default or Event of Default exists or would
result therefrom, the U.S. Borrower may pay regularly accruing cash
Dividends on Disqualified Preferred Stock (excluding, at all times prior to
the PIK Trigger Date, PIK Preferred Stock) issued pursuant to Section
9.13(c), with such Dividends to be paid in accordance with the terms of the
respective certificate of designation therefor;
(iv) so long as no Default or Event of Default exists or would
result therefrom, CLC may pay regularly accruing cash Dividends on CLC
Preferred Stock, with such Dividends to be paid in accordance with the
terms of the CLC Preferred Stock Documents;
(v) any non-Wholly-Owned Subsidiary of the U.S. Borrower may pay
cash Dividends to its shareholders or partners generally, so long as the
U.S. Borrower or its respective Subsidiary which owns the equity interest
or interests in the Subsidiary paying such Dividends receives at least its
proportionate share thereof (based upon its relative holdings of equity
interest in the Subsidiary paying such Dividends and taking into account
the relative preferences, if any, of the various
-115-
<PAGE>
classes of equity interests in such Subsidiary or the terms of any
agreements applicable thereto);
(vi) the U.S. Borrower may pay regularly accruing Dividends with
respect to the PIK Preferred Stock through the issuance of additional
shares of PIK Preferred Stock (but, at any time prior to the PIK Trigger
Date, not in cash) in accordance with the terms thereof; and
(vii) the CLC Merger shall be permitted.
9.07 Transactions with Affiliates and Unrestricted Subsidiaries. No
----------------------------------------------------------
Borrower will, nor will any Borrower permit any of its Subsidiaries to, enter
into any transaction or series of transactions with any Affiliate of the U.S.
Borrower or any of its Subsidiaries or any of its Unrestricted Subsidiaries
other than on terms and conditions substantially as favorable to such Borrower
or such Subsidiary as would be reasonably expected to be obtainable by such
Borrower or such Subsidiary at the time in a comparable arm's-length transaction
with a Person other than an Affiliate; provided, that the following shall in any
--------
event be permitted: (i) the Transaction; (ii) intercompany transactions among
the U.S. Borrower and its Subsidiaries to the extent expressly permitted by
Sections 9.02, 9.04, 9.05 and 9.06 shall be permitted; (iii) so long as no
Default or Event of Default is then in existence or would result therefrom, the
payment, on a quarterly basis, of management fees to Apollo Group in an
aggregate amount not to exceed $125,000 in any fiscal quarter of the U.S.
Borrower pursuant to, and in accordance with the terms of, the Apollo Management
Agreement, provided that if during any fiscal quarter of the U.S. Borrower, a
--------
Default or Event of Default is in existence and such management fees cannot be
paid as provided above, such fees shall continue to accrue and may be paid at
such time as all Defaults and Events of Default have been cured or waived and so
long as no Default or Event of Default will exist immediately after giving
effect to the payment thereof; (iv) customary fees to non-officer directors of
the U.S. Borrower and its Subsidiaries; (v) the U.S. Borrower and its
Subsidiaries may enter into employment arrangements with respect to the
procurement of services with their respective officers and employees in the
ordinary course of business; (vi) the payment on the Restatement Effective Date
of one time consulting and advisory fees to Apollo Group in an aggregate amount
not to exceed $2,000,000; (vii) the reimbursement of Apollo Group for its
reasonable out-of-pocket expenses incurred in connection with performing
management services to the U.S. Borrower and its Subsidiaries or in connection
with the Transaction; (viii) so long as no Default or Event of Default is then
in existence or would result therefrom, the payment to Apollo Group of merger
advisory fees for each Permitted Acquisition in an amount not to exceed 1% of
the fair market value of the business or assets acquired pursuant to such
Permitted Acquisition (determined in good faith by senior management of the U.S.
Borrower); (ix) the payment of consulting, management or other fees to the U.S.
Borrower or any U.S. Subsidiary Guarantor by any of their respective
Subsidiaries in the ordinary course of business; (x) transactions among the U.S.
Borrower or any of its Subsidiaries and Program Affiliates (including Permitted
Program Affiliate Transactions) to the extent
-116-
<PAGE>
expressly permitted by Sections 9.02, 9.04 and 9.05; and (xi) the transactions
set forth on Schedule XV hereto. In no event shall any management, consulting or
similar fee be paid or payable by the U.S. Borrower or any of its Subsidiaries
to any Person except as specifically provided in this Section 9.07.
9.08 Designated Senior Debt. The U.S. Borrower shall not designate
----------------------
any Indebtedness as Designated Senior Debt (as defined in the Senior
Subordinated Notes Indenture or, on and after the execution and delivery
thereof, any agreement relating to Additional Senior Subordinated Note
Indebtedness, Permitted Subordinated Indebtedness and Permitted Subordinated
Refinancing Indebtedness).
9.09 Consolidated Interest Coverage Ratio. The U.S. Borrower will
------------------------------------
not permit the Consolidated Interest Coverage Ratio for any Test Period ending
on the last day of any fiscal quarter of the U.S. Borrower specified below to be
less than the ratio set forth opposite such fiscal quarter below:
<TABLE>
<CAPTION>
Fiscal Quarter Ended Ratio
-------------------- -----
<S> <C>
September 30, 1998 1.75:1.0
December 31, 1998 1.75:1.0
March 31, 1999 1.80:1.0
June 30, 1999 1.85:1.0
September 30, 1999 1.90:1.0
December 31, 1999 2.00:1.0
March 31, 2000 2.00:1.0
June 30, 2000 2.00:1.0
September 30, 2000 2.00:1.0
December 31, 2000 2.00:1.0
March 31, 2001 2.00:1.0
June 30, 2001 2.00:1.0
September 30, 2001 2.00:1.0
December 31, 2001 2.00:1.0
</TABLE>
-117-
<PAGE>
<TABLE>
<S> <C>
March 31, 2002 2.05:1.0
June 30, 2002 2.10:1.0
September 30, 2002 2.20:1.0
December 31, 2002 2.25:1.0
March 31, 2003 2.30:1.0
June 30, 2003 2.35:1.0
September 30, 2003 2.45:1.0
December 31, 2003 2.50:1.0
March 31, 2004 2.50:1.0
June 30, 2004 2.50:1.0
September 30, 2004 2.50:1.0
December 31, 2004 2.50:1.0
March 31, 2005 2.50:1.0
June 30, 2005 2.50:1.0
September 30, 2005 2.50:1.0
December 31, 2005 2.50:1.0
</TABLE>
Notwithstanding anything to the contrary contained in this Agreement, all
calculations of compliance with this Section 9.09 shall be made on a Pro Forma
--- -----
Basis.
9.10 Adjusted Total Leverage Ratio. The U.S. Borrower will not
-----------------------------
permit the Adjusted Total Leverage Ratio on the last day of any fiscal quarter
specified below to exceed the respective ratio set forth opposite such fiscal
quarter below:
<TABLE>
<CAPTION>
Fiscal Quarter Ended Ratio
-------------------- -----
<S> <C>
September 30, 1998 6.00:1.0
December 31, 1998 6.00:1.0
March 31, 1999 6.00:1.0
June 30, 1999 6.00:1.0
September 30, 1999 5.85:1.0
December 31, 1999 5.75:1.0
March 31, 2000 5.75:1.0
June 30, 2000 5.75:1.0
September 30, 2000 5.60:1.0
December 31, 2000 5.50:1.0
</TABLE>
-118-
<PAGE>
<TABLE>
<S> <C>
March 31, 2001 5.50:1.0
June 30, 2001 5.50:1.0
September 30, 2001 5.25:1.0
December 31, 2001 5.00:1.0
March 31, 2002 5.00:1.0
June 30, 2002 5.00:1.0
September 30, 2002 4.75:1.0
December 31, 2002 4.50:1.0
March 31, 2003 4.50:1.0
June 30, 2003 4.40:1.0
September 30, 2003 4.30:1.0
December 31, 2003 4.25:1.0
March 31, 2004 4.25:1.0
June 30, 2004 4.15:1.0
September 30, 2004 4.10:1.0
December 31, 2004 4.00:1.0
March 31, 2005 4.00:1.0
June 30, 2005 4.00:1.0
September 30, 2005 4.00:1.0
December 31, 2005 4.00:1.0
</TABLE>
Notwithstanding anything contrary contained above or elsewhere in this
Agreement, (i) all calculations of compliance with this Section 9.10 shall be
made on a Pro Forma Basis and (ii) in no event shall the Adjusted Total Leverage
--- -----
Ratio be greater than the Maximum Permitted Acquisition Leverage Ratio upon the
consummation of, and after giving effect on a Pro Forma Basis to, any Permitted
--- -----
Acquisition.
9.11 Capital Expenditures. (a) No Borrower will, nor will any
--------------------
Borrower permit any of its Subsidiaries to, make any Capital Expenditures,
except that during any fiscal year set forth below, the U.S. Borrower and its
Subsidiaries may make Capital Expenditures, so long as the aggregate amount of
such Capital Expenditures does not exceed in any fiscal year set forth below the
sum of (x) the amount set forth opposite such fiscal year below plus (y) for
----
each Acquired Business acquired after the Restatement Effective Date and prior
to the first day of the respective fiscal year set forth below, 7.5% of the
Acquired Revenues of such Acquired Business for the trailing twelve months of
such Acquired Business immediately preceding its acquisition for which financial
statements have been made available to the U.S. Borrower and the Banks plus (z)
for each Acquired Business
-119-
<PAGE>
acquired during the respective fiscal year, the amount for such Acquired
Business specified in preceding clause (y) multiplied by a percentage, the
numerator of which is the number of days in the fiscal year after the date of
the respective acquisition and the denominator of which is 365 or 366, as the
case may be:
<TABLE>
<CAPTION>
Fiscal Year Ending Amount
------------------ -------
<S> <C>
December 31, 1998 $35,000,000
December 31, 1999 $55,000,000
December 31, 2000 $55,000,000
December 31, 2001 $57,000,000
December 31, 2002 $60,000,000
December 31, 2003 $60,000,000
December 31, 2004 $60,000,000
December 31, 2005 $60,000,000
December 31, 2006 $10,000,000
</TABLE>
(b) Notwithstanding the foregoing, in the event that the amount of
Capital Expenditures permitted to be made by the U.S. Borrower and its
Subsidiaries pursuant to clause (a) above in any fiscal year (before giving
effect to any increase in such permitted expenditure amount pursuant to this
clause (b)) is greater than the amount of such Capital Expenditures made by the
U.S. Borrower and its Subsidiaries during such fiscal year, such excess (the
"Rollover Amount") may be carried forward and utilized to make Capital
Expenditures in succeeding fiscal years, provided that in no event shall the
--------
Rollover Amount available to be utilized in succeeding fiscal years exceed
$15,000,000 at any time.
(c) Notwithstanding the foregoing, the U.S. Borrower and its
Subsidiaries may make Capital Expenditures (which Capital Expenditures will not
be included in any determination under the foregoing clause (a)) with the
insurance proceeds received by the U.S. Borrower or any of its Subsidiaries from
any Recovery Event so long as such Capital Expenditures are to replace or
restore any properties or assets in respect of which such proceeds were paid or
committed to be paid within 360 days following the date of the receipt of such
insurance proceeds to the extent such insurance proceeds are not required to be
applied to repay Term Loans pursuant to Section 4.02(f).
(d) Notwithstanding the foregoing, the U.S. Borrower and its
Subsidiaries may make Capital Expenditures (which Capital Expenditures will not
be included in any determination under the foregoing clause (a)) with the Net
Sale Proceeds of Asset Sales, to the extent such Net Sale Proceeds are not
required to be applied to repay Term Loans pursuant to Section 4.02(c) and such
proceeds are reinvested as required by said Section.
(e) Notwithstanding the foregoing, the U.S. Borrower and its Wholly-
Owned Domestic Subsidiaries may make Capital Expenditures (which Capital
Expenditures
-120-
<PAGE>
will not be included in any determination under the foregoing clause (a))
constituting Permitted Acquisitions effected in accordance with the requirements
of Section 9.02(h).
9.12 Limitation on Voluntary Payments and Modifications of
-----------------------------------------------------
Indebtedness; Modifications of Certificate of Incorporation, By-Laws and Certain
- --------------------------------------------------------------------------------
Other Agreements; Issuances of Capital Stock; etc. No Borrower will, nor will
- --------------------------------------------------
any Borrower permit any of its Subsidiaries to:
(i) amend or modify, or permit the amendment or modification of, any
provision of any Shareholder Subordinated Note, any Senior Subordinated
Note Document, any CLC Senior Note Document, any Scheduled Existing
Indebtedness, any PIK Preferred Stock Document, any CLC Preferred Stock
Document or, after the incurrence or issuance thereof, any Qualified
Preferred Stock or Permitted Debt or of any agreement (including, without
limitation, any purchase agreement, indenture, loan agreement, security
agreement or certificate of designation) relating thereto in a manner that
could reasonably be expected to in any way be adverse to the interests of
the Banks;
(ii) make (or give any notice in respect of) any voluntary or
optional payment or prepayment on or redemption, repurchase or acquisition
for value of, or any prepayment or redemption as a result of any asset
sale, change of control or similar event of, any Senior Subordinated Notes,
any Scheduled Existing Indebtedness, any Additional Senior Subordinated
Note Indebtedness, any Permitted Subordinated Refinancing Indebtedness, any
Permitted Subordinated Indebtedness or any PIK Preferred Stock; provided
--------
that, so long as no Default or Event of Default then exists or would result
therefrom, (x) Senior Subordinated Notes may be refinanced with Permitted
Subordinated Refinancing Indebtedness, (y) the U.S. Borrower may repurchase
(I) Senior Subordinated Notes on the open-market in an aggregate principal
amount for all purchases made after the Original Effective Date pursuant to
this clause (y) (I) not to exceed $25,000,000 and (II) notes evidencing
Additional Senior Subordinated Note Indebtedness on the open-market in an
aggregate principal amount for all purchases made after the Restatement
Effective Date pursuant to this clause (y)(II) not to exceed $5,000,000, in
each case, so long as the Adjusted Total Leverage Ratio is less than
4.00:1.00 on the last day of the Test Period most recently ended prior to
the consummation of the respective repurchase (as set forth in the
officer's certificate most recently delivered pursuant to Section 8.01(d))
and (z) the U.S. Borrower and its Subsidiaries may make payments and
prepayments in connection with Scheduled Existing Indebtedness;
(iii) make (or give any notice in respect of) any principal or
interest payment on, or any redemption or acquisition for value of, any
Shareholder Subordinated Note, except to the extent permitted by Section
9.06(ii); and
-121-
<PAGE>
(iv) amend, modify or change in any way which could reasonably be
expected to be adverse to the interests of the Banks in any material
respect any Tax Allocation Agreement, any Management Agreement, any
Original Transaction Document (excluding the Original Credit Agreement),
any CLC Equity Financing Document, any CLC Merger Document, its certificate
of incorporation (including, without limitation, by the filing or
modification of any certificate of designation other than any certificates
of designation relating to Qualified Preferred Stock or Disqualified
Preferred Stock issued as permitted herein), by-laws, certificate of
partnership, partnership agreement, certificate of limited liability
company, limited liability company agreement or any agreement entered into
by it, with respect to its capital stock or other equity interest
(including any Shareholders' Agreement), or enter into any new Tax
Allocation Agreement, Management Agreement or agreement with respect to
its capital stock or other equity interest which could reasonably be
expected to in any way be adverse to the interests of the Banks; provided
--------
that the foregoing clause shall not restrict the ability of the U.S.
Borrower and its Subsidiaries to amend their respective certificates of
incorporation to authorize the issuance of capital stock otherwise
permitted to be issued pursuant to the terms of this Agreement.
9.13 Limitation on Issuance of Capital Stock. (a) No Borrower will,
---------------------------------------
nor will any Borrower permit any of its Subsidiaries to, issue (i) any Preferred
Stock (other than (x) PIK Preferred Stock issued in accordance with the
requirements of Section 5.08 and the issuance of additional shares of PIK
Preferred Stock in payment of regularly accruing dividends on theretofore
outstanding shares of PIK Preferred Stock and (y) Preferred Stock issued
pursuant to clauses (c) and (d) below, respectively) or any options, warrants or
rights to purchase Preferred Stock or (ii) any redeemable common stock unless,
in either case, the issuance thereof is, and all terms thereof are, satisfactory
to the Required Banks in their sole discretion.
(b) The U.S. Borrower shall not permit any of its Subsidiaries to
issue any capital stock (including by way of sales of treasury stock) or any
options or warrants to purchase, or securities convertible into, capital stock,
except (i) for transfers and replacements of then outstanding shares of capital
stock, (ii) for stock splits, stock dividends and additional issuances which do
not decrease the percentage ownership of the U.S. Borrower or any of its
Subsidiaries in any class of the capital stock of such Subsidiaries, (iii) to
qualify directors to the extent required by applicable law, (iv) Subsidiaries
formed after the Restatement Effective Date pursuant to Section 9.15 may issue
capital stock in accordance with the requirements of Section 9.15 and (v) that
Subsidiaries may issue common stock in connection with any transaction permitted
by Section 9.05(q). All capital stock issued in accordance with this Section
9.13(b) shall, to the extent required by any Pledge Agreement, be delivered to
the Collateral Agent for pledge pursuant to such Pledge Agreement.
-122-
<PAGE>
(c) The U.S. Borrower may issue Disqualified Preferred Stock so long
as (i) no Default or Event of Default then exists or would exist immediately
after giving effect to the respective issuance, (ii) the aggregate liquidation
preference for all Disqualified Preferred Stock issued after the Original
Effective Date pursuant to this Section 9.13(c) and Section 9.13(c) of the
Original Credit Agreement shall not to exceed, when combined with the aggregate
principal amount of all then outstanding Indebtedness permitted by Section
9.04(n), $25,000,000, (iii) with respect to each issue of Disqualified Preferred
Stock, the gross cash proceeds therefrom (or in the case of Disqualified
Preferred Stock directly issued as consideration for a Permitted Acquisition,
the fair market value thereof (as determined in good faith by the U.S. Borrower)
of the assets received therefor) shall not exceed the liquidation preference
thereof at the time of issuance, (iv) calculations are made by the U.S. Borrower
of compliance with the covenants contained in Sections 9.09 and 9.10 for the
Calculation Period most recently ended prior to the date of the respective
issuance of Disqualified Preferred Stock, on a Pro Forma Basis after giving
--- -----
effect to the respective issuance of Disqualified Preferred Stock, and such
calculations shall show that such financial covenants would have been complied
with if such issuance of Disqualified Preferred Stock had been consummated on
the first day of the respective Calculation Period, and (v) the U.S. Borrower
shall furnish to the Administrative Agent a certificate by an Authorized Officer
of the U.S. Borrower certifying to the best of his or her knowledge as to
compliance with the requirements of this Section 9.13(c) and containing the pro
---
forma calculations required by the preceding clause (iv).
- -----
(d) The U.S. Borrower may issue Qualified Preferred Stock so long as,
with respect to each issue of Qualified Preferred Stock, the U.S. Borrower
receives reasonably equivalent consideration (as determined in good faith by the
U.S. Borrower).
9.14 Limitation on Certain Restrictions on Subsidiaries. No Borrower
--------------------------------------------------
will, nor will any Borrower permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective,
any encumbrance or restriction on the ability of any such Subsidiary to (x) pay
dividends or make any other distributions on its capital stock or any other
interest or participation in its profits owned by such Borrower or any
Subsidiary of such Borrower, or pay any Indebtedness owed to such Borrower or a
Subsidiary of such Borrower, (y) make loans or advances to such Borrower or any
Subsidiary of such Borrower or (z) transfer any of its properties or assets to
such Borrower or any of its Subsidiaries, except for such encumbrances or
restrictions existing under or by reason of (i) applicable law, (ii) this
Agreement and the other Credit Documents, (iii) the provisions contained in the
Scheduled Existing Indebtedness, (iv) the Senior Subordinated Note Documents,
(v) customary provisions restricting subletting or assignment of any lease
governing a leasehold interest of any Borrower or a Subsidiary of such Borrower,
(vi) customary provisions restricting assignment of any contract entered into by
any Borrower or any Subsidiary of such Borrower in the ordinary course of
business, (vii) any agreement or instrument governing Permitted Acquired Debt,
which encumbrance or restriction is not
-123-
<PAGE>
applicable to any Person or the properties or assets of any Person, other than
the Person or the properties or assets of the Person acquired pursuant to the
respective Permitted Acquisition and so long as the respective encumbrances or
restrictions were not created (or made more restrictive) in connection with or
in anticipation of the respective Permitted Acquisition, (viii) customary
provisions restricting subletting or assignments of leases and/or customary
provisions restricting subletting or assignments of leases and/or non-assignment
provisions entered into in the ordinary course of business and consistent with
past practices; (ix) customary provisions restricting the assignment of
licensing agreements, management agreements or franchise agreements entered into
by any Borrower or any of its Subsidiaries in the ordinary course of business;
(x) restrictions applicable to any Joint Venture that is a Subsidiary existing
at the time of the acquisition thereof as a result of an Investment pursuant to
Section 9.05 or a Permitted Acquisition effected in accordance with Section
8.14, provided that the restrictions applicable to the respective such Joint
--------
Venture are not made worse, or more burdensome, from the perspective of the U.S.
Borrower and its Subsidiaries, than those as in effect immediately before giving
effect to the consummation of the respective Investment or Permitted
Acquisition, (xi) any restriction or encumbrance with respect to a Subsidiary
imposed pursuant to an agreement which has been entered into for the sale or
disposition of all or substantially all of the capital stock or assets of such
Subsidiary, so long as such sale or disposition of all or substantially all of
the capital stock or assets of such Subsidiary is permitted under this Agreement
and (xii) the documentation governing Permitted Debt (other than Permitted
Acquired Debt).
9.15 Limitation on the Creation of Subsidiaries, Joint Ventures and
--------------------------------------------------------------
Unrestricted Subsidiaries. (a) Notwithstanding anything to the contrary
- -------------------------
contained in this Agreement, the U.S. Borrower will not, and will not permit any
of its Subsidiaries to, establish, create or acquire after the Restatement
Effective Date any Subsidiary or Unrestricted Subsidiary (other than Joint
Ventures permitted to be established in accordance with the requirements of
Section 9.05(l)); provided that (A) the U.S. Borrower, any of its Wholly-Owned
--------
Domestic Subsidiaries and any Unrestricted Subsidiary shall be permitted to
establish or create an Unrestricted Subsidiary, so long as (i) if a Domestic
Unrestricted Subsidiary of the U.S. Borrower, all of the capital stock or other
equity interests of such new Domestic Unrestricted Subsidiary owned by the U.S.
Borrower or any such Wholly-Owned Domestic Subsidiary shall be pledged pursuant
to the U.S. Pledge Agreement and the certificates representing such stock or
other equity interests, together with appropriate powers duly executed in blank,
shall be delivered to the Collateral Agent and (ii) if a Foreign Unrestricted
Subsidiary of the U.S. Borrower, all of the capital stock or other equity
interests of such new Foreign Unrestricted Subsidiary owned by the U.S. Borrower
or any such Wholly-Owned Domestic Subsidiary (except that not more than 65% of
the outstanding voting stock of any Foreign Unrestricted Subsidiary need be so
pledged, except in the circumstances contemplated by Section 8.12) shall be
pledged pursuant to the U.S. Pledge Agreement and the certificates representing
such stock or other equity interests, together with appropriate powers duly
executed in blank, shall be delivered to the Collateral
-124-
<PAGE>
Agent, (B) the U.S. Borrower and its Wholly-Owned Subsidiaries shall be
permitted to establish or create Wholly-Owned Subsidiaries so long as, in each
case, (i) at least 10 days' prior written notice thereof is given to the
Administrative Agent (or such shorter period of time as is acceptable to the
Administrative Agent), (ii) the capital stock or other equity interests of such
new Subsidiary are promptly pledged pursuant to, and to the extent required by,
this Agreement and the relevant Pledge Agreement and the certificates, if any,
representing such stock or other equity interests, together with stock or other
appropriate powers duly executed in blank, are delivered to the Collateral
Agent, (iii) in the case of a Domestic Subsidiary, such new Domestic Subsidiary
promptly executes a counterpart of the U.S. Subsidiaries Guaranty, the U.S.
Pledge Agreement and the relevant Security Documents, (iv) in the case of a
Canadian Subsidiary that is a Subsidiary of the Canadian Borrower, (x) such new
Canadian Subsidiary promptly executes a counterpart of the Canadian Subsidiaries
Guaranty, the Canadian Pledge Agreement and the relevant Canadian Security
Agreement(s) and, to the extent required pursuant to Section 8.12, the U.S.
Subsidiaries Guaranty, the U.S. Pledge Agreement and the U.S. Security Agreement
and (y) the direct parent of such Canadian Subsidiary shall have duly executed
and delivered to the Collateral Agent a Canadian Pledge Agreement or a Quebec
Pledge Agreement, as appropriate, (v) in the case of any Foreign Subsidiary
other than a Canadian Subsidiary that is a Subsidiary of the Canadian Borrower,
such new Foreign Subsidiary promptly executes a counterpart of the U.S.
Subsidiaries Guaranty, the U.S. Pledge Agreement and the U.S. Security Agreement
to the extent required pursuant to Section 8.12, and (vi) to the extent
requested by the Administrative Agent or the Required Banks, such new Subsidiary
takes all actions required pursuant to Section 8.11 and (C) Subsidiaries may be
acquired pursuant to Permitted Acquisitions so long as, in each such case (i)
with respect to each Wholly-Owned Subsidiary acquired pursuant to a Permitted
Acquisition, the actions specified in preceding clauses (B) and (C), as
applicable, shall be taken and (ii) with respect to each Subsidiary which is not
a Wholly-Owned Subsidiary and is acquired pursuant to a Permitted Acquisition,
all capital stock or other equity interests thereof owned by any Credit Party
shall be pledged pursuant to the relevant Pledge Agreement. In addition, each
new Subsidiary that is required to execute any Credit Document shall execute and
deliver, or cause to be executed and delivered, all other relevant documentation
of the type described in Section 5 as such new Subsidiary would have had to
deliver if such new Subsidiary were a New Credit Party on the Restatement
Effective Date.
(b) No Borrower will, nor will permit any of its Subsidiaries to,
enter into any Joint Venture, except to the extent permitted by Section 9.05(l).
SECTION 10. Events of Default. Upon the occurrence of any of the
-----------------
following specified events (each, an "Event of Default"):
10.01 Payments. Any Borrower shall (i) default in the payment when
--------
due of any principal of the Loans or (ii) default, and such default shall
continue for three or more Business Days, in the payment when due of any Unpaid
Drawing, any interest on the
-125-
<PAGE>
Loans or any Fees or any other amounts owing hereunder or under any other Credit
Document; or
10.02 Representations, etc. Any representation, warranty or
---------------------
statement made by any Credit Party herein or in any other Credit Document or in
any statement or certificate delivered pursuant hereto or thereto shall prove to
be untrue in any material respect on the date as of which made or deemed made;
or
10.03 Covenants. Any Credit Party shall (a) default in the due
---------
performance or observance by it of any term, covenant or agreement contained in
Section 8.01(e)(i), 8.10, 8.13, 8.14 or 9, or (b) default in the due performance
or observance by it of any term, covenant or agreement (other than those
referred to in Section 10.01, 10.02 or clause (a) of this Section 10.03)
contained in this Agreement and such default shall continue unremedied for a
period of at least 30 days after notice to the defaulting party by the
Administrative Agent or the Required Banks; or
10.04 Default Under Other Agreements. (a) Any Borrower or any of
------------------------------
its Subsidiaries shall (i) default in any payment with respect to any
Indebtedness (other than the Obligations) beyond the period of grace, if any,
provided in the instrument or agreement under which Indebtedness was created or
(ii) default in the observance or performance of any agreement or condition
relating to any such Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause, or to permit the holder or holders of such Indebtedness (or a trustee or
agent on behalf of such holder or holders) to cause (determined without regard
to whether any notice is required), any such Indebtedness to become due prior to
its stated maturity; or (b) any Indebtedness (other than the Obligations) of any
Borrower or any of its Subsidiaries shall be declared to be due and payable, or
shall be required to be prepaid other than by a regularly scheduled required
prepayment or as a mandatory prepayment (unless such required prepayment or
mandatory prepayment results from a default thereunder or an event of the type
that constitutes an Event of Default), prior to the stated maturity thereof;
provided, that it shall not constitute an Event of Default pursuant to clause
- --------
(a) or (b) of this Section 10.04 unless the principal amount of any one issue of
such Indebtedness, or the aggregate amount of all such Indebtedness referred to
in clauses (a) and (b) above, exceeds $4,000,000 at any one time; or
10.05 Bankruptcy, etc. The U.S. Borrower or any of its Subsidiaries
----------------
shall commence a voluntary case concerning itself under Title 11 of the United
States Code entitled "Bankruptcy," as now or hereafter in effect, or any
successor thereto (the "Bankruptcy Code"); or an involuntary case is commenced
against the U.S. Borrower or any of its Subsidiaries and the petition is not
controverted within 20 days, or is not dismissed within 60 days, after
commencement of the case; or a custodian (as defined in the Bank-
-126-
<PAGE>
ruptcy Code) is appointed for, or takes charge of, all or substantially all of
the property of the U.S. Borrower or any of its Subsidiaries; or the U.S.
Borrower or any of its Subsidiaries commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to the U.S. Borrower or any of its Subsidiaries; or
there is commenced against the U.S. Borrower or any of its Subsidiaries any such
proceeding which remains undismissed for a period of 60 days; or the U.S.
Borrower or any of its Subsidiaries is adjudicated insolvent or bankrupt; or any
order of relief or other order approving any such case or proceeding is entered;
or the U.S. Borrower or any of its Subsidiaries suffers any appointment of any
custodian or the like for it or any substantial part of its property to continue
undischarged or unstayed for a period of 60 days; or the U.S. Borrower or any of
its Subsidiaries makes a general assignment for the benefit of creditors; or any
corporate action is taken by the U.S. Borrower or any of its Subsidiaries for
the purpose of effecting any of the foregoing; or
10.06 ERISA. (a) (i) Any Plan or Multiemployer Plan shall fail to
-----
satisfy the minimum funding standard required for any plan year or part thereof
under Section 412 of the Code or Section 302 of ERISA or a waiver of such
standard or extension of any amortization period is sought or granted under
Section 412 of the Code or Section 303 or 304 of ERISA, (ii) a Reportable Event
shall have occurred, (iii) a contributing sponsor (as defined in Section
4001(a)(13) of ERISA) of a Plan subject to Title IV of ERISA shall be subject to
the advance reporting requirement of PBGC Regulation Section 4043.61 (without
regard to subparagraph (b)(1) thereof) and an event described in subsection .62,
.63, .64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 shall be
reasonably expected to occur within the following 30 days, (iv) any Plan which
is subject to Title IV of ERISA shall have had or is likely to have a trustee
appointed to administer such Plan, (v) any Plan which is subject to Title IV of
ERISA is, shall have been or is likely to be terminated or to be the subject of
termination proceedings under ERISA, (vi) any Plan shall have an Unfunded
Current Liability, (vii) a contribution required to be made by any Borrower or
any Subsidiary of any Borrower with respect to a Plan, a Multiemployer Plan or a
Foreign Pension Plan has not been timely made, (viii) the U.S. Borrower or any
Subsidiary of the U.S. Borrower has incurred or is likely to incur any liability
to or on account of a Plan or Multiemployer Plan under Section 409, 502(i) or
502(1) of ERISA or Section 4975 of the Code, (ix) any Borrower or any Subsidiary
of any Borrower or any ERISA Affiliate has incurred or is likely to incur any
liability to or on account of a Plan under Section 4062, 4063, 4064, 4069 of
ERISA or Section 401(a)(29) or 4971 of the Code or on account of a group health
plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code)
under Section 4980B of the Code, (x) any Borrower or any Subsidiary of any
Borrower or any ERISA Affiliate has incurred or is likely to incur any liability
to or on account of a Multiemployer Plan under Section 515, 4201, 4204 or 4212
of ERISA; or (ix) any Borrower or any Subsidiary of any Borrower has incurred or
is likely to incur liabilities pursuant to one or more employee welfare benefit
plans (as defined in Section 3(1) of
-127-
<PAGE>
ERISA) that provide benefits to retired employees or other former employees
(other than as required by Section 601 of ERISA) or pursuant to any Plan or
Foreign Pension Plan; (b) there shall result from any such event or events the
imposition of a lien, the granting of a security interest, or a liability or a
material risk of incurring a liability; and (c) such lien, security interest or
liability, individually, and/or in the aggregate, in the opinion of the Required
Banks, has had, or could reasonably be expected to have, a Material Adverse
Effect; or
10.07 Security Documents. (a) Any Security Document shall cease to
------------------
be in full force and effect, or shall cease to give the Collateral Agent the
Liens, rights, powers and privileges purported to be created thereby in favor of
the Collateral Agent, superior to and prior to the rights of all third Persons
(except as permitted by Section 9.03), and subject to no other Liens (except as
permitted by Section 9.03), or (b) any Credit Party shall default in the due
performance or observance of any term, covenant or agreement on its part to be
performed or observed pursuant to any such Security Document and such default
shall continue beyond any cure or grace period specifically applicable thereto
pursuant to the terms of any such Security Document; or
10.08 Guaranties. Any Guaranty or any provision thereof shall cease
----------
to be in full force and effect, or any Guarantor or any Person acting by or on
behalf of such Guarantor shall deny or disaffirm such Guarantor's obligations
under the relevant Guaranty or any Guarantor shall default in the due
performance or observance of any term, covenant or agreement on its part to be
performed or observed pursuant to any Guaranty; or
10.09 Judgments. One or more judgments or decrees shall be entered
---------
against the U.S. Borrower or any of its Subsidiaries involving a liability (to
the extent not paid or not fully covered by insurance) in excess of $4,500,000
for all such judgments and decrees and all such judgments or decrees shall not
have been vacated, discharged or stayed or bonded pending appeal within 60 days
from the entry thereof; or
10.10 Ownership. A Change of Control Event shall have occurred;
---------
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent shall, upon the written
request of the Required Banks, by written notice to the Borrowers, take any or
all of the following actions, without prejudice to the rights of any Agent or
any Bank to enforce its claims against any Guarantor or any Borrower, except as
otherwise specifically provided for in this Agreement (provided, that if an
--------
Event of Default specified in Section 10.05 shall occur with respect to any
Borrower, the result which would occur upon the giving of written notice by the
Administrative Agent as specified in clauses (i), (ii) and (iii) below shall
occur automatically without the giving of any such notice): (i) declare the
Total Commitment terminated, whereupon the Commitment of each Bank shall
forthwith terminate immediately and any Commitment Fees
-128-
<PAGE>
shall forthwith become due and payable without any other notice of any kind;
(ii) declare the principal of and any accrued interest in respect of all Loans
and all Obligations owing hereunder (including Unpaid Drawings) to be, whereupon
the same shall become, forthwith due and payable by the U.S. Borrower without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the U.S. Borrower; (iii) declare the principal of and any
accrued interest in respect of all Canadian Dollar Revolving Loans and all other
Obligations owing by the Canadian Borrower hereunder to be, whereupon the same
shall become, forthwith due and payable by the Canadian Borrower without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Canadian Borrower; (iv) enforce, as Collateral Agent (or
direct the Collateral Agent to enforce), any or all of the Liens and security
interests created pursuant to the Security Documents; (v) terminate any Letter
of Credit which may be terminated in accordance with its terms; (vi) direct the
Canadian Borrower to pay (and the Canadian Borrower hereby agrees that upon
receipt of such notice, or upon the occurrence of an Event of Default specified
in Section 10.05 with respect to any Borrower, it will pay) to the
Administrative Agent all amounts required to be paid pursuant to clause (j) of
Schedule XII regarding the outstanding Bankers' Acceptances and B/A Equivalent
Notes (without duplication of any amounts paid pursuant to clauses (ii) and
(iii); (vii) direct the U.S. Borrower to pay (and the U.S. Borrower hereby
agrees upon receipt of such notice, or upon the occurrence of any Event of
Default specified in Section 10.05, to pay) to the Collateral Agent at the
Payment Office such additional amounts of cash, to be held as security for the
U.S. Borrower's reimbursement obligations in respect of Letters of Credit then
outstanding, equal to the aggregate Stated Amount of all Letters of Credit then
outstanding; and (viii) apply any cash collateral as provided in Section 4.02.
SECTION 11. Definitions. As used herein, the following terms shall
-----------
have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural the singular:
"Acquired Business" shall mean any Person or business, division or
product line acquired pursuant to a Permitted Acquisition.
"Acquired Person" shall have the meaning provided in the definition of
Permitted Acquisition.
"Acquired Revenues" shall mean, with respect to any Acquired Business,
the gross revenues of such Acquired Business for the twelve-month period most
recently ended prior to the date of the acquisition of such Acquired Business as
set forth in the financial statements for such Acquired Business delivered to
the U.S. Borrower and the Banks in connection with such acquisition.
-129-
<PAGE>
"Additional Security Documents" shall have the meaning provided in
Section 8.11.
"Additional Senior Subordinated Note Indebtedness" shall mean
unsecured subordinated Indebtedness of the U.S. Borrower, which Indebtedness (i)
has a weighted average life to maturity greater than or equal to the weighted
average life to maturity of the Senior Subordinated Notes, (ii) contains terms
and conditions (including, without limitation, amortization, defaults,
guarantees, remedies, voting rights, subordination provisions, etc.)
substantially identical to (or, from the perspective of the Banks, more
favorable than) the terms and conditions of the Senior Subordinated Notes, (iii)
does not add guarantors or obligors different from those under, or security
different from that which applied to, the Senior Subordinated Notes and (iv)
shall be governed by documentation reasonably satisfactory to the Agents. The
incurrence of Additional Senior Subordinated Note Indebtedness shall be deemed
to be a representation and warranty by the U.S. Borrower that all conditions
thereto have been satisfied in all material respects and that same is permitted
in accordance with the terms of this Agreement, which representation and
warranty shall be deemed to be a representation and warranty for all purposes
hereunder, including, without limitation, Sections 6 and 10.
"Adjusted Consolidated Net Income" for any period shall mean
Consolidated Net Income for such period plus, without duplication, the sum of
the amount of all net non-cash charges (including, without limitation,
depreciation, amortization, deferred tax expense, non-cash interest expense) and
net non-cash losses which were included in arriving at Consolidated Net Income
for such period less all net non-cash gains included in arriving at Consolidated
Net Income for such period; provided that gains or losses from sales of assets
--------
(other than sales of inventory in the ordinary course of business) shall be
excluded to the extent same would otherwise be included in Adjusted Consolidated
Net Income for the respective period.
"Adjusted Consolidated Working Capital" at any time shall mean
Consolidated Current Assets (but excluding therefrom all cash and Cash
Equivalents) less Consolidated Current Liabilities.
"Adjusted Excess Cash Flow" shall mean, for any period, the remainder
of (i) Excess Cash Flow minus (ii) the product of (I) the aggregate amount of
principal repayments of Loans to the extent (and only to the extent) that such
repayments were (x) required as a result of a Scheduled Repayment under Section
4.02 or (y) made as a voluntary prepayment pursuant to Section 4.01 with
internally generated funds (but in a case of a voluntary prepayment of Revolving
Loans, only to the extent accompanied by a voluntary reduction to the Total
Revolving Loan Commitment) during such period multiplied by (II) 2.
-130-
<PAGE>
"Adjusted Senior Leverage Ratio" shall mean the Adjusted Total
Leverage Ratio, except that references to "Consolidated Debt" and "Adjusted
Total Leverage Ratio" therein shall instead be references to "Consolidated
Senior Debt" and "Adjusted Senior Leverage Ratio", respectively.
"Adjusted Total Leverage Ratio" shall mean, on any date, the ratio of
(i) Consolidated Debt on such date to (ii) Consolidated EBITDA for the Test
Period most recently ended on or prior to such date. All calculations of the
Adjusted Total Leverage Ratio shall be made on a Pro Forma Basis, with
--- -----
determinations of Adjusted Total Leverage Ratio to give effect to all
adjustments (including, without limitation, those specified in clauses (v) and
(w)) contained in the definition of "Pro Forma Basis" contained herein.
--- -----
"Administrative Agent" shall have the meaning provided in the first
paragraph of this Agreement and shall include any successor to the
Administrative Agent appointed pursuant to Section 12.10.
"Affected Loans" shall have the meaning provided in Section 4.02(i).
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and officers of such Person), controlled by, or under direct or indirect common
control with such Person; provided, however, that for purposes of Section 9.07,
-------- -------
an Affiliate of the U.S. Borrower shall include any Person that directly or
indirectly owns more than 5% of any class of the capital stock of the U.S.
Borrower and any officer or director of the U.S. Borrower or any such Person.
"Affiliate Billing Program" shall mean the administrative services
program of the U.S. Borrower made available to Program Affiliates providing for
centralized billings services and the collection and processing of accounts
receivable owing to Program Affiliates.
"Agent" shall have the meaning provided in the first paragraph of this
Agreement and shall include any successor to any Agent appointed pursuant to
Section 12.10.
"Aggregate Revolving Credit Exposure" shall mean, at any time, the sum
of (I) the aggregate principal amount of all Revolving Loans then outstanding
(for this purpose, (x) at all times prior to the occurrence of a Sharing Event
and the automatic conversion of Canadian Dollar Revolving Loans to Dollar
Revolving Loans pursuant to Section 1.15, using the Dollar Equivalent of the
principal amount or Face Amount, as the case may be, of each Canadian Dollar
Revolving Loan then outstanding and (y) at all times after any occurrence as
described in preceding clause (x), giving effect to the conversions
-131-
<PAGE>
to Dollar obligations required by Section 1.15) plus (II) the aggregate
principal amount of all Swingline Loans then outstanding plus (III) the
aggregate amount of all Letter of Credit Outstandings at such time.
"Aggregate U.S. Revolving Credit Exposure" at any time shall mean the
sum of the U.S. Revolving Credit Exposures of all RL Banks at such time.
"Agreement" shall mean this Credit Agreement, as the same may be from
time to time modified, amended and/or supplemented.
"Applicable Currency" shall mean U.S. Dollars or Canadian Dollars, as
the case may be.
"Applicable Excess Cash Flow Percentage" shall mean, with respect to
any Excess Cash Flow Payment Date, 75%; provided that so long as no Default or
--------
Event of Default is then in existence, if on the last day of the relevant Excess
Cash Flow Payment Period, the Adjusted Total Leverage Ratio for the Test Period
then most recently ended is less than 4.00:1.00 (as established pursuant to the
officer's certificate delivered (or required to be delivered) pursuant to
Section 8.01(d)), then the Applicable Excess Cash Flow Percentage shall instead
be 50%.
"Applicable Margin" initially shall mean a percentage equal to (i) in
the case of Dollar Revolving Loans and Tranche A Term Loans maintained as (x)
Base Rate Loans, 1.00% and (y) Eurodollar Loans, 2.00%, (ii) in the case of
Tranche B Term Loans maintained as (x) Base Rate Loans, 1.25% and (y) Eurodollar
Loans, 2.25%, (iii) in the case of Tranche C Term Loans maintained as (x) Base
Rate Loans, 1.50% and (y) Eurodollar Loans, 2.50%, (iv) in the case of Canadian
Prime Rate Loans, 1.00%, (v) in the case of Bankers' Acceptance Loans and B/A
Equivalent Loans, 2.00% and (vi) in the case of the Commitment Fee, 0.50%. From
and after each day of delivery of any certificate delivered in accordance with
the following sentence indicating an entitlement to a different margin than that
described in the immediately preceding sentence (each, a "Start Date") to and
including the applicable End Date described below, the Applicable Margin shall
(subject to any adjustment pursuant to the immediately succeeding proviso) be
that set forth below opposite the Total Leverage Ratio indicated to have been
achieved in any certificate delivered in accordance with the following sentence:
-132-
<PAGE>
<TABLE>
<CAPTION>
Tranche A Tranche B Tranche C B/A Equivalent Tranche A
Total Term Loan Loan Term Loan/Bankers' Acceptance Term Loan Tranche B Term Tranche C Term
Leverage Eurodollar Eurodollar Eurodollar Loan/Revolving Loan Base Rate Loan Base Rate Loan Base Rate
Ratio Margin Margin Margin Eurodollar Margin Margin Margin Margin
- -------- ------ ------ ------ ----------------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Greater 1.75% 2.25% 2.50% 1.75% 0.75% 1.25% 1.50%
than 4.50:1
but less
than or
equal to
4.75:1
Greater 1.625% 2.00% 2.25% 1.625% 0.625% 1.00% 1.25%
than 4.25:1
but less
than or
equal to
4.50:1
Greater 1.50% 2.00% 2.25% 1.50% 0.50% 1.00% 1.25%
than 4.00:1
but less
than or
equal to
4.25:1
Greater 1.25% 2.00% 2.25% 1.25% 0.25% 1.00% 1.25%
than 3.50:1
but less
than or
equal to
4.00:1
Greater 1.25% 2.00% 2.25% 1.25% 0.25% 1.00% 1.25%
than 3.00:1
but less
than or
equal to
3.50:1
<CAPTION>
Dollar
Total Revolving Loan Canadian
Leverage Base Rate Committment Prime Rate Loan
Ratio Margin Fee Margin
- -------- ------ ---- ------
<S> <C> <C> <C>
Greater 0.75% 0.375% 0.75
than 4.50:1
but less
than or
equal to
4.75:1
Greater 0.625% 0.375% 0.625%
than 4.25:1
but less
than or
equal to
4.50:1
Greater 0.50% 0.375% 0.50%
than 4.00:1
but less
than or
equal to
4.25:1
Greater 0.25% 0.375% 0.25%
than 3.50:1
but less
than or
equal to
4.00:1
Greater 0.25% 0.375% 0.25%
than 3.00:1
but less
than or
equal to
3.50:1
</TABLE>
-133-
<PAGE>
<TABLE>
<CAPTION>
Tranche A Tranche B Tranche C B/A Equivalent Tranche A
Total Term Loan Loan Term Loan/Bankers' Acceptance Term Loan Tranche B Term Tranche C Term
Leverage Eurodollar Eurodollar Eurodollar Loan/Revolving Loan Base Rate Loan Base Rate Loan Base Rate
Ratio Margin Margin Margin Eurodollar Margin Margin Margin Margin
- -------- ------ ------ ------ ----------------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Greater
than
2.50:1.0 but 1.125% 2.00% 2.25% 1.125% 0.125% 1.00% 1.25%
less than or
equal to
3.00:1.0
Less than
or equal to 1.00% 2.00% 2.25% 1.00% 0% 1.00% 1.25%
2.50:1
<CAPTION>
Dollar
Total Revolving Loan Canadian
Leverage Base Rate Commitment Prime Rate Loan
Ratio Margin Fee Margin
- -------- ------ ---- ------
<S> <C> <C> <C>
Greater 0.125% 0.25% 0.125%
than
2.50:1.0 but
less than or
equal to
3.00:1.0
Less than 0% 0.25% 0%
or equal to
2.50:1
</TABLE>
-134-
<PAGE>
; provided that if upon the consummation of a Permitted Acquisition, the
--------
Adjusted Senior Leverage Ratio (as set forth in the officer's certificate
referred to in the proviso to the first sentence of the immediately succeeding
paragraph) exceeds 3.00:1.0, the Applicable Margins set forth in the table above
(other than the Applicable Margin for the Commitment Fee) shall each be
increased by 0.125% and such Applicable Margins (as so increased) shall at all
times thereafter be applicable until the delivery of an officer's certificate
pursuant to the immediately succeeding paragraph demonstrating an Adjusted
Senior Leverage Ratio of less than or equal to 3.00:1.0.
The Total Leverage Ratio and the Adjusted Senior Leverage Ratio shall
be determined based on the delivery of a certificate of the U.S. Borrower by an
Authorized Officer of the U.S. Borrower to the Administrative Agent (with a copy
to be sent by the Administrative Agent to each Bank), within 45 days of the last
day of any fiscal quarter of the U.S. Borrower, which certificate shall set
forth the calculation of the Total Leverage Ratio and the Adjusted Senior
Leverage Ratio as at the last day of the Test Period ended immediately prior to
the relevant Start Date and the Applicable Margins which shall be thereafter
applicable (until same are changed or cease to apply in accordance with the
following sentences); provided that at the time of the consummation of any
--------
Permitted Acquisition or any issuance of Permitted Debt or Disqualified
Preferred Stock, an Authorized Officer of the U.S. Borrower shall deliver to the
Administrative Agent a certificate setting forth the calculation of the Total
Leverage Ratio and the Adjusted Senior Leverage Ratio on a Pro Forma Basis as of
--- -----
the last day of the last Calculation Period ended prior to the date on which
such Permitted Acquisition is consummated or such Permitted Debt or Disqualified
Preferred Stock is issued for which financial statements have been made
available (or were required to be made available) pursuant to Section 8.01(a) or
(b), as the case may be, and the date of such consummation shall be deemed to be
a Start Date and the Applicable Margins which shall be thereafter applicable
(until same are changed or cease to apply in accordance with the following
sentence) shall be based upon the Total Leverage Ratio and the Adjusted Senior
Leverage Ratio as so calculated. The Applicable Margins so determined shall
apply, except as set forth in the succeeding sentence, from the Start Date to
the earlier of (x) the date on which the next certificate is delivered to the
Administrative Agent, (y) the date on which the next Permitted Acquisition is
consummated or Permitted Debt or Disqualified Preferred Stock is issued or (z)
the date which is 45 days following the last day of the Test Period in which the
previous Start Date occurred (the "End Date"), at which time, if no certificate
has been delivered to the Administrative Agent indicating an entitlement to
Applicable Margins other than those described in the first sentence of this
definition (and thus commencing a new Start Date), the Applicable Margins shall
be those described in the first sentence of this definition. Notwithstanding
anything to the contrary contained above in this definition, the Applicable
Margins shall be those described in the first sentence of this definition at all
times (x) during which there shall exist any Default or Event of Default and (y)
prior to the date of delivery of the financial statements pursuant to Section
8.01(b) for the fiscal quarter ended March 31, 1999.
-135-
<PAGE>
"Applicable Prepayment Percentage" shall mean, at any time, (i) for
purposes of Sections 4.02(c) and 4.02(d), 100%, provided that if at any time the
--------
Adjusted Total Leverage Ratio is less than 4.00 to 1.00 (as established pursuant
to the officer's certificate delivered (or required to be delivered) pursuant to
Section 8.01(d)), the Applicable Prepayment Percentage shall instead be 75% and
(ii) for purposes of Section 4.02(e), 50%, provided that if at any time the
--------
Adjusted Total Leverage Ratio is less than 4.00 to 1.00 (as established pursuant
to the officer's certificate delivered (or required to be delivered) pursuant to
Section 8.01(d)), the Applicable Prepayment Percentage shall instead be 0%.
Notwithstanding anything to the contrary in this definition, at any time a
Default or Event of Default is then in existence, the Applicable Prepayment
Percentage for purposes of (x) Section 4.02(c) and (d) shall be 100% and (y)
Section 4.02(e) shall be 50%.
"Apollo Group" shall mean Apollo Advisors, L.P., Apollo Investment
Fund, L.P., Apollo Investment Fund III, L.P., Apollo Overseas Partners III,
L.P., Apollo (U.K.) Partners III, L.P., AIF II, L.P., and Apollo Advisors II,
L.P., all Delaware limited partnerships (except that Apollo (U.K.) Partners III,
L.P. is a limited partnership organized under the laws of England).
"Apollo Management Agreement" shall mean the management agreement,
dated February 10, 1998, between Apollo Advisors, L.P. and the U.S. Borrower.
"Apollo PIK Preferred Stock" shall mean the 13.75% pay-in-kind
preferred stock of the U.S. Borrower, $.01 par value per share, issued to Apollo
Investment Fund, L.P.
"Apollo PIK Preferred Stock Documents" shall mean the Apollo PIK
Preferred Stock and the other documents executed and delivered in connection
with the issuance of the Apollo PIK Preferred Stock.
"Approved Insurance FinanceCo" shall mean an insurance financing
company acceptable to the Administrative Agent which shall make a lump sum
prepayment of insurance premiums on behalf of the U.S. Borrower equal to $16.0
million to an insurance carrier of the U.S. Borrower.
"Asset Sale" shall mean any sale, transfer or other disposition by the
U.S. Borrower or any of its Subsidiaries to any Person other than the U.S.
Borrower or any Wholly-Owned Subsidiary of the U.S. Borrower of any asset
(including, without limitation, any capital stock or other securities of another
Person, but excluding the sale by such Person of its own capital stock) of the
U.S. Borrower or such Subsidiary other than (i) sales, transfers or other
dispositions of inventory made in the ordinary course of business, (ii)
dispositions or transfers arising out of, or in connection with, the events
described in clauses (i) and (ii) of the definition of Recovery Event, (iii) any
sale or other disposition of Cash Equivalents in the ordinary course of
business, (iv) any merger, consolidation or liquidation permitted by Sections
9.02(f) and (g), (v) any transfer of assets permitted pursuant to Section
9.02(e), (g), (k), (n) or (q), (vi) any transaction permitted pursuant to
-136-
<PAGE>
Section 9.02(j), (r) or (s) and (vii) other sales and dispositions that generate
Net Sale Proceeds of less than $1,000,000 in the aggregate in any fiscal year of
the U.S. Borrower.
"Assignment and Assumption Agreement" shall mean the Assignment and
Assumption Agreement substantially in the form of Exhibit L (appropriately
completed).
"A TL/RL Maturity Date" shall mean June 9, 2004
"Authorized Officer" shall mean, with respect to (i) the delivery of
Notices of Borrowing, Notices of Conversion, Letter of Credit Requests and
similar notices, the chief operating officer, any treasurer or other financial
officer of any Borrower, (ii) delivery of financial information and officer's
certificates pursuant to this Agreement, the chief operating officer, any
treasurer or other financial officer of the U.S. Borrower and (iii) any other
matter in connection with this Agreement or any other Credit Document, any
officer (or a person or persons so designated by any two officers) of any
Borrower, in each case to the extent reasonably acceptable to the Administrative
Agent.
"Available Basket Amount" shall mean, on any date of determination, an
amount equal to the sum of (i) $20,000,000 minus (ii) the aggregate amount of
-----
Investments made (including for such purpose the fair market value of any
Tractor Trailer contributed to any Joint Venture or Unrestricted Subsidiary (as
determined in good faith by senior management of the U.S. Borrower), net of
Indebtedness and, without duplication, Capitalized Lease Obligations assigned
to, and assumed by, the respective Joint Venture or Unrestricted Subsidiary in
connection therewith) pursuant to Section 9.05(l) after the Restatement
Effective Date and Section 9.05(l) of the Original Credit Agreement after the
Original Effective Date, minus (iii) the aggregate amount of Indebtedness or
-----
other obligations (whether absolute, accrued, contingent or otherwise and
whether or not due) of any Joint Venture or Unrestricted Subsidiary for which
the U.S. Borrower or any of its Subsidiaries (other than the respective Joint
Venture or Unrestricted Subsidiary) is liable, minus (iv) all payments made by
-----
the U.S. Borrower or any of its Subsidiaries (other than the respective Joint
Venture) in respect of Indebtedness or other obligations of the respective Joint
Venture or Unrestricted Subsidiary (including, without limitation, payments in
respect of obligations described in preceding clause (iii)) after the Original
Effective Date, plus (v) the amount of any increase to the Available Basket
----
Amount made after the Original Effective Date in accordance with the provisions
of Section 9.05(l) and Section 9.05(l) of the Original Credit Agreement. In
connection with the foregoing, it is understood that the acquisition of an
Acquired Person which has ownership interests in one or more Joint Ventures,
pursuant to a Permitted Acquisition effected in accordance with the relevant
requirements of this Agreement shall not be deemed to constitute an Investment
pursuant to Section 9.05(l) and the Available Basket Amount shall not be reduced
as a result of the payment of consideration owing to effect the Permitted
Acquisition (although the Available Basket Amount would be affected to the
extent preceding clauses (iii) or (iv) apply with respect to the Joint Venture
so acquired or to the extent additional Investments are made in the respective
Joint Venture pursuant to Section 9.05(l)).
-137-
<PAGE>
"Available Basket Sub-Limit" shall mean, on any date of determination,
an amount equal to the sum of (i) $10,000,000 minus (ii) the aggregate amount of
-----
Investments made (including for such purpose the fair market value of any
Tractor Trailer contributed to any Unrestricted Subsidiary (as determined in
good faith by senior management of the U.S. Borrower)) in Unrestricted
Subsidiaries pursuant to Section 9.05(l) of the Original Credit Agreement after
the Original Effective Date and Section 9.05(l) after the Restatement Effective
Date, minus (iii) the aggregate amount of Indebtedness or other obligations
-----
(whether absolute, accrued, contingent or otherwise and whether or not due) of
any Unrestricted Subsidiary for which the U.S. Borrower or any of its
Subsidiaries is liable, minus (iv) all payments made by the U.S. Borrower or any
-----
of its Subsidiaries in respect of Indebtedness or other obligations of the
respective Unrestricted Subsidiary (including, without limitation, payments in
respect of obligations described in preceding clause (iii)) after the Original
Effective Date, plus (v) the amount of any increase to the Available Basket Sub-
----
Limit made after the Original Effective Date in accordance with the provisions
of Section 9.05(l) of the Original Credit Agreement and Section 9.05(l);
provided that the Available Basket Sub-Limit shall not exceed at any time the
- --------
Available Basket Amount as then in effect.
"B/A Bank" shall mean any Canadian RL Bank which is not a Non-B/A
Bank.
"BA Discount Proceeds" shall mean, in respect of any Bankers'
Acceptance or Draft to be purchased by a Canadian RL Bank on any date pursuant
to Section 1.01 and Schedule XII hereto, an amount rounded to the nearest whole
Canadian cent, and with one-half of one Canadian cent being rounded up
calculated on such day by dividing:
(a) the Face Amount of such Bankers' Acceptance or Draft; by
(b) the sum of one plus the product of:
----
(i) the Reference Discount Rate (expressed as a decimal)
applicable to such Bankers' Acceptance or Draft; and
(ii) a fraction, the numerator of which is the number of days in
the term of such Bankers' Acceptance or Draft and the
denominator of which is 365;
with such product being rounded up or down to the fifth decimal
place and .000005 being rounded up.
"B/A Equivalent Loan" shall mean the purchase of an unaccepted
completed Draft by a Canadian RL Lender and the exchange of such Draft for a B/A
Equivalent Note from the Canadian Borrower, all as contemplated in Section 1.01
hereof and Schedule XII hereto.
-138-
<PAGE>
"B/A Equivalent Note" shall have the meaning provided in subsection
(m) of Schedule XII hereto."
"Bank" shall mean each financial institution with a Commitment listed
on Schedule I (as amended from time to time), as well as any Person which
becomes a "Bank" hereunder pursuant to Section 1.13 and/or 13.04(b). Unless the
context otherwise requires, each reference in this Agreement to a Bank and in
each other Credit Document to a Bank includes each Canadian RL Bank and, if the
reference is to a specific Bank which has a Commitment hereunder, shall include
references to any Affiliate of any Bank which is acting as a Canadian RL Bank.
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any Borrowing (including
any Mandatory Borrowing) or to fund its portion of any unreimbursed payment
under Section 2.03 or (ii) a Bank having notified the Administrative Agent
and/or the Borrowers that it does not intend to comply with the obligations
under Section 1.01(b), 1.01(d) or 2.03, in the case of either clause (i) or (ii)
above as a result of the appointment of a receiver or conservator with respect
to such Bank at the direction or request of any regulatory agency or authority.
"Bankers' Acceptance" means a Draft accepted by a Canadian RL Bank
pursuant to Section 1.01 and Schedule XII hereto.
"Bankers' Acceptance Loans" shall mean the creation and discount of
Bankers' Acceptances as contemplated in Section 1.01 hereof and Schedule XII
hereto.
"Bankruptcy Code" shall have the meaning provided in Section 10.05.
"Base Rate" at any time shall mean the higher of (x) the rate which is
1/2 of 1% in excess of the Federal Funds Rate and (y) the Prime Lending Rate.
"Base Rate Loan" shall mean each Loan bearing interest at the rates
provided in Section 1.08(a).
"Benefitted Bank" shall have the meaning provided in Section 13.06(b).
"Borrowers" shall mean each of the U.S. Borrower and the Canadian
Borrower.
"Borrowing" shall mean the borrowing of one Type of Loan of a single
Tranche by a single Borrower from all the Banks having Commitments of the
respective Tranche (or from CSFB in the case of Swingline Loans or from all the
Canadian RL Banks in the case of Canadian Dollar Revolving Loans or from all RL
Banks with Non-Canadian Revolving Loan Sub-Commitments in the case of Dollar
Revolving Loans) on a given date (or resulting from a conversion or conversions
on such date) having (x) in the case of Euro dollar Loans the same Interest
Period, (y) in the case of Bankers' Acceptance Loans,
-139-
<PAGE>
underlying Bankers' Acceptances with the same maturities and (z) in the case of
B/A Equivalent Loans, underlying B/A Equivalent Notes with the same maturities;
provided that (i) notwithstanding the foregoing, a "Borrowing" of Canadian
- --------
Dollar Revolving Loans may consist of two Types of Loans, a Bankers' Acceptance
Loan and a B/A Equivalent Loan, so long as the maturities of the underlying
Bankers' Acceptances and B/A Equivalent Notes for such Borrowing are identical
and (ii) Base Rate Loans incurred pursuant to Section 1.10(b) shall be
considered part of the related Borrowing of Eurodollar Loans.
"BTCo" shall mean Bankers Trust Company, in its individual capacity,
and any successor corporation thereto by merger, consolidation or otherwise.
"Business Day" shall mean (i) for all purposes other than as covered
by clauses (ii) and (iii) below, any day except Saturday, Sunday and any day
which shall be in New York City a legal holiday or a day on which banking
institutions are authorized or required by law or other government action to
close and (ii) with respect to all notices and determinations in connection
with, and payments of principal and interest on, Eurodollar Loans, any day which
is a Business Day described in clause (i) above and which is also a day for
trading by and between banks in the New York or London interbank Eurodollar
market and (iii) with respect to all notices and determinations in connection
with, and payments of principal and interest on, Canadian Dollar Revolving
Loans, any day which is a Business Day described in clauses (i) and, if
relevant, (ii) above and which is also a day which is not a legal holiday or a
day on which banking institutions are authorized or required by law or other
government action to close in Toronto, Ontario or Montreal, Quebec and, if
different, in the city where the applicable Payment Office of the Administrative
Agent is located in respect of Canadian Dollar Revolving Loans.
"Calculation Period" shall have the meaning provided in Section 8.14.
"Canadian Borrower" shall have the meaning provided in the first
paragraph of this Agreement.
"Canadian Credit Party" shall mean the Canadian Borrower and, on and
after the creation thereof, each Canadian Subsidiary Guarantor.
"Canadian Dollar Equivalent" shall mean, at any time for the
determination thereof, the amount of Canadian Dollars which could be purchased
with the amount of U.S. Dollars involved in such computation at the spot rate of
exchange therefor as quoted by the Administrative Agent as of 11:00 A.M. (New
York time) on the date two Business Days prior to the date of any determination
thereof for purchase on such date (or, in the case of any determination pursuant
to Section 1.15 or 13.20 or Section 26 of the U.S. Subsidiaries Guaranty, on the
date of determination).
"Canadian Dollar Revolving Loan" shall have the meaning provided in
Section 1.01(b).
-140-
<PAGE>
"Canadian Dollar Revolving Note" shall have the meaning provided in
Section 1.05(a).
"Canadian Dollars" and "Cdn.$" shall mean freely transferable lawful
money of Canada.
"Canadian Guaranteed Obligations" shall mean (i) the principal (or
Face Amount of, as applicable) and interest on each Canadian Dollar Revolving
Note issued by the Canadian Borrower to each Canadian RL Bank, and Canadian
Dollar Revolving Loans made, under this Agreement, together with all the other
obligations and liabilities (including, without limitation, indemnities, fees
and interest thereon) of the Canadian Borrower to each Canadian RL Bank, the
Agents and the Collateral Agent now existing or hereafter incurred under,
arising out of or in connection with this Agreement or any other Credit Document
and the due performance and compliance with all the terms, conditions and
agreements contained in the Credit Documents by the Canadian Borrower and (ii)
all obligations and liabilities of the Canadian Borrower or any of its
Subsidiaries owing under any Interest Rate Protection Agreement or Other Hedging
Agreement entered into by the Canadian Borrower or any of its Subsidiaries with
any Bank or any affiliate thereof (even if such Bank subsequently ceases to be a
Bank under this Agreement for any reason) so long as such Bank or affiliate
participates in such Interest Rate Protection Agreement or Other Hedging
Agreement, and their subsequent assigns, if any, whether now in existence or
hereafter arising, and the due performance and compliance with all terms,
conditions and agreements contained therein.
"Canadian Movable Hypothecs" shall have the meaning provided in
Section 5.10(e).
"Canadian Pledge Agreement Collateral" shall mean all of the capital
stock, shares, promissory notes and other collateral pledged to the Collateral
Agent pursuant to the respective Canadian Pledge Agreements.
"Canadian Pledge Agreement" shall mean, on and after the delivery and
execution thereof, a Pledge Agreement in the form of Exhibit G-2, as amended,
amended and restated, modified and/or supplemented from time to time in
accordance with the terms hereof and thereof.
"Canadian Prime Rate" means, at any time, the greater of (i) the per
annum rate of interest quoted, published and commonly known as the "prime rate"
of Credit Suisse First Boston (Canada) which Credit Suisse First Boston (Canada)
establishes at its main office in Toronto, Ontario as the reference rate of
interest in order to determine interest rates for loans in Canadian Dollars to
its Canadian borrowers, adjusted automatically with each quoted or published
change in such rate, all without the necessity of any notice to any Borrower or
any other Person, and (ii) the sum of (x) the average of the rates per annum for
Canadian Dollar bankers' acceptances having a term of 30 days that appears on
the Reuters Screen CDOR Page as of approximately 10:00 A.M. (Toronto time) on
the date of determination, as reported by Credit Suisse First Boston (Canada)
(and if such screen
-141-
<PAGE>
is not available, any successor or similar service as may be selected by Credit
Suisse First Boston (Canada)), and (y) 0.75%.
"Canadian Prime Rate Loans" shall mean any Canadian Dollar Revolving
Loan designated or deemed designated as such by the Canadian Borrower at the
time of the incurrence thereof or conversion thereto.
"Canadian Revolving Loan Sub-Commitment" means, as to any Canadian RL
Bank, (i) the amount set forth, in U.S. Dollars, opposite such Canadian RL
Bank's name in Part B of Schedule I directly below the column entitled "Canadian
Revolving Loan Sub-Commitment", as same may be (x) reduced from time to time
pursuant to Section 3.02, 3.03 and/or 10 or (y) adjusted from time to time as a
result of assignments to or from such Bank pursuant to Section 1.13 or 13.04(b).
The Canadian Revolving Loan Sub-Commitment of each Canadian RL Bank is a sub-
limit of the Commitment of the respective Canadian RL Bank (or its respective
Affiliate which is a Bank with the related Commitment) and not an additional
commitment and, in no event, may exceed at any time the amount of the Commitment
of such Canadian RL Bank (or its respective Affiliate which is a Bank with the
related Commitment).
"Canadian RL Bank" means (i) each Person listed on Part B of Schedule
I, and (ii) each additional Person that becomes a Canadian RL Bank party hereto
in accordance with Section 1.13 and/or 13.04. It is understood and agreed that
each Canadian RL Bank shall either be a Bank, or be an affiliate of a Bank, with
a Commitment pursuant to this Agreement which equals or exceeds the Canadian
Revolving Loan Sub-Commitment of the respective Canadian RL Bank. A Canadian RL
Bank shall cease to be a "Canadian RL Bank" when it has assigned all of its
Canadian Revolving Loan Sub-Commitments in accordance with Section 1.13 and/or
13.04. For purposes of this Agreement, "Bank" includes each Canadian RL Bank
unless the context otherwise requires.
"Canadian RL Percentage" of any Canadian RL Bank at any time shall
mean a fraction (expressed as a percentage), the numerator of which is the
Canadian Revolving Loan Sub-Commitment of such Canadian RL Bank at such time and
the denominator of which is the aggregate amount of Canadian Revolving Loan Sub-
Commitments of all Canadian RL Banks at such time, provided that if the Canadian
--------
RL Percentage of any Canadian RL Bank is to be determined after the Total
Revolving Loan Commitment has been terminated, then the Canadian RL Percentages
of the Canadian RL Banks shall be determined immediately prior (and without
giving effect) to such termination.
"Canadian Security Agreements" shall have the meaning provided in
Section 5.10(e).
"Canadian Security Agreement Collateral" shall mean all of the assets
and property secured pursuant to the respective Canadian Security Agreements.
-142-
<PAGE>
"Canadian Security Documents" shall mean and include the Quebec Pledge
Agreement, each Canadian Movable Hypothec, each Canadian Security Agreement and,
on and after the execution and delivery thereof, each Canadian Pledge Agreement.
"Canadian Subsidiaries Guaranty" shall mean, on and after the
execution and delivery thereof, the Subsidiaries Guaranty in the form of Exhibit
I-2 hereto, as the same may be amended, modified or supplemented from time to
time.
"Canadian Subsidiary" shall mean each Subsidiary of the U.S. Borrower
incorporated or organized in Canada or any province thereof.
"Canadian Subsidiary Guarantor" shall mean each Wholly-Owned
Subsidiary of the U.S. Borrower that is a Canadian Subsidiary (other than MTL
Investments) and that is or becomes a party to the Canadian Subsidiaries
Guaranty.
"Capital Expenditures" shall mean, with respect to any Person, for any
period, all expenditures by such Person which should be capitalized in
accordance with GAAP during such period, including all such expenditures with
respect to fixed or capital assets (including, without limitation, expenditures
for maintenance and repairs which should be capitalized in accordance with GAAP)
and, without duplication, the amount of all Capitalized Lease Obligations
incurred by such Person during such period.
"Capital Lease," as applied to any Person, shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Capitalized Lease Obligations" shall mean all obligations under
Capital Leases of the U.S. Borrower or any of its Subsidiaries, in each case
taken at the amount thereof accounted for as liabilities in accordance with
GAAP.
"Cash Equivalents" shall mean, as to any Person, (i) securities issued
or directly and fully guaranteed or insured by the United States or any agency
or instrumentality thereof (provided that the full faith and credit of the
--------
United States is pledged in support thereof) having maturities of not more than
six months from the date of acquisition, (ii) time deposits, certificates of
deposit and bankers' acceptances of any Bank or any commercial bank having, or
which is the principal banking subsidiary of a bank holding company organized
under the laws of the United States, any State thereof, the District of Columbia
or any foreign jurisdiction having capital, surplus and undivided profits
aggregating in excess of $200,000,000 and having a long-term unsecured debt
rating of at least "A" or the equivalent thereof from S&P or "A2" or the
equivalent thereof from Moody's, with maturities of not more than six months
from the date of acquisition by such Person, (iii) repurchase agreements with a
term of not more than 30 days, involving securities of the types described in
preceding clause (i), and entered into with commercial banks meeting the
requirements of preceding clause (ii), (iv) commercial paper issued by any
Person incorporated in the United States rated at least A-1 or the equivalent
thereof by S&P or at
-143-
<PAGE>
least P-1 or the equivalent thereof by Moody's and in each case maturing not
more than six months after the date of acquisition by such Person, (v)
investments in money market funds substantially all of whose assets are
comprised of securities of the types described in clauses (i) through (iv) above
and (vi) overnight deposits and demand deposit accounts (in the respective local
currencies) maintained in the ordinary course of business.
"Change of Control Event" shall mean, (I) at any time prior to the
consummation of a Qualified IPO, (a) Apollo Group and its Affiliates shall cease
to own on a fully diluted basis in the aggregate at least 30% of the economic
and voting interest in the U.S. Borrower's capital stock (for such purposes,
excluding the PIK Preferred Stock, any Qualified Preferred Stock and any
Disqualified Preferred Stock, in each case to the extent same is not Voting
Stock) or (b) Apollo Group and its Affiliates, together with the Management
Participants and other investors which own shares of U.S. Borrower Common Stock
on the Original Effective Date, shall cease to own on a fully diluted basis in
the aggregate at least a majority of the outstanding Voting Stock of the U.S.
Borrower or (c) any Person or "group" (within the meaning of Rules 13d-3 and
13d-5 under the Securities Exchange Act of 1934, as in effect on the Original
Effective Date, other than the Permitted Holders, shall (A) have acquired
beneficial ownership of 30% or more on a fully diluted basis of the voting
and/or economic interest in the U.S. Borrower's capital stock or (B) obtained
the power (whether or not exercised) to elect a majority of the U.S. Borrower's
directors or (d) the Board of Directors of the U.S. Borrower shall cease to
consist of a majority of Continuing Directors or (e) a "change of control" or
similar event shall occur as provided in the Senior Subordinated Notes Indenture
or in any Scheduled Existing Indebtedness, Permitted Debt, PIK Preferred Stock,
Disqualified Preferred Stock or Qualified Preferred Stock, to the extent the
outstanding principal amount or liquidation preference, as the case may be, of
such Scheduled Existing Indebtedness, Permitted Debt, PIK Preferred Stock,
Disqualified Preferred Stock or Qualified Preferred Stock exceeds $10,000,000 or
(f) the U.S. Borrower shall cease to own directly of indirectly 100% of the
capital stock of the Canadian Borrower or (II) at any time after a Qualified
IPO, (a) any Person or "group" (within the meaning of Rules 13d-3 and 13d-5
under the Securities Exchange Act of 1934, as in effect on the Original
Effective Date), other than the Permitted Holders, shall have acquired
beneficial ownership of 25% or more on a fully diluted basis of the voting
and/or economic interest in the U.S. Borrower's capital stock and Apollo Group
and its Affiliates shall own less than such Person or "group" on a fully diluted
basis of the economic and voting interest in the U.S. Borrower's capital stock
or (b) the Board of Directors of the U.S. Borrower shall cease to consist of a
majority of Continuing Directors or (c) a "change of control" or similar event
shall occur as provided in the Senior Subordinated Notes Indenture or in any
Scheduled Existing Indebtedness, Permitted Debt, PIK Preferred Stock,
Disqualified Preferred Stock or Qualified Preferred Stock, to the extent the
outstanding principal amount or liquidation preference, as the case may be, of
such Scheduled Existing Indebtedness, Permitted Debt, PIK Preferred
Stock,Disqualified Preferred Stock or Qualified Preferred Stock exceeds
$10,000,000 or (d) the U.S. Borrower shall cease to own directly or indirectly
100% of the capital stock of the Canadian Borrower.
-144-
<PAGE>
"Chemical Tank" shall mean Chemical Leaman Tank Lines, Inc., a
Pennsylvania corporation and a Wholly-Owned Subsidiary of CLC.
"CLC" shall mean Chemical Leaman Corporation, a Pennsylvania
corporation.
"CLC Acquisition Corp." shall mean Palestra Acquisition Corp., a
Delaware corporation, and immediately prior to the CLC Merger, a Wholly-Owned
Subsidiary of the U.S. Borrower.
"CLC Equity Financing" shall mean the equity financing transactions
referred to in Section 5.08(b).
"CLC Equity Financing Documents" shall mean all of the agreements and
documents governing, or relating to, the CLC Equity Financing (including the PIK
Preferred Stock Documents).
"CLC Merger" shall mean the merger of CLC Acquisition Corp. with and
into CLC, with CLC being the surviving corporation of such merger, and as a
result of which, CLC shall become a Wholly-Owned Subsidiary of the U.S.
Borrower.
"CLC Merger Agreement" shall mean the Agreement and Plan of Merger,
dated as of June 23, 1998, between CLC and CLC Acquisition Corp., as in effect
on the Restatement Effective Date and as the same may be amended, modified or
supplemented from time to time pursuant to the terms hereof and thereof.
"CLC Merger Documents" shall mean the CLC Merger Agreement and all
other agreements, instruments and documents entered into or delivered in
connection with the CLC Merger.
"CLC Noteholders" shall have the meaning provided in Section 5.09(a).
"CLC Preferred Stock" shall mean, collectively, CLC's Series A
Preferred Stock, $.01 par value per share, and Series B Preferred Stock, $.01
par value per share.
"CLC Preferred Stock Documents" shall mean the CLC Preferred Stock,
the certificate of designation in respect of the CLC Preferred Stock and the
other documents executed and delivered in connection with the issuance of the
CLC Preferred Stock.
"CLC Refinanced Indebtedness" shall have the meaning provided in
Section 5.09(b).
"CLC Refinancing" shall mean the refinancing transactions described in
Section 5.09.
-145-
<PAGE>
"CLC Refinancing Documents" shall mean each of the agreements,
documents and instruments entered into in connection with the CLC Refinancing.
"CLC Senior Note Documents" shall mean the CLC Senior Notes, the CLC
Senior Notes Indenture and all other documents executed and delivered in
connection with the issuance of the CLC Senior Notes, as in effect on the
Restatement Effective Date.
"CLC Senior Notes" shall mean CLC's 10-3/8% Senior Notes due 2005, as
in effect on the Restatement Effective Date and as the same may be modified,
supplemented or amended from time to time in accordance with the terms hereof
and thereof.
"CLC Senior Notes Indenture" shall mean the Indenture, dated as of
June 16, 1997, entered into by and between CLC, as Issuer, and First Union
National Bank, as trustee thereunder, as in effect on the Restatement Effective
Date (after giving effect to the execution and delivery of the CLC Senior Notes
Indenture Supplement) and as the same may be further modified, amended or
supplemented from time to time in accordance with the terms hereof and thereof.
"CLC Senior Notes Indenture Amendment" shall have the meaning provided
in Section 5.09(a).
"CLC Senior Notes Indenture Supplement" shall mean the Supplemental
Indenture to the CLC Senior Notes Indenture in form and substance satisfactory
to the Agents and entered into by CLC and the trustee for the CLC Senior Notes
in connection with the CLC Tender Offer/Consent Solicitation to effect the CLC
Senior Notes Indenture Amendment.
"CLC Senior Notes Retirement Date" shall mean the date occuring 30
days after the Restatement Effective Date (or such later date as the
Administrative Agent shall determine in its sole discretion).
"CLC Tender Offer/Consent Solicitation" shall have the meaning
provided in Section 5.09(a).
"CLC Tender Offer/Consent Solicitation Consummation" shall have the
meaning provided in Section 5.09(a).
"Co-Agents" shall have the meaning provided in the first paragraph of
this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated thereunder. Section references to
the Code are to the Code, as in effect at the date of this Agreement and any
subsequent provisions of the Code, amendatory thereof, supplemental thereto or
substituted therefor.
-146-
<PAGE>
"Collateral" shall mean all property (whether real or personal,
movable or immovable) with respect to which any security interests have been
granted (or purported to be granted) pursuant to any Security Document,
including, without limitation, all Pledge Agreement Collateral, all Security
Agreement Collateral, all Mortgaged Properties and all cash and Cash Equivalents
delivered as collateral pursuant to any Credit Document.
"Collateral Agent" shall mean the Administrative Agent acting as
collateral agent for the Secured Creditors.
"Collective Bargaining Agreements" shall have the meaning provided in
Section 5.12.
"Commitment" shall mean any of the commitments of any Bank, i.e.,
----
whether a New Tranche A Term Loan Commitment, a Tranche B Term Loan Commitment,
a Tranche C Term Loan Commitment or a Revolving Loan Commitment.
"Commitment Fee" shall have the meaning provided in Section 3.01(a).
"Company" shall mean any corporation, limited liability company,
partnership or other business entity (or the adjectival form thereof, where
appropriate).
"Consolidated Current Assets" shall mean, at any time, the current
assets (other than cash, Cash Equivalents and deferred income taxes to the
extent included in current assets) of the U.S. Borrower and its Subsidiaries at
such time determined on a consolidated basis.
"Consolidated Current Liabilities" shall mean, at any time, the
current liabilities of the U.S. Borrower and its Subsidiaries determined on a
consolidated basis, but excluding deferred income taxes, restructuring costs or
reserves, litigation costs or reserves and the current portion of and accrued
but unpaid interest on any Indebtedness under this Agreement and any other long-
term Indebtedness which would otherwise be included therein.
"Consolidated Debt" shall mean, at any time, the sum of (without
duplication) (i) all Indebtedness of the U.S. Borrower and its Subsidiaries as
would be required to be reflected on the liability side of a balance sheet of
such Person in accordance with GAAP as determined on a consolidated basis, (ii)
all Indebtedness of the U.S. Borrower and its Subsidiaries of the type described
in clauses (iii) and (vii) of the definition of Indebtedness and (iii) all
Contingent Obligations of the U.S. Borrower and its Subsidiaries in respect of
Indebtedness of other Persons (i.e., Persons other than the U.S. Borrower or any
----
of its Subsidiaries) of the type referred to in preceding clauses (i) and (ii)
of this definition; provided, that for purposes of this definition, (i) the
--------
amount of Indebtedness in respect of Interest Rate Protection Agreements shall
be at any time the unrealized net loss position, if any, of the U.S. Borrower
and/or its Subsidiaries thereunder on a marked-to-market basis determined no
more than one month prior to such time and
-147-
<PAGE>
(ii) any Disqualified Preferred Stock of the U.S. Borrower and any Preferred
Stock of any of its Subsidiaries shall be treated as Indebtedness, with an
amount equal to the greater of the liquidation preference or the maximum
mandatory fixed repurchase price of any such outstanding Preferred Stock deemed
to be a component of Consolidated Debt.
"Consolidated EBIT" shall mean, for any period, the Consolidated Net
Income of the U.S. Borrower and its Subsidiaries, determined on a consolidated
basis, before Consolidated Interest Expense (to the extent deducted in arriving
at Consolidated Net Income) and provision for taxes based on income or gains or
losses from sales of assets other than inventory sold in the ordinary course of
business, in each case that were included in arriving at Consolidated Net
Income.
"Consolidated EBITDA" shall mean, for any period, Consolidated EBIT,
adjusted by adding thereto the amount of (i) all amortization and depreciation
and other non-cash items and (ii) any management fees and consulting fees paid
pursuant to, and in accordance with the requirements of, clauses (iii) and (vi)
of Section 9.07 and clause (vi) of Section 9.07 of the Original Credit Agreement
during such period, in each case that were deducted in arriving at Consolidated
EBIT for such period; provided that Consolidated EBITDA for each Test Period
--------
ending on or prior to December 31, 1999 shall mean the sum of (x) Consolidated
EBITDA for such Test Period as determined without regard to this proviso plus
----
(y) the amount set forth in Schedule XV hereto as applicable to Consolidated
EBITDA for such Test Period. Notwithstanding anything to the contrary contained
above, to the extent Consolidated EBITDA is to be determined for any Test Period
which ends prior to the first anniversary of the Restatement Effective Date,
Consolidated EBITDA for all portions of such period occurring prior to the
Restatement Effective Date shall be calculated in accordance with the definition
of Test Period contained herein.
"Consolidated Interest Coverage Ratio" for any period shall mean the
ratio of Consolidated EBITDA to Consolidated Interest Expense for such period.
"Consolidated Interest Expense" shall mean, for any period, the total
consolidated interest expense of the U.S. Borrower and its Subsidiaries for
such period (calculated without regard to any limitations on the payment
thereof) plus, without duplication, (i) that portion of Capitalized Lease
----
Obligations of the U.S. Borrower and its Subsidiaries representing the interest
factor for such period, and capitalized interest expense, plus (ii) that portion
----
of Indebtedness of the U.S. Borrower incurred in connection with a Permitted
Insuarance Program representing the interest factor for such period plus (iii)
----
the product of (x) the amount of all cash Dividend requirements (whether or not
declared or paid) on Disqualified Preferred Stock of the U.S. Borrower and on
any Preferred Stock of any of its Subsidiaries paid, accrued or scheduled to
paid or accrued during such period multiplied by (y) a fraction, the numerator
of which is one and the denominator of which is one minus the then current
effective consolidated Federal, state, local and foreign tax rate (expressed as
a decimal number between one and zero) of the U.S. Borrower as reflected in the
audited consolidated financial statements of the U.S. Borrower for its most
recently completed fiscal year, which amounts described in preceding clause (ii)
shall be treated as interest expense of the U.S. Borrower and its Subsidiaries
for purposes of this definition regardless of the treatment of such amounts
under GAAP, in each case net of the total
-148-
<PAGE>
consolidated cash interest income of the U.S. Borrower and its Subsidiaries for
such period, but excluding the amortization of any deferred financing costs or
of any costs in respect of any Interest Rate Protection Agreement.
Notwithstanding anything to the contrary contained above, to the extent
Consolidated Interest Expense is to be determined for any Test Period which ends
prior to the first anniversary of the Restatement Effective Date, Consolidated
Interest Expense for all portions of such period occurring prior to the
Restatement Effective Date shall be calculated in accordance with the definition
of Test Period contained herein.
"Consolidated Net Income" shall mean, for any period, the net after-
tax income of the U.S. Borrower and its Subsidiaries determined on a
consolidated basis, without giving effect to any after-tax non-recurring gains
or losses or after-tax items classified as extraordinary gains or losses, any
other non-cash expenses incurred or payments made in connection with the
Original Transaction and the Transaction, and without giving effect to gains and
losses from the sale or disposition of assets (other than sales or dispositions
of inventory, equipment, raw materials and supplies) by the U.S. Borrower and
its Subsidiaries; provided that the following items shall be excluded in
--------
computing Consolidated Net Income (without duplication): (i) the net income or
net losses of any Person in which any other Person or Persons (other than the
U.S. Borrower and its Wholly-Owned Domestic Subsidiaries) has an equity interest
or interests, except to the extent of the amount of dividends or other
distributions actually paid to the U.S. Borrower or such Wholly-Owned
Subsidiaries by such Person during such period, (ii) except for determinations
expressly required to be made on a Pro Forma Basis, the net income (or loss) of
--- -----
any Person accrued prior to the date it becomes a Wholly-Owned Subsidiary or all
or substantially all of the property or assets of such Person are acquired by a
Wholly-Owned Subsidiary and (iii) the net income of any Subsidiary to the extent
that the declaration or payment of dividends or similar distributions by such
Subsidiary of such net income is not at the time permitted by the operation of
the terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to such Subsidiary.
"Consolidated Senior Debt" shall mean, at any time, Consolidated Debt
at such time, adjusted by excluding therefrom all amounts otherwise included
therein representing Indebtedness owing pursuant to the Senior Subordinated
Notes and any then outstanding Additional Senior Subordinated Note Indebtedness,
Permitted Subordinated Indebtedness, Permitted Subordinated Refinancing
Indebtedness, Shareholder Subordinated Notes, Convertible Subordinated Notes and
any Disqualified Preferred Stock of the U.S. Borrower (including, after the PIK
Trigger Date, the PIK Preferred Stock).
"Contingent Obligations" shall mean as to any Person any obligation of
such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(a) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (x) for
-149-
<PAGE>
the purchase or payment of any such primary obligation or (y) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (c) 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 (d) otherwise to assure or hold harmless
the owner of such primary obligation against loss in respect thereof; provided,
--------
however, that the term Contingent Obligation shall not include endorsements of
- -------
instruments for deposit or collection or standard contractual indemnities
entered into, in each case in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
"Continuing Directors" shall mean the directors of the U.S. Borrower
on the Original Effective Date and each other director if such director's
nomination for the election to the Board of Directors of the U.S. Borrower is
recommended by a majority of the then Continuing Directors.
"Convertible Subordinated Notes" shall mean promissory notes issued by
the U.S. Borrower to management of any Person acquired by the U.S. Borrower or
any of its Subsidiaries pursuant to a Permitted Acquisition, which notes (i)
shall be convertible into U.S. Borrower Common Stock on the terms provided
therein and (ii) shall contain subordination provisions substantially similar to
those set forth on Annex A to the Intercompany Note (with appropriate
modifications).
"Credit Documents" shall mean this Agreement, the Notes, each
Subsidiaries Guaranty and each Security Document.
"Credit Event" shall mean the making of a Loan (other than a Revolving
Loan made pursuant to a Mandatory Borrowing) or the issuance of a Letter of
Credit.
"Credit Party" shall mean each U.S. Credit Party and each Canadian
Credit Party.
"CSFB" shall mean Credit Suisse First Boston, in its individual
capacity, and any successor corporation thereto by merger, consolidation or
otherwise.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.
-150-
<PAGE>
"Disqualified Preferred Stock" shall mean any Preferred Stock of the
U.S. Borrower other than Qualified Preferred Stock and, at all times prior to
the PIK Trigger Date, PIK Preferred Stock.
"Dividend" shall have the meaning provided in Section 9.06.
"Documentation Agent" shall have the meaning provided in the first
paragraph of this Agreement and shall include any successor to the Documentation
Agent designated pursuant to Section 12.10.
"Documents" shall mean and include (i) the Credit Documents, (ii) the
CLC Equity Financing Documents, (iii) the CLC Merger Documents, (iv) the CLC
Refinancing Documents, (v) the Original Transaction Documents and (vi) all other
documents, agreements and instruments executed in connection with the
Transaction.
"Dollar Equivalent" of an amount denominated in a currency other than
U.S. Dollars (the "Other Currency") shall mean, at any time for the
determination thereof, the amount of U.S. Dollars which could be purchased with
the amount of the Other Currency involved in such computation at the spot
exchange rate therefor as quoted by the Administrative Agent as of 11:00 A.M.
(New York time) on the date two Business Days prior to the date of any
determination thereof for purchase on such date (or, in the case of any
determination pursuant to Section 1.15 or 13.20 or Section 26 of the U.S.
Subsidiaries Guaranty, on the date of determination); provided that for purposes
--------
of (x) determining compliance with Sections 1.01, 2.01 and 4.02(a) and (y)
calculating Commitment Fees pursuant to Section 3.01(a), the Dollar Equivalent
of any amounts outstanding in Canadian Dollars shall be revalued on a quarterly
basis using the spot exchange rate therefor quoted in the Wall Street Journal on
-------------------
the last Business Day of each calendar quarter; provided, however, that the
-------- -------
Administrative Agent may revalue the Dollar Equivalent of any such amounts
outstanding in Canadian Dollars described in the preceding proviso of this
definition at any time, at its sole discretion or at the direction of the
Required Banks, when the Dollar Equivalent of the aggregate principal amount or
Face Amount, as the case may be, of all Canadian Dollar Revolving Loans
outstanding on the date of any revaluation pursuant to this proviso would change
by at least 5% of the Total Canadian Revolving Loan Sub-Commitment at such time
as a result of the revaluation made pursuant to this proviso.
"Dollar Loan" shall mean each Term Loan, each Dollar Revolving Loan
and each Swingline Loan.
"Dollar Revolving Loan" shall have the meaning provided in Section
1.01(b).
"Dollar Revolving Note" shall have the meaning provided in Section
1.05(a).
"Dollar RL Percentage" of any RL Bank at any time shall mean a
fraction (expressed as a percentage) the numerator of which is the Non-Canadian
Revolving Loan
-151-
<PAGE>
Sub-Commitment of such RL Bank at such time and the denominator of which is the
aggregate amount of Non-Canadian Revolving Loan Sub-Commitments of all RL Banks
at such time. Notwithstanding anything to the contrary contained above, if the
Dollar RL Percentage of any RL Bank is to be determined after the Total
Revolving Loan Commitment has been terminated, then the Dollar RL Percentages of
the RL Banks shall be determined immediately prior (and without giving effect)
to such termination (and without giving effect to the termination of the Non-
Canadian Revolving Loan Sub-Commitments).
"Domestic Subsidiary" shall mean each Subsidiary of the U.S. Borrower
incorporated or organized in the United States or any State or territory
thereof.
"Domestic Unrestricted Subsidiary" shall mean any Unrestricted
Subsidiary which is not a Foreign Unrestricted Subsidiary.
"Draft" means at any time a blank bill of exchange, within the meaning
of the Bills of Exchange Act (Canada), drawn by the Canadian Borrower on a
---------------------
Canadian RL Bank and bearing such distinguishing letters and numbers as such
Canadian RL Bank may determine, but which at such time has not been completed or
accepted by such Canadian RL Bank.
"Drawing Date" means any Business Day fixed pursuant to Schedule XII
for the creation and purchase of Bankers' Acceptances (in the case of Bankers'
Acceptance Loans) or the purchase of completed Drafts and the exchange thereof
for B/A Equivalent Notes (in the case of B/A Equivalent Loans), in each case by
a Canadian RL Bank pursuant to Schedule XII.
"Drawing Fee" shall mean, in respect of a Draft drawn by the Canadian
Borrower hereunder and accepted and purchased (in the case of a Bankers'
Acceptance Loan) or purchased and exchanged for a B/A Equivalent Note (in the
case of a B/A Equivalent Loan), in each case by the Canadian Borrower, a fee
calculated on the Face Amount of such Draft at a rate per annum equal to the
Applicable Margin that would be payable with respect to a Dollar Revolving Loan
maintained as a Eurodollar Loan drawn on the Drawing Date of such Draft.
Drawing Fees shall be calculated on the basis of the term to maturity of the
Draft accepted and purchased (in the case of a Bankers' Acceptance Loan) or
purchased and exchanged for a B/A Equivalent Note (in the case of a B/A
Equivalent Loan) and a year of 365 days.
"Effective Date" shall mean the Original Effective Date.
"Eligible Transferee" shall mean and include a commercial bank, mutual
fund, financial institution, a "qualified institutional buyer" (as defined in
Rule 144A of the Securities Act), any fund that invests in bank loans or any
other "accredited investor" (as defined in Regulation D of the Securities Act)
(other than an individual), excluding, in the case of any assignment of a
Canadian Revolving Loan Sub-Commitment and/or outstanding
-152-
<PAGE>
Canadian Dollar Revolving Loans prior to the occurrence of a Sharing Event, a
non-resident of Canada for the purposes of the Income Tax Act (Canada).
"Employee Benefit Plans" shall have the meaning set forth in Section
5.12.
"Employment Agreements" shall have the meaning set forth in Section
5.12.
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of non-compliance or violation, investigations or proceedings relating
in any way to any violation (or alleged violation) by the U.S. Borrower or any
of its Subsidiaries under any Environmental Law (hereafter "Claims") or any
permit issued to the U.S. Borrower or any of its Subsidiaries under any such
law, including, without limitation, (a) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law, and (b)
any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
Hazardous Materials or arising from alleged injury or threat of injury to
health, safety or the environment.
"Environmental Law" shall mean any federal, state, provincial, foreign
or local policy, statute, law, rule, regulation, ordinance, code or rule of
common law now or hereafter in effect and in each case as amended, and any
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent, decree or judgment (for purposes of this
definition (collectively, "Laws")), relating to the environment, or Hazardous
Materials or health and safety to the extent such health and safety issues arise
under the Occupational Safety and Health Act of 1970, as amended, or any such
similar Laws.
"Equity Investors" shall mean and include (i) the Apollo Group and
(ii) the Management Participants.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued there under. Section references to ERISA are to ERISA, as in effect at
the date of this Agreement and any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with the U.S. Borrower or a Subsidiary of the U.S.
Borrower would be deemed to be a "single employer" within the meaning of Section
414(b), (c), (m) or (o) of the Code.
"Eurodollar Loans" shall mean each Loan bearing interest at the rates
provided in Section 1.08(b).
-153-
<PAGE>
"Eurodollar Rate" shall mean with respect to each Interest Period for
a Eurodollar Loan, (i) the rate per annum determined by the Administrative
Agent, at approximately 11:00 A.M. (London time) on the date which is two
Business Days prior to the beginning of the relevant Interest Period (as
specified in the applicable Notice of Borrowing or Notice of Conversion) by
reference to the British Bankers' Association Interest Settlement Rates for
deposits in U.S. Dollars (as set forth by any service which has been nominated
by the British Bankers' Association as an authorized information vendor for the
purpose of displaying such rates) for a period equal to such Interest Period
(provided that, to the extent that an interest rate is not ascertainable
- ---------
pursuant to the foregoing provision of this definition, the "Eurodollar Rate"
shall be the interest rate per annum, determined by the Administrative Agent to
be the average of the rates per annum at which deposits in U.S. Dollars are
offered for such relevant Interest Period to major banks in the London interbank
market in London, England by the Administrative Agent at approximately 11:00
A.M. (London time) on the date which is two Business Days prior to the beginning
of such Interest Period) divided (and rounded upward to the next whole multiple
-------
of 1/16 of 1%) by (ii) a percentage equal to 100% minus the then stated maximum
rate of all reserve requirements (including, without limitation, any marginal,
emergency, supplemental, special or other reserves) applicable to any member
bank of the Federal Reserve System in respect of Eurocurrency liabilities as
defined in Regulation D (or any successor category of liabilities under
Regulation D).
"Event of Default" shall have the meaning provided in Section 10.
"Excess Cash Flow" shall mean, for any period, the remainder of (a)
the sum of (i) Adjusted Consolidated Net Income for such period and (ii) the
decrease, if any, in Adjusted Consolidated Working Capital from the first day to
the last day of such period, minus (b) the sum of (i) the amount of Capital
-----
Expenditures made by the U.S. Borrower and its Subsidiaries on a consolidated
basis during such period, except to the extent financed with the proceeds of
Indebtedness (other than the proceeds of Revolving Loans) or pursuant to
Capitalized Lease Obligations or with proceeds of asset sales, asset trade-ins
or insurance, (ii) the aggregate amount of permanent principal payments of
Indebtedness for borrowed money of the U.S. Borrower and its Subsidiaries and
the permanent repayment of the principal component of Capitalized Lease
Obligations of the U.S. Borrower and its Subsidiaries (excluding (1) payments
pursuant to the Original Refinancing and the CLC Refinancing, (2) payments with
proceeds of asset sales, (3) payments with the proceeds of Indebtedness or
equity and (4) payments of Loans or other Obligations) during such period, (iii)
the increase, if any, in Adjusted Consolidated Working Capital from the first
day to the last day of such period and (iv) without duplication of amounts
deducted in the preceding clauses (b)(i), (ii) and (iii), the amount of cash
expended in respect of Permitted Acquisitions during such period, except to the
extent financed with Indebtedness.
"Excess Cash Flow Payment Date" shall mean the date occurring 90 days
after the last day of a fiscal year of the U.S. Borrower (commencing with the
fiscal year ending on December 31, 1998).
-154-
<PAGE>
"Excess Cash Flow Payment Period" shall mean (i) with respect to the
fiscal year ending December 31, 1998, the period from and including July 1, 1998
to and including December 31, 1998 and (ii) with respect to each repayment
required on an Excess Cash Flow Payment Date for each fiscal year thereafter,
the immediately preceding fiscal year of the U.S. Borrower.
"Excluded Recovery Event" shall mean (i) any Recovery Event resulting
in the receipt of proceeds by the U.S. Borrower or any of its Subsidiaries of
less than $1,000,000 and (ii) any receipt of insurance proceeds by the U.S.
Borrower or any of its Subsidiaries payable under an insurance policy covering
environmental liabilities, to the extent (and only to the extent) (x) the U.S.
Borrower or such Subsidiary has, prior to the date of its receipt of such
proceeds, used monies to remediate or restore properties in respect of which
such proceeds were paid, (y) the amount of the insurance proceeds included for
purposes of this clause (ii) does not exceed the amount of the monies so used to
remediate or restore properties as provided in the immediately preceding clause
(x) and (z) within 10 days following receipt by the Borrower or such Subsidiary
of such insurance procceds, an Authorized Officer of the U.S. Borrower has
delivered to the Administrative Agent an officer's certificate, certifying the
U.S. Borrower's compliance with preceding clauses (x) and (y) and attaching
invoices and such other supporting information as the Administrative Agent may
request. For avoidance of doubt, the parties hereto acknowledge and agree that
the receipt by the U.S. Borrower or any of its Subsidiaries of any proceeds from
a single Recovery Event of the type described in clause (ii) above not entitled
to inclusion in said clause (ii) by virtue of the qualification contained in
clause (y) thereof shall be subject to the provisions of Section 4.02(f) as if
such receipt of proceeds were a separate and distinct Recovery Event.
"Existing CLC Receivables Documents" shall mean [_______], in each
case as in effect on the Restatement Effective Date.
"Existing CLC Credit Agreement" shall mean the Credit Agreement, dated
as of June 16, 1997, among CLC and First Union National Bank, as successor by
merger to CoreStates Bank, N.A., as in effect on the Restatement Effective Date.
"Existing Indebtedness" shall have the meaning provided in Section
5.09(d).
"Existing Indebtedness Agreements" shall have the meaning provided in
Section 5.12.
"Face Amount" means, in respect of a Draft, Bankers' Acceptance or
B/A Equivalent Note, as the case may be, the amount payable to the holder
thereof on its maturity. The Face Amount of any Bankers' Acceptance Loan or B/A
Equivalent Loan shall be equal to the aggregate Face Amounts of the underlying
Bankers' Acceptances, B/A Equivalent Notes or Drafts, as the case may be.
"Facing Fee" shall have the meaning provided in Section 3.01(c).
-155-
<PAGE>
"Federal Funds Rate" shall mean, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal Funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal Funds
brokers of recognized standing selected by the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to, or referred to in,
Section 3.01.
"Final Maturity Date", with respect to any relevant Tranche of Loans,
shall mean the A TL/RL Maturity Date, the Tranche B Term Loan Maturity Date or
the Tranche C Term Loan Maturity Date, as the case may be.
"Foreign Pension Plan" means any plan, fund (including, without
limitation, any superannuation fund) or other similar program established or
maintained outside the United States of America by any Borrower or any one or
more of its Subsidiaries primarily for the benefit of employees of any Borrower
or any of its Subsidiaries residing outside the United States of America, which
plan, fund or other similar program provides, or results in, retirement income,
a deferral of income in contemplation of retirement or payments to be made upon
termination of employment, and which plan is not subject to ERISA or the Code.
"Foreign Subsidiary" shall mean each Subsidiary of the U.S. Borrower
other than a Domestic Subsidiary.
"Foreign Unrestricted Subsidiary" shall mean each Unrestricted
Subsidiary that is incorporated under the laws of any jurisdiction other than
the United States of America, any State thereof, the United States Virgin
Islands or Puerto Rico.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time; it being understood and
agreed that deter-minations in accordance with GAAP for purposes of Section 9,
including defined terms as used therein, are subject (to the extent provided
therein) to Section 13.07(a).
"Gross-Up Amount" shall have the meaning provided in Section 4.04(a).
"Guaranteed Creditors" shall mean and include each of the Agents, the
Collateral Agent, the Banks and each party (other than any Credit Party) party
to an Interest Rate Protection Agreement or Other Hedging Agreement to the
extent that such party constitutes a Secured Creditor under the Security
Documents.
-156-
<PAGE>
"Guaranties" shall mean and include each of the U.S. Borrower Guaranty
and each Subsidiaries Guaranty.
"Guarantors" shall mean and include the U.S. Borrower, each U.S.
Subsidiary Guarantor and each Canadian Subsidiary Guarantor.
"Hazardous Materials" shall mean (a) any petrochemical or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls, and
radon gas; and (b) any chemicals, materials or substances defined as or included
in the definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "restricted hazardous materials," "extremely hazardous wastes,"
"restrictive hazardous wastes," "toxic pollutants," "contaminants" or
"pollutants" under any Environmental Law, or words of similar meaning and
regulatory effect.
"Indebtedness" of any Person shall mean, without duplication, (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase price
of assets or services payable to the sellers thereof or any of such seller's
assignees which in accordance with GAAP would be shown on the liability side of
the balance sheet of such Person but excluding deferred rent as determined in
accordance with GAAP, (iii) the face amount of all letters of credit issued for
the account of such Person and, without duplication, all drafts drawn
thereunder, (iv) all Indebtedness of a second Person secured by any Lien on any
property owned by such first Person, whether or not such Indebtedness has been
assumed, (v) all Capitalized Lease Obligations of such Person, (vi) all
obligations of such Person to pay a specified purchase price for goods or
services whether or not delivered or accepted, i.e., take-or-pay and similar
----
obligations, (vii) all obligations under Interest Rate Protection Agreements and
Other Hedging Agreements and (viii) all Contingent Obligations of such Person,
provided, that Indebtedness shall not include trade payables and accrued
- --------
expenses, in each case arising in the ordinary course of business.
"Initial Borrowing Date" shall have the meaning provided in the
Original Credit Agreement.
"Intercompany Loan" shall have the meaning provided in Section
9.05(f).
"Intercompany Notes" shall mean promissory notes, in the form of
Exhibit M, evidencing Intercompany Loans.
"Interest Determination Date" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
"Interest Period," with respect to any Eurodollar Loan, shall mean the
interest period applicable thereto, as determined pursuant to Section 1.09.
-157-
<PAGE>
"Interest Rate Protection Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement, interest
rate hedging agreement or other similar agreement or arrangement.
"Investment" shall have the meaning provided in the preamble to
Section 9.05.
"Joint Venture" shall mean any Person, other than an individual or a
Wholly-Owned Subsidiary of the U.S. Borrower, (i) in which the U.S. Borrower or
a Subsidiary of the U.S. Borrower holds or acquires an ownership interest
(whether by way of capital stock, partnership or limited liability company
interest, or other evidence of ownership) and (ii) which is engaged in a
Permitted Business.
"Judgment Currency" shall have the meaning provided in Section
13.20(a).
"Judgment Currency Conversion Date" shall have the meaning provided in
Section 13.20(a).
"L/C Supportable Indebtedness" shall mean obligations of the U.S.
Borrower or its Wholly-Owned Subsidiaries incurred in the ordinary course of
business and otherwise permitted to exist pursuant to the terms of this
Agreement.
"Leasehold" of any Person shall mean all of the right, title and
interest of such Person as lessee or licensee in, to and under leases or
licenses of land, improvements and/or fixtures.
"Letter of Credit" shall have the meaning provided in Section 2.01(a).
"Letter of Credit Fees" shall have the meaning provided in Section
3.01(b).
"Letter of Credit Issuer" shall mean CSFB, BTCo and any other Bank
which, at the request of the U.S. Borrower and with the consent of the
Administrative Agent, agrees in such Bank's sole discretion to become a Letter
of Credit Issuer for purposes of issuing Letters of Credit pursuant to Section
2. The sole Letter of Credit Issuers on the Restatement Effective Date are CSFB
and BTCo.
"Letter of Credit Outstandings" shall mean, at any time, the sum of,
without duplication, (i) the aggregate Stated Amount of all outstanding Letters
of Credit and (ii) the aggregate amount of all Unpaid Drawings in respect of all
Letters of Credit.
"Letter of Credit Request" shall have the meaning provided in Section
2.02(a).
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien, hypothec or charge of any kind (including any agreement to
give any of the foregoing,
-158-
<PAGE>
any conditional sale or other title retention agreement, any financing or
similar statement or notice filed under the UCC or any similar recording or
notice statute, and any lease having substantially the same effect as the
foregoing).
"Loan" shall mean each Tranche A Term Loan, each Tranche B Term Loan,
each Tranche C Term Loan, each Revolving Loan and each Swingline Loan.
"Majority Lenders" of any Sub-Tranche shall mean those Banks which
would constitute the Required Banks under, and as defined in, this Agreement if
all outstanding Obligations of the other Sub-Tranches under this Agreement were
paid in full and all Sub-Commitments (or in the case of Term Loans, relevant
Commitments) with respect thereto were terminated.
"Management Agreements" shall have the meaning provided in Section
5.12.
"Management Participants" shall mean certain members of management of
the U.S. Borrower previously identified and satisfactory to the Agents.
"Mandatory Borrowing" shall have the meaning provided in Section
1.01(d).
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Adverse Effect" shall mean a material adverse effect on the
business, properties, assets, liabilities, condition (financial or otherwise) or
prospects of the U.S. Borrower, the U.S. Borrower and its Subsidiaries taken as
a whole or, for purposes of Section 5, CLC and its Subsidiaries taken as a
whole.
"Material Contracts" shall have the meaning provided in Section 5.12.
"Maximum Permitted Acquisition Leverage Ratio" shall mean, at any
time, the maximum Adjusted Leverage Ratio which may exist pursuant to Section
9.10 without giving rise to a Default or Event of Default at such time, adjusted
by reducing the ratio appearing in such maximum Adjusted Leverage Ratio by 0.25.
"Maximum Swingline Amount" shall mean $2,500,000.
"Minimum Borrowing Amount" shall mean (i) for Dollar Revolving Loans,
$1,000,000, (ii) for Term Loans of any Tranche, $5,000,000, (iii) for Swingline
Loans, $500,000, (iv) for Canadian Prime Rate Loans, Cdn.$500,000 and (iv) for
Bankers' Acceptance Loans and B/A Equivalent Loans, the minimum amount specified
in Schedule XII.
"Moody's" shall mean Moody's Investors Service, Inc.
-159-
<PAGE>
"Montgomery Tank" shall mean Montgomery Tank Lines, Inc., an Illinois
corporation and a Wholly-Owned Subsidiary of the U.S. Borrower.
"Mortgage" shall mean each mortgage, deed of trust or deed to secure
debt required to be delivered with respect to any Real Property pursuant to the
terms of this Agreement, together with any assignment of leases and rents to be
executed in connection therewith.
"Mortgage Policy" shall mean each mortgage title insurance policy (and
all endorsements thereto) for each Mortgaged Property required to be delivered
pursuant to this Agreement.
"Mortgaged Property" shall mean each Real Property owned by the U.S.
Borrower or any of its Subsidiaries and required to be mortgaged pursuant to
this Agreement.
"MTL Investments" shall mean MTL Investments, Inc., a Canadian non-
registered corporation and a Wholly-Owned Subsidiary of the U.S. Borrower.
"Multiemployer Plan" shall mean any multiemployer plan as defined in
Section 4001(a)(3) of ERISA, which is maintained or contributed to by (or to
which there is an obligation to contribute of) the U.S. Borrower, a Subsidiary
of the U.S. Borrower or an ERISA Affiliate, and each such plan for the five year
period immediately following the latest date on which the U.S. Borrower, a
Subsidiary of the U.S. Borrower or an ERISA Affiliate maintained, contributed to
or had an obligation to contribute to such plan.
"Net Cash Proceeds" shall mean for any event requiring a reduction of
the Total Revolving Loan Commitment and/or repayment of Term Loans pursuant to
Section 3.03 or 4.02, as the case may be, the gross cash proceeds (including any
cash received by way of deferred payment pursuant to a promissory note,
receivable or otherwise, but only as and when received) received from such
event, net of reasonable transaction costs (including, as applicable, any
underwriting, brokerage or other customary commissions and reasonable legal,
advisory and other fees and expenses associated therewith) received from any
such event.
"Net Sale Proceeds" shall mean for any sale of assets, the gross cash
proceeds (including any cash received by way of deferred payment pursuant to a
promissory note, receivable or otherwise, but only as and when received)
received from any sale of assets, net of (i) reasonable transaction costs
(including, without limitation, any underwriting, brokerage or other customary
selling commissions and reasonable legal, advisory and other fees and expenses,
including title and recording expenses, associated therewith) and payments of
unassumed liabilities relating to the assets sold at the time of, or within 30
days after, the date of such sale, (ii) the amount of such gross cash proceeds
required to be used to repay any Indebtedness (other than Indebtedness of the
Banks pursuant to this Agreement) which is secured by the respective assets
which were sold, and
-160-
<PAGE>
(iii) the estimated marginal increase in income taxes which will be payable by
the U.S. Borrower's consolidated group with respect to the fiscal year in which
the sale occurs as a result of such sale; provided, however, that such gross
-------- -------
proceeds shall not include any portion of such gross cash proceeds which the
U.S. Borrower determines in good faith should be reserved for post-closing
adjustments (including indemnification payments) (to the extent the U.S.
Borrower delivers to the Banks a certificate signed by its chief financial
officer or treasurer, controller or chief accounting officer as to such
determination), it being understood and agreed that on the day that all such
post-closing adjustments have been determined (which shall not be later than six
months following the date of the respective asset sale), the amount (if any) by
which the reserved amount in respect of such sale or disposition exceeds the
actual post-closing adjustments payable by the U.S. Borrower or any of its
Subsidiaries shall constitute Net Sale Proceeds on such date received by the
U.S. Borrower and/or any of its Subsidiaries from such sale, lease, transfer or
other disposition. The parties hereto acknowledge and agree that Net Sale
Proceeds shall not include any trade-in-credits or purchase price reductions
received by the U.S. Borrower or any of its Subsidiaries in connection with an
exchange of equipment for replacement equipment that is the functional
equivalent of such exchanged equipment.
"New Bank" shall mean each Person listed on Schedule I that is not an
Original Bank.
"New Credit Party" shall mean each Credit Party that was not a Credit
Party (as defined in the Original Credit Agreement) on the Original Effective
Date.
"New Pro Forma Balance Sheet" shall have the meaning provided in
--- -----
Section 5.15.
"New Tranche A Term Loan Commitment" shall mean, with respect to each
Bank, the amount set forth opposite such Bank's name in Part A of Schedule I
directly below the column entitled "New Tranche A Term Loan Commitment", as the
same may be reduced or terminated pursuant to Sections 3.03 and/or 10.
"New Tranche A Term Loans" shall have the meaning provided in Section
1.01(a).
"New Withholding Regulations" shall have the meaning provided in
Section 4.04(b).
"Non-B/A Bank" shall mean any Canadian RL Bank which is unwilling or
unable to create Bankers' Acceptances by accepting Drafts and which has
identified itself as a "Non-B/A Bank" by written notice to the Canadian
Borrower.
"Non-Canadian Revolving Loan Sub-Commitment" means, for any Bank at
any time, such Bank's Revolving Loan Commitment minus, in the case of a Bank
that is,
-161-
<PAGE>
or whose Affiliate is, a Canadian RL Bank, such Bank's or such Affiliate's
Canadian Revolving Loan Sub-Commitment.
"Non-Defaulting Bank" shall mean each Bank other than a Defaulting
Bank.
"Non-Wholly Owned Entity" shall have the meaning provided in the
definition of Permitted Acquisition.
"Note" shall mean each Tranche A Term Note, each Tranche B Term Note,
each Tranche C Term Note, each Revolving Note, each B/A Equivalent Note and/or
the Swingline Note, as the context may require.
"Notice of Borrowing" shall have the meaning provided in Section
1.03(a).
"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Notice Office" shall mean the office of the Administrative Agent
located at 11 Madison Avenue, New York, New York 10010 or such other office as
the Administrative Agent may designate to the Borrowers and the Banks from time
to time; provided that in the case of Canadian Dollar Revolving Loans, the
--------
"Notice Office" shall mean the office specified above, with a copy of the
respective notice to be delivered at the same time as otherwise required
pursuant to the terms of this Agreement to the office of the Administrative
Agent located at 525 University Avenue, Toronto, Ontario, Canada M5G-2K6,
Attention: Edith Chan.
"Obligation Currency" shall have the meaning provided in Section
13.20(a).
"Obligations" shall mean all amounts, direct or indirect, contingent
or absolute, of every type or description, and at any time existing, owing to
either Agent, the Collateral Agent or any Bank pursuant to the terms of this
Agreement or any other Credit Document.
"Original Bank" shall mean each Person which was a Bank under, and as
defined in, the Original Credit Agreement.
"Original Common Equity Issuance" shall have the meaning provided in
the Original Credit Agreement.
"Original Credit Agreement" shall have the meaning provided in the
first WHEREAS clause of this Agreement.
"Original Effective Date" shall mean the Effective Date under, and as
defined in, the Original Credit Agreement.
-162-
<PAGE>
"Original Letter of Credit" shall have the meaning provided in Section
2.01(e).
"Original Pro Forma Balance Sheet" shall mean the "Pro Forma Balance
--- ----- --- -----
Sheet," as defined in the Original Credit Agreement.
"Original Refinancing" shall mean the "Refinancing", as defined in the
Original Credit Agreement.
"Original Revolving Loan Bank" shall mean each RL Bank under, and as
defined in, the Original Credit Agreement on the Restatement Effective Date
(immediately prior to giving effect thereto).
"Original Term Loan Bank" shall mean each Bank under, and as defined
in, the Original Credit Agreement with outstanding Original Term Loans on the
Restatement Effective Date (immediately prior to giving effect thereto).
"Original Term Loans" shall mean the "Term Loans" under, and as
defined in, the Original Credit Agreement.
"Original Transaction" shall mean the "Transaction", as defined in the
Original Credit Agreement.
"Original Transaction Documents" shall mean the Documents under, and
as defined in, the Original Credit Agreement.
"Other Hedging Agreements" shall mean any foreign exchange contracts,
currency swap agreements or other similar agreements or arrangements designed to
protect against fluctuations in currency values.
"Over-Allotted Bank" shall have the meaning provided in clause (e) of
Schedule XII.
"Participant" shall have the meaning provided in Section 2.03(a).
"Payment Office" shall mean (i) in respect of Term Loans, Dollar
Revolving Loans, Letters of Credit, Fees (other than Acceptance Fees) and,
except as provided in clause (ii) below, all other amounts owing under this
Agreement and the other Credit Documents, the office of the Administrative Agent
located at 11 Madison Avenue, New York, New York 10010, and (ii) in the case of
Canadian Dollar Revolving Loans, the office of the Administrative Agent located
at 525 University Avenue, Toronto, Ontario, Canada M5G-2K6, or, in each case,
such other office as the Administrative Agent may hereafter designate in writing
as such to the other parties hereto.
-163-
<PAGE>
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Acquired Debt" shall have the meaning set forth in Section
9.04(d).
"Permitted Acquisition" shall mean the acquisition by the U.S.
Borrower or any of its Wholly-Owned Domestic Subsidiaries of assets constituting
a business, division or product line of any Person not already a Subsidiary of
the U.S. Borrower or any of its Wholly-Owned Subsidiaries or of 100% of the
capital stock or other equity interests of any such Person, provided that (A)
--------
the consideration paid by the U.S. Borrower or such Wholly-Owned Subsidiary
consists solely of cash (including proceeds of Revolving Loans), the issuance of
the U.S. Borrower Common Stock, the issuance of any Qualified Preferred Stock or
Disqualified Preferred Stock otherwise permitted in Section 9.13, the issuance
of Indebtedness otherwise permitted in Section 9.04 (including Permitted
Subordinated Indebtedness) and the assumption/acquisition of any Permitted
Acquired Debt (calculated in accordance with GAAP) relating to such business,
division, product line or Person which is permitted to remain outstanding in
accordance with the requirements of Section 9.04, (B) those acquisitions that
are structured as stock acquisitions shall be effected through a purchase of
100% of the capital stock or other equity interests of such Person by the U.S.
Borrower or such Wholly-Owned Domestic Subsidiary or through a merger between
such Person and a Wholly-Owned Domestic Subsidiary of the U.S. Borrower, so that
after giving effect to such merger, 100% of the capital stock of the surviving
corporation of such merger is owned by the U.S. Borrower or a Wholly-Owned
Domestic Subsidiary, (C) in the case of the acquisition of 100% of the capital
stock or other equity interests of any Person, such Person (the "Acquired
Person") shall own no capital stock or other equity interests of any other
Person unless either (x) the Acquired Person owns 100% of the capital stock or
other equity interests of such other Person or (y) if the Acquired Person owns
capital stock or equity interests in any other Person which is not a Wholly-
Owned Subsidiary of the Acquired Person (a "Non-Wholly Owned Entity"), both (1)
the Acquired Person shall not have been created or established in contemplation
of, or for purposes of, the respective Permitted Acquisition and (2) any Non-
Wholly Owned Entity of the Acquired Person shall have been non-wholly-owned
prior to the date of the respective Permitted Acquisition and not created or
established in contemplation thereof, (D) substantially all of the business,
division or product line acquired pursuant to the respective Permitted
Acquisition, or the business of the Person acquired pursuant to the respective
Permitted Acquisition and its Subsidiaries taken as a whole, is in the United
States, (E) the assets acquired, or the business of the Person whose stock is
acquired, shall be in a Permitted Business and (F) all applicable requirements
of Sections 8.14 and 9.02 applicable to Permitted Acquisitions are satisfied.
Notwithstanding anything to the contrary contained in the immediately preceding
sentence, an acquisition which does not otherwise meet the requirements set
forth above in the definition of "Permitted Acquisition" shall constitute a
Permitted Acquisition if, and to the extent, the Required Banks agree in writing
that such acquisition shall constitute a Permitted Acquisition for purposes of
this Agreement.
-164-
<PAGE>
"Permitted Acquisition Additional Cost-Savings" shall mean, in
connection with each Permitted Acquisition, those demonstrable cost-savings
adjustments (in each case not included pursuant to clause (iii) or (iv) of the
definition of Pro Forma Basis contained herein) reasonably anticipated by the
--- -----
U.S. Borrower to be achieved in connection with such Permitted Acquisition for
the 12 month period following the consummation of such Permitted Acquisition,
which cost-savings adjustments shall be estimated on a good faith basis by the
U.S. Borrower and, if requested by the Administrative Agent, be verified by a
nationally recognized accounting firm or as otherwise agreed to by the
Administrative Agent.
"Permitted Business" shall mean the truckload transportation of bulk
liquids, tank cleaning services, intermodal services, rail transloding services,
ancillary leasing services and the business contemplated by the Permitted
Program Affiliate Transactions, in each case as such businesses are conducted by
the U.S. Borrower and its Subsidiaries on the Restatement Effective Date, and
reasonable extensions of the foregoing.
"Permitted Debt" shall mean and include Permitted Acquired Debt,
Additional Permitted Senior Subordinated Note Indebtedness, Permitted
Subordinated Refinancing Indebtedness and Permitted Subordinated Indebtedness.
"Permitted Encumbrances" shall mean (i) those liens, encumbrances,
hypothecs and other matters affecting title to any Real Property and found
reasonably acceptable by the Administrative Agent, (ii) as to any particular
Real Property at any time, such easements, encroachments, covenants, rights of
way, minor defects, irregularities or encumbrances on title which could
reasonably be expected to materially impair such Real Property for the purpose
for which it is held by the mortgagor or grantor thereof, or the lien or
hypothec held by the Collateral Agent, (iii) zoning and other municipal
ordinances which are not violated in any material respect by the existing
improvements and the present use made by the mortgagor or grantor thereof of the
premises, (iv) general real estate taxes and assessments not yet delinquent, and
(v) such other similar items as the Administrative Agent may consent to (such
consent not to be unreasonably withheld).
"Permitted Holders" shall mean Apollo Group and its Affiliates and the
Management Participants.
"Permitted Liens" shall have the meaning provided in Section 9.03.
"Permitted Program Affiliate Transactions" shall mean a transaction or
series of transactions effected in the ordinary course of business of the U.S.
Borrower or any of its Subsidiaries and consistent with the past practices of
the U.S. Borrower and its Subsidiaries as determined on the Restatement
Effective Date, pursuant to which (A) (i) the U.S. Borrower and/or one or more
of its Subsidiaries leases equipment from a third party financial institution,
(ii) transfers the lease (and the equipment subject thereto) to a Program
Affiliate and (iii) guarantees a portion of the lease payments owing by such
Program Affiliate to such financial institution and/or agrees to assume from the
Program Affiliate
-165-
<PAGE>
the lease initially so transferred to it upon the failure of such Program
Affiliate to make the lease payments owing by it thereunder to such financial
institution, (B) (i) the U.S. Borrower and/or one or more of its Subsidiaries
leases equipment from a third party financial institution, (ii) subleases such
equipment to a Program Affiliate, (iii) transfers the account receivable related
to the sublease (together with all collateral rights to the equipment that is
the subject of the sublease) to a third party financial institution and (iv)
guarantees the sublease payments owing by the Program Affiliate to such
financial institution, (C) (i) the U.S. Borrower and/or one or more of its
Subsidiaries leases equipment to a Program Affiliate, (ii) transfers the account
receivable related to such lease (together with the all collateral rights to the
equipment that is the subject of the lease) to a third party financial
institution and (iii) guarantees the lease payments owing by the Program
Affiliate to such financial institution or (D) (i) the U.S. Borrower and/or one
or more of its Subsidiaries leases equipment to a Program Affiliate, (ii)
transfers the lease (and the related account receivable and the equipment that
is the subject of the lease) to a third party financial institution and (iii)
guarantees the lease payments owing by the Program Affiliate to such financial
institution and/or agrees to assume such equipment lease from such Program
Affiliate upon the failure of such Program Affiliate to make the lease payments
owing by it thereunder to such financial institution.
"Permitted Sale-Leaseback Transaction" shall mean any sale by the U.S.
Borrower or any of its Subsidiaries of any Tractor Trailer first acquired by the
U.S. Borrower or such Subsidiary after the Original Effective Date which Tractor
Trailer is then leased back to the U.S. Borrower or such Subsidiary, provided
--------
that (i) the proceeds of the respective sale shall be entirely cash and in an
amount at least equal to 85% of the aggregate amount expended by the U.S.
Borrower or such Subsidiary in so acquiring such Tractor Trailer, (ii) such sale
and leaseback are effected within 90 days of the acquisition by the U.S.
Borrower or such Subsidiary of such Tractor Trailer, and (iii) the respective
transaction is otherwise effected in accordance with the applicable requirements
of Section 9.02(s).
"Permitted Subordinated Indebtedness" shall mean subordinated
Indebtedness of the U.S. Borrower incurred in connection with a Permitted
Acquisition and in accordance with Section 8.14, which Permitted Subordinated
Indebtedness and all terms and conditions thereof (including, without
limitation, the maturity thereof, the interest rate applicable thereto,
amortization, defaults, remedies, voting rights, subordination provisions,
etc.), and the documentation therefor, shall be reasonably satisfactory to the
Administrative Agent, provided, that in any event, unless the Required Banks
--------
otherwise expressly consent in writing prior to the incurrence thereof, (i) no
such Indebtedness shall be guaranteed by any Subsidiary of the U.S. Borrower,
(ii) no such Indebtedness shall be secured by any asset of the U.S. Borrower or
any of its Subsidiaries and (iii) such Indebtedness has substantially the same
(or, from the perspective of the Banks, more favorable) subordination provisions
as are contained in the Senior Subordinated Notes Indenture. The incurrence of
Permitted Subordinated Indebtedness shall be deemed to be a representation and
warranty by the U.S. Borrower that all conditions thereto have been satisfied in
all material respects and that same is permitted in accordance with the terms of
this Agreement, which
-166-
<PAGE>
representation and warranty shall be deemed to be a representation and warranty
for all purposes hereunder, including, without limitation, Sections 6 and 10.
"Permitted Subordinated Refinancing Indebtedness" shall mean
Indebtedness of the U.S. Borrower issued or given in exchange for, or the
proceeds of which are used to refinance, the Senior Subordinated Notes, so long
as (a) such Indebtedness has a weighted average life to maturity greater than or
equal to the weighted average life to maturity of the Senior Subordinated Notes,
(b) such refinancing does not (i) increase the amount of such Indebtedness
outstanding immediately prior to such refinancing or (ii) add guarantors,
obligors or security from that which applied to the Senior Subordinated Notes,
(c) such Indebtedness has substantially the same (or, from the perspective of
the Banks, more favorable) subordination provisions, if any, as applied to the
Senior Subordinated Notes, and (d) all other terms of such refinancing
(including, without limitation, with respect to the amortization schedules,
redemption provisions, maturities, covenants, defaults and remedies), are not,
taken as a whole, materially less favorable to the U.S. Borrower than those
previously existing with respect to the Senior Subordinated Notes.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
or any government or political subdivision or any agency, department or
instrumentality thereof.
"PIK Preferred Stock" shall mean and include the Seller PIK Preferred
Stock and the Apollo PIK Preferred Stock.
"PIK Preferred Stock Documents" shall mean and include the Apollo PIK
Preferred Stock Documents and the Seller PIK Preferred Stock Documents.
"PIK Trigger Date" shall mean the third anniversary of the Restatement
Effective Date.
"Plan" shall mean any pension plan as defined in Section 3(2) of
ERISA, which is maintained or contributed to by (or to which there is an
obligation to contribute of) the U.S. Borrower or a Subsidiary of the U.S.
Borrower or an ERISA Affiliate, and each such plan for the five year period
immediately following the latest date on which the U.S. Borrower, or a
Subsidiary of the U.S. Borrower or an ERISA Affiliate maintained, contributed to
or had an obligation to contribute to such plan but excluding all Multiemployer
Plans.
"Pledge Agreement Collateral" shall mean all of the U.S. Pledge
Agreement Collateral and all of the Canadian Pledge Agreement Collateral.
"Pledge Agreements" shall mean and include the U.S. Pledge Agreement
and the Canadian Pledge Agreements.
-167-
<PAGE>
"Pledged Securities" shall mean all the Pledged Securities as defined
in the U.S. Pledge Agreement.
"PPSA" shall mean the Personal Property Security Act (Ontario) and the
personal property security acts of each other Canadian province.
"Preferred Stock," as applied to the capital stock of any Person,
means capital stock of such Person (other than common stock of such Person) of
any class or classes (however designed) that ranks prior, as to the payment of
dividends or as to the distribution of assets upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person, to shares of capital
stock of any other class of such Person, and shall include any Qualified
Preferred Stock and Disqualified Preferred Stock.
"Prime Lending Rate" shall mean the rate which CSFB announces from
time to time as its prime lending rate, the Prime Lending Rate to change when
and as such prime lending rate changes. The Prime Lending Rate is a reference
rate and does not necessarily represent the lowest or best rate actually charged
to any customer. CSFB may make commercial loans or other loans at rates of
interest at, above or below the Prime Lending Rate.
"Pro Forma Basis" shall mean, in connection with any calculation of
--- -----
compliance with any financial covenant or financial term, the calculation
thereof after giving effect on a pro forma basis to (v) if the relevant period
--- -----
to be tested includes any period prior to the Original Effective Date, the
consummation of the Original Transaction as if the same had occurred on the
first day of such period, (w) if the relevant period to be tested includes any
period prior to the Restatement Effective Date, the consummation of the
Transaction as if the same had occurred on the first day of such period (for
such purpose, without giving pro forma effect to synergies and cost savings
--- -----
which have been, or may be, realized in connection with the Transaction, such
synergies and cost savings having been independently accounted for in the
proviso to the definition of "Consolidated EBITDA"), (x) the incurrence of any
Indebtedness (other than revolving Indebtedness, except to the extent same is
incurred to finance the Original Transaction or the Transaction, to refinance
other outstanding Indebtedness or to finance Permitted Acquisitions) or
Preferred Stock (other than Qualified Preferred Stock of the U.S. Borrower)
after the first day of the relevant Calculation Period as if such Indebtedness
or Preferred Stock had been incurred or issued (and the proceeds thereof
applied) on the first day of the relevant Calculation Period, (y) the permanent
repayment of any Indebtedness (other than revolving Indebtedness except to the
extent paid with Permitted Debt or Disqualified Preferred Stock) or Preferred
Stock (other than Qualified Preferred Stock of the U.S. Borrower) after the
first day of the relevant Calculation Period as if such Indebtedness or
Preferred Stock had been retired or redeemed on the first day of the relevant
Calculation Period and (z) the Permitted Acquisition, if any, then being
consummated as well as any other Permitted Acquisition consummated after the
first day of the relevant Calculation Period and on or prior to the date of the
respective Permitted Acquisition then being effected, with the following rules
to apply in connection therewith:
-168-
<PAGE>
(i) all Indebtedness and Preferred Stock (other than Qualified
Preferred Stock of the U.S. Borrower) (x) (other than revolving
Indebtedness, except to the extent same is incurred to finance the Original
Transaction or the Transaction, to refinance other outstanding
Indebtedness, or to finance Permitted Acquisitions) incurred or issued
after the first day of the relevant Calculation Period (whether incurred to
finance a Permitted Acquisition, to refinance Indebtedness or otherwise)
shall be deemed to have been incurred or issued (and the proceeds thereof
applied) on the first day of the respective Calculation Period and remain
outstanding through the date of determination (and thereafter in the case
of projections pursuant to Section 8.14(a)(iv)) and (y) (other than
revolving Indebtedness except to the extent paid with Permitted Debt or
Disqualified Preferred Stock) permanently retired or redeemed after the
first day of the relevant Calculation Period shall be deemed to have been
retired or redeemed on the first day of the respective Calculation Period
and remain retired through the date of determination (and thereafter in the
case of projections pursuant to Section 8.14(a)(iv));
(ii) all Indebtedness or Preferred Stock (other than Qualified
Preferred Stock of the U.S. Borrower) assumed to be outstanding pursuant to
preceding clause (i) shall be deemed to have borne interest or accrued
dividends, as the case may be, at (x) the rate applicable thereto, in the
case of fixed rate indebtedness or Preferred Stock or (y) the rates which
would have been applicable thereto during the respective period when same
was deemed outstanding, in the case of floating rate Indebtedness or
Preferred Stock (although interest expense with respect to any Indebtedness
or Preferred Stock for periods while same was actually outstanding during
the respective period shall be calculated using the actual rates applicable
thereto while same was actually outstanding); provided that for purposes of
--------
calculations pursuant to Section 8.14(a)(iv), all Indebtedness or Preferred
Stock (whether actually outstanding or deemed outstanding) bearing interest
at a floating rate of interest shall be tested on the basis of the rates
applicable at the time the determination is made pursuant to said
provisions;
(iii) in making any determination of Consolidated EBITDA, pro forma
--- -----
effect shall be given to any Permitted Acquisition consummated after the
first day of the respective period being tested, taking into account, for
any portion of the relevant period being tested occurring prior to the
consummation of such Permitted Acquisition, demonstrable cost savings
actually achieved simultaneously with the closing of the respective
Permitted Acquisition, which cost savings would be permitted to be
recognized in pro forma statements prepared in accordance with Regulation
--- -----
S-X under the Securities Act, as if such cost-savings were realized on the
first day of the relevant period;
(iv) without duplication of adjustments provided above, in case of
any Permitted Acquisition consummated after the first day of the relevant
period being tested, pro forma effect shall be given to the termination or
--- -----
replacement of operating leases with Capitalized Lease Obligations or other
Indebtedness, and to
-169-
<PAGE>
any replacement of Capitalized Lease Obligations or other Indebtedness with
operating leases, in each case effected at the time of the consummation of
such Permitted Acquisition or thereafter, in each case if effected after
the first day of the period being tested and prior to the date the
respective determination is being made, as if such termination or
replacement had occurred on the first day of the relevant period; and
(v) in making any determination of Consolidated EBITDA for purposes
of any calculation of the Adjusted Total Leverage Ratio or the Adjusted
Senior Leverage Ratio only, (x) for any Permitted Acquisition which
occurred during the last two fiscal quarters comprising the respective Test
Period (and, in the case of Section 8.14, thereafter and on or prior to the
relevant date of determination), there shall be added to Consolidated
EBITDA the amount of Permitted Acquisition Additional Cost Savings,
determined in accordance with the definition thereof contained herein,
expected to be realized with respect to such Permitted Acquisition, (y) for
any Permitted Acquisition effected in the second fiscal quarter of the
respective Test Period, the Consolidated EBITDA shall be increased by 50%
of the Permitted Acquisition Additional Cost Savings estimated to arise in
connection with the respective Permitted Acquisition and (z) for any
Permitted Acquisition effected in the first fiscal quarter of the
respective Test Period, the Consolidated EBITDA shall be increased by 25%
of the Permitted Acquisition Additional Cost Savings estimated to arise in
connection with the respective Permitted Acquisition; provided that the
aggregate additions to Consolidated EBITDA, for any period being tested,
pursuant to this clause (v) shall not exceed 15% of the amount which would
have been Consolidated EBITDA in the absence of the adjustment pursuant to
this clause (v).
Notwithstanding anything to the contrary contained above, (x) for purposes of
Sections 9.09 and 9.10 and, for purposes of all determinations of the Applicable
Margins, pro forma effect (as otherwise provided above) shall only be given for
--- -----
events or occurrences which occurred during the respective Test Period but not
thereafter and (y) for purposes of Section 8.14, pro forma effect (as otherwise
--- -----
provided above) shall be given for events or occurrences which occurred during
the respective Test Period and thereafter but on or prior to the respective date
of determination.
"Program Affiliate" shall mean each of the independently-owned (i.e.,
----
owned by Persons other than the U.S. Borrower and its Subsidiaries and
Affiliates, except for Persons which may constitute Affiliates solely by reason
of their ownership interest in one or more Program Affiliates) entities that
operate under the name of the U.S. Borrower or any of its Subsidiaries pursuant
to an exclusive agreement with the U.S. Borrower or such Subsidiary (including
each of the Persons listed on Schedule XI).
"Projections" shall have the meaning provided in Section 5.15.
-170-
<PAGE>
"Qualified IPO" shall mean an underwritten public offering of U.S.
Borrower Common Stock which generates cash proceeds of at least $50,000,000.
"Qualified Preferred Stock" shall mean any Preferred Stock of the U.S.
Borrower, the express terms of which shall provide that dividends thereon shall
not be required to be paid at any time (and to the extent) that such payment
would be prohibited by the terms of this Agreement or any other agreement of the
U.S. Borrower relating to outstanding indebtedness and which, by its terms (or
by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event (including any Change of
Control Event), cannot mature and is not mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, and is not redeemable, or required to be
repurchased, at the sole option of the holder thereof (including, without
limitation, upon the occurrence of a Change of Control Event), in whole or in
part, on or prior to the date occurring two years after the Tranche C Term Loan
Maturity Date.
"Quarterly Payment Date" shall mean the last Business Day of each March,
June, September and December.
"Quebec Pledge Agreement" shall have the meaning provided in Section
5.10(b).
"Real Property" of any Person shall mean all of the right, title and
interest of such Person in and to land, immovable property, improvements and
fixtures, including Leaseholds.
"Recapitalization" shall have the meaning provided in the Original
Credit Agreement.
"Recovery Event" shall mean the receipt by the U.S. Borrower or any of
its Subsidiaries of any insurance or condemnation proceeds payable (i) by reason
of theft, physical destruction or damage or any other similar event with respect
to any properties or assets of the U.S. Borrower or any of its Subsidiaries,
(ii) by reason of any condemnation, taking, seizing or similar event with
respect to any properties or assets of the U.S. Borrower or any of its
Subsidiaries and (iii) under any policy of insurance required to be maintained
under Section 8.03.
"Reference Discount Rate" means, in respect of any Bankers' Acceptances
or completed Drafts to be purchased by a Canadian RL Bank pursuant to Section
1.01 and Schedule XII hereto, the arithmetic average of the discount rates
(calculated on an annual basis and rounded to the nearest one-hundredth of 1%,
with five-thousandths of 1% being rounded up) quoted by each Reference Lender at
10:00 A.M. (Toronto time) as the discount rate at which such Reference Lender
would purchase, on the relevant Drawing Date, its own bankers' acceptances or
Drafts having an aggregate Face Amount equal to, and with a term to maturity the
same as, the Bankers' Acceptances or Drafts, as the case may be, to be acquired
by such Canadian RL Bank on such Drawing Date.
-171-
<PAGE>
"Reference Lenders" means, collectively, Royal Bank of Canada and The
Bank of Nova Scotia; and "Reference Lender" means any one of them, as the
context requires.
"Register" shall have the meaning provided in Section 13.17.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing reserve requirements.
"Regulation T" shall mean Regulation T of the Board of Governors of the
Federal Reserve System as from to time in effect and any successor to all or any
portion thereof.
"Regulation U" shall mean Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or any portion thereof.
"Release" means disposing, discharging, injecting, spilling, pumping,
leaking, leaching, dumping, emitting, escaping, emptying, seeping, placing,
pouring and the like, into or upon any land or water or air, or otherwise
entering into the environment.
"Replaced Bank" shall have the meaning provided in Section 1.13.
"Replacement Bank" shall have the meaning provided in Section 1.13.
"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan that is subject to Title IV of ERISA other than
those events as to which the 30-day notice period is waived under subsection
.22, .23, .25, .27, or .28 of PBGC Regulation Section 4043.
"Required Appraisals" shall have the meaning provided in Section
8.11(d).
"Required Banks" shall mean Non-Defaulting Banks, the sum of whose
outstanding Term Loans and Revolving Loan Commitments (or after the termination
thereof, outstanding Revolving Loans (for this purpose, using the Dollar
Equivalent of the outstanding principal amount or Face Amount, as the case may
be of all Canadian Dollar Revolving Loans) and Dollar RL Percentage (or, after
the occurrence of a Sharing Event, the Sharing Percentage) of Swingline Loans
and Letter of Credit Outstandings) represent an amount greater than 50% of the
sum of all outstanding Term Loans of Non-Defaulting Banks and the Total
Revolving Loan Commitment (or after the termination thereof, the sum of the then
total outstanding Revolving Loans (for this purpose, using the Dollar Equivalent
-172-
<PAGE>
of the outstanding principal amount or Face Amount, as the case may be of all
Canadian Dollar Revolving Loans) of Non-Defaulting Banks and the aggregate
Dollar RL Percentages (or, after the occurrence of a Sharing Event, the Sharing
Percentages) of all Non-Defaulting Banks of the total outstanding Swingline
Loans and Letter of Credit Outstandings at such time. For purposes of
determining Required Banks, all outstanding Loans and Commitments, as the case
may be, that are denominated in U.S. Dollars will be calculated in U.S. Dollars
and all Loans and Commitments, as the case may be, denominated in Canadian
Dollars will be calculated according to the Dollar Equivalent thereof.
"Restatement Effective Date" shall have the meaning provided in Section
13.10.
"Returns" shall have the meaning provided in Section 7.21.
"Revolving Credit Exposure" shall mean, for any RL Bank at any time, the
sum of (i) the aggregate principal amount of all Revolving Loans made by such RL
Bank (and its Affiliates, if any, acting as a Canadian RL Bank, and, for this
purpose, (x) at all times prior to the occurrence of any Sharing Event and
automatic conversion of all Canadian Dollar Revolving Loans to Dollar Revolving
Loans pursuant to Section 1.15, using the Dollar Equivalent of the principal
amount or Face Amount, as the case may be, of all Canadian Dollar Revolving
Loans then outstanding from such RL Bank or any Affiliate thereof acting as a
Canadian RL Bank and (y) at all times after the occurrence of any Sharing Event,
giving effect to the conversions required by Section 1.15 and to all
participations purchased by such Bank pursuant to Section 1.15) plus (ii) the
product of (A) such Bank's Dollar RL Percentage (or, after the occurrence of a
Sharing Event, its Sharing Percentage) and (B) the sum of (x) the aggregate
amount of all Letter of Credit Outstandings at such time and (y) the aggregate
principal amount of all Swingline Loans then outstanding.
"Revolving Loan" shall mean each Dollar Revolving Loan and each Canadian
Dollar Revolving Loan.
"Revolving Loan Commitment" shall mean, with respect to each RL Bank,
the amount set forth opposite such Bank's name in Part A of Schedule I directly
below the column entitled "Revolving Loan Commitment," as the same may be
reduced from time to time pursuant to Sections 3.02, 3.03, 4.02 and/or Section
10.
"Revolving Note" shall mean and include each Dollar Revolving Note and
each Canadian Dollar Revolving Note.
"RL Bank" shall mean at any time each Bank with a Revolving Loan
Commitment or with outstanding Revolving Loans.
"S&P" shall mean Standard & Poor's Ratings Services, a division of The
McGraw Hill Companies, Inc.
-173-
<PAGE>
"Scheduled Existing Indebtedness" shall have the meaning provided in
Section 5.09(d).
"Scheduled Repayment" mean any Tranche A Term Loan Scheduled Repayment,
any Tranche B Term Loan Scheduled Repayment and/or any Tranche C Term Loan
Scheduled Repayment.
"SEC" shall mean the Securities and Exchange Commission or any successor
thereto.
"Section 4.04(b)(ii) Certificate" shall have the meaning provided in
Section 4.04(b)(ii).
"Secured Creditors" shall have the meaning provided in the Security
Documents.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Security Agreements" shall mean and include the U.S. Security Agreement
and each Canadian Security Document.
"Security Agreement Collateral" shall mean all of the collateral
required to be pledged or on which security is otherwise granted pursuant to the
respective Security Agreements.
"Security Documents" shall mean and include each U.S. Security Document,
each Canadian Security Document and each Additional Security Document, if any.
"Seller PIK Preferred Stock" shall mean the ____% pay-in-kind preferred
stock of the U.S. Borrower, $.01 par value per share, issued to certain existing
shareholders of CLC on the Restatement Effective Date (immediately prior to
giving effect to the CLC Merger).
"Seller PIK Preferred Stock Documents" shall mean the Seller PIK
Preferred Stock and the other documents executed and delivered in connection
with the issuance of the Seller PIK Preferred Stock.
"Senior Subordinated Notes" shall mean the U.S. Borrower's 10% Senior
Subordinated Notes due 2006 and the U.S. Borrower's Floating Interest Rate
Subordinated Term Securities due 2006, in each case issued pursuant to the
Senior Subordinated Note Indenture, as in effect on the Original Effective Date
and as the same may be amended, modified or supplemented from time to time in
accordance with the terms hereof and thereof.
-174-
<PAGE>
"Senior Subordinated Notes Documents" shall mean the Senior Subordinated
Notes, the Senior Subordinated Notes Indenture and all other documents executed
and delivered with respect to the Senior Subordinated Notes or Senior
Subordinated Notes Indenture, as in effect on the Original Effective Date and as
the same may be amended, modified or supplemented from time to time in
accordance with the terms hereof and thereof.
"Senior Subordinated Notes Indenture" shall mean the Indenture, dated as
of June 9, 1998, among the U.S. Borrower, the U.S. Subsidiary Guarantors and the
Senior Subordinated Note Indenture Trustee, as in effect on the Original
Effective Date and as thereafter amended from time to time in accordance with
the requirements hereof and thereof.
"Senior Subordinated Notes Indenture Trustee" shall mean United States
Trust Company of New York.
"Shareholder Subordinated Note" shall mean an unsecured junior
subordinated note issued by the U.S. Borrower (and not guaranteed or supported
in any way by the U.S. Borrower or any of its Subsidiaries) in the form of
Exhibit N.
"Shareholders' Agreements" shall have the meaning provided in Section
5.12.
"Sharing Event" shall mean (i) the occurrence of any Event of Default
with respect to any Borrower pursuant to Section 10.05, (ii) the declaration of
the termination of the Total Commitment, or the acceleration of the maturity of
any Loans, in each case pursuant to the last paragraph of Section 10, (iii) the
failure of the U.S. Borrower to pay any principal of, or interest on, Dollar
Loans or any Letter of Credit Outstandings on the relevant Final Maturity Date
or (iv) the failure of the Canadian Borrower to pay any principal (or Face
Amount, as the case may be) of, or interest on, Canadian Dollar Revolving Loans
on the A TL/RL Maturity Date.
"Sharing Percentage" of any RL Bank at any time shall mean a fraction
(expressed as a percentage) the numerator of which is the Revolving Loan
Commitment of such RL Bank at such time and the denominator which is the Total
Revolving Loan Commitment at such time. Notwithstanding anything to the
contrary contained above, if the Sharing Percentage of any RL Bank is to be
determined after the Total Revolving Loan Commitment has been terminated, then
the Sharing Percentages of the RL Banks shall be determined immediately prior
(and without giving effect) to such termination.
"Standby Letter of Credit" shall have the meaning provided in Section
2.01(a).
"Stated Amount" of each Letter of Credit shall mean the maximum amount
available to be drawn thereunder (regardless of whether any conditions for
drawing could then be met).
-175-
<PAGE>
"Subsidiaries Guaranty" shall mean and include the U.S. Subsidiaries
Guaranty and the Canadian Subsidiaries Guaranty.
"Subsidiary Guarantors" shall mean and include each U.S. Subsidiary
Guarantor and each Canadian Subsidiary Guarantor.
"Sub-Commitments" shall mean, with respect to any RL Bank, the Non-
Canadian Revolving Loan Sub-Commitment, if any, of such RL Bank and the Canadian
Revolving Loan Sub-Commitment of such RL Bank (or its Affiliate which is acting
as a Canadian RL Bank).
"Subsidiary" of any Person shall mean and include (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity (other than a corporation) in which such Person directly
or indirectly through Subsidiaries, has more than a 50% equity interest at the
time. Notwithstanding the foregoing (and except for purposes of Sections 7.01,
7.04, 7.12, 7.16, 7.17, 7.20, 8.01(g), 8.07, 8.08, 10.05, 10.06 and 10.09, and
the definitions of Unrestricted Subsidiary and Wholly-Owned Unrestricted
Subsidiary contained herein), an Unrestricted Subsidiary shall be deemed not to
be a Subsidiary of the U.S. Borrower or any of its other Subsidiaries for
purposes of this Agreement.
"Sub-Tranche" shall mean and include each of (i) the Tranche A Term
Loans and the Commitments pursuant to which the Tranche A Term Loans are
extended, (ii) the Tranche B Term Loans and the Commitments pursuant to which
the Tranche B Term Loans are extended, (iii) the Tranche C Term Loans and the
Commitments pursuant to which the Tranche C Term Loans are extended, (iv) the
Canadian Revolving Loan Sub-Commitments and the extensions of credit made from
time to time pursuant thereto and (v) the Non-Canadian Revolving Loan Sub-
Commitments and the extensions of credit made from time to time pursuant
thereto.
"Supermajority Banks" of any Sub-Tranche, shall mean those Banks which
would constitute the Required Banks under, and as defined in, this Agreement if
(x) all outstanding obligations of the other Sub-Tranches under this Agreement
were repaid in full and all commitments (or Sub-Commitments) with respect
thereto were terminated and (y) the percentage "50% contained therein were
changed to "66-2/3%".
"Swingline Expiry Date" shall mean the date which is five Business Days
prior to the A TL/RL Maturity Date.
"Swingline Loan" shall have the meaning provided in Section 1.01(c).
-176-
<PAGE>
"Swingline Note" shall have the meaning provided in Section 1.05(a).
"Syndication Agent" shall have the meaning provided in the first
paragraph of this Agreement and shall include any successor to the Syndication
Agent designated pursuant to Section 12.10.
"Syndication Date" shall mean that date upon which the Agents determine
(and notify the U.S. Borrower and the Banks) that the primary syndication of the
New Tranche A Term Loans, the Tranche B Term Loans and the Tranche C Term Loans
(and resultant addition of Persons as Banks pursuant to Section 13.04(b)) has
been completed.
"Tax Act" shall have the meaning provided in Section 4.04(f).
"Tax Allocation Agreements" shall have the meaning provided in Section
5.12.
"Tax Benefit" shall have the meaning provided in Section 4.04(c).
"Taxes" shall have the meaning provided in Section 4.04(a).
"Term Loans" shall mean and include Tranche A Term Loans, Tranche B Term
Loans and Tranche C Term Loans.
"Test Period" shall mean each period of four consecutive fiscal quarters
then last ended, in each case taken as one accounting period. Notwithstanding
anything to the contrary contained above or in Section 13.07 or otherwise
required by GAAP, in the case of any Test Period ending prior to the first
anniversary of the Restatement Effective Date, such period shall be a one-year
period ending on the last day of the fiscal quarter last ended, with any
calculations of (x) Consolidated Interest Expense required in determining
compliance with Section 9.09 to be made on a pro forma basis in accordance with,
--- -----
and to the extent provided in, the immediately succeeding sentence and (y)
Consolidated EBITDA required in determining compliance with Sections 9.09 and
9.10 to be made on a pro forma basis in accordance with, and to the extent
--- -----
provided in, the second succeeding sentence. To the extent the respective Test
Period (i) includes the fourth fiscal quarter of the fiscal year ended December
31, 1997, Consolidated Interest Expense for such fiscal quarter shall be deemed
to be $9,724,097, (ii) includes the first fiscal quarter of the fiscal year
ended December 31, 1998, Consolidated Interest Expense for such fiscal quarter
shall be deemed to be $9,512,704, (iii) includes the second fiscal quarter of
the fiscal year ended December 31, 1998, Consolidated Interest Expense for such
fiscal quarter shall be deemed to be $9,618,400 and (iv) includes the third
fiscal quarter of the fiscal year ended December 31, 1998, Consolidated Interest
Expense shall be determined by (x) taking actual Consolidated Interest Expense
determined in accordance with the definition thereof for any period beginning
on, and ending after, the Restatement Effective Date and (y) for each day of
such fiscal quarter occurring prior to the Restatement Effective Date, using a
per-day Consolidated Interest Expense of $105,723.79; provided that any
--------
additional adjustments re-
-177-
<PAGE>
quired by the definition of Pro Forma Basis for occurrences after the
--- -----
Restatement Effective Date shall also be made. To the extent the respective
Test Period (i) includes the fourth fiscal quarter of the fiscal year ended
December 31, 1997, Consolidated EBITDA for such fiscal quarter shall be deemed
to be $22,072,011, (ii) includes the first fiscal quarter of the fiscal year
ended December 31, 1998, Consolidated EBITDA for such fiscal quarter shall be
deemed to be $22,277,315, (iii) includes the second fiscal quarter of the
fiscal year ended December 31, 1998, Consolidated EBITDA for such fiscal
quarter shall be deemed to be $23,367,663 and (iv) includes the third fiscal
quarter of the fiscal year ended December 31, 1998, Consolidated EBITDA shall
be determined by (x) taking actual Consolidated EBITDA determined in accordance
with the definition thereof for any period beginning on, and ending after, the
Restatement Effective Date and (y) for each day of such fiscal quarter
occurring prior to the Restatement Effective Date, using a per-day Consolidated
EBITDA of $246,723.29; provided that any additional adjustments required by the
--------
definition of Pro Forma Basis for occurrences after the Restatement Effective
--- -----
Date shall also be made.
"Total Canadian Revolving Loan Sub-Commitment" at any time shall mean
the sum of the Canadian Revolving Loan Sub-Commitments of all the Canadian RL
Banks; provided that at no time shall the Total Canadian Revolving Loan Sub-
--------
Commitment exceed $15,000,000.
"Total Commitment" shall mean the sum of the Total Term Loan Commitment
and the Total Revolving Loan Commitment.
"Total Leverage Ratio" shall mean on any date the ratio of (i)
Consolidated Debt on such date to (ii) Consolidated EBITDA for the Test Period
most recently ended on or prior to such date. All calculations of the Total
Leverage Ratio shall be made on a Pro Forma Basis, it being understood and
--- -----
agreed that, as provided in the definition of Pro Forma Basis, the adjustments
--- -----
contained in clause (v) thereof shall not be taken into account in determining
the Total Leverage Ratio.
"Total New Tranche A Term Loan Commitment" shall mean the sum of the New
Tranche A Term Loan Commitments of each of the Banks.
"Total Non-Canadian Revolving Loan Sub-Commitment" at any time shall
mean the sum of the Non-Canadian Revolving Loan Sub-Commitments of all the RL
Banks; provided that at no time shall the Total Non-Canadian Revolving Loan Sub-
--------
Commitment exceed the Total Revolving Loan Commitment as then in effect.
"Total Revolving Loan Commitment" shall mean the sum of the Revolving
Loan Commitments of each of the Banks.
"Total Term Loan Commitment" shall mean the sum of the Total New Tranche
A Term Loan Commitment, the Total Tranche B Term Loan Commitment and the Total
Tranche C Term Loan Commitment.
-178-
<PAGE>
"Total Tranche B Term Loan Commitment" shall mean the sum of the Tranche
B Term Loan Commitments of each of the Banks.
"Total Tranche C Term Loan Commitment" shall mean the sum of the Tranche
C Term Loan Commitments of each of the Banks.
"Total Unutilized Revolving Loan Commitment" shall mean, at any time,
(i) the Total Revolving Loan Commitment at such time less (ii) the sum of (I)
----
the aggregate principal amount of all Revolving Loans then outstanding (using
the Dollar Equivalent of the principal amount or Face Amount, as the case may
be, thereof in the case of Canadian Dollar Revolving Loans then outstanding),
(II) the aggregate principal amount of Swingline Loans then outstanding plus
(III) the Letter of Credit Outstandings at such time.
"Trade Letter of Credit" shall have the meaning set forth in Section
2.01(a).
"Tractor Trailer" shall mean any truck, tractor, tank trailer or other
trailer and any similar vehicle or trailer used in a Permitted Business.
"Tractor Trailer Replacement" shall mean the exchange, sale or other
disposition of a Tractor Trailer, which, in the reasonable opinion of the U.S.
Borrower, is obsolete, uneconomic, or no longer useful in the conduct of the
U.S. Borrower's or any of its Subsidiaries' business or otherwise requires
upgrading, the purpose of which exchange, sale or other disposition is to
acquire (and has resulted within 180 days prior to such exchange, sale or
disposition, or will result within 180 days following such exchange, sale or
disposition, in the acquisition of) a replacement Tractor Trailer.
"Tranche" shall mean the respective facility and commitments utilized in
making Loans hereunder, with there being five separate Tranches, i.e., Tranche A
----
Term Loans, Tranche B Term Loans, Tranche C Term Loans, Revolving Loans and
Swingline Loans.
"Tranche A Term Loan Borrowing Amount" shall mean, with respect to each
Bank, the sum of (i) the New Tranche A Term Loan Commitment of such Bank as in
effect on the Restatement Effective Date (before giving effect to any reduction
thereto on such date pursuant to Section 3.03(b)) plus (ii) the amount set forth
----
opposite such Bank's name in Part A of Schedule I directly below the column
entitled "Original Term Loans".
"Tranche A Term Loan Scheduled Repayment" shall have the meaning
provided in Section 4.02(b)(i).
"Tranche A Term Loans" shall have the meaning provided in Section
1.01(a).
"Tranche A Term Note" shall have the meaning provided in Section
1.05(a)(i).
-179-
<PAGE>
"Tranche B Term Loan Scheduled Repayment" shall have the meaning
provided in Section 4.02(b)(ii).
"Tranche B Term Loan" shall have the meaning provided in Section
1.01(e).
"Tranche B Term Loan Commitment" shall mean, with respect to each Bank,
the amount set forth opposite such Bank's name in Part A of Schedule I directly
below the column entitled "Tranche B Term Loan Commitment", as the same may be
reduced or terminated pursuant to Sections 3.03 and/or 10.
"Tranche B Term Loan Maturity Date" shall mean August 28, 2005.
"Tranche B Term Note" shall have the meaning provided in Section
1.05(a)(ii).
"Tranche C Term Loan Scheduled Repayment" shall have the meaning
provided in Section 4.02(b)(iii).
"Tranche C Term Loan" shall have the meaning provided in Section
1.01(e).
"Tranche C Term Loan Commitment" shall mean, with respect to each Bank,
the amount set forth opposite such Bank's name in Part A of Schedule I directly
below the column entitled "Tranche C Term Loan Commitment", as the same may be
reduced or terminated pursuant to Sections 3.03 and/or 10.
"Tranche C Term Loan Maturity Date" shall mean February 28, 2006.
"Tranche C Term Note" shall have the meaning provided in Section
1.05(a)(iii).
"Transaction" shall mean, collectively, (i) the consummation of the CLC
Merger, (ii) the CLC Equity Financing, (iii) the consummation of the CLC
Refinancing (including the CLC Tender Offer/Consent Solicitation Consummation),
(iv) the amendment and restatement of the Original Credit Agreement in the form
of this Agreement as provided herein, (v) the incurrence of all Loans hereunder
on the Restatement Effective Date and (vi) the payment of fees and expenses in
connection with the foregoing.
"Transplastics" shall mean Transplastics, Inc., a Pennsylvania
corporation and a Wholly-Owned Subsidiary of CLC.
"Type" shall mean any type of Loan determined with respect to the
interest option applicable thereto, i.e., a Base Rate Loan, a Eurodollar Loan, a
----
Canadian Prime Rate Loan, a Bankers' Acceptance Loan or a B/A Equivalent Loan.
"UCC" shall mean the Uniform Commercial Code as in effect from time to
time in the relevant jurisdiction.
-180-
<PAGE>
"Unfunded Current Liability" of any Plan shall mean the amount, if any,
by which the value of the accumulated plan benefits under the Plan determined on
a plan termination basis in accordance with actuarial assumptions at such time
consistent with those prescribed by the PBGC for purposes of Section 4044 of
ERISA, exceeds the fair market value of all plan assets allocable to such
liabilities under Title IV of ERISA (excluding any accrued but unpaid
contributions).
"Unpaid Drawing" shall have the meaning provided in Section 2.04(a).
"Unrestricted Subsidiary" shall mean any Subsidiary of the U.S. Borrower
that is acquired or created after the Restatement Effective Date and designated
by the U.S. Borrower as an Unrestricted Subsidiary hereunder by written notice
to the Administrative Agent, provided that the U.S. Borrower shall only be
--------
permitted to so designate a new Unrestricted Subsidiary after the Restatement
Effective Date and so long as (i) no Default or Event of Default exists or would
result therefrom, (ii) in the case of any Unrestricted Subsidiary directly owned
by the U.S. Borrower or any of its Wholly-Owned Domestic Subsidiaries, 100% of
the capital stock of such newly-designated Unrestricted Subsidiary is owned by
the U.S. Borrower or such Wholly-Owned Domestic Subsidiary and (iii) all of the
provisions of Section 9.15 shall have been complied with in respect of such
newly-designated Unrestricted Subsidiary and such Unrestricted Subsidiary shall
be capitalized (to the extent capitalized by the U.S. Borrower or any of its
Subsidiaries) through Investments as permitted by, and in compliance with,
Section 9.05(l), with any assets owned by such Unrestricted Subsidiary at the
time of the initial designation thereof to be treated as Investments pursuant to
Section 9.05(l), provided that at the time of the initial Investment by the U.S.
--------
Borrower or any Wholly-Owned Domestic Subsidiary in such Subsidiary, the U.S.
Borrower shall designate such entity as an Unrestricted Subsidiary in a written
notice to the Administrative Agent.
"Unutilized Revolving Loan Commitment" with respect to any RL Bank at
any time shall mean such RL Bank's Revolving Loan Commitment at such time less
----
the sum of (i) the aggregate outstanding principal amount of all Revolving Loans
made by such RL Bank (including any Affiliate of any such Bank acting as a
Canadian RL Bank) (taking the Dollar Equivalent of the principal amount or Face
Amount, as the case may be, in the case of any Canadian Dollar Revolving Loans
then outstanding) and (ii) such RL Bank's Dollar RL Percentage (or, after a
Sharing Event has occurred, its Sharing Percentage) of the Letter of Credit
Outstandings at such time.
"U.S. Bank" shall mean (i) each Person listed on Part A of Schedule I
that has a New Tranche A Term Loan Commitment, a Tranche B Term Loan Commitment,
a Tranche C Term Loan Commitment, outstanding Term Loans and/or a Non-Canadian
Revolving Loan Sub-Commitment and (ii) each additional Person that becomes a
U.S. Bank party hereto in accordance with Section 1.13 and/or 13.04. A U.S. Bank
shall cease to be a "U.S. Bank" when it has assigned all of its outstanding Term
Loans and Non-Canadian Revolving Loan Sub-Commitment in accordance with Section
1.13 and/or 13.04. For pur-
-181-
<PAGE>
poses of this Agreement, "Bank" includes each U.S. Bank unless the context
otherwise requires.
"U.S. Borrower" shall have the meaning provided in the first paragraph
of this Agreement
"U.S. Borrower Common Stock" shall have the meaning provided in Section
7.13.
"U.S. Borrower Guaranty" shall mean the guaranty of the U.S. Borrower
pursuant to Section 14 of this Agreement.
"U.S. Credit Party" shall mean the U.S. Borrower and each U.S.
Subsidiary Guarantor.
"U.S. Dollars" and the sign "$" shall each mean freely transferable
lawful money of the United States of America.
"U.S. Pledge Agreement" shall have the meaning provided in Section
5.10(a).
"U.S. Pledge Agreement Collateral" shall mean all of the "Collateral" as
defined in the U.S. Pledge Agreement.
"U.S. Revolving Credit Exposure" for any RL Bank at any time shall mean
the Revolving Credit Exposure of such RL Bank, after deducting therefrom all
amounts included therein relating to outstanding Canadian Dollar Revolving
Loans.
"U.S. Security Agreement" shall have the meaning provided in Section
5.10(c).
"U.S. Security Agreement Collateral" shall mean all of the "Collateral"
as defined in the U.S. Security Agreement.
"U.S. Security Documents" shall mean and include the U.S. Pledge
Agreement, the U.S. Security Agreement and each Mortgage.
"U.S. Subsidiaries Guaranty" shall have the meaning provided in Section
5.11(a).
"U.S. Subsidiary Guarantor" shall mean each Wholly-Owned Domestic
Subsidiary (and, to the extent required by Section 8.12, each Wholly-Owned
Foreign Subsidiary) of the U.S. Borrower that is or becomes a party to the U.S.
Subsidiaries Guaranty.
-182-
<PAGE>
"Voting Stock" shall mean, as to any Person, any class or classes of
capital stock of such Person pursuant to which the holders thereof have the
general voting power under ordinary circumstances to elect at least a majority
of the Board of Directors of such Person.
"Wholly-Owned Domestic Subsidiary" shall mean, as to any Person, any
Wholly-Owned Subsidiary of such Person which is a Domestic Subsidiary.
"Wholly-Owned Foreign Subsidiary" shall mean, as to any Person, any
Wholly-Owned Subsidiary of such Person which is a Foreign Subsidiary.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock (other than director's qualifying shares
and/or other nominal amounts of shares required to be held other than by such
Person under applicable law) is at the time owned by such Person and/or one or
more Wholly-Owned Subsidiaries of such Person and (ii) any partnership,
association, joint venture or other entity in which such Person and/or one or
more Wholly-Owned Subsidiaries of such Person has a 100% equity interest at such
time; provided that (x) other than in the definition of Wholly-Owned Un
--------
restricted Subsidiary, no Unrestricted Subsidiary shall be considered a Wholly-
Owned Subsidiary and (y) Leaman Logistics, Inc. shall be deemed to be a Wholly-
Owned Subsidiary of the U.S. Borrower.
"Wholly-Owned Unrestricted Subsidiary" shall mean any Wholly-Owned
Subsidiary which is an Unrestricted Subsidiary..
"Written" (whether lower or upper case) or "in writing" shall mean any
form of written communication or a communication by means of telex, facsimile
device, telegraph or cable.
SECTION 12. The Agents.
----------
12.01 Appointment. Each Bank hereby irrevocably designates and
-----------
appoints Credit Suisse First Boston as Administrative Agent of such Bank (for
purposes of this Section 12, the term "Administrative Agent" shall mean Credit
Suisse First Boston in its capacity as Administrative Agent hereunder and
Collateral Agent pursuant to the Security Documents), BTCo as Syndication Agent
and Salomon Brothers Holding Company Inc. as Documentation Agent to act as
specified herein and in the other Credit Documents, and each such Bank hereby
irrevocably authorizes the Administrative Agent, the Syndication Agent and the
Documentation Agent to take such action on its behalf under the provisions of
this Agreement and the other Credit Documents and to exercise such powers and
perform such duties as are expressly delegated to the Administrative Agent, the
Syndication Agent and the Documentation Agent by the terms of this Agreement and
the other Credit Documents, together with such other powers as are reasonably
incidental thereto. Each of the Administrative Agent, the Syndication Agent and
the Documentation Agent agrees to act
-183-
<PAGE>
as such upon the express conditions contained in this Section 12.
Notwithstanding any provision to the contrary elsewhere in this Agreement or in
any other Credit Document, the Administrative Agent, the Syndication Agent and
the Documentation Agent shall not have any duties or responsibilities, except
those expressly set forth herein or in the other Credit Documents, or any
fiduciary relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or otherwise exist against the Administrative Agent, the Syndication
Agent or the Documentation Agent. The provisions of this Section 12 are solely
for the benefit of the Administrative Agent, the Syndication Agent, the
Documentation Agent and the Banks, and neither any Borrower nor any of its
Subsidiaries shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this Agreement,
each of the Administrative Agent, the Syndication Agent and the Documentation
Agent shall act solely as agent of the Banks and does not assume and shall not
be deemed to have assumed any obligation or relationship of agency or trust with
or for any Borrower or any of its Subsidiaries.
12.02 Delegation of Duties. Each of the Administrative Agent, the
--------------------
Syndication Agent and the Documentation Agent may execute any of its duties
under this Agreement or any other Credit Document by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. None of the Administrative Agent, the
Syndication Agent or the Documentation Agent shall be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
12.03 Exculpatory Provisions. None of the Administrative Agent, the
----------------------
Syndication Agent, the Documentation Agent or any of their respective officers,
directors, employees, agents, attorneys-in-fact or affiliates shall be (i)
liable for any action lawfully taken or omitted to be taken by it or such Person
in its capacity as Administrative Agent, Syndication Agent or Documentation
Agent, as the case may be, under or in connection with this Agreement or the
other Credit Documents (except for its or such Person's own gross negligence or
willful misconduct) or (ii) responsible in any manner to any of the Banks for
any recitals, statements, representations or warranties made by the Borrowers,
any of their respective Subsidiaries or any of their respective officers
contained in this Agreement or the other Credit Documents, any other Document or
in any certificate, report, statement or other document referred to or provided
for in, or received by the Administrative Agent, the Syndication Agent or the
Documentation Agent under or in connection with, this Agreement or any other
Document or for any failure of any Borrower or any of its Subsidiaries or any of
their respective officers to perform its obligations here under or thereunder.
None of the Administrative Agent, the Syndication Agent or the Documentation
Agent 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 the other Documents, or to inspect the
properties, books or records of any Borrower or any of its Subsidiaries. None of
the Administrative Agent, the Syndication Agent or the Documentation Agent shall
be responsible to any Bank for the effectiveness, genuineness, validity,
enforceability, collectability or sufficiency of this
-184-
<PAGE>
Agreement or any other Document or for any representations, warranties, recitals
or statements made herein or therein or made in any written or oral statement or
in any financial or other statements, instruments, reports, certificates or any
other documents in connection herewith or therewith furnished or made by the
Administrative Agent, the Syndication Agent or the Documentation Agent, as the
case may be, to the Banks or by or on behalf of any Borrower or any of its
Subsidiaries to the Administrative Agent, the Syndication Agent or the
Documentation Agent, as the case may be, or any Bank or be required to
ascertain or inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained herein or therein or
as to the use of the proceeds of the Loans or of the existence or possible
existence of any Default or Event of Default.
12.04 Reliance by Agents. The Administrative Agent, the Syndication
------------------
Agent and the Documentation Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, consent,
certificate, affidavit, letter, cable gram, telegram, facsimile, telex or
teletype message, statement, order or other document or conversation reasonably
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, without limitation, counsel to the Borrowers or any of their
respective Subsidiaries), independent accountants and other experts selected by
the Administrative Agent, the Syndication Agent or the Documentation Agent, as
the case may be. Each of the Administrative Agent, the Syndication Agent and the
Documentation Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Credit Document unless it shall first
receive such advice or concurrence of the Required Banks as it deems appropriate
or 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 Administrative Agent, the Syndication
Agent and the Documentation Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement and the other Credit
Documents in accordance with a request of the Required Banks, and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all the Banks.
12.05 Notice of Default. None of the Administrative Agent, the
-----------------
Syndication Agent or the Documentation Agent shall be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default unless the
Administrative Agent, the Syndication Agent or the Documentation Agent, as the
case may be, has actually received notice from a Bank or a Borrower referring to
this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default." In the event that the Administrative
Agent, the Syndication Agent or the Documentation Agent receives such a notice,
the Administrative Agent, the Syndication Agent or the Documentation Agent, as
the case may be, shall give prompt notice thereof to the Banks. The
Administrative Agent, the Syndication Agent or the Documentation Agent, as the
case may be, shall take such action with respect to such Default or Event of
Default as shall be reasonably directed by the Required Banks; provided, that,
--------
unless and until the Administrative Agent, the Syndication Agent or the
Documentation Agent, as the case may be, shall have received
-185-
<PAGE>
such directions, the Administrative Agent, the Syndication Agent, or the
Documentation Agent, as the case may be, 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 in the best interests of
the Banks.
12.06 Nonreliance on Agents and Other Banks. Each Bank expressly
-------------------------------------
acknowledges that none of the Administrative Agent, the Syndication Agent, the
Documentation Agent or any of their respective officers, directors, employees,
agents, attorneys-in-fact or affiliates has made any representations or
warranties to it and that no act by the Administrative Agent, the Syndication
Agent or Documentation Agent hereinafter taken, including any review of the
affairs of any Borrower or any of its Subsidiaries, shall be deemed to
constitute any representation or warranty by the Administrative Agent, the
Syndication Agent or the Documentation Agent to any Bank. Each Bank represents
to the Administrative Agent, the Syndication Agent and the Documentation Agent
that it has, independently and without reliance upon the Administrative Agent,
the Syndication Agent, the Documentation Agent or any other Bank, and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, assets, operations, property,
financial and other condition, prospects and creditworthiness of each Borrower
and its Subsidiaries and made its own decision to make its Loans hereunder and
enter into this Agreement. Each Bank also represents that it will, indepen-
dently and without reliance upon the Administrative Agent, the Syndication
Agent, the Documentation Agent or any other Bank, 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 to make such investigation as it deems necessary to
inform itself as to the business, assets, operations, property, financial and
other condition, prospects and creditworthiness of each Borrower and its
Subsidiaries. None of the Administrative Agent, the Syndication Agent or the
Documentation Agent shall have any duty or responsibility to provide any Bank
with any credit or other information concerning the business, operations,
assets, property, financial and other condition, prospects or creditworthiness
of any Borrower or any of its Subsidiaries which may come into the possession of
the Administrative Agent, the Syndication Agent, the Documentation Agent or any
of their respective officers, directors, employees, agents, attorneys-in-fact or
affiliates.
12.07 Indemnification. The Banks agree to indemnify each of the
---------------
Administrative Agent, the Syndication Agent and the Documentation Agent in their
respective capacities as such ratably according to their respective
"percentages" as used in determining the Required Banks at such time or, if the
Commitments have terminated and all Loans have been repaid in full, as
determined immediately prior to such termination and repayment (with such
"percentages" to be determined as if there are no Defaulting Banks), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, reasonable expenses or disbursements of any
kind whatsoever which may at any time (including, without limitation, at any
time following the payment of the Obligations) be imposed on, incurred by or
asserted against the Administrative Agent, the Syndication Agent or the
Documentation Agent in their respective capacities as such in any
-186-
<PAGE>
way relating to or arising out of this Agreement or any other Credit Document,
or any documents contemplated by or referred to herein or the transactions
contemplated hereby or any action taken or omitted to be taken by the
Administrative Agent, the Syndication Agent or the Documentation Agent under or
in connection with any of the foregoing, but only to the extent that any of the
foregoing is not paid by the U.S. Borrower or any of its Subsidiaries; provided,
--------
that no Bank shall be liable to the Administrative Agent, the Syndication Agent
or the Documentation Agent for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting primarily from the gross negligence or
willful misconduct of the Administrative Agent, the Syndication Agent or the
Documentation Agent. If any indemnity furnished to the Administrative Agent, the
Syndication Agent or the Documentation Agent for any purpose shall, in the
opinion of the Administrative Agent, the Syndication Agent or the Documentation
Agent be insufficient or become impaired, the Administrative Agent, the
Syndication Agent or the Documentation Agent, as the case may be, may call for
additional indemnity and cease, or not commence, to do the acts indemnified
against until such additional indemnity is furnished. The agreements in this
Section 12.07 shall survive the payment of all Obligations.
12.08 Agents in their Individual Capacities. Each of the
-------------------------------------
Administrative Agent, the Syndication Agent and the Documentation Agent and
their respective affiliates may make loans to, accept deposits from and
generally engage in any kind of business with the U.S. Borrower and its
Subsidiaries as though the Administrative Agent, the Syndication Agent or the
Documentation Agent, as the case may be, were not the Administrative Agent, the
Syndication Agent or the Documentation Agent, as the case may be, hereunder.
With respect to the Loans made by it and all Obligations owing to it, each of
the Administrative Agent, the Syndication Agent and the Documentation Agent
shall have the same rights and powers under this Agreement as any Bank and may
exercise the same as though it were not the Administrative Agent, the
Syndication Agent or the Documentation Agent, as the case may be, and the terms
"Bank" and "Banks" shall include the Administrative Agent, the Syndication Agent
and the Documentation Agent in their individual capacities.
12.09 Holders. The Administrative Agent may deem and treat the payee
-------
of any Note as the owner thereof for all purposes hereof unless and until a
written notice of the assignment, transfer or endorsement thereof, as the case
may be, shall have been filed with the Administrative Agent. Any request,
authority or consent of any Person or entity who, at the time of making such
request or giving such authority or consent, is the holder of any Note shall be
conclusive and binding on any subsequent holder, transferee, assignee or
indorsee, as the case may be, of such Note or of any Note or Notes issued in
exchange therefor.
12.10 Resignation of the Agents. (a) The Administrative Agent may
-------------------------
resign from the performance of all its functions and duties hereunder and/or
under the other Credit Documents at any time by giving 30 Business Days' prior
written notice to the Borrowers and the Banks. Such resignation shall take
effect upon the appointment of a successor Administrative Agent pursuant to
clauses (b) and (c) below or as otherwise provided below.
-187-
<PAGE>
(b) Upon any such notice of resignation, the Required Banks shall
appoint a successor Administrative Agent hereunder or thereunder who shall be a
commercial bank or trust company reasonably acceptable to the Borrowers.
(c) If a successor Administrative Agent shall not have been so
appointed within such 30 Business Day period, the Administrative Agent, with the
consent of the Borrowers (which consent shall not be unreasonably withheld or
delayed), shall then appoint a successor Administrative Agent who shall serve as
Administrative Agent hereunder or thereunder until such time, if any, as the
Required Banks appoint a successor Administrative Agent as provided above.
(d) If no successor Administrative Agent has been appointed pursuant to
clause (b) or (c) above by the 30th Business Day after the date such notice of
resignation was given by the Administrative Agent, the Administrative Agent's
resignation shall become effective and the Required Banks shall thereafter
perform all the duties of the Administrative Agent hereunder and/or under any
other Credit Document until such time, if any, as the Banks appoint a successor
Administrative Agent as provided above.
(e) The Syndication Agent may resign from the performance of all its
functions and duties hereunder and/or under the other Credit Documents at any
time by giving five Business Days' prior written notice to the Banks. Such
resignation shall take effect at the end of such five Business Day period. Upon
the effectiveness of the resignation of the Syndication Agent, the
Administrative Agent shall assume all of the functions and duties of the
Syndication Agent hereunder and/or under the other Credit Documents.
(f) The Documentation Agent may resign from the performance of all its
functions and duties hereunder and/or under the other Credit Documents at any
time by giving five Business Days' prior written notice to the Banks. Such
resignation shall take effect at the end of such five Business Day period. Upon
the effectiveness of the resignation of the Documentation Agent, the
Administrative Agent shall assume all of the functions and duties of the
Documentation Agent hereunder and/or under the other Credit Documents.
12.11 Special Provisions Regarding the Co-Agents. No Co-Agent shall
------------------------------------------
have any obligations, responsibilities or duties under this Agreement or any
other Credit Document in its capacity as such.
SECTION 13. Miscellaneous.
-------------
13.01 Payment of Expenses, etc. The U.S. Borrower agrees to: (i)
-------------------------
whether or not the transactions herein contemplated are consummated, pay all
reasonable out-of-pocket costs and expenses of the Agents (including, without
limitation, the reasonable fees and disbursements of White & Case LLP and local
counsel) in connection with the
-188-
<PAGE>
negotiation, preparation, execution and delivery of the Credit Documents and the
documents and instruments referred to therein and any amendment, waiver or
consent relating thereto and in connection with the Agents' syndication efforts
with respect to this Agreement; (ii) pay all reasonable out-of-pocket costs and
expenses of each Agent, each Letter of Credit Issuer and each of the Banks in
connection with the enforcement of the Credit Documents and the documents and
instruments referred to therein and, after an Event of Default shall have
occurred and be continuing, the protection of the rights of each Agent, each
Letter of Credit Issuer and each of the Banks thereunder (including, without
limitation, the reason able fees and disbursements of counsel (including in-
house counsel) for each Agent, for each Letter of Credit Issuer and for each of
the Banks); (iii) pay and hold each of the Banks harmless from and against any
and all present and future stamp and other similar taxes with respect to the
foregoing matters and save each of the Banks harmless from and against any and
all liabilities with respect to or resulting from any delay or omission (other
than to the extent attributable to such Bank) to pay such taxes; and (iv)
indemnify each Agent, the Collateral Agent, each Letter of Credit Issuer and
each Bank, their respective officers, directors, employees, representatives,
trustees and agents from and hold each of them harmless against any and all
losses, liabilities, claims, damages or expenses incurred by any of them as a
result of, or arising out of, or in any way related to, or by reason of, (a) any
investigation, litigation or other proceeding (whether or not any Agent, the
Collateral Agent, any Letter of Credit Issuer or any Bank is a party thereto and
whether or not any such investigation, litigation or other proceeding is between
or among any Agent, the Collateral Agent, any Letter of Credit Issuer, any Bank,
any Credit Party or any third Person or otherwise) related to the entering into
and/or performance of this Agreement or any other Document or the use of the
proceeds of any Loans hereunder or any drawing on any Letter of Credit or the
Original Transaction or the Transaction or the consummation of any other
transactions contemplated in any Document (but excluding any such losses,
liabilities, claims, damages or expenses to the extent incurred by reason of the
gross negligence or willful misconduct of the Person to be indemnified), or (b)
the actual or alleged presence of Hazardous Materials in the air, surface water
or groundwater or on the surface or subsurface of any Real Property or any
Environmental Claim, in each case, including, without limitation, the reasonable
fees and disbursements of counsel and independent consultants incurred in
connection with any such investigation, litigation or other proceeding.
13.02 Right of Setoff. In addition to any rights now or hereafter
---------------
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence of an Event of Default, each Agent, each Letter
of Credit Issuer and each Bank is hereby authorized at any time or from time to
time, without presentment, demand, protest or other notice of any kind to the
U.S. Borrower or any of its Subsidiaries or to any other Person, any such notice
being hereby expressly waived, to set off and to appropriate and apply any and
all deposits (general or special) and any other Indebtedness at any time held or
owing by such Agent, such Letter of Credit Issuer or such Bank (including,
without limitation, by branches and agencies of such Agent, such Letter of
Credit Issuer and such Bank wherever located) to or for the credit or the
account of the U.S. Borrower or any of its Subsidiaries against and on account
of the Obligations of the U.S. Borrower or any of its Subsidiaries to such
Agent, such Letter of Credit Issuer or such Bank under this Agree-
-189-
<PAGE>
ment or under any of the other Credit Documents, including, without limitation,
all interests in Obligations of the U.S. Borrower or any of its Subsidiaries
purchased by such Bank pursuant to Section 13.06(b), and all other claims of any
nature or description arising out of or connected with this Agreement or any
other Credit Document, irrespective of whether or not such Agent, such Letter of
Credit Issuer or such Bank shall have made any demand hereunder and although
said Obligations shall be contingent or unmatured.
13.03 Notices. Except as otherwise expressly provided herein, all
-------
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, facsimile or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered, if to any Credit Party,
at the address specified opposite its signature below or in the other relevant
Credit Documents, as the case may be; if to any Bank, at its address specified
for such Bank on Schedule II; or, at such other address as shall be designated
by any party in a written notice to the other parties hereto. All such notices
and communications shall be mailed, telegraphed, telexed, telecopied or cabled
or sent by overnight courier, and shall be effective when received.
13.04 Benefit of Agreement. (a) This Agreement shall be binding upon
--------------------
and inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided, however, no Borrower may assign or
-------- -------
transfer any of its rights, obligations or interest hereunder or under any other
Credit Document without the prior written consent of each of the Banks, except
as provided in clause (v) of the first proviso to Section 13.12(a), and,
provided further, that, although any Bank may grant participations in its rights
- ----------------
hereunder, such Bank shall remain a "Bank" for all purposes hereunder (and may
not transfer or assign all or any portion of its Commitments or Loans hereunder
except as provided in Section 13.04(b)) and the participant shall not constitute
a "Bank" hereunder and, provided further, that no Bank shall transfer or grant
any participation under which the participant shall have rights to approve any
amendment to or waiver of this Agreement or any other Credit Document except to
the extent such amendment or waiver would (i) extend the final scheduled
maturity of any Loan, Note or Letter of Credit (unless such Letter of Credit is
not extended beyond the relevant Final Maturity Date) in which such participant
is participating, or reduce the rate or extend the time of payment of interest
or Fees thereon (except in connection with a waiver of applicability of any
post-default in crease in interest rates) or reduce the principal amount
thereof, or increase the amount of the participant's participation over the
amount thereof then in effect (it being understood that a waiver of any Default
or Event of Default or of a mandatory reduction in the Total Commitment or of a
mandatory repayment of Loans shall not constitute a change in the terms of such
participation, that an increase in any Commitment or Loan shall be permitted
without the consent of any participant if the participant's participation is not
increased as a result thereof and that any amendment or modification to the
financial definitions in this Agreement shall not constitute a reduction in any
rate of interest or fees for purposes of this clause (i)), (ii) consent to the
assignment or transfer by any Borrower of any of its rights and obligations
under this Agreement (except as provided in clause (v) of the first proviso to
Section 13.12(a)) or (iii) release all or substantially all of the Collateral
under all of the Security Documents (except as expressly provided in the
Security Documents) supporting
-190-
<PAGE>
the Loans hereunder in which such participant is participating. In the case of
any such participation, the participant shall not have any rights under this
Agreement or any of the other Credit Documents (the participant's rights against
such Bank in respect of such participation to be those set forth in the
agreement executed by such Bank in favor of the participant relating thereto)
and all amounts payable by any Borrower hereunder shall be determined as if such
Bank had not sold such participation.
(b) Notwithstanding the foregoing, any Bank (or any Bank together with
one or more other Banks) may (x) assign all or a portion of its Revolving Loan
Commitment (and related outstanding Obligations hereunder) and/or its
outstanding Term Loans of any Tranche to (i) its parent company and/or any
affiliate of such Bank which is at least 50% owned by such Bank or its parent
company or to one or more Banks or (ii) in the case of any Bank that is a fund
that invests in bank loans, any other fund that invests in bank loans and is
managed by the same investment advisor of such Bank or by an Affiliate of such
investment advisor or (y) assign all, or if less than all, a portion equal to at
least $5,000,000 in the aggregate for the assigning Bank or assigning Banks, of
such Revolving Loan Commitments (and related outstanding Obligations hereunder)
and outstanding principal amount of Term Loans of any Tranche to one or more
Eligible Transferees (treating (x) any fund that invests in bank loans and (y)
any other fund that invests in bank loans and is managed by the same investment
advisor as such fund or by an Affiliate of such investment advisor, as a single
Eligible Transferee), each of which assignees shall become a party to this
Agreement as a Bank by execution of an Assignment and Assumption Agreement,
provided that, (i) the assignment by any Bank (or Canadian RL Bank) of its
- --------
Canadian Revolving Loan Sub-Commitment (or any portion thereof) shall constitute
the assignment of a like amount of such Bank's (or its respective Affiliate's)
Revolving Loan Commitment, (ii) any assignment of all or any portion of the
Revolving Loan Commitment of any Bank shall be required to be accompanied by the
assignment of all or such portion of the Canadian Revolving Loan Sub-Commitment
and/or Non-Canadian Revolving Loan Sub-Commitment of such Bank (or its
respective Affiliate) as is equal, in the aggregate, to the amount of the
Revolving Loan Commitment being so assigned, (iii) any assignment of all or any
portion of the Revolving Loan Commitment and related outstanding Obligations
(or, if the Revolving Loan Commitment has terminated, any assignment of
Obligations originally extended pursuant to the Revolving Loan Commitments)
shall be made on a basis such that the respective assignee participates in
Revolving Loans, and in Letter of Credit Outstandings, in accordance with the
Revolving Loan Commitment (and Sub-Commitments described above) so assigned (or
if the Revolving Loan Commitment has been terminated, on the same basis as
participated in by the Banks with Revolving Loan Commitments (and Sub-
Commitments described above) prior to the termination thereof), (iv) at such
time Schedule I shall be deemed modified to reflect the Commitments and Sub-
Commitments and/or outstanding Term Loans, as the case may be, of such new Bank
and of the existing Banks (and their respective Affiliates), (v) upon surrender
of the old Notes (or the furnishing of a standard indemnity letter from the
respective assigning Bank in respect of any lost Notes), new Notes will be
issued, at the relevant Borrower's expense, to such new Bank and to the
assigning Bank, such new Notes to be in conformity with the requirements of
Section 1.05 (with appropriate modifications)
-191-
<PAGE>
to the extent needed to reflect the revised Commitments, Sub-Commitments and/or
outstanding Term Loans, as the case may be, (vi) the consent of the
Administrative Agent and, so long as no Default or Event of Default is then in
existence, the U.S. Borrower shall be required in connection with any assignment
to an Eligible Transferee pursuant to clause (y) of this Section 13.04(b) (which
consent, in each case, shall not be unreasonably withheld or delayed), (vii) the
consent of each Letter of Credit Issuer shall be required in connection with any
assignment of Non-Canadian Revolving Loan Sub-Commitments pursuant to clause (y)
of this Section 13.04(b) (which consent shall not be unreasonably withheld or
delayed) and (viii) the Administrative Agent shall receive at the time of each
assignment, from the assigning or assignee Bank, the payment of a non-refundable
assignment fee of $3,500 and, provided further, that such transfer or assignment
----------------
will not be effective until recorded by the Administrative Agent on the Register
pursuant to Section 13.17. To the extent of any assignment pursuant to this
Section 13.04(b), the assigning Bank shall be relieved of its obligations
hereunder with respect to its assigned Commitments (and Sub-Commitments) and/or
outstanding Term Loans. At the time of each assignment pursuant to this Section
13.04(b) to a Person which is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax
purposes, the respective assignee Bank shall provide to the U.S. Borrower and
the Administrative Agent the appropriate Internal Revenue Service Forms (and, if
applicable a Section 4.04(b)(ii) Certificate) described in Section 4.04(b). In
addition, at any time prior to the occurrence of a Sharing Event, if such
assignment pursuant to this Section 13.04(b) is of an interest in a Canadian
Revolving Loan Sub-Commitment or Canadian Dollar Revolving Loan to a Person
which is not already a Canadian RL Bank hereunder, the respective assignee
Canadian RL Bank shall provide, at the time of the assignment, a representation
that, as of the date of assignment, the respective assignee Canadian RL Bank is
a resident of Canada for purposes of the Tax Act. To the extent that an
assignment of all or any portion of a Bank's Commitment and outstanding
Obligations pursuant to Section 1.13 or this Section 13.04(b) would, due to
circumstances existing at the time of such assignment, result in increased costs
under Section 1.10, 1.11, 2.05 or 4.04 from those being charged by the
respective assigning Bank prior to such assignment, then the Borrowers shall not
be obligated to pay such increased costs (although the respective Borrower or
Borrowers shall be obligated to pay any other increased costs of the type
described above resulting from changes after the date of the respective
assignment). Notwithstanding anything to the contrary contained above, at any
time after the termination of the Total Revolving Loan Commitment, if any
Revolving Loans or Letters of Credit remain outstanding, assignments may be made
as provided above, except that the respective assignment shall be of a portion
of the outstanding Revolving Loans of the respective RL Bank and its
participation in Letters of Credit and its obligation to make Mandatory
Borrowings, although any such assignment effected after the termination of the
Total Revolving Loan Commitment shall not release the assigning RL Bank from its
obligations as a Participant with respect to outstanding Letters of Credit or to
fund its share of any Mandatory Borrowing (although the respective assignee may
agree, as between itself and the respective assigning RL Bank, that it shall be
responsible for such amounts).
-192-
<PAGE>
(c) Nothing in this Agreement shall prevent or prohibit any Bank or
CSFB from pledging its Loans and Notes hereunder to a Federal Reserve Bank in
support of borrowings made by such Bank from such Federal Reserve Bank and, with
the consent of the Administrative Agent, any Bank which is a fund may pledge all
or any portion of its Notes or Loans to its trustee in support of its
obligations to its trustee. No pledge pursuant to this clause (c) shall release
the transferor Bank from any of its obligations hereunder.
13.05 No Waiver; Remedies Cumulative. No failure or delay on the part
------------------------------
of any Agent, the Collateral Agent or any Bank in exercising any right, power or
privilege hereunder or under any other Credit Document and no course of dealing
between any Credit Party and any Agent, the Collateral Agent or any Bank shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder or under any other Credit Document preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege hereunder or thereunder. The rights and remedies herein expressly
provided are cumulative and not exclusive of any rights or remedies which any
Agent, the Collateral Agent or any Bank would otherwise have. No notice to or
demand on any Credit Party in any case shall entitle any Credit Party to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Agents, the Collateral Agent or the
Banks to any other or further action in any circumstances without notice or
demand.
13.06 Payments Pro Rata. (a) The Administrative Agent agrees that
-----------------
promptly after its receipt of each payment from or on behalf of any Credit Party
in respect of any Obligations of such Credit Party, it shall, except as
otherwise provided in this Agreement, distribute such payment to the Banks
(other than any Bank that has consented in writing to waive its pro rata share
--- ----
of such payment) pro rata based upon their respective shares, if any, of the
--- ----
Obligations with respect to which such payment was received.
(b) Except to the extent that this Agreement provides for payments to
be allocated to the Banks under a particular Tranche or with particular
Obligations, in each case prior to the occurrence of a Sharing Event, if any
Bank (a "Benefitted Bank") shall at any time receive any payment of all or part
of its Loans or the other Obligations owing to it, or interest thereon, or
receive any collateral in respect thereof (whether voluntarily or involuntarily,
by set-off, pursuant to events or proceedings of the nature referred to in
Section 10.05, or otherwise), in a greater proportion than any such payment to
or collateral received by any other Bank, if any, in respect of such other
Bank's Loans or the other Obligations owing to such other Bank, or interest
thereon, such Benefitted Banks shall purchase for cash from the other Banks a
participating interest in such portion of each such other Bank's Loans and/or
other Obligations owing to each such other Banks, or shall provide such other
Banks with the benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause such Benefitted Bank to share the excess payment or
benefits of such collateral or proceeds ratably with each of the Banks;
provided, however, that if all or any portion of such excess payment or benefits
- -------- -------
is thereafter recovered from such Benefitted Bank, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.
-193-
<PAGE>
13.07 Calculations; Computations. (a) The financial statements to be
--------------------------
furnished to the Banks pursuant hereto shall be made and prepared in accordance
with GAAP consistently applied throughout the periods involved (except as set
forth in the notes thereto or as otherwise disclosed in writing by the U.S.
Borrower to the Banks); provided, that except as otherwise specifically provided
--------
herein, all computations determining compliance with Sections 4.02, 8.14 and 9,
including definitions used therein shall, in each case, utilize accounting
principles and policies in effect at the time of the preparation of, and in
conformity with those used to prepare, the December 31, 1997 financial
statements of the U.S. Borrower delivered to the Banks pursuant to Section
7.10(b); provided further, that (i) to the extent expressly required pursuant to
----------------
the provisions of this Agreement, certain calculations shall be made on a Pro
---
Forma Basis, (ii) to the extent compliance with any of Section 9.09 or 9.10
- -----
would include periods occurring prior to the Original Effective Date or the
Restatement Effective Date, such calculation shall be adjusted on a Pro Forma
--- -----
Basis to give effect to the Original Transaction or the Transaction, as the case
may be, as if same had occurred on the first day of the respective period, (iii)
in the case of any determinations of Consolidated Interest Expense or
Consolidated EBITDA for any portion of any Test Period which ends prior to the
Original Effective Date or the Restatement Effective Date, all computations
determining compliance with Sections 9.09 and 9.10 and all determinations of the
Adjusted Total Leverage Ratio, the Adjusted Senior Leverage Ratio and the Total
Leverage Ratio shall be calculated in accordance with the definition of Test
Period contained herein and (iv) for purposes of calculating financial terms,
all covenants and related definitions, all such calculations based on the
operations of the U.S. Borrower and its Subsidiaries on a consolidated basis
shall be made without giving effect to the operations of any Unrestricted
Subsidiaries.
(b) For purposes of determining compliance with any incurrence or
expenditure tests set forth in Sections 8 and/or 9 (excluding Sections 9.09 and
9.10), any amounts so incurred or expended (to the extent incurred or expended
in a currency other than U.S. Dollars) shall be converted into U.S. Dollars on
the basis of the Dollar Equivalent of the respective such amounts as in effect
on the date of such incurrence or expenditure under any provision of any such
Section that has an aggregate Dollar limitation provided for therein (and to the
extent the respective incurrence or expenditure test regulates the aggregate
amount outstanding or made at any time and it is expressed in terms of U.S.
Dollars, all amounts originally incurred or spent in currencies other that U.S.
Dollars shall be converted into U.S. Dollars on the basis of the Dollar
Equivalent of the respective such amounts as in effect on the date any new
incurrence or expenditures made under any provision of any such Section that
regulates the Dollar amount outstanding or made at any time).
(c) All computations of interest (other than interest payable in
respect of Canadian Prime Rate Loans) and Fees (other than Acceptance Fees,
which shall be determined as provided in the definition thereof) hereunder shall
be made on the actual number of days elapsed over a year of 360 days. All
computations of interest payable in respect of Canadian Prime Rate Loans
hereunder shall be made on the actual number of days elapsed over a year of 365
or 366 days, as the case may be.
-194-
<PAGE>
(d) For purposes of the Interest Act (Canada), (i) whenever any
interest or fee under this Agreement is calculated using a rate based on a year
of 360 days or 365 days, as the case may be, the rate determined pursuant to
such calculation, when expressed as an annual rate, is equivalent to (x) the
applicable rate based on a year of 360 days or 365 days, as the case may be, (y)
multiplied by the actual number of days in the calendar year in which such
annual rate is to be ascertained, and (z) divided by 360 or 365, as the case may
be; (ii) the principle of deemed reinvestment or interest does not apply to any
interest calculation under this Agreement; and (iii) the rates of interest
stipulated in this Agreement are intended to be nominal rates and not effective
rates or yields.
13.08 Governing Law; Submission to Jurisdiction; Venue. (a) THIS
------------------------------------------------
AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT AS OTHERWISE PROVIDED IN CERTAIN
MORTGAGES AND THE CANADIAN SECURITY DOCUMENTS, BE CONSTRUED IN ACCORDANCE WITH
AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. Any legal action or
proceeding with respect to this Agreement or any other Credit Document may be
brought in the courts of the State of New York or of the United States for the
Southern District of New York, and, by execution and delivery of this Agreement,
each Borrower hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Each Borrower hereby irrevocably designates, appoints and empowers CT
Corporation System, with offices on the date hereof at 1633 Broadway, New York,
New York 10019 as its designee, appointee and agent to receive, accept and
acknowledge for and on its behalf, and in respect of its property, service of
any and all legal process, summons, notices and documents which may be served in
any such action or proceeding. If for any reason such designee, appointee and
agent shall cease to be available to act as such, each Borrower agrees to
designate a new designee, appointee and agent in New York City on the terms and
for the purposes of this provision satisfactory to the Administrative Agent
under this Agreement. Each Borrower hereby further irrevocably waives any claim
that any such courts lack jurisdiction over such Borrower, and agrees not to
plead or claim, in any legal action or proceeding with respect to this Agreement
or any other Credit Document brought in any of the aforesaid courts, that any
such court lacks jurisdiction over such Borrower. Each Borrower further
irrevocably consents to the service of process in any such action or proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, to such Borrower, at its address for notices pursuant to Section 13.03,
such service to become effective 30 days after such mailing. Each Borrower
hereby irrevocably waives any objection to such service of process and further
irrevocably waives and agrees not to plead or claim in any action or proceeding
commenced hereunder or under any other Credit Document that service of process
was in any way invalid or ineffective. Nothing herein shall affect the right of
any Agent, the Collateral Agent, any Bank or the holder of any Note to serve
process in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against any Credit Party in any other jurisdiction.
-195-
<PAGE>
(b) Each Borrower hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid actions
or proceedings arising out of or in connection with this Agreement or any other
Credit Document brought in the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been brought in
an inconvenient forum.
13.09 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts executed by all the parties hereto shall be lodged with each
Borrower and the Administrative Agent.
13.10 Effectiveness. This Agreement shall become effective on the
-------------
date (the "Restatement Effective Date") on which (i) each Borrower, each
Original Term Loan Bank, each Bank with a New Tranche A Term Loan Commitment,
each Bank with a Tranche B Term Loan Commitment, each Bank with a Tranche C Term
Loan Commitment, the Required Banks (determined immediately before the
occurrence of the Restatement Effective Date and without giving effect thereto),
the Administrative Agent, the Syndication Agent and the Documentation Agent
shall have signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered the same (including by way of facsimile
transmission) to the Administrative Agent and (ii) the conditions contained in
Sec tions 5 and 6 are met to the satisfaction of the Agents and the Required
Banks (determined immediately after the occurrence of the Restatement Effective
Date). Unless the Administrative Agent has received actual notice from any Bank
that the conditions contained in Sections 5 and 6 have not been met to its
satisfaction, upon the satisfaction of the condition described in clause (i) of
the immediately preceding sentence and upon the Administrative Agent's good
faith determination that the conditions described in clause (ii) of the
immediately preceding sentence have been met, then the Restatement Effective
Date shall have been deemed to have occurred, regardless of any subsequent
determination that one or more of the conditions thereto had not been met
(although the occurrence of the Restatement Effective Date shall not release
either Borrower from any liability for failure to satisfy one or more of the
applicable conditions contained in Section 5 or 6). The Administrative Agent
will give each Borrower and each Bank prompt written notice of the occurrence of
the Restatement Effective Date.
13.11 Headings Descriptive. The headings of the several sections and
--------------------
sub sections of this Agreement are inserted for convenience only and shall not
in any way affect the meaning or construction of any provision of this
Agreement.
13.12 Amendment or Waiver; etc. (a) Neither this Agreement nor any
-------------------------
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination
is in writing signed by the respective Credit Parties party thereto and the
Required Banks, provided that no such change, waiver, discharge or termination
--------
shall, without the consent of each Bank
-196-
<PAGE>
(other than a Defaulting Bank) (with Obligations being directly affected thereby
in the case of the following clause (i)), (i) extend the final scheduled
maturity of any Loan or Note or extend the stated maturity of any Letter of
Credit beyond the Final Maturity Date, or reduce the rate or extend the time of
payment of interest or Fees thereon, or reduce the principal amount thereof (it
being understood that any amendment or modification to the financial definitions
in this Agreement shall not constitute a reduction in any rate of interest or
fees for purposes of this clause (i)), (ii) release all or substantially all of
the Collateral (except as expressly provided in the Security Documents) under
all the Security Documents, (iii) amend, modify or waive any provision of this
Section 13.12, (iv) reduce the percentage specified in the definition of
Required Banks (it being understood that, with the consent of the Required
Banks, additional extensions of credit pursuant to this Agreement may be
included in the determination of the Required Banks on substantially the same
basis as the extensions of Term Loans and Revolving Loan Commitments are
included on the Effective Date) or (v) consent to the assignment or transfer by
any Borrower of any of its rights and obligations under this Agreement, except
that the U.S. Borrower may assign or otherwise transfer its rights, obligations
and interests hereunder or under the other Credit Documents to any Wholly-Owned
Domestic Subsidiary of the U.S. Borrower to the extent (but only to the extent)
that (i) the U.S. Borrower guarantees all of the Obligations of such assignee
Subsidiary pursuant to a guaranty in form and substance satisfactory to the
Required Banks and (ii) the Required Banks shall have consented to such
assignment or transfer; provided further, that no such change, waiver, discharge
----------------
or termination shall (t) without the consent of the Majority Lenders of each
Sub-Tranche which is being allocated a lesser prepayment, repayment or
commitment reduction as a result of the actions described below (or without the
consent of the Majority Lenders of each Sub-Tranche in the case of an amendment
to the definition of Majority Lenders), amend the definition of Majority Banks
(it being understood that, with the consent of the Required Banks, additional
extensions of credit pursuant to this Agreement may be included in the
determination of the Majority Banks on substantially the same basis as the
extensions of credit pursuant to the various Sub-Tranches are included on the
Initial Borrowing Date) or alter the required application of any prepayments,
repayments or commitment reductions, as the between the various Sub-Tranches,
pursuant to Sections 3.02, 3.03 or 4.02 (excluding Section 4.02(b))(although (x)
the Required Banks may waive, in whole or in part, any such prepayment,
repayment or commitment reduction, so long as the application, as amongst the
various Sub-Tranches, of any such prepayment, repayment or commitment reduction
which is still required to be made is not altered and (y) if additional Tranches
or Sub-Tranches of term loans are extended after the Initial Borrowing Date with
the consent of the Required Banks as required above, such Tranches and/or Sub-
Tranches may be included on a pro rata basis in the various prepayments or
repayments required pursuant to Section 4.02), (u) without the consent of the
Supermajority Banks of the Term Loans, reduce the amount of, or extend the date
of, any Scheduled Repayment owing with respect thereto, or amend the definition
of Supermajority Banks (it being understood that, with the consent of the
Required Banks additional extensions of credit pursuant to this Agreement may be
included in the determination of Supermajority Banks on substantially the same
basis as the extensions of Term Loans on the Initial Borrowing Date), (v)
increase the Commitments of any Bank over the amount thereof then in effect
without the consent of such Bank (it being understood
-197-
<PAGE>
that waivers or modifications of conditions precedent, covenants, Defaults or
Events of Default or of a mandatory reduction in the Total Commitment shall not
constitute an increase of the Commitment of any Bank, and that an increase in
the available portion of any Commitment of any Bank shall not constitute an
increase in the Commitment of such Bank), (w) without the consent of each Letter
of Issuer, amend, modify or waive any provision of Section 2 or alter its rights
or obligations with respect to Letters of Credit, (x) without the consent of
CSFB, alter its rights or obligations with respect to Swingline Loans, (y)
without the consent of the Agents, amend, modify or waive any provision of
Section 12 as same applies to the Agents or any other provision as same relates
to the rights or obligations of the Agents and (z) without the consent of the
Collateral Agent, amend, modify or waive any provision relating to the rights or
obligations of the Collateral Agent.
(b) If, in connection with any proposed change, waiver, discharge or
termination of or to any of the provisions of this Agreement as contemplated by
clauses (i) through (v), inclusive, of the first proviso to Section 13.12(a),
the consent of the Required Banks is obtained but the consent of one or more of
such other Banks whose consent is required is not obtained, then the U.S.
Borrower shall have the right, so long as all non-consenting Banks whose
individual consent is required are treated as described in either clause (A) or
(B) below, to either (A) replace each such non-consenting Bank or Banks (or, at
the option of the U.S. Borrower if the respective Bank's consent is required
with respect to less than all Tranches of Loans (or related Commitments), to
replace only the Revolving Loan Commitments and/or Loans of the respective non-
consenting Bank which gave rise to the need to obtain such Bank's individual
consent) with one or more Replacement Banks pursuant to Section 1.13 so long as
at the time of such replacement, each such Replacement Bank consents to the
proposed change, waiver, discharge or termination or (B) terminate such non-
consenting Bank's Revolving Loan Commitment (if such Bank's consent is required
as a result of its Revolving Loan Commitment) and/or repay each Tranche of
outstanding Loans of such Bank which gave rise to the need to obtain such Bank's
consent and/or cash collateralize its applicable Dollar RL Percentage (or, after
the occurrence of any Sharing Event, its Sharing Percentage) of the Letter of
Credit of Outstandings, in accordance with Sections 3.02(b) and/or 4.01(b),
provided that, unless the Commitments which are terminated and Loans which are
- --------
repaid pursuant to preceding clause (B) are immediately replaced in full at such
time through the addition of new Banks or the increase of the Commitments and/or
outstanding Loans of existing Banks (who in each case must specifically consent
thereto), then in the case of any action pursuant to preceding clause (B), the
Required Banks (determined after giving effect to the proposed action) shall
specifically consent thereto, provided further, that the U.S. Borrower shall not
----------------
have the right to replace a Bank, terminate its Revolving Loan Commitment or
repay its Loans solely as a result of the exercise of such Bank's rights (and
the withholding of any required consent by such Bank) pursuant to the second
proviso to Section 13.12(a).
13.13 Survival. All indemnities set forth herein including, without
--------
limitation, in Sections 1.10, 1.11, 2.05, 4.04, 12.07 and 13.01, shall, subject
to the provisions of Section 13.18 (to the extent applicable), survive the
execution and delivery of this Agreement and the making and repayment of the
Loans.
-198-
<PAGE>
13.14 Domicile of Loans and Commitments. Each Bank may transfer and
---------------------------------
carry its Loans and/or Commitments at, to or for the account of any branch
office, subsidiary or affiliate of such Bank; provided, that no Borrower shall
--------
be responsible for costs arising under Section 1.10, 1.11, 2.05 or 4.04
resulting from any such transfer (other than a transfer pursuant to Section 1.12
or 1.15) to the extent such costs would not otherwise be applicable to such Bank
in the absence of such transfer.
13.15 Confidentiality. (a) Each of the Banks agrees that it will
---------------
use its reasonable efforts not to disclose without the prior consent of the
U.S. Borrower (other than to its directors, trustees, employees, auditors,
counsel or other professional advisors, to affiliates or to another Bank if the
Bank or such Bank's holding or parent company in its sole discretion determines
that any such party should have access to such information) any information with
respect to the U.S. Borrower or any of its Subsidiaries which is furnished
pursuant to this Agreement; provided, that any Bank may disclose any such
--------
information (a) as has become generally available to the public, (b) as may be
required or appropriate (x) in any report, statement or testimony submitted to
any municipal, state or Federal regulatory body having or claiming to have
jurisdiction over such Bank or to the Federal Reserve Board or the Federal
Deposit Insurance Corporation or similar organizations (whether in the United
States or elsewhere) or their successors or (y) in connection with any request
or requirement of any such regulatory body (including any securities exchange or
self-regulatory organization), (c) as may be required or appropriate in response
to any summons or subpoena or in connection with any litigation, (d) to comply
with any law, order, regulation or ruling applicable to such Bank, and (e) to
any prospective transferee in connection with any contemplated transfer of any
of the Notes or any interest therein by such Bank; provided, that such
--------
prospective transferee agrees to be bound by this Section 13.15 to the same
extent as such Bank.
(b) Each Borrower hereby acknowledges and agrees that each Bank may
share with any of its affiliates any information related to such Borrower or any
of its Subsidiaries (including, without limitation, any nonpublic customer
information regarding the creditworthiness of such Borrower and its
Subsidiaries), provided that such Persons shall be subject to the provisions of
--------
this Section 13.15 to the same extent as such Bank.
13.16 Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT
--------------------
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
13.17 Register. Each Borrower hereby designates the Administrative
--------
Agent to serve as such Borrower's agent, solely for purposes of this Section
13.17, to maintain a register (the "Register") on which it will record the
Commitments (and related Canadian Revolving Loan Sub-Commitment, if any) from
time to time of each of the Banks, the Loans made by each of the Banks and each
repayment in respect of the principal amount of the Loans of each Bank. Failure
to make any such recordation, or any error in such
-199-
<PAGE>
recordation shall not affect any Borrower's obligations in respect of such
Loans. With respect to any Bank, the transfer of any Commitment (and related
Canadian Revolving Loan Sub-Commitment, if any) of such Bank and the rights to
the principal of, and interest on, any Loan shall not be effective until such
transfer is recorded on the Register maintained by the Administrative Agent with
respect to ownership of such Commitment (and related Canadian Revolving Loan
Sub-Commitment, if any) and Loans and prior to such recordation all amounts
owing to the transferor with respect to such Commitment (and related Canadian
Revolving Loan Sub-Commitment, if any) and Loans shall remain owing to the
transferor. The registration of assignment or transfer of all or part of any
Commitment (and related Canadian Revolving Loan Sub-Commitment, if any) and
Loans shall be recorded by the Administrative Agent on the Register only upon
the acceptance by the Administrative Agent of a properly executed and delivered
Assignment and Assumption Agreement pursuant to Section 13.04(b). Coincident
with the delivery of such an Assignment and Assumption Agreement to the
Administrative Agent for acceptance and registration of assignment or transfer
of all or part of a Commitment and/or Loan, or as soon thereafter as
practicable, the assigning or transferor Bank shall surrender the Note evi
dencing such Commitment (and related Canadian Revolving Loan Sub-Commitment, if
any) and/or Loan, and thereupon one or more new Notes in the same aggregate
principal amount shall be issued to the assigning or transferor Bank and/or the
new Bank. Each Borrower jointly and severally agrees to indemnify the
Administrative Agent from and against any and all losses, claims, damages and
liabilities of whatsoever nature which may be imposed on, asserted against or
incurred by the Administrative Agent in performing its duties under this Section
13.17.
13.18 Limitation on Additional Amounts, etc. Notwithstanding
--------------------------------------
anything to the contrary contained in Section 1.10, 1.11, 2.05 or 4.04 of this
Agreement, unless a Bank gives notice to the respective Borrower that it is
obligated to pay an amount under such Section within six months after the later
of (x) the date the Bank incurs the respective increased costs, Taxes, loss,
expense or liability, reduction in amounts received or receivable or reduction
in return on capital or (y) the date such Bank has actual knowledge of its
incurrence of the respective increased costs, Taxes, loss, expense or liability,
reductions in amounts received or receivable or reduction in return on capital,
then such Bank shall only be entitled to be compensated for such amount by such
Borrower pursuant to said Section 1.10, 1.11, 2.05 or 4.04, as the case may be,
to the extent of the costs, Taxes, loss, expense or liability, reduction in
amounts received or receivable or reduction in return on capital that are
incurred or suffered on or after the date which occurs six months prior to such
Bank giving notice to such Borrower that it is obligated to pay the respective
amounts pursuant to said Section 1.10, 1.11, 2.05 or 4.04, as the case may be.
This Section 13.18 shall have no applicability to any Section of this Agreement
other than said Sections 1.10, 1.11, 2.05 and 4.04.
13.19 Post-Closing Actions. Notwithstanding anything to the contrary
--------------------
contained in this Agreement or the other Credit Documents, the parties hereto
acknowledge and agree that:
-200-
<PAGE>
(a) Security Document Filings. Form UCC-1 financing statements
-------------------------
delivered by the U.S. Borrower to the Collateral Agent on the Restatement
Effective Date shall be filed in the appropriate governmental office within 5
days following the Restatement Effective Date.
(b) Certificates of Title. (i) The Collateral Agent's security
---------------------
interest with respect to the certificates of title in respect of all Tractor
Trailers owned by CLC and its Subsidiaries on the Restatement Effective Date
(other than Tractor Trailers securing Scheduled Existing Indebtedness not being
refinanced on the Restatement Effective Date) shall be registered in the
appropriate governmental office within 90 days following the Restatement
Effective Date and (ii) the Collateral Agent's security interest with respect to
the certificates of title in respect of all Tractor Trailers owned by the U.S.
Borrower and its Subsidiaries on the Original Effective Date (other than Tractor
Trailers securing Scheduled Existing Indebtedness not refinanced on the Original
Effective Date) shall be registered in the appropriate governmental office
within 60 days following the Restatement Effective Date.
(c) UCC-3 Termination and PPSA Financing Change Statements. Within
------------------------------------------------------
10 days following the Restatement Effective Date (or such later date as shall
have been determined by the Administrative Agent in its sole discretion), the
Administrative Agent shall have received Form UCC-3 termination statements and
Form PPSA 2-C financing change statements and applications for registration in
respect of the Liens listed on Part B of Schedule IX hereto and same shall be
filed in the appropriate governmental office within 15 days following the
Restatement Effective Date (or such later date as shall have been determined by
the Administrative Agent in its sole discretion).
(d) Opinions of Local Counsel. Within 10 days following the
-------------------------
Restatement Effective Date, the Collateral Agent shall have received additional
opinions, addressed to each Agent, the Collateral Agent and each of the Banks
from local counsel to Credit Parties and/or the Agents reasonably satisfactory
to the Collateral Agent, which opinions (x) shall cover the perfection and
enforceability as against third parties of the security interests granted
pursuant to the Security Documents and such other matters relating to the
transactions contemplated herein as the Collateral Agent may reasonably request
and (y) shall be in form and substance reasonably satisfactory to the Collateral
Agent.
(e) Mortgages. Within 30 days following the Restatement Effective
---------
Date, the Collateral Agent shall have received all of the Mortgages, Mortgage
Policies, surveys and other agreements and documents in respect of the Real
Property owned by CLC and its Subsidiaries and designated on Schedule III as
Mortgaged Properties and which would otherwise be required to be delivered on
the Restatement Effective Date pursuant to Section 5.10(f) in the absence of
this Section 13.19(e).
All provisions of this Credit Agreement and the other Credit Documents
(including, without limitation, all conditions precedent, representations,
warranties, covenants, events of default and other agreements herein and
therein) shall be deemed
-201-
<PAGE>
modified to the extent necessary to effect the foregoing (and to permit the
taking of the actions described above within the time periods, required above,
rather than as otherwise provided in the Credit Documents); provided, that (x)
--------
to the extent any representation and warranty would not be true because the
foregoing actions were not taken on the Restatement Effective Date, the
respective representation and warranty shall be required to be true and correct
in all material respects at the time the respective action is taken (or was
required to be taken) in accordance with the foregoing provisions of this
Section 13.19 and (y) all representations and warranties relating to the
Collateral Documents shall be required to be true immediately after the actions
required to be taken by Section 13.19 have been taken (or were required to be
taken). The acceptance of the benefits of the Loans shall constitute a
representation, warranty and covenant by each Borrower to each of the Banks that
the actions required pursuant to this Section 13.19 will be, or have been, taken
within the rele vant time periods referred to in this Section 13.19 and that, at
such time, all representations and warranties contained in this Credit Agreement
and the other Credit Documents shall then be true and correct without any
modification pursuant to this Section 13.19. The parties hereto acknowledge and
agree that the failure to take any of the actions required above, within the
relevant time periods required above, shall give rise to an immediate Event of
Default pursuant to this Agreement.
13.20 Judgment Currency. (a) The Credit Parties' obligations
-----------------
hereunder and under the other Credit Documents to make payments in the
respective Applicable Currency (the "Obligation Currency") shall not be
discharged or satisfied by any tender or recovery pursuant to any judgment
expressed in or converted into any currency other than the Obligation Currency,
except to the extent that such tender or recovery results in the effective
receipt by the Administrative Agent, the Collateral Agent or the respective Bank
of the full amount of the Obligation Currency expressed to be payable to the
Administrative Agent, the Collateral Agent or such Bank under this Agreement or
the other Credit Documents. If for the purpose of obtaining or enforcing
judgment against any Credit Party in any court or in any jurisdiction, it
becomes necessary to convert into or from any currency other than the
Obligation Currency (such other currency being hereinafter referred to as the
"Judgment Currency") an amount due in the Obligation Currency, the conversion
shall be made at the Canadian Dollar Equivalent or the Dollar Equivalent
thereof, as the case may be, and, in the case of other currencies, the rate of
exchange (as quoted by the Administrative Agent or if the Administrative Agent
does not quote a rate of exchange on such currency, by a known dealer in such
currency designated by the Administrative Agent) determined, in each case, as of
the day on which the judgment is given (such Business Day being hereinafter
referred to as the "Judgment Currency Conversion Date").
(b) If there is a change in the rate of exchange prevailing between
the Judgment Currency Conversion Date and the date of actual payment of the
amount due, the Borrowers covenant and agree to pay, or cause to be paid, such
additional amounts, if any (but in any event not a lesser amount), as may be
necessary to ensure that the amount paid in the Judgment Currency, when
converted at the rate of exchange prevailing on the date of payment, will
produce the amount of the Obligation Currency which could have been
-202-
<PAGE>
purchased with the amount of Judgment Currency stipulated in the judgment or
judicial award at the rate or exchange prevailing on the Judgment Currency
Conversion Date.
(c) For purposes of determining the Canadian Dollar Equivalent or the
Dollar Equivalent or any other rate of exchange for this Section 13.20, such
amounts shall include any premium and costs payable in connection with the
purchase of the Obligation Currency.
13.21 Absence of Financial Assistance by Canadian Borrower. (a) The
----------------------------------------------------
parties hereto acknowledge and agree that notwithstanding anything to the
contrary in this Agreement (i) the Obligations of the U.S. Borrower under this
Agreement are solely those of the U.S. Borrower and not the Canadian Borrower
(which shall have no liability therefor), (ii) none of the provisions of this
Agreement or any other Credit Document are intended to result in the Canadian
Borrower furnishing any form of "financial assistance" within the meaning of
Section 123.66 of the Companies Act (Quebec) (including, without limitation, the
granting of security) to the U.S. Borrower, (iii) any indemnities or other
amounts owing under Section 13.01 for which the U.S. Borrower and the Canadian
Borrower may be deemed to be jointly and severally liable shall instead
constitute the several obligations of the U.S. Borrower and shall not be
obligations of the Canadian Borrower and (iv) under no circumstances shall the
Canadian Borrower be required by the terms of this Agreement, any other Credit
Document or any Interest Rate Protection Agreement or Other Hedging Agreement
the obligations under which are secured by any Security Document to provide
"financial assistance" to the U.S. Borrower (as such term may be interpreted by
a court of competent jurisdiction in Quebec in considering the application of
Section 123.66 of the Companies Act (Quebec)).
13.22 Additions of New Banks, etc. (a) On and as of the occurrence
---------------------------
of the Restatement Effective Date in accordance with Section 13.10 hereof, each
New Bank shall become a "Bank" under, and for all purposes of, this Agreement
and the other Credit Documents.
(b) By their execution and delivery hereof, the U.S. Borrower, the
Canadian Borrower and the Required Banks (as determined immediately before the
occurrence of the Restatement Effective Date) agree that, notwithstanding
anything to the contrary contained in Section 3.02(a) of the Original Credit
Agreement, the reduction to the Total Unutilized Revolving Loan Commitment
required pursuant to Section 5.17(a) shall apply to reduce the Revolving Loan
Commitment (and the Non-Canadian Revolving Loan Sub-Commitment) of each Bank
with a Non-Canadian Revolving Loan Sub-Commitment, pro rata based on the
--- ----
relative Non-Canadian Revolving Loan Sub-Commitments of the various Banks.
SECTION 14. U.S. Borrower Guaranty.
----------------------
14.01 The U.S. Borrower Guaranty. In order to induce the Banks to
--------------------------
enter into this Agreement and to extend credit hereunder and in recognition of
the direct benefits to be received by the U.S. Borrower from the proceeds of the
Loans and the issuance of the Letters of Credit, the U.S. Borrower hereby agrees
with the Banks as follows: the U.S. Borrower hereby, unconditionally and
irrevocably, guarantees, as primary obligor and not
-203-
<PAGE>
merely as surety the full and prompt payment when due, whether upon maturity,
acceler ation or otherwise, of any and all of the Canadian Guaranteed
Obligations to the Guaranteed Creditors. If any or all of the Canadian
Guaranteed Obligations to the Guaranteed Creditors becomes due and payable
hereunder, the U.S. Borrower unconditionally promises to pay such indebtedness
to the Guaranteed Creditors, or order, on demand, together with any and all
expenses which may be incurred by the Guaranteed Creditors in collecting any of
the Canadian Guaranteed Obligations. This U.S. Borrower Guaranty is a continuing
one and all liabilities to which it applies or may apply under the terms hereof
shall be conclusively presumed to have been created in a reliance hereon. If
claim is ever made upon any Guaranteed Creditor for repayment or recovery of any
amount or amounts received in payment or on account of any of the Canadian
Guaranteed Obligations and any of the aforesaid payees repays all or part of
said amount by reason of (i) any judgment, decree or order of any court or
administrative body having jurisdiction over such payee or any of its property
or (ii) any settlement or compromise of any such claim effected by such payee
with any such claimant (including the Canadian Borrower), then and in such event
the U.S. Borrower agrees that any such judgment, decree, order, settlement or
compromise shall be binding upon the U.S. Borrower, notwithstanding any
revocation of this U.S. Borrower Guaranty or any other instrument evidencing any
liability of the Canadian Borrower, and the U.S. Borrower shall be and remain
liable to the aforesaid payees hereunder for the amount so repaid or recovered
to the same extent as if such amount had never originally been received by any
such payee.
14.02 Bankruptcy. Additionally, the U.S. Borrower, unconditionally
----------
and irrevocably, guarantees the payment of any and all of the Canadian
Guaranteed Obligations to the Guaranteed Creditors whether or not due or payable
by the Canadian Borrower upon the occurrence of any of the events specified in
Section 10.05, and unconditionally promises to pay such indebtedness to the
Guaranteed Creditors, or order, on demand, in lawful money of the United States.
14.03 Nature of Liability. The liability of the U.S. Borrower
-------------------
hereunder is exclusive and independent of any security for or other guaranty of
the Canadian Guaranteed Obligations whether executed by the U.S. Borrower, any
other guarantor or by any other party, and the liability of the U.S. Borrower
hereunder is not affected or impaired by (a) any direction as to application of
payment by the Canadian Borrower or by any other party, or (b) any other
continuing or other guaranty, undertaking or maximum liability of a guarantor or
of any other party as to the Canadian Guaranteed Obligations, or (c) any payment
on or in reduction of any such other guaranty or undertaking, or (d) any
dissolution, termination or increase, decrease or change in personnel by the
Canadian Borrower, or (e) any payment made to the Guaranteed Creditors on the
Canadian Guaranteed Obligations which any such Guaranteed Creditor repays to the
Canadian Borrower pursuant to court order in any bankruptcy, reorganization,
arrangement, moratorium or other debtor relief proceeding, and the U.S. Borrower
waives any right to the deferral or modification of its obligations hereunder by
reason of any such proceeding.
-204-
<PAGE>
14.04 Independent Obligation. No invalidity, irregularity or
----------------------
unenforceability of all or any part of the Canadian Guaranteed Obligations or of
any security therefor shall affect, impair or be a defense to this U.S. Borrower
Guaranty, and this U.S. Borrower Guaranty shall be primary, absolute and
unconditional notwithstanding the occurrence of any event or the existence of
any other circumstances which might constitute a legal or equitable discharge of
a surety or guarantor except payment in full of the Canadian Guaranteed
Obligations. The obligations of the U.S. Borrower hereunder are independent of
the obligations of any other guarantor, any other party or the Canadian
Borrower, and a separate action or actions may be brought and prosecuted against
the U.S. Borrower whether or not action is brought against any other guarantor,
any other party or the Canadian Borrower and whether or not any other guarantor,
any other party or the Canadian Borrower be joined in any such action or
actions. The U.S. Borrower waives, to the full extent permitted by law, the
benefit of any statute of limitations affecting its liability hereunder or the
enforcement thereof. Any payment by the Canadian Borrower or other circumstance
which operates to toll any statute of limitations as to the Canadian Borrower
shall operate to toll the statute of limitations as to the U.S. Borrower.
14.05 Authorization. The U.S. Borrower authorizes the Guaranteed
-------------
Creditors without notice or demand (except as shall be required by applicable
statute and cannot be waived), and without affecting or impairing its liability
hereunder, from time to time to:
(a) change the manner, place or terms of payment of, and/or change or
extend the time of payment of, renew, increase, accelerate or alter, any of
the Canadian Guaranteed Obligations (including any increase or decrease in
the rate of interest thereon), any security therefor, or any liability
incurred directly or indirectly in respect thereof, and this U.S. Borrower
Guaranty shall apply to the Canadian Guaranteed Obligations as so changed,
extended, renewed or altered;
(b) take and hold security for the payment of the Canadian Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Canadian Guaranteed Obligations or any liabilities (including
any of those hereunder) incurred directly or indirectly in respect thereof
or hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights against the
Canadian Borrower or others or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers, guarantors, the
Canadian Borrower or other obligors;
(e) settle or compromise any of the Canadian Guaranteed Obligations,
any security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all
-205-
<PAGE>
or any part thereof to the payment of any liability (whether due or not) of
the Canadian Borrower to its creditors other than the Guaranteed Creditors;
(f) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Canadian Borrower to the Guaranteed
Creditors regardless of what liability or liabilities of the Canadian
Borrower remain unpaid;
(g) consent to or waive any breach of, or any act, omission or
default under, this Agreement, any other Credit Document or any of the
instruments or agreements referred to herein or therein, or otherwise
amend, modify or supplement this Agreement, any other Credit Document or
any of such other instruments or agreements; and/or
(h) take any other action which would, under otherwise applicable
principles of common law, give rise to a legal or equitable discharge of
the U.S. Borrower from its liabilities under this U.S. Borrower Guaranty.
14.06 Reliance. It is not necessary for the Guaranteed Creditors to
--------
inquire into the capacity or powers of the Canadian Borrower or the officers,
directors, partners or agents acting or purporting to act on their behalf, and
the Canadian Guaranteed Obligations made or created in reliance upon the
professed exercise of such powers shall be guaranteed hereunder.
14.07 Subordination. Any of the indebtedness of the Canadian
-------------
Borrower now or hereafter owing to the U.S. Borrower is hereby subordinated by
the U.S. Borrower to the Canadian Guaranteed Obligations owing to the Guaranteed
Creditors; and if the Administrative Agent so requests at a time when an Event
of Default exists, all such indebtedness of the Canadian Borrower to the U.S.
Borrower shall be collected, enforced and received by the U.S. Borrower for the
benefit of the Guaranteed Creditors and be paid over to the Administrative Agent
on behalf of the Guaranteed Creditors on account of the Canadian Guaranteed
Obligations, but without affecting or impairing in any manner the liability of
the U.S. Borrower under the other provisions of this U.S. Borrower Guaranty.
Prior to the transfer by the U.S. Borrower of any note or negotiable instrument
evidencing any of the indebtedness of the Canadian Borrower to the U.S.
Borrower, the U.S. Borrower shall mark such note or negotiable instrument with a
legend that the same is subject to this subordination. Without limiting the
generality of the foregoing, the U.S. Borrower hereby agrees with the Guaranteed
Creditors that it will not exercise any right of subrogation which it may at any
time otherwise have as a result of this U.S. Borrower Guaranty (whether
contractual, under Section 509 of the Bankruptcy Code or otherwise) until all
Canadian Guaranteed Obligations have been irrevocably paid in full in cash.
14.08 Waiver. (a) The U.S. Borrower waives any right (except as
------
shall be required by applicable statute and cannot be waived) to require any
Guaranteed Creditor to (i) proceed against the Canadian Borrower, any other
guarantor or any other party, (ii) proceed against or exhaust any security held
from the Canadian Borrower, any other
-206-
<PAGE>
guarantor or any other party or (iii) pursue any other remedy in any Guaranteed
Creditor's power whatsoever. The U.S. Borrower waives any defense based on or
arising out of any defense of the Canadian Borrower, any other guarantor or any
other party, other than payment in full of the Canadian Guaranteed Obligations,
based on or arising out of the disability of the Canadian Borrower, any other
guarantor or any other party, or the unenforceability of the Canadian Guaranteed
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of the Canadian Borrower other than payment in full of the
Canadian Guaranteed Obligations. The Guaranteed Creditors may, at their
election, foreclose on any security held by the Administrative Agent, the
Collateral Agent or any other Guaranteed Creditor by one or more judicial or
nonjudicial sales, whether or not every aspect of any such sale is commercially
reasonable (to the extent such sale is permitted by applicable law), or exercise
any other right or remedy the Guaranteed Creditors may have against the Canadian
Borrower or any other party, or any security, without affecting or impairing in
any way the liability of the U.S. Borrower under this U.S. Borrower Guaranty
except to the extent the Canadian Guaranteed Obligations have been paid. The
U.S. Borrower waives any defense arising out of any such election by the
Guaranteed Creditors, even though such election operates to impair or extinguish
any right of reimbursement or subrogation or other right or remedy of the U.S.
Borrower against the Canadian Borrower or any other party or any security.
(b) The U.S. Borrower waives all presentments, demands for
performance, protests and notices, including, without limitation, notices of
nonperformance, notices of protest, notices of dishonor, notices of acceptance
of this U.S. Borrower Guaranty, and notices of the existence, creation or
incurring of new or additional Canadian Guaranteed Obligations. The U.S.
Borrower assumes all responsibility for being and keeping itself informed of the
Canadian Borrower's financial condition and assets, and of all other
circumstances bearing upon the risk of nonpayment of the Canadian Guaranteed
Obligations and the nature, scope and extent of the risks which the U.S.
Borrower assumes and incurs under this U.S. Borrower Guaranty, and agrees that
the Guaranteed Creditors shall have no duty to advise the U.S. Borrower of
information known to them regarding such circumstances or risks.
(c) Until such time as the Canadian Guaranteed Obligations have been
paid in full in cash or Cash Equivalents, the U.S. Borrower hereby waives all
rights of subrogation which it may at any time otherwise have as a result of
this U.S. Borrower Guaranty (whether contractual, under Section 509 of the
Bankruptcy Code, or otherwise) to the claims of the Canadian Guaranteed
Creditors against the Canadian Borrower or any other guarantor of the Canadian
Guaranteed Obligations and all contractual, statutory or common law rights of
reimbursement, contribution or indemnity from the Canadian Borrower or any other
guarantor which it may at any time otherwise have as a result of this U.S.
Borrower Guaranty.
14.09 Payment. All payments made by the U.S. Borrower pursuant to
-------
this Section 14 shall be made in the respective Applicable Currency in which the
Canadian Guaranteed Obligations are then due and payable (giving effect, in the
circumstances
-207-
<PAGE>
contemplated by Section 1.15, to any conversion occurring pursuant thereto). All
payments made by the U.S. Borrower pursuant to this Section 14 will be made
without setoff, counterclaim or other defense, and shall be subject to the
provisions of Section 4.04.
* * * *
-208-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
MTL INC.
By /s/ Charles J. O'Brien, Jr.
-------------------------------------
Name: Charles J. O'Brien, Jr.
Title: President
LEVY TRANSPORT, LTD./LEVY TRANSPORT LTEE.
By /s/ Charles J. O'Brien, Jr.
-------------------------------------
Name: Charles J. O'Brien, Jr.
Title:
CREDIT SUISSE FIRST BOSTON,
Individually and as
Administrative Agent
By /s/ Julia P. Kingsbury
-------------------------------------
Name: Julia P. Kingsbury
Title: Vice President
By /s/ Robert N. Finney
--------------------------------------
Name: Robert N. Finney
Title: Managing Director
BANKERS TRUST COMPANY,
Individually and as
Syndication Agent
By /s/ Anthony LoGrippo
--------------------------------------
Name: Anthony LoGrippo
Title: Vice President
<PAGE>
SALOMON BROTHERS HOLDING COMPANY INC.,
By /s/ Mavis B. Taintor
------------------------------------
Name: Mavis B. Taintor
Title: Managing Director
<PAGE>
ABN AMRO BANK N.V.
By /s/ Kathleen L. Ross
-----------------------------
Name: Kathleen L. Ross
Title: Group Vice President
By /s/ Gerlad F. Mackin
-----------------------------
Name: Gerlad F. Mackin
Title: Vice President
<PAGE>
THE BANK OF NOVA SCOTIA
By /s/ W. E. Zarrett
--------------------------
Name: William E. Zarrett
Title: Senior Relationship Manager
<PAGE>
BALANCED HIGH YIELD FUND II LTD.
By: BHF-Bank Aktiengesellscaft acting
through its New York Branch as
attorney in fact.
By /s/ Anthony Heyman - Dan Dobrjanskyj
-------------------------------------
Name: Anthony Heyman Dan Dobrjanskyj
Title: AVP AVP
<PAGE>
BHF-BANK AKTIENGESELLSCHAFT
By /s/ Anthony Heyman - Dan Dobrjanskyj
-------------------------------------
Name: Anthony Heyman Dan Dobrjanskyj
Title: AVP AVP
<PAGE>
CREDITANSTALT CORPORATE
FINANCE, INC.
By /s/ Carl G. Drake
--------------------------
Name: Carl G. Drake
Title: Vice President
By /s/ Robert M. Biringer
--------------------------
Name: Robert M. Biringer
Title: Executive Vice President
<PAGE>
COMERICA BANK, N.A.
By /s/ Martin G. Ellis
--------------------------
Name: Martin G. Ellis
Title: Vice President
<PAGE>
THE MITSUBISHI TRUST AND
BANKING CORPORATION
By /s/ Genichiro Chiba
--------------------------
Name: Genichiro Chiba
Title: Deputy General Manager
<PAGE>
BANK OF TOKYO-MITSUBISHI
TRUST COMPANY
By /s/ Patrick Zoro
--------------------------
Name: Patrick Zoro
Title: Assistant Vice President
<PAGE>
ROYAL BANK OF CANADA
By /s/ Michael J. Madnick
--------------------------
Name: Michael J. Madnick
Title: Senior Manager
<PAGE>
SOCIETE GENERALE
By /s/ Louis P. Laville, III
----------------------------
Name: Louis P. Laville, III
Title: Vice President
<PAGE>
BANK POLSKA KASA OPIEKI
S.A. - PEKAO
By /s/ Harvey Winter
--------------------------
Name: Harvey Winter
Title: Vice President
<PAGE>
METROPOLITAN LIFE
INSURANCE COMPANY
By /s/ Scott W. Isley
--------------------------
Name: SCOTT W. ISLEY
Title: Director
<PAGE>
PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By /s/ B. Ross Smead
--------------------------
Name: B. Ross Smead
Title: Vice President
<PAGE>
NATIONAL WESTMINSTER
BANK PLC
By: NatWest Capital Markets
Limited, its Agent
By: Greenwich Capital Markets,
Inc., its Agent
By /s/ J.J. Hood
---------------------------
Name: Jerry J. Hood
Title: Vice President
<PAGE>
KZH SOLEIL LLC
By /s/ V Conway
---------------------------
Name: Virginia Conway
Title: Authorized Agent
<PAGE>
BANKBOSTON, N.A.
By /s/ Kevin Kearns
--------------------------
Name: Kevin Kearns
Title: Managing Director
<PAGE>
MORGAN STANLEY
DEAN WITTER PRIME INCOME
TRUST
By /s/ Peter Sewirtz
--------------------------
Name: Peter Sewirtz
Title: Authorized Signatory
<PAGE>
ING HIGH INCOME PRINCIPAL
PRESERVATION FUND
HOLDINGS, LCD
By: ING Capitol Advisors Inc.
As Investment Advisor
By /s/ Helen Y. Rhee
---------------------------
Name: HELEN Y. RHEE
Title: VICE PRESIDENT & PORTFOLIO MANAGER
<PAGE>
CANADIAN IMPERIAL BANK
OF COMMERCE
By /s/ Frank Fiorito
---------------------------
Name: FRANK FIORITO
Title: Authorized Signatory
<PAGE>
TRANSAMERICA LIFE INSURANCE AND
ANNUITY COMPANY
By /s/ John M. Casparian
------------------------------
Name: John M. Casparian
Title: Investment Officer
<PAGE>
EXHIBIT 4.2
================================================================================
MTL INC.,
as Issuer,
the GUARANTORS named herein,
as Guarantors,
and
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
__________________
INDENTURE
Dated as of June 9, 1998
__________________
up to $275,000,000
__________________
$100,000,000
10% Senior Subordinated Notes due 2006
$40,000,000
Floating Interest Rate Subordinated Term Securities ("FIRSTS")(SM)/*/
due 2006
================================================================================
_________________________
/*/ FIRSTS(SM) is a service mark of BT Alex. Brown Incorporated
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- ---------
<S> <C>
310(a)(1)............................................. 7.10
(a)(2)............................................. 7.10
(a)(3)............................................. N.A.
(a)(4)............................................. N.A.
(a)(5)............................................. 7.08; 7.10
(b)................................................ 7.08; 7.10;
13.02
(c)................................................ N.A.
311(a)................................................ 7.11
(b)................................................ 7.11
(c)................................................ N.A.
312(a)............................................. 2.05
(b)................................................ 13.03
(c)................................................ 13.03
313(a)................................................ 7.06
(b)(1)............................................. 7.06
(b)(2)............................................. 7.06
(c)................................................ 7.06; 13.02
(d)................................................ 7.06
314(a)................................................ 4.08; 4.10;
13.02
(b)................................................ N.A.
(c)(1)............................................. 7.02; 13.04;
13.05
(c)(2)............................................. 7.02; 13.04;
13.05
(c)(3)............................................. N.A.
(d)................................................ N.A.
(e)................................................ 13.05
(f)................................................ N.A.
315(a)................................................ 7.01(b)
(b)................................................ 7.05
(c)................................................ 7.01
(d)................................................ 6.05; 7.01(c)
(e)................................................ 6.11
316(a)(last sentence)................................. 2.09
(a)(1)(A).......................................... 6.05
(a)(1)(B).......................................... 6.04
(a)(2)............................................. 9.05
(b)................................................ 6.07
(c)................................................ 9.05
317(a)(1)............................................. 6.08
(a)(2)............................................. 6.09
(b)................................................ 2.04
318(a)................................................ 13.01
(c)................................................ 13.01
</TABLE>
- -----------------------
N.A. means Not Applicable
Note: This Cross - Reference Table shall not, for any purpose,
be deemed to be a part of the Indenture
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions................................................ 1
SECTION 1.02. Incorporation by Reference of TIA.......................... 33
SECTION 1.03. Rules of Construction...................................... 33
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating............................................ 34
SECTION 2.02. Execution and Authentication............................... 35
SECTION 2.03. Registrar, Paying Agent and Calculation Agent.............. 36
SECTION 2.04. Paying Agent To Hold Assets in Trust....................... 37
SECTION 2.05. Holder Lists............................................... 37
SECTION 2.06. Transfer and Exchange...................................... 38
SECTION 2.07. Replacement Securities..................................... 40
SECTION 2.08. Outstanding Securities..................................... 40
SECTION 2.09. Treasury Securities........................................ 41
SECTION 2.10. Temporary Securities....................................... 41
SECTION 2.11. Cancellation............................................... 41
SECTION 2.12. Defaulted Interest......................................... 42
SECTION 2.13. CUSIP Number............................................... 42
SECTION 2.14. Restrictive Legends........................................ 42
SECTION 2.15. Book-Entry Provisions for Global Security.................. 44
SECTION 2.16. Special Transfer Provisions................................ 46
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee......................................... 48
SECTION 3.02. Selection of Securities To Be Redeemed..................... 48
SECTION 3.03. Notice of Redemption....................................... 49
SECTION 3.04. Effect of Notice of Redemption............................. 50
SECTION 3.05. Deposit of Redemption Price................................ 50
SECTION 3.06. Securities Redeemed in Part................................ 51
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities...................................... 51
SECTION 4.02. Maintenance of Office or Agency............................ 51
SECTION 4.03. Limitation on Restricted Payments.......................... 52
SECTION 4.04. Limitation on Incurrence of
Additional Indebtedness................................. 55
SECTION 4.05. Corporate Existence........................................ 55
SECTION 4.06. Payment of Taxes and Other Claims.......................... 55
SECTION 4.07. Maintenance of Properties and Insurance.................... 56
SECTION 4.08. Compliance Certificate; Notice of Default.................. 57
SECTION 4.09. Compliance with Laws....................................... 57
SECTION 4.10. Reports to Holders......................................... 58
SECTION 4.11. Waiver of Stay, Extension or Usury Laws.................... 58
SECTION 4.12. Limitations on Transactions with Affiliates................ 59
SECTION 4.13. Limitation on Dividend and Other Payment
Restrictions Affecting Subsidiaries..................... 60
SECTION 4.14. Limitation on Liens........................................ 62
SECTION 4.15. Change of Control.......................................... 62
SECTION 4.16. Limitation on Asset Sales.................................. 65
SECTION 4.17. Prohibition on Incurrence of
Senior Subordinated Debt................................ 69
SECTION 4.18. Additional Subsidiary Guarantees........................... 69
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Merger, Consolidation and Sale of Assets................... 69
SECTION 5.02. Successor Corporation Substituted.......................... 71
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.......................................... 72
SECTION 6.02. Acceleration............................................... 74
SECTION 6.03. Other Remedies............................................. 75
SECTION 6.04. Waiver of Past Defaults.................................... 75
SECTION 6.05. Control by Majority........................................ 75
SECTION 6.06. Limitation on Suits........................................ 76
SECTION 6.07. Rights of Holders To Receive Payment....................... 76
SECTION 6.08. Collection Suit by Trustee................................. 77
SECTION 6.09. Trustee May File Proofs of Claim........................... 77
SECTION 6.10. Priorities................................................. 78
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 6.11. Undertaking for Costs...................................... 78
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.......................................... 79
SECTION 7.02. Rights of Trustee.......................................... 80
SECTION 7.03. Individual Rights of Trustee............................... 82
SECTION 7.04. Trustee's Disclaimer....................................... 82
SECTION 7.05. Notice of Default.......................................... 82
SECTION 7.06. Reports by Trustee to Holders.............................. 82
SECTION 7.07. Compensation and Indemnity................................. 83
SECTION 7.08. Replacement of Trustee..................................... 84
SECTION 7.09. Successor Trustee by Merger, Etc........................... 85
SECTION 7.10. Eligibility; Disqualification.............................. 86
SECTION 7.11. Preferential Collection of Claims
Against Company......................................... 86
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Termination of the Company's Obligations................... 86
SECTION 8.02. Legal Defeasance and Covenant Defeasance................... 88
SECTION 8.03. Conditions to Legal Defeasance
or Covenant Defeasance.................................. 90
SECTION 8.04. Application of Trust Money................................. 92
SECTION 8.05. Repayment to the Company................................... 92
SECTION 8.06. Reinstatement.............................................. 93
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders................................. 93
SECTION 9.02. With Consent of Holders.................................... 94
SECTION 9.03. Effect on Senior Debt...................................... 96
SECTION 9.04. Compliance with TIA........................................ 96
SECTION 9.05. Revocation and Effect of Consents.......................... 96
SECTION 9.06. Notation on or Exchange of Securities...................... 97
SECTION 9.07. Trustee To Sign Amendments, Etc............................ 97
</TABLE>
-iii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE TEN
SUBORDINATION OF SECURITIES
SECTION 10.01. Securities Subordinated to
Senior Debt............................................. 98
SECTION 10.02. Suspension of Payment When Senior
Debt Is in Default...................................... 98
SECTION 10.03. Securities Subordinated to Prior Payment
of All Senior Debt on Dissolution,
Liquidation or Reorganization of Company................ 100
SECTION 10.04. Payments May Be Paid Prior
to Dissolution.......................................... 102
SECTION 10.05. Holders To Be Subrogated to Rights
of Holders of Senior Debt............................... 102
SECTION 10.06. Obligations of the Company Unconditional................... 102
SECTION 10.07. Notice to Trustee.......................................... 103
SECTION 10.08. Reliance on Judicial Order or
Certificate of Liquidating Agent........................... 104
SECTION 10.09. Trustee's Relation to Senior Debt.......................... 104
SECTION 10.10. Subordination Rights Not Impaired
by Acts or Omissions of the Company
or Holders of Senior Debt............................... 105
SECTION 10.11. Securityholders Authorize Trustee To
Effectuate Subordination of Securities.................. 105
SECTION 10.12. This Article Ten Not To
Prevent Events of Default............................... 106
SECTION 10.13. Trustee's Compensation
Not Prejudiced.......................................... 106
ARTICLE ELEVEN
GUARANTEE OF SECURITIES
SECTION 11.01. Unconditional Guarantee.................................... 106
SECTION 11.02. Limitations on Guarantees.................................. 108
SECTION 11.03. Execution and Delivery of Guarantee........................ 108
SECTION 11.04. Release of a Guarantor..................................... 109
SECTION 11.05. Waiver of Subrogation...................................... 110
SECTION 11.06. Immediate Payment.......................................... 111
SECTION 11.07. No Set-Off................................................. 111
SECTION 11.08. Obligations Absolute....................................... 111
SECTION 11.09. Obligations Continuing..................................... 111
SECTION 11.10. Obligations Not Reduced.................................... 112
SECTION 11.11. Obligations Reinstated..................................... 112
SECTION 11.12. Obligations Not Affected................................... 112
SECTION 11.13 Waiver..................................................... 114
</TABLE>
-iv-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 11.14. No Obligation To Take Action Against
the Company............................................. 114
SECTION 11.15. Dealing with the Company and Others........................ 114
SECTION 11.16. Default and Enforcement.................................... 115
SECTION 11.17. Amendment, Etc............................................. 115
SECTION 11.18. Acknowledgment............................................. 115
SECTION 11.19. Costs and Expenses......................................... 116
SECTION 11.20. No Merger or Waiver; Cumulative Remedies................... 116
SECTION 11.21. Survival of Obligations.................................... 116
SECTION 11.22. Guarantee in Addition to Other Obligations................. 116
SECTION 11.23. Severability............................................... 117
SECTION 11.24. Successors and Assigns..................................... 117
ARTICLE TWELVE
SUBORDINATION OF GUARANTEE
SECTION 12.01. Guarantee Obligations Subordinated
to Guarantor Senior Debt................................ 117
SECTION 12.02. Suspension of Guarantee Obligations
When Guarantor Senior Debt Is in Default................ 118
SECTION 12.03. Guarantee Obligations Subordinated
to Prior Payment of All Guarantor
Senior Debt on Dissolution, Liquidation
or Reorganization of Such Guarantor..................... 119
SECTION 12.04. Payments May Be Paid Prior
to Dissolution.......................................... 121
SECTION 12.05. Holders of Guarantee Obligations
To Be Subrogated to Rights of
Holders of Guarantor Senior Debt........................ 121
SECTION 12.06. Obligations of the Guarantors Unconditional................ 122
SECTION 12.07. Notice to Trustee.......................................... 122
SECTION 12.08. Reliance on Judicial Order or
Certificate of Liquidating Agent........................ 123
SECTION 12.09. Trustee's Relation to Guarantor Senior Debt................ 123
SECTION 12.10. Subordination Rights Not Impaired
by Acts or Omissions of the Guarantors
or Holders of Guarantor Senior Debt..................... 124
SECTION 12.11. Holders Authorize Trustee To Effectuate
Subordination of Guarantee Obligations.................. 125
SECTION 12.12. This Article Twelve Not To
Prevent Events of Default............................... 125
</TABLE>
-v-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 12.13. Trustee's Compensation
Not Prejudiced.......................................... 126
ARTICLE THIRTEEN
MISCELLANEOUS
SECTION 13.01. TIA Controls............................................... 126
SECTION 13.02. Notices.................................................... 126
SECTION 13.03. Communications by Holders
with Other Holders...................................... 127
SECTION 13.04. Certificate and Opinion as
to Conditions Precedent................................. 128
SECTION 13.05. Statements Required in
Certificate or Opinion.................................. 128
SECTION 13.06. Rules by Trustee, Paying Agent, Registrar.................. 129
SECTION 13.07. Legal Holidays............................................. 129
SECTION 13.08. Governing Law.............................................. 129
SECTION 13.09. No Adverse Interpretation
of Other Agreements..................................... 129
SECTION 13.10. No Recourse Against Others................................. 129
SECTION 13.11. Successors................................................. 129
SECTION 13.12. Duplicate Originals........................................ 130
SECTION 13.13. Severability............................................... 130
Signatures.................................................................. S-1
</TABLE>
Exhibit A - Form of Fixed Rate Note
Exhibit B - Form of Floating Rate Note
Exhibit C - Form of Guarantee
Note: This Table of Contents shall not, for any purpose, be deemed to be part
of the Indenture
-vi-
<PAGE>
INDENTURE dated as of June 9, 1998 among MTL INC., a Florida
corporation (the "Company"), as Issuer, each of the Guarantors named herein, as
-------
Guarantors, and United States Trust Company of New York, as Trustee (the
"Trustee").
-------
The Company has duly authorized the creation of an issue of 10% Senior
Subordinated Notes due 2006 and Floating Interest Rate Subordinated Term
Securities ("FIRSTS")(SM)/*/ due 2006 and, when and if issued as provided in
the Registration Rights Agreement, Series B Senior Subordinated Notes due 2006
and Series B Floating Interest Rate Subordinated Term Securities, and, to
provide therefor, the Company has duly authorized the execution and delivery of
this Indenture. All things necessary to make the Securities, when duly issued
and executed by the Company and authenticated and delivered hereunder, the valid
and binding obligations of the Company and to make this Indenture a valid and
binding agreement of the Company have been done.
Each party hereto agrees as follows for the benefit of each other
party and for the equal and ratable benefit of the Holders of the Securities:
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
-----------
"Acceleration Notice" has the meaning set forth in Section 6.02.
-------------------
"Accredited Investor" has the meaning set forth in Section 2.16(a)
-------------------
"Acquired Indebtedness" means Indebtedness of a Person or any of its
---------------------
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary of
the Company or at the time it merges or consolidates with the Company or any of
its Restricted Subsidiaries or assumed in connection with the acquisition of
assets from such Person and in each case not incurred
- ----------------------------
/*/ FIRSTS(SM) is a service mark of BT Alex. Brown Incorporated.
<PAGE>
-2-
by such Person in connection with, or in anticipation or contemplation of, such
Person becoming a Restricted Subsidiary of the Company or such acquisition,
merger or consolidation, unless such Indebtedness is incurred in connection with
a tax-advantaged Asset Acquisition.
"Affiliate" means, with respect to any specified Person, any other
---------
Person who directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with, such specified Person.
The term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative of the
foregoing.
"Affiliate Transaction" has the meaning set forth in Section 4.12.
---------------------
"Agent" means any Registrar, Paying Agent or co-Registrar.
-----
"Agent Members" has the meaning set forth in Section 2.15.
-------------
"Apollo" means Apollo Management, L.P. and its Affiliates.
------
"Applicable Premium" means, with respect to a Security, the greater of
------------------
(i) 1.0% of the then outstanding principal amount of such Security and (ii)(a)
the present value of all remaining required interest and principal payments due
on such Security and all premium payments relating thereto assuming a redemption
date of June 15, 2002, computed using a discount rate equal to the Treasury Rate
plus 50 basis points minus (b) the then outstanding principal amount of such
Security minus (c) accrued interest paid on the date of redemption.
"Asset Acquisition" means (a) an Investment by the Company or any
-----------------
Restricted Subsidiary of the Company in any other Person pursuant to which such
Person shall become a Restricted Subsidiary of the Company or any Restricted
Subsidiary of the Company, or shall be merged with or into the Company or any
Restricted Subsidiary of the Company, or (b) the acquisition by the Company or
any Restricted Subsidiary of the Company of the assets of any Person (other than
a Restricted Subsidiary of the Company) which constitute all or substantially
all of the assets of such Person or comprises any division or line of
<PAGE>
-3-
business of such Person or any other properties or assets of such Person other
than in the ordinary course of business.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
----------
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment or other transfer for value by the Company or any of
its Restricted Subsidiaries (including any Sale and Leaseback Transaction) to
any Person other than the Company or a Wholly Owned Restricted Subsidiary of the
Company of (a) any Capital Stock of any Restricted Subsidiary of the Company; or
(b) any other property or assets of the Company or any Restricted Subsidiary of
the Company other than in the ordinary course of business; provided, however,
-------- -------
that Asset Sales shall not include (i) a transaction or series of related
transactions for which the Company or its Restricted Subsidiaries receive
aggregate consideration of less than $1.5 million, (ii) the sale or exchange of
equipment in connection with the purchase or other acquisition of other
equipment, in each case used in the business of the Company and its Restricted
Subsidiaries, (iii) the sale, lease, conveyance, disposition or other transfer
of all or substantially all of the assets of the Company as permitted under
Section 5.01, (iv) disposals of tractors and trailers in connection with the
reinvestment in or the replacement of its fleet and disposals or replacements of
worn-out or obsolete equipment, in each case in the ordinary course of business
of the Company or its Restricted Subsidiaries and (v) the sale of accounts
receivable pursuant to a Qualified Receivables Transaction.
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal,
--------------
state or foreign law for the relief of debtors.
"Board of Directors" means, as to any Person, the board of directors
------------------
of such Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a
----------------
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means any day other than a Saturday, Sunday or any
------------
other day on which banking institutions in the
<PAGE>
-4-
City of New York are required or authorized by law or other governmental action
to be closed.
"Calculation Agent" means the Person appointed by the Company to
-----------------
calculate the interest rate on the Floating Rate Notes. The Calculation Agent
shall initially be the Trustee.
"Capitalized Lease Obligation" means, as to any Person, the
----------------------------
obligations of such Person under a lease that are required to be classified and
accounted for as capital lease obligations under GAAP and any refinancing
thereof and, for purposes of this definition, the amount of such obligations at
any date shall be the capitalized amount of such obligations at such date,
determined in accordance with GAAP.
"Capital Stock" means (i) with respect to any Person that is a
-------------
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of Common Stock and Preferred Stock of such Person or options to
purchase the same and (ii) with respect to any Person that is not a corporation,
any and all partnership or other equity interests of such Person.
"Cash Equivalents" means (i) marketable direct obligations issued by,
----------------
or unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Corporation ("S&P") or Moody's
---
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more
-------
than one year from the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 from S&P or at least P-1 from Moody's; (iv)
certificates of deposit or bankers' acceptances maturing within one year from
the date of acquisition thereof issued by any bank organized under the laws of
the United States of America or any state thereof or the District of Columbia or
any U.S. branch of a foreign bank having at the date of acquisition thereof
combined capital and surplus of not less than $250.0 million; (v) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clause (i) above entered into with any bank meeting the
qualifications
<PAGE>
-5-
specified in clause (iv) above; and (vi) investments in money market funds which
invest substantially all their assets in securities of the types described in
clauses (i) through (v) above.
"Change of Control" means the occurrence of one or more of the
-----------------
following events: (i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Company to any Person or group of related Persons for purposes
of Section 13(d) of the Exchange Act (a "Group"), together with any Affiliates
-----
thereof (whether or not otherwise in compliance with the provisions of this
Indenture), other than to the Permitted Holders; (ii) the approval by the
holders of Capital Stock of the Company of any plan or proposal for the
liquidation or dissolution of the Company (whether or not otherwise in
compliance with the provisions of this Indenture); (iii) any Person or Group
(other than the Permitted Holders) shall become the owner, directly or
indirectly, beneficially or of record, of shares representing more than 50% of
the aggregate ordinary voting power represented by the issued and outstanding
Capital Stock of the Company; or (iv) the replacement of a majority of the Board
of Directors of the Company over a two-year period from the directors who
constituted the Board of Directors of the Company at the beginning of such
period, and such replacement shall not have been approved by the Permitted
Holders or a vote of at least a majority of the Board of Directors of the
Company then still in office who either were members of such Board of Directors
at the beginning of such period or whose election as a member of such Board of
Directors was previously so approved.
"Change of Control Date" has the meaning set forth in Section 4.15.
----------------------
"Change of Control Offer" has the meaning set forth in Section 4.15.
-----------------------
"Change of Control Payment Date" has the meaning set forth in Section
------------------------------
4.15.
"Commission" means the Securities and Exchange Commission.
----------
"Common Stock" of any Person means any and all shares, interests or
------------
other participations in, and other equivalents (however designated and whether
voting or non-voting) of such Person's common stock, whether outstanding on the
Issue
<PAGE>
-6-
Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.
"Company" means the party named as such in this Indenture until a
-------
successor replaces it pursuant to this Indenture and thereafter shall mean such
successor corporation.
"Consolidated EBITDA" means, with respect to any Person, for any
-------------------
period, the sum (without duplication) of (i) Consolidated Net Income and (ii) to
the extent Consolidated Net Income has been reduced thereby, (A) all income
taxes of such Person and its Restricted Subsidiaries paid or accrued in
accordance with GAAP for such period (other than income taxes attributable to
extraordinary, unusual or nonrecurring gains or losses), (B) Consolidated
Interest Expense and (C) Consolidated Non-cash Charges less any non-cash items
----
increasing Consolidated Net Income for such period, all as determined on a
consolidated basis for such Person and its Restricted Subsidiaries in accordance
with GAAP, as applicable.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any
----------------------------------------
Person, the ratio of Consolidated EBITDA of such Person during the four full
fiscal quarters (the "Four Quarter Period") ending on or prior to the date of
-------------------
the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of
----------------
such Person for the Four Quarter Period. In addition to and without limitation
of the foregoing, for purposes of this definition, "Consolidated EBITDA" and
"Consolidated Fixed Charges" shall be calculated after giving effect on a pro
---
forma basis (consistent with the provisions below) for the period of such
- -----
calculation to (i) the incurrence or repayment of any Indebtedness of such
Person or any of its Restricted Subsidiaries (and the application of the
proceeds thereof) giving rise to the need to make such calculation and any
incurrence or repayment of other Indebtedness (and the application of the
proceeds thereof), other than the incurrence or repayment of Indebtedness in the
ordinary course of business for working capital purposes pursuant to working
capital facilities, occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or prior to the
Transaction Date, as if such incurrence or repayment, as the case may be (and
the application of the proceeds thereof), occurred on the first day of the Four
Quarter Period and (ii) any Asset Sales or Asset Acquisitions (including,
without limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of such Person or one of its Restricted Subsidiaries
(including any
<PAGE>
-7-
Person who becomes a Restricted Subsidiary as a result of the Asset Acquisition)
incurring, assuming or otherwise being liable for Acquired Indebtedness and also
including any Consolidated EBITDA (including any pro forma expense and cost
---------
reductions, adjustments and other operating improvements or synergies both
achieved by such Person during such period and to be achieved by such Person and
with respect to the acquired assets, all as determined in good faith by a
responsible financial or accounting officer of the Company and as reported on or
otherwise confirmed, consistent with auditing standards, to the Company by an
independent public accounting firm) attributable to the assets which are the
subject of the Asset Acquisition or Asset Sale during the Four Quarter Period)
occurring during the Four Quarter Period or at any time subsequent to the last
day of the Four Quarter Period and on or prior to the Transaction Date, as if
such Asset Sale or Asset Acquisition (including the incurrence, assumption or
liability for any such Acquired Indebtedness) occurred on the first day of the
Four Quarter Period. If such Person or any of its Restricted Subsidiaries
directly or indirectly guarantees Indebtedness of a third Person, the preceding
sentence shall give effect to the incurrence of such guaranteed Indebtedness as
if such Person or any Restricted Subsidiary of such Person had directly incurred
or otherwise assumed such guaranteed Indebtedness. Furthermore, in calculating
"Consolidated Fixed Charges" for purposes of determining the denominator (but
not the numerator) of this "Consolidated Fixed Charge Coverage Ratio," (1)
interest on outstanding Indebtedness determined on a fluctuating basis as of the
Transaction Date and which will continue to be so determined thereafter shall be
deemed to have accrued at a fixed rate per annum equal to the rate of interest
on such Indebtedness in effect on the Transaction Date; and (2) notwithstanding
clause (1) above, interest on Indebtedness determined on a fluctuating basis, to
the extent such interest is covered by agreements relating to Interest Swap
Obligations, shall be deemed to accrue at the rate per annum resulting after
giving effect to the operation of such agreements.
"Consolidated Fixed Charges" means, with respect to any Person for any
--------------------------
period, the sum, without duplication, of (i) Consolidated Interest Expense
(excluding amortization or write-off of deferred financing costs), plus (ii) the
product of (x) the amount of all dividend payments on any series of Preferred
Stock of such Person (other than dividends paid in Qualified Capital Stock)
paid, accrued or scheduled to be paid or accrued during such period times (y) a
fraction, the numerator of which is one and the denominator of which is one
minus
<PAGE>
-8-
the then current effective consolidated federal, state and local tax rate of
such Person, expressed as a decimal.
"Consolidated Interest Expense" means, with respect to any Person for
-----------------------------
any period, the sum of, without duplication: (i) the aggregate of the interest
expense of such Person and its Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, including, without
limitation, (a) any amortization of debt discount and amortization or write-off
of deferred financing costs (including the amortization of costs relating to
interest rate caps or other similar agreements), (b) the net costs under
Interest Swap Obligations, (c) all capitalized interest and (d) the interest
portion of any deferred payment obligation; and (ii) the interest component of
Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or
accrued by such Person and its Restricted Subsidiaries during such period as
determined on a consolidated basis in accordance with GAAP, minus interest
income for such period.
"Consolidated Net Income" means, with respect to any Person, for any
-----------------------
period, the aggregate net income (or loss) of such Person and its Restricted
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP; provided that there shall be excluded therefrom (a) after-tax gains
--------
or losses from Asset Sales (without regard to the $1.5 million limitation set
forth in the definition thereof) or abandonments or reserves relating thereto,
(b) after-tax non-recurring gains or losses or after-tax items classified as
extraordinary or nonrecurring gains or losses, (c) the net income of any Person
acquired in a "pooling of interests" transaction accrued prior to the date it
becomes a Restricted Subsidiary of the referent Person or is merged or
consolidated with the referent Person or any Restricted Subsidiary of the
referent Person, (d) the net income (but not loss) of any Restricted Subsidiary
of the referent Person to the extent that the declaration of dividends or
similar distributions by that Restricted Subsidiary of that income is restricted
by a contract, operation of law or otherwise, (e) the net income of any Person,
other than a Restricted Subsidiary of the referent Person, except to the extent
of cash dividends or distributions paid to the referent Person or to a Wholly
Owned Restricted Subsidiary of the referent Person by such Person, (f) income or
loss attributable to discontinued operations (including, without limitation,
operations disposed of during such period whether or not such operations were
classified as discontinued), and (g) in the case of a successor to the referent
Person by consolidation or merger or as a transferee of the referent Per-
<PAGE>
-9-
son's assets, any earnings of the successor corporation prior to such
consolidation, merger or transfer of assets.
"Consolidated Non-cash Charges" means, with respect to any Person, for
-----------------------------
any period, the aggregate depreciation, amortization and other non-cash expenses
of such Person and its Restricted Subsidiaries reducing Consolidated Net Income
of such Person and its Restricted Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.
"Covenant Defeasance" has the meaning set forth in Section 8.02.
-------------------
"Credit Agreement" means the Credit Agreement dated as of the Issue
----------------
Date, among the Company, Levy Transport, Ltd., the lenders party thereto in
their capacities as lenders thereunder and Credit Suisse First Boston
Corporation, as administrative agent, together with the related documents
thereto (including, without limitation, any guarantee agreements and security
documents), in each case as such agreements may be amended (including any
amendment and restatement thereof), supplemented or otherwise modified from time
to time, including any agreement extending the maturity of, refinancing,
replacing or otherwise restructuring (including increasing the amount of
available borrowings thereunder in connection with any of the foregoing
(provided that such increase in borrowings is permitted by Section 4.04) or
--------
adding Restricted Subsidiaries of the Company as additional and/or replacement
borrowers or guarantors thereunder) all or any portion of the Indebtedness under
such agreement or any successor or replacement agreement and whether by the same
or any other agent, lender or group of lenders.
"Currency Agreement" means any foreign exchange contract, currency
------------------
swap agreement or other similar agreement or arrangement designed to protect the
Company or any Restricted Subsidiary of the Company against fluctuations in
currency values.
"Custodian" means any receiver, trustee, assignee, liquidator,
---------
sequestrator or similar official under any Bankruptcy Law.
"Default" means an event or condition the occurrence of which, with
-------
the lapse of time or the giving of notice or both, would be an Event of Default.
<PAGE>
-10-
"Default Notice" has the meaning set forth in Section 10.02.
--------------
"Depository" shall mean The Depository Trust Company, New York, New
----------
York, or a successor thereto registered under the Exchange Act or other
applicable statute or regulation.
"Designated Senior Debt" means (i) Indebtedness under or in respect of
----------------------
the Credit Agreement and (ii) any other Indebtedness constituting Senior Debt
which, at the time of determination, has an aggregate principal amount of at
least $25.0 million and is specifically designated in the instrument evidencing
such Senior Debt as "Designated Senior Debt" by the Company.
"Disqualified Capital Stock" means that portion of any Capital Stock
--------------------------
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the sole option of the holder
thereof, on or prior to the Maturity Date of the Securities.
"Equity Investment" means the investment by Apollo of approximately
-----------------
$58.7 million of cash equity in the Company, the investment by an affiliate of
BT Alex. Brown Incorporated of approximately $1.2 million of cash equity in the
Company, the investment by an affiliate of Credit Suisse First Boston
Corporation of approximately $1.2 million of cash equity in the Company, and the
investment by management of the Company of approximately $6.9 million in the
form of cash and the implied value of retained shares in the Company.
"Equity Offering" means a public or private offering of Qualified
---------------
Capital Stock (other than public offerings with respect to the Company's Common
Stock on Form S-8) of the Company for aggregate net cash proceeds to the Company
of at least $20.0 million.
"Event of Default" has the meaning set forth in Section 6.01.
----------------
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
or any successor statute or statutes thereto.
"Exchange Fixed Rate Notes" means the 10% Series B Senior Subordinated
-------------------------
Notes due 2006 (the terms of which are identical to the Initial Fixed Rate Notes
except that, unless
<PAGE>
-11-
any Exchange Fixed Rate Notes shall be issued as Private Exchange Notes (as
defined in the Registration Rights Agreement), the Exchange Fixed Rate Notes
shall be registered under the Securities Act, and shall not contain the
restrictive legend on the face of the form of the Initial Fixed Rate Notes), to
be issued in exchange for the Initial Fixed Rate Notes pursuant to the
registered Exchange Offer and a Private Exchange (as defined in the Registration
Rights Agreement).
"Exchange Floating Rate Notes" means the Series B Floating Interest
----------------------------
Rate Subordinated Term Securities due 2006 (the terms of which are identical to
the Initial Floating Rate Notes except that, unless any Exchange Floating Rate
Notes shall be issued as Private Exchange Notes (as defined in the Registration
Rights Agreement), the Exchange Floating Rate Notes shall be registered under
the Securities Act, and shall not contain the restrictive legend on the face of
the form of the Initial Floating Rate Notes), to be issued in exchange for the
Initial Floating Rate Notes pursuant to the registered Exchange Offer and a
Private Exchange (as defined in the Registration Rights Agreement).
"Exchange Notes" means the Exchange Fixed Rate Notes and the Exchange
--------------
Floating Rate Notes.
"Exchange Offer" means the registration by the Company under the
--------------
Securities Act pursuant to a registration statement of the offer by the Company
to each Holder of the Initial Notes to exchange all the Initial Notes held by
such Holder for the Exchange Notes in an aggregate principal amount equal to the
aggregate principal amount of the Initial Notes held by such Holder, all in
accordance with the terms and conditions of the Registration Rights Agreement.
"fair market value" means, with respect to any asset or property, the
-----------------
price which could be negotiated in an arm's-length, free market transaction, for
cash, between a willing seller and a willing and able buyer, neither of whom is
under undue pressure or compulsion to complete the transaction. Fair market
value shall be determined by the Board of Directors of the Company acting
reasonably and in good faith and shall be evidenced by a Board Resolution of the
Board of Directors of the Company delivered to the Trustee.
"Fixed Rate Notes" means the Initial Fixed Rate Notes, the Exchange
----------------
Fixed Rate Notes and any other 10% Senior Subordinated Notes due 2006 issued
after the Issue Date in accordance with clause (iii) of the fourth paragraph of
Section
<PAGE>
-12-
2.02 treated as a single class of securities, as amended or supplemented from
time to time in accordance with the terms hereof, that are issued pursuant to
this Indenture.
"Floating Rate Notes" means the Initial Floating Rate Notes, the
-------------------
Exchange Floating Rate Notes and any other Floating Interest Rate Subordinated
Term Securities due 2006 issued after the Issue Date in accordance with clause
(iii) of the fourth paragraph of Section 2.02 treated as a single class of
securities, as amended or supplemented from time to time in accordance with the
terms hereof, that are issued pursuant to this Indenture.
"GAAP" means generally accepted accounting principles set forth in the
----
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, which are in effect as of the Issue Date.
"Global Security" shall mean a Security which is executed by the
---------------
Company and authenticated and delivered by the Trustee to the Depository or
pursuant to the Depository's instruction, all in accordance with this Indenture
and pursuant to a written order, which shall be registered in the name of the
Depository or its nominee.
"Guarantees" means the guarantees of the Securities of the Company by
----------
the Guarantors pursuant to this Indenture.
"Guarantor" means (i) each of Montgomery Tank Lines, Inc., Quality
---------
Carriers, Inc., Lakeshore Leasing, Inc., Mexico Investments, Inc. and MTL of
Nevada and (ii) each of the Company's Restricted Subsidiaries that in the future
executes a supplemental indenture in which such Restricted Subsidiary agrees to
be bound by the terms of this Indenture as a Guarantor and executes a Guarantee
pursuant to this Indenture; provided that any Person constituting a Guarantor as
--------
described above shall cease to constitute a Guarantor when its respective
Guarantee is released in accordance with the terms of this Indenture.
"Guarantor Payment Blockage Period" has the meaning set forth in
---------------------------------
Section 12.02.
<PAGE>
-13-
"Guarantor Senior Debt" means with respect to any Guarantor, (i) the
---------------------
principal of, premium, if any, and interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for in
the documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law) on any Indebtedness of a Guarantor, whether
outstanding on the Issue Date or thereafter created, incurred or assumed,
unless, in the case of any particular Indebtedness, the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Indebtedness shall not be senior in right of payment to the
Guarantee of such Guarantor. Without limiting the generality of the foregoing,
"Guarantor Senior Debt" shall also include the principal of, premium, if any,
interest (including any interest accruing subsequent to the filing of a petition
of bankruptcy at the rate provided for in the documentation with respect
thereto, whether or not such interest is an allowed claim under applicable law)
on, and all other amounts owing by any Guarantor in respect of, (x) all monetary
obligations of every nature of a Guarantor under, or with respect to, the Credit
Agreement, including, without limitation, obligations to pay principal and
interest, reimbursement obligations under letters of credit, fees, expenses and
indemnities (including guarantees thereof), (y) all Interest Swap Obligations
(including guarantees thereof) and (z) all obligations under Currency Agreements
(including guarantees thereof), in each case whether outstanding on the Issue
Date or thereafter incurred. Notwithstanding the foregoing, "Guarantor Senior
Debt" shall not include (i) any Indebtedness of such Guarantor to a Restricted
Subsidiary of such Guarantor, (ii) Indebtedness to, or guaranteed on behalf of,
any director, officer or employee of such Guarantor or any Restricted Subsidiary
of such Guarantor (including, without limitation, amounts owed for
compensation), (iii) Indebtedness to trade creditors and other amounts incurred
in connection with obtaining goods, materials or services, (iv) Indebtedness
represented by Disqualified Capital Stock, (v) any liability for federal, state,
local or other taxes owed or owing by such Guarantor, (vi) that portion of any
Indebtedness incurred in violation of the provisions of Section 4.04 (but, as to
any such obligation, no such violation shall be deemed to exist for purposes of
this clause (vi) if the holder(s) of such obligation or their representative and
the Trustee shall have received an Officers' Certificate of the Company to the
effect that the incurrence of such Indebtedness does not (or, in the case of
revolving credit Indebtedness, that the incurrence of the entire committed
amount thereof at the date on which the initial borrowing thereunder is made
would not) violate such provisions of this Indenture),
<PAGE>
-14-
(vii) that portion of any Indebtedness which, when incurred and without respect
to any election under Section 1111(b) of Title 11, United States Code, is
without recourse to the Company or any Guarantor and (viii) any Indebtedness
which is, by its express terms, subordinated in right of payment to any other
Indebtedness of such Guarantor.
"incur" has the meaning set forth in Section 4.04.
-----
"Indebtedness" means with respect to any Person, without duplication,
------------
(i) all Obligations of such Person for borrowed money, including, without
limitation, Senior Debt, (ii) all Obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all Capitalized Lease
Obligations of such Person, (iv) all Obligations of such Person issued or
assumed as the deferred purchase price of property, all conditional sale
obligations and all Obligations under any title retention agreement (but
excluding trade accounts payable and other accrued liabilities arising in the
ordinary course of business), (v) all Obligations for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction, (vi) guarantees and other contingent Obligations in respect of
Indebtedness referred to in clauses (i) through (v) above and clause (viii)
below, (vii) all Obligations of any other Person of the type referred to in
clauses (i) through (vi) which are secured by any Lien on any property or asset
of such Person, the amount of such Obligation being deemed to be the lesser of
the fair market value of such property or asset or the amount of the Obligation
so secured, (viii) all Obligations under currency agreements and interest swap
agreements of such Person and (ix) all Disqualified Capital Stock issued by such
Person with the amount of Indebtedness represented by such Disqualified Capital
Stock being equal to the greater of its voluntary or involuntary liquidation
preference and its maximum fixed repurchase price, but excluding accrued
dividends, if any. For purposes hereof, the "maximum fixed repurchase price" of
any Disqualified Capital Stock which does not have a fixed repurchase price
shall be calculated in accordance with the terms of such Disqualified Capital
Stock as if such Disqualified Capital Stock were purchased on any date on which
Indebtedness shall be required to be determined pursuant to this Indenture, and
if such price is based upon, or measured by, the fair market value of such
Disqualified Capital Stock, such fair market value shall be determined
reasonably and in good faith by the Board of Directors of the issuer of such
Disqualified Capital Stock. For purposes of Section 4.04, in determining the
principal amount of any Indebtedness to be incurred by the Company or a
Guaran-
<PAGE>
-15-
tor or which is outstanding at any date, the principal amount of any
Indebtedness which provides that an amount less than the principal amount
thereof shall be due upon any declaration of acceleration thereof shall be the
accreted value thereof at the date of determination.
"Indenture" means this Indenture, as amended or supplemented from time
---------
to time in accordance with the terms hereof.
"Independent Financial Advisor" means a firm (i) which does not, and
-----------------------------
whose directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in the Company and (ii) which, in the judgment of
the Board of Directors of the Company, is otherwise independent and qualified to
perform the task for which it is to be engaged.
"Initial Fixed Rate Notes" means the 10% Senior Subordinated Notes due
------------------------
2006 of the Company issued on the Issue Date and authenticated and delivered
under this Indenture pursuant to Section 2.02 of this Indenture.
"Initial Floating Rate Notes" means the Floating Interest Rate
---------------------------
Subordinated Term Securities due 2006 issued on the Issue Date and authenticated
and delivered under this Indenture pursuant to Section 2.02 of this Indenture.
"Initial Notes" means the Initial Fixed Rate Notes and the Initial
-------------
Floating Rate Notes.
"Interest Payment Date" means the stated maturity of an installment of
---------------------
interest on the Securities.
"Interest Swap Obligations" means the obligations of any Person
-------------------------
pursuant to any arrangement with any other Person, whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such other
Person calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.
"Investment" means, with respect to any Person, any direct or indirect
----------
loan or other extension of credit (including, without limitation, a guarantee)
or capital contribution to (by means of any transfer of cash or other property
<PAGE>
-16-
to others or any payment for property or services for the account or use of
others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness issued
by, any Person. "Investment" shall exclude extensions of trade credit by the
Company and its Restricted Subsidiaries on commercially reasonable terms in
accordance with normal trade practices of the Company or such Restricted
Subsidiary, as the case may be. For purposes of Section 4.03, (i) "Investment"
shall include and be valued at the fair market value of the net assets of any
Restricted Subsidiary of the Company at the time that such Restricted Subsidiary
is designated an Unrestricted Subsidiary of the Company and shall exclude the
fair market value of the net assets of any Unrestricted Subsidiary of the
Company at the time that such Unrestricted Subsidiary is designated a Restricted
Subsidiary of the Company and (ii) the amount of any Investment shall be the
original cost of such Investment plus the cost of all additional Investments by
the Company or any of its Restricted Subsidiaries, without any adjustments for
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment, reduced by the payment of dividends or distributions
in connection with such Investment or any other amounts received in respect of
such Investment; provided that no such payment of dividends or distributions or
--------
receipt of any such other amounts shall reduce the amount of any Investment if
such payment of dividends or distributions or receipt of any such amounts would
be included in Consolidated Net Income. If the Company or any Restricted
Subsidiary of the Company sells or otherwise disposes of any Common Stock of any
direct or indirect Restricted Subsidiary of the Company such that, after giving
effect to any such sale or disposition, the Company no longer owns, directly or
indirectly, 100% of the outstanding Common Stock of such Restricted Subsidiary,
the Company shall be deemed to have made an Investment on the date of any such
sale or disposition equal to the fair market value of the Common Stock of such
Restricted Subsidiary not sold or disposed of.
"Issue Date" means June 9, 1998.
----------
"Legal Defeasance" has the meaning set forth in Section 8.02.
----------------
"Lien" means any lien, mortgage, deed of trust, pledge, security
----
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest).
<PAGE>
-17-
"Management Agreement" means the Management Agreement dated February
--------------------
10, 1998 between the Company and Apollo Management, L.P., as amended from time
to time in accordance with its terms.
"Maturity Date" means June 15, 2006.
-------------
"Net Cash Proceeds" means, with respect to any Asset Sale, the
-----------------
proceeds in the form of cash or Cash Equivalents including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents (other than the portion of any such deferred payment constituting
interest) received by the Company or any of its Restricted Subsidiaries from
such Asset Sale net of (a) reasonable out-of-pocket expenses and fees relating
to such Asset Sale (including, without limitation, legal, accounting and
investment banking fees and sales commissions), (b) taxes paid or payable after
taking into account any reduction in consolidated tax liability due to available
tax credits or deductions and any tax sharing arrangements, (c) repayment of
Indebtedness that is required to be repaid in connection with such Asset Sale
and (d) appropriate amounts to be provided by the Company or any Restricted
Subsidiary, as the case may be, as a reserve, in accordance with GAAP, against
any liabilities associated with such Asset Sale and retained by the Company or
any Restricted Subsidiary, as the case may be, after such Asset Sale, including,
without limitation, pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale.
"Net Proceeds Offer" has the meaning set forth in Section 4.16.
------------------
"Net Proceeds Offer Amount" has the meaning set forth in Section 4.16.
-------------------------
"Net Proceeds Offer Payment Date" has the meaning set forth in Section
-------------------------------
4.16.
"Net Proceeds Offer Trigger Date" has the meaning set forth in Section
-------------------------------
4.16.
"Non-payment Default" has the meaning set forth in Section 10.02.
-------------------
"Obligations" means all obligations for principal, premium, interest,
-----------
penalties, fees, indemnifications, reim-
<PAGE>
-18-
bursements, damages and other liabilities payable under the documentation
governing any Indebtedness.
"Offering" means the offering of the Initial Notes.
--------
"Officer" means, with respect to any Person, the Chairman of the
-------
Board, the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Controller, or the Secretary of such Person.
"Officers' Certificate" means a certificate signed by two Officers of
---------------------
the Company or of a Guarantor, as applicable.
"Opinion of Counsel" means a written opinion from legal counsel, which
------------------
opinion and counsel are reasonably acceptable to the Trustee.
"Option Plan" means the Option Plan adopted by the Company on June 9,
-----------
1998 with respect to an aggregate of 188,889 shares of the Company's Common
Stock.
"Paying Agent" has the meaning set forth in Section 2.03.
------------
"Payment Blockage Period" has the meaning set forth in Section 10.02.
-----------------------
"Payment Default" has the meaning set forth in Section 10.02.
---------------
"Permitted Holders" means Apollo Management, L.P. and its Affiliates.
-----------------
"Permitted Indebtedness" means, without duplication, each of the
----------------------
following:
(i) Indebtedness represented by $140.0 million aggregate
principal amount of the Initial Notes and the related Guarantees issued on
the Issue Date;
(ii) Indebtedness incurred pursuant to the Credit Agreement in an
aggregate principal amount at any time outstanding not to exceed $160.0
million less the amount of all repayments of term debt and permanent
commitment reductions under the Credit Agreement with Net Cash Proceeds of
Asset Sales applied thereto as required by Section 4.16; provided, further,
-------- -------
that the aggregate principal amount of Indebtedness under this clause (ii)
shall be re-
<PAGE>
-19-
duced dollar for dollar for any Indebtedness outstanding under clause (xii)
below;
(iii) other Indebtedness of the Company and its Restricted
Subsidiaries outstanding on the Issue Date reduced by the amount of any
scheduled amortization payments or mandatory prepayments when actually paid
or permanent reductions thereon;
(iv) Interest Swap Obligations covering Indebtedness of the
Company or any of its Restricted Subsidiaries and Interest Swap Obligations
of any Restricted Subsidiary of the Company covering Indebtedness of the
Company or such Restricted Subsidiary; provided, however, that such
-------- -------
Interest Swap Obligations are entered into to protect the Company and its
Restricted Subsidiaries from fluctuations in interest rates on Indebtedness
incurred in accordance with this Indenture to the extent the notional
principal amount of such Interest Swap Obligation does not exceed the
principal amount of the Indebtedness to which such Interest Swap Obligation
relates;
(v) Indebtedness under Currency Agreements; provided that in the
--------
case of Currency Agreements which relate to Indebtedness, such Currency
Agreements do not increase the Indebtedness of the Company and its
Restricted Subsidiaries outstanding other than as a result of fluctuations
in foreign currency exchange rates or by reason of fees, indemnities and
compensation payable thereunder;
(vi) Indebtedness of a Restricted Subsidiary of the Company to the
Company or to a Wholly Owned Restricted Subsidiary of the Company for so
long as such Indebtedness is held by the Company, a Wholly Owned Restricted
Subsidiary of the Company or the lenders or collateral agent under the
Credit Agreement, in each case subject to no Lien held by a Person other
than the Company, a Wholly Owned Restricted Subsidiary of the Company or
the lenders or collateral agent under the Credit Agreement; provided that
--------
if as of any date any Person other than the Company, a Wholly Owned
Restricted Subsidiary of the Company or the lenders or collateral agent
under the Credit Agreement owns or holds any such Indebtedness or holds a
Lien in respect of such Indebtedness, such date shall be deemed the
incurrence of Indebtedness not constituting Permitted Indebtedness by the
issuer of such Indebtedness;
<PAGE>
-20-
(vii) Indebtedness of the Company to a Wholly Owned Restricted
Subsidiary of the Company for so long as such Indebtedness is held by a
Wholly Owned Restricted Subsidiary of the Company or the lenders or
collateral agent under the Credit Agreement and is subject to no Lien other
than a Lien in favor of the lenders or collateral agent under the Credit
Agreement; provided that (a) any Indebtedness of the Company to any Wholly
--------
Owned Restricted Subsidiary of the Company is unsecured and subordinated,
pursuant to a written agreement, to the Company's obligations under this
Indenture and the Securities and (b) if as of any date any Person other
than a Wholly Owned Restricted Subsidiary of the Company or the lenders or
collateral agent under the Credit Agreement owns or holds any such
Indebtedness or any Person holds a Lien in respect of such Indebtedness,
such date shall be deemed the incurrence of Indebtedness not constituting
Permitted Indebtedness by the Company;
(viii) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient
funds in the ordinary course of business; provided, however, that such
-------- -------
Indebtedness is extinguished within two Business Days of incurrence;
(ix) Indebtedness of the Company or any of its Restricted
Subsidiaries in respect of performance bonds, bankers' acceptances,
workers' compensation claims, surety or appeal bonds, payment obligations
in connection with self-insurance or similar obligations, and bank
overdrafts (and letters of credit in respect thereof);
(x) Indebtedness represented by Capitalized Lease Obligations,
Purchase Money Indebtedness or Acquired Indebtedness of the Company and its
Restricted Subsidiaries incurred in the ordinary course of business not to
exceed $25.0 million (as reduced dollar for dollar for any amounts incurred
pursuant to the proviso to this clause (x))at any one time outstanding;
provided that all or a portion of the $25.0 million permitted to be
--------
incurred under this clause (x) may, at the option of the Company, be
incurred under the Credit Agreement or pursuant to clause (xiv) below
instead of pursuant to Capitalized Lease Obligations, Purchase Money
Indebtedness or Acquired Indebtedness;
<PAGE>
-21-
(xi) Indebtedness arising from agreements of the Company or a
Restricted Subsidiary of the Company providing for indemnification,
adjustment of purchase price or similar obligations, in each case, incurred
or assumed in connection with the disposition of any business, assets or a
Subsidiary, other than guarantees of Indebtedness incurred by any Person
acquiring all or any portion of such business, assets or a Subsidiary for
the purpose of financing such acquisition; provided, however, that (a) such
-------- -------
Indebtedness is not reflected on the balance sheet of the Company or any
Restricted Subsidiary of the Company (contingent obligations referred to in
a footnote to financial statements and not otherwise reflected on the
balance sheet will not be deemed to be reflected on such balance sheet for
purposes of this clause (a)) and (b) the maximum assumable liability in
respect of all such Indebtedness shall at no time exceed the gross proceeds
including non-cash proceeds (the fair market value of such noncash proceeds
being measured at the time it is received and without giving effect to any
subsequent changes in value) actually received by the Company and its
Restricted Subsidiaries in connection with such disposition;
(xii) the incurrence by a Receivables Subsidiary of Indebtedness in
a Qualified Receivables Transaction that is without recourse to the Company
or to any Restricted Subsidiary of the Company or their assets (other than
such Receivables Subsidiary and its assets), and is not guaranteed by any
such Person; provided that any outstanding Indebtedness incurred under this
--------
clause (xii) shall reduce the aggregate amount permitted to be incurred
under clause (ii) above to the extent set forth therein;
(xiii) Refinancing Indebtedness; and
(xiv) additional Indebtedness of the Company and its Restricted
Subsidiaries in an aggregate principal amount not to exceed $25.0 million
at any one time outstanding (which amount may, but need not, be incurred in
whole or in part under the Credit Agreement) plus any amounts incurred in
accordance with the proviso to clause (x) above; provided that any
--------
Indebtedness incurred in excess of $25.0 million in accordance with the
proviso to clause (x) above shall reduce the aggregate amount permitted to
be incurred under clause (x) above to the extent set forth therein.
"Permitted Investments" means (i) Investments by the Company or any
---------------------
Restricted Subsidiary of the Company in any Per-
<PAGE>
-22-
son that is or will become immediately after such Investment a Wholly Owned
Restricted Subsidiary of the Company or that will merge or consolidate into the
Company or a Wholly Owned Restricted Subsidiary of the Company, provided that
--------
such Wholly Owned Restricted Subsidiary of the Company is not restricted from
making dividends or similar distributions by contract, operation of law or
otherwise (other than restrictions in the Credit Agreement that are permitted
under this Indenture); (ii) Investments in the Company by any Restricted
Subsidiary of the Company; provided that any Indebtedness evidencing such
--------
Investment is unsecured and subordinated, pursuant to a written agreement, to
the Company's obligations under the Securities and this Indenture; (iii)
Investments in cash and Cash Equivalents; (iv) loans and advances to employees
and officers of the Company and its Restricted Subsidiaries in the ordinary
course of business for bona fide business purposes not to exceed $4.0 million at
any one time outstanding; (v) Currency Agreements and Interest Swap Obligations
entered into in the ordinary course of the Company's or its Restricted
Subsidiaries' businesses and otherwise in compliance with this Indenture; (vi)
additional Investments (including joint ventures) not to exceed $20.0 million at
any one time outstanding; (vii) Investments in securities of trade creditors or
customers received (x) pursuant to any plan of reorganization or similar
arrangement upon the bankruptcy or insolvency of such trade creditors or
customers or (y) in settlement of delinquent obligations of, and other disputes
with, customers and suppliers, in each case arising in the ordinary course of
business; (viii) Investments made by the Company or its Restricted Subsidiaries
as a result of consideration received in connection with an Asset Sale made in
compliance with Section 4.16; and (ix) Investments of a Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary of
the Company or at the time such Person merges or consolidates with the Company
or any of its Restricted Subsidiaries, in either case in compliance with this
Indenture; provided that such Investments were not made by such Person in
--------
connection with, or in anticipation or contemplation of, such Person becoming a
Restricted Subsidiary of the Company or such merger or consolidation; and (x)
Investments in the Securities.
"Permitted Liens" means the following types of Liens:
---------------
(i) Liens for taxes, assessments or governmental charges or claims
either (a) not delinquent or (b) contested in good faith by appropriate
proceedings and as to which the Company or its Restricted Subsidiaries
shall
<PAGE>
-23-
have set aside on its books such reserves as may be required pursuant to
GAAP;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens
imposed by law incurred in the ordinary course of business for sums not yet
delinquent or being contested in good faith, if such reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been
made in respect thereof;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, including any Lien securing letters of
credit issued in the ordinary course of business in connection therewith,
or to secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, government contracts, performance and return-
of-money bonds and other similar obligations (exclusive of obligations for
the payment of borrowed money);
(iv) judgment Liens not giving rise to an Event of Default so long
as such Lien is adequately bonded and any appropriate legal proceedings
which may have been duly initiated for the review of such judgment shall
not have been finally terminated or the period within which such
proceedings may be initiated shall not have expired;
(v) easements, rights-of-way, zoning restrictions and other
similar charges or encumbrances in respect of real property not interfering
in any material respect with the ordinary conduct of the business of the
Company or any of its Restricted Subsidiaries;
(vi) any interest or title of a lessor under any Capitalized Lease
Obligation; provided that such Liens do not extend to any property or asset
--------
which is not leased property subject to such Capitalized Lease Obligation;
(vii) Liens securing Capitalized Lease Obligations and Purchase
Money Indebtedness permitted pursuant to clause (x) of the definition of
"Permitted Indebtedness"; provided, however, that in the case of Purchase
-------- -------
Money Indebtedness (a) the Indebtedness shall not exceed the cost of such
property or assets and shall not be secured by any property or assets of
the Company or any Restricted Subsidiary of the Company other than the
property and assets
<PAGE>
-24-
so acquired or constructed and (b) the Lien securing such Indebtedness
shall be created within 180 days of such acquisition or construction or, in
the case of a refinancing of any Purchase Money Indebtedness, within 180
days of such refinancing;
(viii) Liens upon specific items of inventory or other goods and
proceeds of any Person securing such Person's obligations in respect of
bankers' acceptances issued or created for the account of such Person to
facilitate the purchase, shipment or storage of such inventory or other
goods;
(ix) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof;
(x) Liens encumbering deposits made to secure obligations arising
from statutory, regulatory, contractual, or warranty requirements of the
Company or any of its Restricted Subsidiaries, including rights of offset
and set-off;
(xi) Liens securing Interest Swap Obligations which Interest Swap
Obligations relate to Indebtedness that is otherwise permitted under this
Indenture;
(xii) Liens in the ordinary course of business not exceeding $5.0
million at any one time outstanding that (a) are not incurred in connection
with borrowing of money and (b) do not materially detract from the value of
the property or materially impair its use;
(xiii) Liens by reason of a judgment or decree not otherwise
resulting in an Event of Default;
(xiv) Liens securing Indebtedness permitted to be incurred pursuant
to clauses (xii) and (xiv) of the definition of "Permitted Indebtedness";
(xv) Liens securing Indebtedness under Currency Agreements
permitted under this Indenture; and
(xvi) Liens securing Acquired Indebtedness incurred in accordance
with Section 4.04 and clause (x) of the definition of "Permitted
Indebtedness" hereunder; provided that (a) such Liens secured such Acquired
--------
Indebtedness at the
<PAGE>
-25-
time of and prior to the incurrence of such Acquired Indebtedness by the
Company or a Restricted Subsidiary of the Company and were not granted in
connection with, or in anticipation of, the incurrence of such Acquired
Indebtedness by the Company or a Restricted Subsidiary of the Company,
unless the related Indebtedness is incurred in connection with a tax-
advantaged Asset Acquition and (b) such Liens do not extend to or cover any
property or assets of the Company or of any of its Restricted Subsidiaries
other than the property or assets that secured the Acquired Indebtedness
prior to the time such Indebtedness became Acquired Indebtedness of the
Company or a Restricted Subsidiary of the Company and are no more favorable
to the lienholders than those securing the Acquired Indebtedness prior to
the incurrence of such Acquired Indebtedness by the Company or a Restricted
Subsidiary of the Company.
"Person" means an individual, partnership, limited liability company,
------
corporation, unincorporated organization, trust or joint venture, or a
governmental agency or political subdivision thereof.
"Physical Securities" has the meaning provided in Section 2.01.
-------------------
Physical Securities are sometimes referred to herein as certificated Securities.
"Preferred Stock" of any Person means any Capital Stock of such Person
---------------
that has preferential rights to any other Capital Stock of such Person with
respect to dividends or redemptions or upon liquidation.
"Private Placement Legend" means the legend initially set forth on the
------------------------
Notes in the form set forth in the first paragraph of Section 2.14.
"Purchase Money Indebtedness" means Indebtedness of the Company and
---------------------------
its Restricted Subsidiaries incurred in the normal course of business for the
purpose of financing all or any part of the purchase price, or the cost of
installation, construction or improvement, of property or equipment and any
refinancing thereof.
"QIB" means any "qualified institutional buyer" (as defined under the
---
Securities Act).
"Qualified Capital Stock" means any Capital Stock that is not
-----------------------
Disqualified Capital Stock.
<PAGE>
-26-
"Qualified Receivables Transaction" means any transaction or series of
---------------------------------
transactions that may be entered into by the Company or any of its Restricted
Subsidiaries pursuant to which the Company or any of its Restricted Subsidiaries
may sell, convey or otherwise transfer to (i) a Receivables Subsidiary (in the
case of a transfer by the Company or any of its Restricted Subsidiaries) and
(ii) any other person (in the case of a transfer by a Receivables Subsidiary),
or may grant a security interest in, any accounts receivable (whether now
existing or arising in the future) of the Company or any of its Restricted
Subsidiaries, and any assets related thereto including, without limitation, all
collateral securing such accounts receivable, all contracts and all guarantees
or other obligations in respect of such accounts receivable, proceeds of such
accounts receivable and other assets which are customarily transferred or in
respect of which security interests are customarily granted in connection with
asset securitization transactions involving accounts receivable.
"Recapitalization" means the financing used to consummate the
----------------
recapitalization of the Company.
"Receivables Subsidiary" means a Wholly Owned Restricted Subsidiary of
----------------------
the Company that engages in no activities other than in connection with the
financing of accounts receivable and that is designated by the Board of
Directors of the Company (as provided below) as a Receivables Subsidiary (a) no
portion of the Indebtedness or any other Obligations (contingent or otherwise)
of which (i) is guaranteed by the Company or any Restricted Subsidiary of the
Company (excluding guarantees of Obligations (other than the principal of, and
interest on, Indebtedness) pursuant to representations, warranties, covenants
and indemnities entered into in the ordinary course of business in connection
with a Qualified Receivables Transaction), (ii) is recourse to or obligates the
Company or any Restricted Subsidiary of the Company in any way other than
pursuant to representations, warranties, covenants and indemnities entered into
in the ordinary course of business in connection with a Qualified Receivables
Transaction or (iii) subjects any property or asset of the Company or any
Restricted Subsidiary of the Company, directly or indirectly, contingently or
otherwise, to the satisfaction thereof, other than pursuant to representations,
warranties, covenants and indemnities entered into in the ordinary course of
business in connection with a Qualified Receivables Transaction, (b) with which
neither the Company nor any Restricted Subsidiary of the Company has any
material contract, agreement, arrangement or understanding other than on terms
no less favorable to the Company or such
<PAGE>
-27-
Restricted Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of the Company, other than fees payable in the ordinary
course of business in connection with servicing accounts receivable and (c) with
which neither the Company nor any Restricted Subsidiary of the Company has any
obligation to maintain or preserve such Restricted Subsidiary's financial
condition or cause such Restricted Subsidiary to achieve certain levels of
operating results. Any such designation by the Board of Directors of the Company
shall be evidenced to the Trustee by filing with the Trustee a Board Resolution
giving effect to such designation and an Officers' Certificate certifying that
such designation complied with the foregoing conditions.
"Record Date" means the applicable record date specified in the
-----------
Securities.
"Redemption Date," when used with respect to any Security to be
---------------
redeemed, means the date fixed for such redemption pursuant to this Indenture
and the Securities.
"Redemption Price," when used with respect to any Security to be
----------------
redeemed, means the price fixed for such redemption, payable in immediately
available funds, pursuant to this Indenture and the Securities.
"Reference Date" has the meaning set forth in Section 4.03.
--------------
"Refinance" means, in respect of any security or Indebtedness, to
---------
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the Company or any
------------------------
Restricted Subsidiary of the Company of (a) for the purposes of clause (xiii) of
the definition of "Permitted Indebtedness, hereunder, Indebtedness incurred in
accordance with Section 4.04 (other than pursuant to clause (ii), (iv), (v),
(vi), (vii), (viii), (ix), (x), (xi), (xii) or (xiv) of the definition of
"Permitted Indebtedness") or (b) for any other purpose, Indebtedness incurred in
accordance with Section 4.04, in each case that does not (1) result in an
increase in the aggregate principal amount of Indebtedness of such Person as of
the date of such proposed Refinancing (plus the amount of any premium required
to be paid under the terms
<PAGE>
-28-
of the instrument governing such Indebtedness and plus the amount of reasonable
expenses incurred by the Company in connection with such Refinancing) or (2)
create Indebtedness with (a) a Weighted Average Life to Maturity that is less
than the Weighted Average Life to Maturity of the Indebtedness being Refinanced
or (b) a final maturity earlier than the final maturity of the Indebtedness
being Refinanced; provided that (x) if such Indebtedness being Refinanced is
--------
Indebtedness of the Company, then such Refinancing Indebtedness shall be
Indebtedness solely of the Company and (y) if such Indebtedness being Refinanced
is subordinate or junior to the Securities, then such Refinancing Indebtedness
shall be subordinate to the Securities at least to the same extent and in the
same manner as the Indebtedness being Refinanced.
"Registrar" has the meaning set forth in Section 2.03.
---------
"Replacement Assets" has the meaning set forth in Section 4.16.
------------------
"Representative" means the indenture trustee or other trustee, agent
--------------
or representative in respect of any Designated Senior Debt; provided that if,
--------
and for so long as, any Designated Senior Debt lacks such a representative, then
the Representative for such Designated Senior Debt shall at all times constitute
the holders of a majority in outstanding principal amount of such Designated
Senior Debt in respect of any Designated Senior Debt.
"Responsible Officer" means, when used with respect to the Trustee,
-------------------
any officer in the corporate trust office of the Trustee with direct
responsibility for the administration of this Indenture or to whom any corporate
trust matter is referred because of such officer's knowledge of and familiarity
with the particular subject.
"Restricted Payment" has the meaning set forth in Section 4.03.
------------------
"Restricted Security" has the meaning assigned to such term in Rule
-------------------
144(a)(3) under the Securities Act; provided that the Trustee shall be entitled
--------
to request and conclusively rely on an Opinion of Counsel with respect to
whether any Security constitutes a Restricted Security.
<PAGE>
-29-
"Restricted Subsidiary" of any Person means any Subsidiary of such
---------------------
Person which at the time of determination is not an Unrestricted Subsidiary.
"Sale and Leaseback Transaction" means any direct or indirect
------------------------------
arrangement with any Person or to which any such Person is a party, providing
for the leasing to the Company or a Restricted Subsidiary of any property,
whether owned by the Company or any Restricted Subsidiary at the Issue Date or
later acquired, which has been or is to be sold or transferred by the Company or
such Restricted Subsidiary to such Person or to any other Person from whom funds
have been or are to be advanced by such Person on the security of such property.
"Securities" means the Initial Notes and the Exchange Notes and any
----------
other notes issued after the Issue Date in accordance with clause (iii) of the
fourth paragraph of Section 2.02 treated as a single class of securities, as
amended or supplemented from time to time in accordance with the terms hereof,
that are issued pursuant to this Indenture.
"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
successor statute or statutes thereto.
"Securityholder" or "Holder" means the Person in whose name a Security
-------------- ------
is registered on the Registrar's books.
"Senior Debt" means the principal of, premium, if any, and interest
-----------
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under applicable law) on any
Indebtedness of the Company, whether outstanding on the Issue Date or thereafter
created, incurred or assumed, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness shall
not be senior in right of payment to the Securities. Without limiting the
generality of the foregoing, "Senior Debt" shall also include the principal of,
premium, if any, interest (including any interest accruing subsequent to the
filing of a petition of bankruptcy at the rate provided for in the documentation
with respect thereto, whether or not such interest is an allowed claim under
applicable law) on, and all other amounts owing by the Company in respect of,
(x) all monetary obligations of every nature of the Company under the Credit
Agreement, including, without limitation, obligations to pay principal and
interest, reimbursement obligations under letters of credit,
<PAGE>
-30-
fees, expenses and indemnities, (y) all Interest Swap Obligations (including
guarantees thereof) and (z) all obligations under Currency Agreements (including
guarantees thereof), in each case whether outstanding on the Issue Date or
thereafter incurred. Notwithstanding the foregoing, "Senior Debt" shall not
include (i) any Indebtedness of the Company to a Subsidiary of the Company, (ii)
Indebtedness to, or guaranteed on behalf of, any director, officer or employee
of the Company or any Subsidiary of the Company (including, without limitation,
amounts owed for compensation), (iii) Indebtedness to trade creditors and other
amounts incurred in connection with obtaining goods, materials or services, (iv)
Indebtedness represented by Disqualified Capital Stock, (v) any liability for
federal, state, local or other taxes owed or owing by the Company, (vi) that
portion of any Indebtedness incurred in violation of Section 4.04 (but, as to
any such obligation, no such violation shall be deemed to exist for purposes of
this clause (vi) if the holder(s) of such obligation or their representative and
the Trustee shall have received an Officers' Certificate of the Company to the
effect that the incurrence of such Indebtedness does not (or, in the case of
revolving credit Indebtedness, that the incurrence of the entire committed
amount thereof at the date on which the initial borrowing thereunder is made
would not) violate such provisions of this Indenture), (vii) Indebtedness which,
when incurred and without respect to any election under Section 1111(b) of Title
11, United States Code, is without recourse to the Company and (viii) any
Indebtedness which is, by its express terms, subordinated in right of payment to
any other Indebtedness of the Company.
"Shareholders' Agreement" means the Shareholders' Agreement dated as
-----------------------
of February 10, 1998 among certain Affiliates of Apollo Management, L.P. and
certain shareholders of the Company, as it may be amended or supplemented in
accordance with its terms.
"Significant Subsidiary" shall have the meaning set forth in Rule
----------------------
1.02(w) of Regulation S-X under the Securities Act.
"Subsidiary", with respect to any Person, means (i) any corporation of
----------
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person or (ii) any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
<PAGE>
-31-
"Surviving Entity" has the meaning set forth in Section 5.01.
----------------
"TIA" means the Trust Indenture act of 1939 (15 U.S.C. (S)(S) 77aaa-
---
77bbbb), as amended, as in effect on the date of the execution of this Indenture
until such time as this Indenture is qualified under the TIA, and thereafter as
in effect on the date on which this Indenture is qualified under the TIA, except
as otherwise provided in Section 9.04.
"Transactions" means the Offering, the Recapitalization, the Equity
------------
Investment and the related borrowings under the Credit Agreement.
"Treasury Rate" means the rate per annum equal to the yield to
-------------
maturity at the time of computation of United States Treasury securities with a
constant maturity selected by the Calculation Agent (which shall initially be
the Trustee) most nearly equal to the period from such date of redemption to
June 15, 2002; provided, however, that if the period from such date of
-------- -------
redemption to June 15, 2002 is not equal to the constant maturity of the United
States Treasury security for which a weekly average yield is given, the Treasury
Rate shall be obtained by linear interpolation (calculated to the nearest one-
twelfth of a year) from the weekly average yields of United States Treasury
securities for which such yields are given, except that if the period from such
date of redemption to June 15, 2002 is less than one year, the weekly average
yield on actually traded United States Treasury securities adjusted to a
constant maturity of one year shall be used.
"Trustee" means the party named as such in this Indenture until a
-------
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"Unrestricted Subsidiary" of any Person means (i) any Subsidiary of
-----------------------
such Person that at the time of determination shall be or continue to be
designated an Unrestricted Subsidiary by the Board of Directors of such Person
in the manner provided below and (ii) any Subsidiary of an Unrestricted
Subsidiary. The Board of Directors may designate any Subsidiary (including any
newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary
unless such Subsidiary owns any Capital Stock of, or owns or holds any Lien on
any property of, the Company or any other Subsidiary of the Company that is not
a Subsidiary of the Subsidiary to be so designated; provided that (x) the
--------
Company certifies to the Trustee in an Officers'
<PAGE>
-32-
Certificate that such designation complies with Section 4.03 and (y) each
Subsidiary to be so designated and each of its Subsidiaries has not at the time
of designation, and does not thereafter, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable with respect to any
Indebtedness pursuant to which the lender has recourse to any of the assets of
the Company or any of its Restricted Subsidiaries. The Board of Directors may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary only if (x)
immediately after giving effect to such designation, the Company is able to
incur at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) in compliance with Section 4.04 and (y) immediately before and
immediately after giving effect to such designation, no Default or Event of
Default shall have occurred and be continuing. Any such designation by the Board
of Directors shall be evidenced to the Trustee by promptly filing with the
Trustee a copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing provisions.
"U.S. Government Obligations" means direct obligations of, and
---------------------------
obligations guaranteed by, the United States of America for the payment of which
the full faith and credit of the United States of America is pledged and which
are not callable or redeemable at the issuer's option.
"U.S. Legal Tender" means such coin or currency of the United States
-----------------
of America as at the time of payment shall be legal tender for the payment of
public and private debts.
"Weighted Average Life to Maturity" means, when applied to any
---------------------------------
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the sum of
the total of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including payment at final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly Owned Restricted Subsidiary" of any Person means any
----------------------------------
Restricted Subsidiary of such Person of which all the outstanding voting
securities (other than in the case of a foreign Restricted Subsidiary,
directors' qualifying shares or an immaterial amount of shares required to be
owned by other Per-
<PAGE>
-33-
sons pursuant to applicable law) are owned by such Person or any Wholly Owned
Restricted Subsidiary of such Person.
SECTION 1.02. Incorporation by Reference of TIA.
---------------------------------
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in, and made a part of, this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Securities.
--------------------
"indenture security holder" means a Holder or a Securityholder.
-------------------------
"indenture to be qualified" means this Indenture.
-------------------------
"indenture trustee" or "institutional trustee" means the Trustee.
----------------- ---------------------
"obligor" on the indenture securities means the Company, any Guarantor
-------
or any other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
and not otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03. Rules of Construction.
---------------------
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) "herein," "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision.
<PAGE>
-34-
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating.
---------------
The Initial Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibits A-1 and A-2 and the Exchange
Notes and the Trustee's certificate of authentication shall be substantially in
the form of Exhibits B-1 and B-2. The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage. The Company and the
Trustee shall approve the form of the Securities and any notation, legend or
endorsement on them. Each Security shall be dated the date of its
authentication. At the time of issuance, each Security shall have an executed
Guarantee from each of the then existing Guarantors endorsed thereon
substantially in the form of Exhibit C.
The terms and provisions contained in the Securities, annexed hereto
as Exhibits A-1, A-2, B-1 and B-2, and the Guarantees shall constitute, and are
hereby expressly made, a part of this Indenture and, to the extent applicable,
the Company, the Guarantors and the Trustee, by their execution and delivery of
this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
Securities offered and sold in reliance on Rule 144A shall be issued
initially in the form of one or more permanent Global Securities in registered
form, substantially in the form set forth in Exhibits A-1 and A-2, deposited
with the Trustee, as custodian for the Depository, duly executed by the Company
and authenticated by the Trustee as hereinafter provided, and shall bear the
legends set forth in Section 2.14. The aggregate principal amount of the Global
Securities may from time to time be increased or decreased by adjustments made
on the records of the Trustee, as custodian for the Depository, as hereinafter
provided.
Securities issued in exchange for interests in the Global Securities
pursuant to Section 2.15 may be issued in the form of permanent certificated
Securities in registered form (the "Physical Securities") and shall bear the
first legend set forth in Section 2.14. All Securities offered and sold in
reliance on Regulation S shall remain in the form of a Global Security until the
consummation of the Exchange Offer pursuant to the Registration Rights
Agreement.
<PAGE>
-35-
SECTION 2.02. Execution and Authentication.
----------------------------
Two Officers, or an Officer and an Assistant Secretary, shall sign, or
one Officer shall sign and one Officer or an Assistant Secretary (each of whom
shall, in each case, have been duly authorized by all requisite corporate
actions) shall attest to, the Securities for the Company by manual or facsimile
signature.
If an Officer whose signature is on a Security was an Officer at the
time of such execution but no longer holds that office at the time the Trustee
authenticates the Security, the Security shall nevertheless be valid.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate (i) Initial Notes for original issue on
the Issue Date in the aggregate principal amount not to exceed $140,000,000,
(ii) pursuant to the Exchange Offer, Exchange Notes from time to time for issue
only in exchange for a like principal amount of Initial Notes and (iii) one or
more series of Fixed Rate Notes and one or more series of Floating Rate Notes
for original issue after the Issue Date (such Securities to be substantially in
the form of Exhibits A-1, A-2, B-1 or B-2, as the case may be) in an aggregate
principal amount not to exceed $135,000,000 (and if in the form of Exhibit A-1
or A-2, as the case may be, the same principal amount of Exchange Notes in
exchange therefor upon consummation of a registered exchange offer) in each case
upon written orders of the Company in the form of an Officers' Certificate,
which Officers' Certificate shall, in the case of any issuance pursuant to
clause (iii) above, certify that such issuance is in compliance with Section
4.04. In addition, each such Officers' Certificate shall specify the amount of
Securities to be authenticated, the date on which the Securities are to be
authenticated, whether the Securities are to be Initial Fixed Rate Notes,
Initial Floating Rate Notes, Exchange Fixed Rate Notes or Exchange Floating Rate
Notes or Securities issued under clause (iii) of the preceding sentence and the
aggregate principal amount of Securities outstanding on the date of
authentication, and shall further specify the amount of such Securities to be
issued as a Global Security or Physical Securities. Such Securities shall
initially be in the form of one or more Global Securities, which (i) shall
represent, and shall
<PAGE>
-36-
be denominated in an amount equal to the aggregate principal amount of, the
Securities to be issued, (ii) shall be registered in the name of the Depository
for such Global Security or Securities or its nominee and (iii) shall be
delivered by the Trustee to the Depository or pursuant to the Depository's
instruction. The aggregate principal amount of Securities outstanding at any
time may not exceed $275,000,000, except as provided in Section 2.07.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Company to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company and Affiliates of the Company.
The Securities shall be issuable only in registered form without
coupons in denominations of $1,000 and integral multiples thereof.
SECTION 2.03. Registrar, Paying Agent and Calculation Agent.
---------------------------------------------
The Company shall maintain an office or agency in the Borough of
Manhattan, The City of New York, where (a) Securities may be presented or
surrendered for registration of transfer or for exchange ("Registrar"), (b)
---------
Securities may be presented or surrendered for payment ("Paying Agent") and (c)
------------
notices and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The Company may also from time to time designate one
or more other offices or agencies where the Securities may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
-------- -------
any manner relieve the Company of its obligation to maintain an office or agency
in the Borough of Manhattan, The City of New York, for such purposes. The
Company may act as its own Registrar, Paying Agent or Calculation Agent except
that for the purposes of Articles Three and Eight and Sections 4.15 and 4.16,
neither the Company nor any Affiliate of the Company shall act as Paying Agent.
The Registrar shall keep a register of the Securities and of their transfer and
exchange. The Company, upon notice to the Trustee, may have one or more co-
Registrars and one or more additional paying agents reasonably acceptable to the
Trustee. The term "Paying Agent" includes any additional paying agent. The
------------
Company hereby initially appoints the Trustee as Registrar,
<PAGE>
-37-
Paying Agent and Calculation Agent until such time as the Trustee has resigned
or a successor has been appointed.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall
notify the Trustee, in advance, of the name and address of any such Agent. If
the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act
as such.
SECTION 2.04. Paying Agent To Hold Assets in Trust.
------------------------------------
The Company shall require each Paying Agent other than the Trustee to
agree in writing that, subject to Article Four and Article Twelve, each Paying
Agent shall hold in trust for the benefit of Holders or the Trustee all assets
held by the Paying Agent for the payment of principal of, or interest on, the
Securities (whether such assets have been distributed to it by the Company or
any other obligor on the Securities), and shall notify the Trustee of any
Default or Event of Default by the Company (or any other obligor on the
Securities) in making any such payment. If the Company or a Subsidiary acts as
Paying Agent, it shall segregate such assets and hold them as a separate trust
fund. The Company at any time may require a Paying Agent to distribute all
assets held by it to the Trustee and account for any assets disbursed and the
Trustee may at any time during the continuance of any payment Default or payment
Event of Default, upon written request to a Paying Agent, require such Paying
Agent to distribute all assets held by it to the Trustee and to account for any
assets distributed. Upon distribution to the Trustee of all assets that shall
have been delivered by the Company to the Paying Agent, the Paying Agent shall
have no further liability for such assets.
SECTION 2.05. Holder Lists.
------------
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee on or before each Interest Payment Date and at such other times as the
Trustee may request in writing a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Holders, which
list may be conclusively relied upon by the Trustee.
<PAGE>
-38-
SECTION 2.06. Transfer and Exchange.
---------------------
(a) Subject to the provisions of Sections 2.14 and 2.15, when
Securities are presented to the Registrar or a co-Registrar with a request to
register the transfer of such Securities or to exchange such Securities for an
equal principal amount of Securities of other authorized denominations, the
Registrar or co-Registrar shall register the transfer or make the exchange as
requested if its requirements for such transaction are met; provided, however,
-------- -------
that the Securities surrendered for registration of transfer or exchange shall
be duly endorsed or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Registrar or co-Registrar, duly executed by
the Holder thereof or his attorney duly authorized in writing. To permit
registrations of transfers and exchanges, the Company shall execute and the
Trustee shall authenticate Securities at the Registrar's or co-Registrar's
request. No service charge shall be made for any registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
transfer tax or similar governmental charge payable in connection therewith
(other than any such transfer taxes or similar governmental charge payable upon
exchanges or transfers pursuant to Sections 2.02, 2.10, 3.06, 4.15, 4.16 or
9.06). The Registrar or co-Registrar shall not be required to register the
transfer of or exchange of any Security (i) during a period beginning at the
opening of business 15 days before the mailing of a notice of redemption of
Securities and ending at the close of business on the day of such mailing, (ii)
selected for redemption in whole or in part pursuant to Article Three, except
the unredeemed portion of any Security being redeemed in part, and (iii) during
a Change of Control Offer or an Net Proceeds Offer if such Security is tendered
pursuant to such Change of Control Offer or Net Proceeds Offer and not
withdrawn. A Global Security may be transferred, in whole but not in part, in
the manner provided in this Section 2.06(a), only to a nominee of the Depository
for such Global Security, or to the Depository, or a successor Depository for
such Global Security selected or approved by the Company, or to a nominee of
such successor Depository.
(b) If at any time the Depository for the Global Security or
Securities notifies the Company that it is unwilling or unable to continue as
Depository for such Global Security or Securities or the Company becomes aware
that the Depository has ceased to be a clearing agency registered under the
Exchange Act, the Company shall appoint a successor Depository with respect to
such Global Security or Securities. If a successor
<PAGE>
-39-
Depository for such Global Security or Securities has not been appointed within
120 days after the Company receives such notice or becomes aware of such
ineligibility, the Company shall execute, and the Trustee, upon receipt of an
Officers' Certificate for the authentication and delivery of Securities, shall
authenticate and deliver, Securities in definitive form, in an aggregate
principal amount at maturity equal to the principal amount at maturity of the
Global Security representing such Securities, in exchange for such Global
Security. The Company shall reimburse the Registrar, the Depository and the
Trustee for expenses they incur in documenting such exchanges and issuances of
Securities in definitive form.
The Company may at any time and in its sole discretion determine that
the Securities shall no longer be represented by such Global Security or
Securities. In such event the Company will execute, and the Trustee, upon
receipt of a written order for the authentication and delivery of individual
Securities in exchange in whole or in part for such Global Security or
Securities, will authenticate and deliver individual Securities in definitive
form in an aggregate principal amount equal to the principal amount of such
Global Security or Securities in exchange for such Global Security or
Securities.
In any exchange provided for in any of the preceding two paragraphs,
the Company will execute and the Trustee will authenticate and deliver
individual Securities in definitive registered form in authorized denominations.
Upon the exchange of a Global Security for individual Securities, such Global
Security shall be cancelled by the Trustee. Securities issued in exchange for a
Global Security pursuant to this Section 2.06(b) shall be registered in such
names and in such authorized denominations as the Depository for such Global
Security, pursuant to instructions from its direct or indirect participants or
otherwise, shall instruct the Trustee. The Trustee shall deliver such
Securities to the Persons in whose names such Securities are so registered.
None of the Company, the Trustee, any Paying Agent or the Registrar
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests of a Global
Security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
<PAGE>
-40-
SECTION 2.07. Replacement Securities.
----------------------
If a mutilated Security is surrendered to the Trustee or if the Holder
of a Security claims that the Security has been lost, destroyed or wrongfully
taken, the Company shall issue and the Trustee shall authenticate a replacement
Security if the Trustee's requirements are met. If required by the Trustee or
the Company, such Holder must provide an indemnity bond or other indemnity,
sufficient in the judgment of both the Company and the Trustee, to protect the
Company, the Trustee or any Agent from any loss which any of them may suffer if
a Security is replaced. The Company may charge such Holder for its reasonable
out-of-pocket expenses in replacing a Security pursuant to this Section 2.07,
including reasonable fees and expenses of counsel.
Every replacement Security is an additional obligation of the Company.
SECTION 2.08. Outstanding Securities.
----------------------
Securities outstanding at any time are all the Securities that have
been authenticated by the Trustee except those cancelled by it, those delivered
to it for cancellation and those described in this Section as not outstanding.
A Security does not cease to be outstanding because the Company, the Guarantors
or any of their respective Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.07 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser. A mutilated Security ceases to be outstanding
---- ----
upon surrender of such Security and replacement thereof pursuant to Section
2.07. If the principal amount of any Security is considered paid under Section
4.01, it ceases to be outstanding and interest ceases to accrue.
If on a Redemption Date or the Maturity Date the Paying Agent (other
than the Company or a Subsidiary) holds U.S. Legal Tender sufficient to pay all
of the principal and interest due on the Securities payable on that date, then
on and after that date such Securities cease to be outstanding and interest on
them ceases to accrue.
<PAGE>
-41-
SECTION 2.09. Treasury Securities.
-------------------
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company, any of its Subsidiaries or any of their respective Affiliates
shall be disregarded, except that, for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Securities that a Responsible Officer of the Trustee knows or has reason to
know are so owned shall be disregarded.
SECTION 2.10. Temporary Securities.
--------------------
Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of definitive Securities but may
have variations that the Company considers appropriate for temporary Securities.
Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Securities in exchange for temporary Securities. Until
such exchange, temporary Securities shall be entitled to the same rights,
benefits and privileges as definitive Securities. Notwithstanding the
foregoing, so long as the Securities are represented by a Global Security, such
Global Security may be in typewritten form.
SECTION 2.11. Cancellation.
------------
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for registration of transfer, exchange or
payment. The Trustee, or at the direction of the Trustee, the Registrar or the
Paying Agent (other than the Company or a Subsidiary), and no one else, shall
cancel and shall dispose of all Securities surrendered for registration of
transfer, exchange, payment or cancellation. Subject to Section 2.07, the
Company may not issue new Securities to replace Securities that it has paid or
delivered to the Trustee for cancellation. If the Company or any Guarantor
shall acquire any of the Securities, such acquisition shall not operate as a
redemption or satisfaction of the Indebtedness represented by such Securities
unless and until the same are surrendered to the Trustee for cancellation
pursuant to this Section 2.11.
<PAGE>
-42-
SECTION 2.12. Defaulted Interest.
------------------
If the Company defaults in a payment of interest on the Securities, it
shall, unless the Trustee fixes another record date pursuant to Section 6.10,
pay the defaulted interest, plus (to the extent lawful) any interest payable on
the defaulted interest, in any lawful manner. The Company may pay the defaulted
interest to the Persons who are Holders on a subsequent special record date,
which date shall be the fifteenth day next preceding the date fixed by the
Company for the payment of defaulted interest or the next succeeding Business
Day if such date is not a Business Day. At least 15 days before any such
subsequent special record date, the Company shall mail to each Holder, with a
copy to the Trustee, a notice that states the subsequent special record date,
the payment date and the amount of defaulted interest, and interest payable on
such defaulted interest, if any, to be paid.
SECTION 2.13. CUSIP Number.
------------
The Company in issuing the Securities may use a "CUSIP" number, and if
so, the Trustee shall use the CUSIP number in notices of redemption or exchange
as a convenience to Holders; provided, however, that any such notice may state
-------- -------
that no representation is made as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Securities, and that reliance may be
placed only on the other identification numbers printed on the Securities.
SECTION 2.14. Restrictive Legends.
-------------------
Each Global Security and Physical Security that constitutes a
Restricted Security or is sold in compliance with Regulation S shall bear the
following legend (the "Private Placement Legend") on the face thereof until
after the second anniversary of the later of the Issue Date and the last date on
which the Company or any Affiliate of the Company was the owner of such Security
(or any predecessor security) (or such shorter period of time as permitted by
Rule 144(k) under the Securities Act or any successor provision thereunder) (or
such longer period of time as may be required under the Securities Act or
applicable state securities laws in the opinion of counsel for the Company,
unless otherwise agreed by the Company and the Holder thereof):
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD WITHIN
<PAGE>
-43-
THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE
904 UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT RESELL OR
OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) INSIDE THE UNITED STATES TO AN "ACCREDITED INVESTOR" (AS DEFINED IN
RULE 501(a)(1), (2), (3) or (7) UNDER THE SECURITIES ACT) THAT, PRIOR TO
SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-
DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY
(THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR THIS
SECURITY), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO
WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY, IF THE
PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO
SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT.
Each Global Security shall also bear the following legend on the face
thereof:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT
AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY ANY SUCH
NOMINEE OF THE DEPOSITORY, OR BY THE DEPOSITORY OR NOMINEE OF SUCH
<PAGE>
-44-
SUCCESSOR DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A
NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTION 2.16 OF THE INDENTURE GOVERNING THIS
SECURITY.
SECTION 2.15. Book-Entry Provisions for Global Security.
-----------------------------------------
(a) Each Global Security initially shall (i) be registered in the
name of the Depository or the nominee of such Depository, (ii) be delivered to
the Trustee as custodian for such Depository and (iii) bear legends as set forth
in Section 2.14.
Members of, or participants in, the Depository ("Agent Members") shall
-------------
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depository, or the Trustee as its custodian, or under any
Global Security, and the Depository may be treated by the Company, the Trustee
and any agent of the Company or the Trustee as the absolute owner of each Global
Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between the Depository
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a Holder of any Security.
(b) Transfers of Global Securities shall be limited to transfers in
whole, but not in part, to the Depository, its
<PAGE>
-45-
successors or their respective nominees. Interests of beneficial owners in any
Global Security may be transferred or, subject to Section 2.01, exchanged for
Physical Securities in accordance with the rules and procedures of the
Depository and the provisions of Section 2.16. In addition, Physical Securities
shall be transferred to all beneficial owners in exchange for their beneficial
interests in any Global Security if (i) the Depository notifies the Company that
it is unwilling or unable to continue as Depository for the Global Securities
and a successor depositary is not appointed by the Company within 90 days of
such notice or (ii) an Event of Default has occurred and is continuing and the
Registrar has received a written request from the Depository or the Trustee to
issue Physical Securities.
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in any Global Security to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Securities are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of such Global Security in an amount equal to the principal
amount of the beneficial interest in such Global Security to be transferred, and
the Company shall execute, and the Trustee shall authenticate and deliver, one
or more Physical Securities of like tenor and amount.
(d) In connection with the transfer of an entire Global Security to
beneficial owners pursuant to paragraph (b), such Global Security shall be
deemed to be surrendered to the Trustee for cancellation, and the Company shall
execute, and the Trustee shall authenticate and deliver, to each beneficial
owner identified by the Depository in exchange for its beneficial interest in
such Global Security, an equal aggregate principal amount of Physical Securities
of authorized denominations.
(e) Any Physical Security constituting a Restricted Security
delivered in exchange for an interest in a Global Security pursuant to paragraph
(b) or (c) shall, except as otherwise provided by paragraphs (a)(i)(x) and (c)
of Section 2.16, bear the legend regarding transfer restrictions applicable to
the Physical Securities set forth in Section 2.14.
(f) The Holder of a Global Security may grant proxies and otherwise
authorize any person, including Agent Members and persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Securities.
<PAGE>
-46-
SECTION 2.16. Special Transfer Provisions.
---------------------------
(a) Transfers to Non-QIB Institutional Accredited Investors and Non-
---------------------------------------------------------------
U.S. Persons. The following provisions shall apply with respect to the
- ------------
registration of any proposed transfer of a Security constituting a Restricted
Security to any institutional accredited investor (as defined in Rule 501(a)(1),
(2), (3) or (7) under the Securities Act) (an "Accredited Investor") which is
not a QIB or to any Non-U.S. Person:
(i) the Registrar shall register the transfer of any Security
constituting a Restricted Security, whether or not such Security bears the
Private Placement Legend, if (x) the transferee certifies that it is not an
Affiliate of the Company and the requested transfer is after the second
anniversary of the later of the (a) Issue Date and (b) the last date on
which the Company or an Affiliate of the Company was the owner of such
Security (or any predecessor Security) or such shorter period of time as
permitted by Rule 144(k) under the Securities Act or any successor
provision thereunder or (y) (1) in the case of a transfer to an Accredited
Investor which is not a QIB (excluding Non-U.S. Persons), the proposed
transferee has delivered to the Registrar a certificate substantially in
the form of Exhibit D hereto or (2) in the case of a transfer to a Non-U.S.
---------
Person, the proposed transferor has delivered to the Registrar a
certificate substantially in the form of Exhibit E hereto and such other
---------
information that the Trustee may reasonably request in order to confirm
that such transaction is being made pursuant to an exemption from or in a
transaction not subject to the registration requirements of the Securities
Act; and
(ii) if the proposed transferor is an Agent Member holding a
beneficial interest in the Global Security, the Registrar shall register
the transfer of any Security constituting a Restricted Security, whether or
not such Security bears a Private Placement Legend upon receipt by the
Registrar of (x) the certificate, if any, required by paragraph (i) above
and (y) instructions given in accordance with the Depository's and the
Registrar's procedures,
whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical Securities)
a decrease in the principal amount of the applicable Global Security in an
amount equal to the principal amount of the beneficial interest in such Global
<PAGE>
-47-
Security to be transferred, and (b) the Company shall execute and the Trustee
shall authenticate and deliver one or more Physical Securities of like tenor and
amount.
(b) Transfers to QIBs. The following provisions shall apply with
-----------------
respect to the registration of any proposed transfer of a Security constituting
a Restricted Security to a QIB (excluding transfers to Non-U.S. Persons):
(i) the Registrar shall register the transfer if such transfer is
being made by a proposed transferor who has checked the box provided for on
the form of Security stating, or has otherwise advised the Company and the
Registrar in writing, that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has signed the certification
provided for on the form of Security stating, or has otherwise advised the
Company and the Registrar in writing, that it is purchasing the Security
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a QIB within the
meaning of Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as it has requested pursuant to Rule 144A
or has determined not to request such information and that it is aware that
the transferor is relying upon its foregoing representations in order to
claim the exemption from registration provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and the
Securities to be transferred consist of Physical Securities which after
transfer are to be evidenced by an interest in a Global Security, upon
receipt by the Registrar of instructions given in accordance with the
Depository's and the Registrar's procedures, the Registrar shall reflect on
its books and records the date and an increase in the principal amount of
the applicable Global Security in an amount equal to the principal amount
of the Physical Securities to be transferred, and the Trustee shall cancel
the Physical Securities so transferred.
(c) Private Placement Legend. Upon the registration of transfer,
------------------------
exchange or replacement of Securities not bearing the Private Placement Legend,
the Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the registration of transfer, exchange or replacement of
Securities bearing the Private Placement Legend, the Registrar shall de-
<PAGE>
-48-
liver only Securities that bear the Private Placement Legend unless (i) the
circumstance contemplated by paragraph (a)(i)(x) of this Section 2.16 exist or
(ii) there is delivered to the Registrar an Opinion of Counsel reasonably
satisfactory to the Company and the Trustee to the effect that neither such
legend nor the related restrictions on transfer are required in order to
maintain compliance with the provisions of the Securities Act.
(d) General. By its acceptance of any Security bearing the Private
-------
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as provided
in this Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.15 or this Section 2.16 in
accordance with its customary procedures. The Company shall have the right to
inspect and make copies of all such letters, notices or other written
communications at any reasonable time upon the giving of reasonable written
notice to the Registrar.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.
------------------
If the Company elects to redeem Securities pursuant to Paragraph 6 or
Paragraph 7 of the Fixed Rate Notes or pursuant to Paragraph 6 of the Floating
Rate Notes, it shall notify the Trustee in writing of the Redemption Date, the
Redemption Price and the principal amount of the applicable Securities to be
redeemed. The Company shall give notice of redemption to the Paying Agent and
Trustee at least 30 days but not more than 60 days before the Redemption Date
(unless a shorter notice shall be agreed to by the Trustee in writing), together
with an Officers' Certificate stating that such redemption will comply with the
conditions contained herein.
SECTION 3.02. Selection of Securities To Be Redeemed.
--------------------------------------
In the event that less than all of the Fixed Rate Notes or Floating
Rate Notes, as applicable, are to be redeemed
<PAGE>
-49-
at any time, selection of such Securities for redemption will be made by the
Trustee in compliance with the requirements of the principal national securities
exchange, if any, on which such Securities are listed or, if such Securities are
not then listed on a national securities exchange, on a pro rata basis, by lot
--- ----
or by such method as the Trustee shall deem fair and appropriate; provided,
--------
however, that no Securities of a principal amount of $1,000 or less shall be
- -------
redeemed in part; and provided, further, that if a partial redemption is made
-------- -------
with the net cash proceeds of an Equity Offering, selection of the Fixed Rate
Notes or portions thereof for redemption shall be made by the Trustee only on a
pro rata basis or on as nearly a pro rata basis as is practicable (subject to
- --- ---- --- ----
the procedures of the Depository), unless such method is otherwise prohibited.
SECTION 3.03. Notice of Redemption.
--------------------
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail a notice of redemption by first class mail, postage
prepaid, to each Holder whose Securities are to be redeemed at its registered
address. At the Company's request at least 40 days before a Redemption Date
(unless a shorter period shall be acceptable to the Trustee), the Trustee shall
give the notice of redemption in the Company's name and at the Company's
expense. Each notice of redemption shall identify the Securities to be redeemed
and shall state:
(1) the Redemption Date;
(2) the Redemption Price and the amount of accrued interest, if
any, to be paid;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to
the Paying Agent to collect the Redemption Price plus accrued interest, if
any;
(5) that, unless the Company defaults in making the redemption
payment, interest on Securities called for redemption ceases to accrue on
and after the Redemption Date, and the only remaining right of the Holders
of such Securities is to receive payment of the Redemption Price upon
surrender to the Paying Agent of the Securities redeemed;
<PAGE>
-50-
(6) if any Security is being redeemed in part, the portion of the
principal amount of such Security to be redeemed and that, after the
Redemption Date, and upon surrender of such Security, a new Security or
Securities in aggregate principal amount equal to the unredeemed portion
thereof will be issued;
(7) if fewer than all the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Securities to be
redeemed and the aggregate principal amount of Securities to be outstanding
after such partial redemption; and
(8) the Paragraph of the Securities pursuant to which the
Securities are to be redeemed.
The notice, if mailed in a manner herein provided, shall be
conclusively presumed to have been given, whether or not the Holder receives
such notice. In any case, failure to give such notice by mail or any defect in
the notice to the Holder of any Security designated for redemption in whole or
in part shall not affect the validity of the proceedings for the redemption of
any other Security.
SECTION 3.04. Effect of Notice of Redemption.
------------------------------
Once notice of redemption is mailed in accordance with Section 3.03,
Securities called for redemption become due and payable on the Redemption Date
and at the Redemption Price plus accrued interest, if any. Upon surrender to
the Trustee or Paying Agent, such Securities called for redemption shall be paid
at the Redemption Price (which shall include accrued interest thereon to the
Redemption Date), but installments of interest, the maturity of which is on or
prior to the Redemption Date, shall be payable to Holders of record at the close
of business on the relevant Record Dates.
SECTION 3.05. Deposit of Redemption Price.
---------------------------
On or before 11:00 a.m New York time on the Redemption Date, the
Company shall deposit with the Paying Agent U.S. Legal Tender sufficient to pay
the Redemption Price plus accrued interest, if any, of all Securities to be
redeemed on that date.
If the Company complies with the preceding paragraph, then, unless the
Company defaults in the payment of such Re-
<PAGE>
-51-
demption Price plus accrued interest, if any, interest on the Securities to be
redeemed will cease to accrue on and after the applicable Redemption Date,
whether or not such Securities are presented for payment.
SECTION 3.06. Securities Redeemed in Part.
---------------------------
Upon surrender of a Security that is to be redeemed in part only, the
Trustee shall upon written instruction from the Company authenticate for the
Holder a new Security or Securities in a principal amount equal to the
unredeemed portion of the Security surrendered.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities.
---------------------
The Company shall pay the principal of and interest on the Securities
in the manner provided in the Securities. An installment of principal of or
interest on the Securities shall be considered paid on the date it is due if the
Trustee or Paying Agent holds on that date U.S. Legal Tender designated for and
sufficient to pay the installment. Interest on the Fixed Rate Notes will be
computed on the basis of a 360-day year comprised of twelve 30-day months and
interest on the Floating Rate Notes will be computed as set forth in Exhibit B.
SECTION 4.02. Maintenance of Office or Agency.
-------------------------------
The Company shall maintain in the Borough of Manhattan, The City of
New York, the office or agency required under Section 2.03. The Company shall
give prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the address of the Trustee set forth in Section 13.02.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations. The
Company will give prompt written notice to the Trustee of any such designa-
<PAGE>
-52-
tion or rescission and of any change in the location of any such other office or
agency.
The Company hereby initially designates the Corporate Trust Office of
the Trustee located in the Borough of Manhattan, The City of New York, as such
office of the Company in accordance with Section 2.03.
SECTION 4.03. Limitation on Restricted Payments.
---------------------------------
The Company shall not, and shall not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, (a) declare or pay any
dividend or make any distribution (other than dividends or distributions payable
in Qualified Capital Stock of the Company) on or in respect of shares of the
Company's Capital Stock to holders of such Capital Stock, (b) purchase, redeem
or otherwise acquire or retire for value any Capital Stock of the Company or any
warrants, rights or options to purchase or acquire shares of any class of such
Capital Stock, (c) make any principal payment on, purchase, defease, redeem,
prepay, decrease or otherwise acquire or retire for value, prior to any
scheduled final maturity, scheduled repayment or scheduled sinking fund payment,
any Indebtedness of the Company (other than the Securities) that is subordinate
or junior in right of payment to the Securities or (d) make any Investment
(other than Permitted Investments) (each of the foregoing actions set forth in
clauses (a), (b), (c) and (d) being referred to as a "Restricted Payment"), if
------------------
at the time of such Restricted Payment or immediately after giving effect
thereto, (i) a Default or an Event of Default shall have occurred and be
continuing or (ii) the Company is not able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with Section 4.04
or (iii) the aggregate amount of Restricted Payments (including such proposed
Restricted Payment) made subsequent to the Issue Date (the amount expended for
such purposes, if other than in cash, being the fair market value of such
property as determined reasonably and in good faith by the Board of Directors of
the Company) shall exceed the sum of: (w) 50% of the cumulative Consolidated
Net Income (or if cumulative Consolidated Net Income shall be a loss, minus 100%
of such loss) of the Company earned subsequent to the Issue Date and on or prior
to the date the Restricted Payment occurs (the "Reference Date") (treating such
--------------
period as a single accounting period); plus (x) 100% of the aggregate net cash
proceeds and the fair market value, as determined in good faith by the Board of
Directors, of property other than cash received by the Company from any Person
(other than a Subsidiary of the Company) from the issuance and sale subsequent
to
<PAGE>
-53-
the Issue Date and on or prior to the Reference Date of Qualified Capital
Stock of the Company; plus (y) without duplication of any amounts included in
clause (iii)(x) above, 100% of the aggregate net cash proceeds of any equity
contribution received by the Company from a holder of the Company's Capital
Stock; plus (z) without duplication, the sum of (1) the aggregate amount
returned in cash on or with respect to Investments (other than Permitted
Investments) made subsequent to the Issue Date whether through interest
payments, principal payments, dividends or other distributions or payments, (2)
the net cash proceeds received by the Company or any Restricted Subsidiary of
the Company from the disposition of all or any portion of such Investments
(other than to a Subsidiary of the Company) and (3) upon redesignation of an
Unrestricted Subsidiary of the Company as a Restricted Subsidiary of the
Company, the fair market value of such Subsidiary (valued in each case as
provided in the definition of "Investment"); provided, however, that the sum of
---------- -------- -------
clauses (1), (2) and (3) above shall not exceed the aggregate amount of all such
Investments made subsequent to the Issue Date.
Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph do not prohibit: (1) the payment of any dividend
within 60 days after the date of declaration of such dividend if the dividend
would have been permitted on the date of declaration; (2) if no Default or Event
of Default shall have occurred and be continuing, the acquisition of any shares
of Capital Stock of the Company, either (i) solely in exchange for shares of
Qualified Capital Stock of the Company or (ii) through the application of net
proceeds of a substantially concurrent sale for cash (other than to a Subsidiary
of the Company) of shares of Qualified Capital Stock of the Company; (3) if no
Default or Event of Default shall have occurred and be continuing, the
acquisition of any Indebtedness of the Company that is subordinate or junior in
right of payment to the Securities either (i) solely in exchange for shares of
Qualified Capital Stock of the Company, or (ii) through the application of net
proceeds of a substantially concurrent sale for cash (other than to a Subsidiary
of the Company) of (a) shares of Qualified Capital Stock of the Company or (b)
Refinancing Indebtedness; (4) so long as no Default or Event of Default shall
have occurred and be continuing, repurchases by the Company of Capital Stock of
the Company from (i) employees of or consultants to the Company or any of its
Subsidiaries or their authorized representatives (a) upon the death, disability
or termination of employment of such employees or consultants or to the extent
required pursuant to employee benefit plans, employment agreements or consulting
agreements, (b) pursuant to
<PAGE>
-54-
any other agreements with such employees of or consultants to the Company or any
of its Subsidiaries, in an aggregate amount not to exceed $2.5 million in any
calendar year (with unused amounts in any calendar year being carried over to
succeeding years subject to a maximum of $5.0 million in any calendar year) or
(c) to the extent required pursuant to the Shareholders' Agreement or the Option
Plan or (ii) Elton Babbitt; (5) the declaration and payment of dividends to
holders of any class or series of Preferred Stock (other than Disqualified
Capital Stock) issued after the Issue Date, provided that for the most recently
ended four full fiscal quarters for which internal financial statements are
available immediately preceding the date of issuance of such Preferred Stock,
after giving effect to such issuance on a pro forma basis, the Company would
--- -----
have had a Consolidated Fixed Charge Coverage Ratio of at least 1.75 to 1.00;
(6) the payment of dividends on the Company's Common Stock, following the first
public offering of the Company's Common Stock after the Issue Date, of up to 6%
per annum of the net proceeds received by the Company in such public offering,
other than public offerings with respect to the Company's Common Stock
registered on Form S-8; (7) the repurchase, retirement or other acquisition or
retirement for value of equity interests of the Company in existence on the
Issue Date and from the persons holding such equity interests on the Issue Date
and which are not held by Apollo or members of management of the Company and its
Subsidiaries on the Issue Date (including any equity interests issued in respect
of such equity interests as a result of a stock split, recapitalization, merger,
combination, consolidation or similar transaction), provided, however, that the
-------- -------
Company shall be permitted to make Restricted Payments under this clause only if
after giving effect thereto, the Company would be permitted to incur at least
$1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to
Section 4.04; and (8) other Restricted Payments in an aggregate amount not to
exceed $7.5 million. In determining the aggregate amount of Restricted Payments
made subsequent to the Issue Date in accordance with clause (iii) of the
immediately preceding paragraph, amounts expended pursuant to clauses (1),
(2)(ii), (4), (5), (6), (7), and (8) shall be included in such calculation.
Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment complies with this Indenture and setting forth in reasonable
detail the basis upon which the required calculations were computed, which
calculations may be based upon the Company's latest available internal quarterly
financial statements.
<PAGE>
-55-
SECTION 4.04. Limitation on Incurrence of
Additional Indebtedness.
------------------------
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume, guarantee,
acquire, become liable, contingently or otherwise, with respect to, or otherwise
become responsible for payment of (collectively, "incur") any Indebtedness
-----
(other than Permitted Indebtedness); provided, however, that if no Default or
-------- -------
Event of Default shall have occurred and be continuing at the time of or as a
consequence of the incurrence of any such Indebtedness, the Company or any of
the Guarantors may incur Indebtedness (including, without limitation, Acquired
Indebtedness) and Restricted Subsidiaries of the Company may incur Acquired
Indebtedness, in each case if on the date of the incurrence of such
Indebtedness, after giving effect to the incurrence thereof, the Consolidated
Fixed Charge Coverage Ratio of the Company is greater than 1.90 to 1.0 if such
incurrence is on or prior to December 31, 1999 and 2.0 to 1.0 if such incurrence
is after December 31, 1999 and on or prior to to December 31, 2001, and 2.25 to
1.0 if such incurrence is thereafter.
SECTION 4.05. Corporate Existence.
-------------------
Except as otherwise permitted by Article Five, the Company shall do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence and the corporate, partnership or other existence
of each of its Restricted Subsidiaries in accordance with the respective
organizational documents of each such Restricted Subsidiary and the rights
(charter and statutory) and material franchises of the Company and each of its
Restricted Subsidiaries; provided, however, that the Company shall not be
-------- -------
required to preserve any such right, franchise or corporate existence with
respect to each such Restricted Subsidiary if the Board of Directors of the
Company shall determine that the loss thereof is not, and will not be, adverse
in any material respect to the Holders.
SECTION 4.06. Payment of Taxes and Other Claims.
---------------------------------
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all material taxes, assessments and
governmental charges levied or imposed upon it or any of its Subsidiaries or
upon the income, profits or property of it or any of its Restricted Subsidiaries
and (b) all lawful claims for labor, materials and
<PAGE>
-56-
supplies which, in each case, if unpaid, might by law become a material
liability or Lien upon the property of it or any of its Restricted Subsidiaries;
provided, however, that the Company shall not be required to pay or discharge or
- -------- -------
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, (i) the applicability or validity is being contested in good faith by
appropriate proceedings and for which appropriate provision has been made or
(ii) where the failure to effect such payment or discharge is not adverse in any
material respect to the Holders.
SECTION 4.07. Maintenance of Properties and Insurance.
---------------------------------------
(a) The Company shall cause all material properties owned by or
leased by it or any of its Restricted Subsidiaries used or useful to the conduct
of its business or the business of any of its Restricted Subsidiaries, taken as
a whole, to be maintained and kept in normal condition, repair and working order
and supplied with all necessary equipment and shall cause to be made all
repairs, renewals, replacements, and betterments thereof, all as in its judgment
may be necessary, so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
-------- -------
nothing in this Section 4.07 shall prevent the Company or any of its Restricted
Subsidiaries from discontinuing the use, operation or maintenance of any of such
properties, or disposing of any of them, if such discontinuance or disposal is,
in the judgment of the Board of Directors of the Company or any such Restricted
Subsidiary desirable in the conduct of the business of the Company or any such
Restricted Subsidiary, and if such discontinuance or disposal is not adverse in
any material respect to the Holders; provided, further, that nothing in this
-------- -------
Section 4.07 shall prevent the Company or any of its Restricted Subsidiaries
from discontinuing or disposing of any properties to the extent otherwise
permitted by this Indenture.
(b) The Company shall maintain, and shall cause its Restricted
Subsidiaries to maintain, insurance with responsible carriers against such risks
and in such amounts, and with such deductibles, retentions, self-insured amounts
and co-insurance provisions, as are, in the Company's reasonable judgment,
customarily carried by similar businesses of similar size, including property
and casualty loss, workers' compensation and interruption of business insurance.
<PAGE>
-57-
SECTION 4.08. Compliance Certificate; Notice of Default.
-----------------------------------------
(a) The Company and each Guarantor shall deliver to the Trustee,
within 120 days after the close of each fiscal year of the Company (currently
December 31) an Officers' Certificate stating that a review of the activities of
the Company or the applicable Guarantor has been made under the supervision of
the signing officers with a view to determining whether it has kept, observed,
performed and fulfilled its obligations under this Indenture and further
stating, as to each such Officer signing such certificate, that to the best of
his knowledge the Company or the applicable Guarantor during such preceding
fiscal year has kept, observed, performed and fulfilled each and every such
covenant and no Default or Event of Default occurred during such year and at the
date of such certificate there is no Default or Event of Default that has
occurred and is continuing or, if such signers do know of such Default or Event
of Default, the certificate shall describe its status with particularity. The
applicable Officers' Certificate shall also notify the Trustee should the
Company or any Guarantor elect to change the manner in which it fixes its fiscal
year end.
(b) The annual financial statements delivered pursuant to Section
4.10 shall be accompanied by a written report of the Company's independent
accountants (who shall be a firm of established national reputation) that in
conducting their audit of such financial statements nothing has come to their
attention that would lead them to believe that the Company has violated any
provisions of Article Four, Five or Six of this Indenture insofar as they relate
to accounting matters or, if any such violation has occurred, specifying the
nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.
(c) The Company shall deliver to the Trustee, forthwith upon becoming
aware of any Default or Event of Default in the performance of any covenant,
agreement or condition contained in this Indenture, an Officers' Certificate
specifying the Default or Event of Default and describing its status with
particularity.
SECTION 4.09. Compliance with Laws.
--------------------
The Company shall comply, and shall cause each of its Subsidiaries to
comply, with all applicable statutes, rules, regulations, orders and
restrictions of the United States, all
<PAGE>
-58-
states and municipalities thereof, and of any governmental department,
commission, board, regulatory authority, bureau, agency and instrumentality of
the foregoing, in respect of the conduct of their respective businesses and the
ownership of their respective properties, except for such noncompliances as
would not in the aggregate have a material adverse effect on the financial
condition or results of operations of the Company and its Subsidiaries taken as
a whole.
SECTION 4.10. Reports to Holders.
------------------
The Company will deliver to the Trustee within 15 days after the
filing of the same with the Commission, copies of the quarterly and annual
reports and of the information, documents and other reports, if any, which the
Company is required to file with the Commission pursuant to Section 13 or 15(d)
of the Exchange Act. Notwithstanding that the Company may not be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
will file with the Commission, to the extent permitted, and provide the Trustee
and Holders with such annual reports and such information, documents and other
reports specified in Sections 13 and 15(d) of the Exchange Act. The Company
will upon request provide to prospective purchasers of the Securities the
foregoing reports. The Company will also comply with the other provisions of
TIA (S) 314(a).
SECTION 4.11. Waiver of Stay, Extension or Usury Laws.
---------------------------------------
Each of the Company and each Guarantor covenants (to the extent that
it may lawfully do so) that it will not at any time insist upon, plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit or forgive the
Company or such Guarantor from paying all or any portion of the principal of
and/or interest on the Securities or the Guarantee of any such Guarantor as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of this Indenture, and (to the
extent that it may lawfully do so) each hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
<PAGE>
-59-
SECTION 4.12. Limitations on Transactions with Affiliates.
-------------------------------------------
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction or series of related transactions (including, without limitation,
the purchase, sale, lease or exchange of any property or the rendering of any
service) with, or for the benefit of, any of its Affiliates (each an "Affiliate
---------
Transaction"), other than (x) Affiliate Transactions permitted under paragraph
- -----------
(b) below and (y) Affiliate Transactions on terms that are no less favorable
than those that might reasonably have been obtained in a comparable transaction
at such time on an arm's-length basis from a Person that is not an Affiliate of
the Company or such Restricted Subsidiary. All Affiliate Transactions (and each
series of related Affiliate Transactions which are similar or part of a common
plan) involving aggregate payments or other property with a fair market value in
excess of $1.0 million shall be approved by the Board of Directors of the
Company or such Restricted Subsidiary, as the case may be, such approval to be
evidenced by a Board Resolution stating that such Board of Directors has
determined that such transaction complies with the foregoing provisions. If the
Company or any Restricted Subsidiary of the Company enters into an Affiliate
Transaction (or a series of related Affiliate Transactions related to a common
plan) that involves an aggregate fair market value of more than $10.0 million,
the Company or such Restricted Subsidiary, as the case may be, shall, prior to
the consummation thereof, obtain a favorable opinion as to the fairness of such
transaction or series of related transactions to the Company or the relevant
Restricted Subsidiary, as the case may be, from a financial point of view, from
an Independent Financial Advisor and file the same with the Trustee.
(b) The restrictions set forth in clause (a) shall not apply to (i)
reasonable fees and compensation paid to and indemnity provided on behalf of,
officers, directors, employees or consultants of the Company or any Restricted
Subsidiary of the Company as determined in good faith by the Company's Board of
Directors; (ii) transactions exclusively between or among the Company and any of
its Wholly Owned Restricted Subsidiaries or exclusively between or among such
Wholly Owned Restricted Subsidiaries, provided such transactions are not
--------
otherwise prohibited by this Indenture; (iii) any agreement as in effect as of
the Issue Date or any amendment thereto or any transaction contemplated thereby
(including pursuant to any amendment thereto) in any replacement agreement
thereto so long as any such amendment or replacement agreement is not more
disadvanta-
<PAGE>
-60-
geous to the Holders in any material respect than the original agreement as in
effect on the Issue Date; (iv) Restricted Payments permitted by this Indenture;
(v) transactions in which the Company or any of its Restricted Subsidiaries, as
the case may be, delivers to the Trustee a letter from an Independent Financial
Advisor stating that such transaction is fair to the Company or such Restricted
Subsidiary from a financial point of view or meets the requirements of the first
sentence of paragraph (a) above; (vi) the existence of, or the performance by
the Company or any of its Restricted Subsidiaries of its obligations under the
terms of, any stockholders agreement (including any registration rights
agreement or purchase agreement related thereto) to which it is a party as of
the Issue Date and any similar agreements which it may enter into thereafter;
provided, however, that the existence of, or the performance by the Company or
- -------- -------
any of its Restricted Subsidiaries of obligations under, any future amendment to
any such existing agreement or under any similar agreement entered into after
that Issue Date shall only be permitted by this clause to the extent that the
terms of any such, amendment or new agreement are not otherwise disadvantageous
to the holders of the Securities in any material respect; (vii) the issuance of
securities or other payments, awards or grants in cash, securities or otherwise
pursuant to, or the funding of, employment arrangements, stock options and stock
ownership plans approved by Board of Directors of the Company in good faith and
loans to employees of the Company and its Subsidiaries which are approved by the
Board of Directors of the Company in good faith; (viii) the payment of all fees
and expenses related to the Transactions; (ix) transactions with customers,
clients, suppliers, or purchasers or sellers of goods or services, in each case
in the ordinary course of business and otherwise in compliance with the terms of
this Indenture, which are fair to the Company or its Restricted Subsidiaries, in
the reasonable determination of the Board of Directors of the Company or the
senior management thereof, or are on terms at least as favorable as might
reasonably have been obtained at such time from an unaffiliated party; and (x)
fees payable to Apollo pursuant to the Management Agreement and the Shareholders
Agreement.
SECTION 4.13. Limitation on Dividend and Other Payment
Restrictions Affecting Subsidiaries.
------------------------------------
The Company shall not, and shall not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
permit to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary of the Company to (a) pay dividends or make
<PAGE>
-61-
any other distributions on or in respect of its Capital Stock; (b) make loans or
advances or to pay any Indebtedness or other obligation owed to the Company or
any other Restricted Subsidiary of the Company; or (c) transfer any of its
property or assets to the Company or any other Restricted Subsidiary of the
Company, except for such encumbrances or restrictions existing under or by
reason of: (1) applicable law; (2) this Indenture; (3) the Credit Agreement (as
it may be assigned in accordance with its terms); (4) customary non-assignment
provisions of any contract or any lease governing a leasehold interest of any
Restricted Subsidiary of the Company; (5) any instrument governing Acquired
Indebtedness, which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person or the
properties or assets of the Person so acquired; (6) agreements existing on the
Issue Date to the extent and in the manner such agreements are in effect on the
Issue Date; (7) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature discussed in clause
(c) above on the property so acquired; (8) contracts for the sale of assets,
including, without limitation, customary restrictions with respect to a
Restricted Subsidiary of the Company pursuant to an agreement that has been
entered into for the sale or disposition of all or substantially all of the
Capital Stock or assets of such Restricted Subsidiary; (9) secured Indebtedness
otherwise permitted to be incurred pursuant to Section 4.04 and Section 4.14;
(10) customary provisions in joint venture agreements and other similar
agreements entered into in the ordinary course of business; (11) customary net
worth provisions contained in leases and other agreements entered into by the
Company or any Restricted Subsidiary; (12) an agreement governing Indebtedness
incurred to Refinance the Indebtedness issued, assumed or incurred pursuant to
an agreement referred to in clauses (1) through (11) above; provided, however,
-------- -------
that the provisions relating to such encumbrance or restriction contained in any
such Indebtedness are no less favorable to the Company in any material respect
as determined by the Board of Directors of the Company in their reasonable and
good faith judgment than the provisions relating to such encumbrance or
restriction contained in agreements referred to in such clauses; or (13) an
agreement governing Indebtedness permitted to be incurred pursuant to Section
4.04; provided that the provisions relating to such encumbrance or restriction
--------
contained in such Indebtedness are no less favorable to the Company in any
material respect as determined by the Board of Directors of the Company in their
reasonable and good faith judgment than the provisions contained in the Credit
Agreement as in effect on the Issue Date.
<PAGE>
-62-
SECTION 4.14. Limitation on Liens.
-------------------
The Company shall not, and shall not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
permit or suffer to exist any Liens of any kind against or upon any property or
assets of the Company or any of its Restricted Subsidiaries whether owned on the
Issue Date or acquired after the Issue Date, or any proceeds therefrom, or
assign or otherwise convey any right to receive income or profits therefrom
unless (i) in the case of Liens securing Indebtedness that is expressly
subordinate or junior in right of payment to the Securities, the Securities are
secured by a Lien on such property, assets or proceeds that is senior in
priority to such Liens and (ii) in all other cases, the Securities are equally
and ratably secured, except for the following Liens which are expressly
permitted: (a) Liens existing as of the Issue Date to the extent and in the
manner such Liens are in effect on the Issue Date; (b) Liens securing Senior
Debt and Liens securing Guarantor Senior Debt; (c) Liens securing the Securities
and the Guarantees; (d) Liens of the Company or a Wholly Owned Restricted
Subsidiary of the Company on assets of any Restricted Subsidiary of the Company;
(e) Liens securing Refinancing Indebtedness which is incurred to Refinance any
Indebtedness which has been secured by a Lien permitted under this Indenture and
which has been incurred in accordance with the provisions of this Indenture;
provided, however, that such Liens (x) are no less favorable to the Holders and
- -------- -------
are not more favorable to the lienholders with respect to such Liens than the
Liens in respect of the Indebtedness being Refinanced and (y) do not extend to
or cover any property or assets of the Company or any of its Restricted
Subsidiaries not securing the Indebtedness so Refinanced; and (f) Permitted
Liens.
SECTION 4.15. Change of Control.
-----------------
(a) Upon the occurrence of a Change of Control, the Company shall be
obligated to make an offer to purchase (the "Change of Control Offer"), and
-----------------------
shall purchase, on a Business Day (the "Change of Control Payment Date") as
------------------------------
described below, all of the then outstanding Securities at a purchase price
equal to 101% of the principal amount thereof, plus accrued and unpaid interest,
if any, thereon to the Change of Control Payment Date. The Change of Control
Offer shall remain open for at least 20 Business Days and until the close of
business on the Change of Control Payment Date.
(b) Prior to the mailing of the notice referred to below, but in any
event within 30 days following any Change of
<PAGE>
-63-
Control, the Company covenants to (i) repay in full and terminate all
commitments under Indebtedness under the Credit Agreement and all other Senior
Debt the terms of which require repayment upon a Change of Control or offer to
repay in full and terminate all commitments under all Indebtedness under the
Credit Agreement and all other such Senior Debt and to repay the Indebtedness
owed to each lender which has accepted such offer or (ii) obtain the requisite
consents under the Credit Agreement and all other Senior Debt to permit the
repurchase of the Securities as provided below. The Company shall first comply
with the covenant in the immediately preceding sentence before it shall be
required to repurchase Securities pursuant to the provisions described below.
The Company's failure to comply with the covenant described in the immediately
preceding sentence shall constitute an Event of Default described in clause (c)
and not in clause (b) of Section 6.01.
(c) Within 30 days following the date upon which a Change of Control
occurs (the "Change of Control Date"), the Company shall send, by first class
----------------------
mail, a notice to each Holder, with a copy to the Trustee, which notice shall
govern the terms of the Change of Control Offer. The notice to the Holders
shall contain all instructions and materials necessary to enable such Holders to
tender Securities pursuant to the Change of Control Offer. Such notice shall
state:
(1) that the Change of Control Offer is being made pursuant to this
Section 4.15 and that all Securities tendered and not withdrawn will be
accepted for payment;
(2) the purchase price (including the amount of accrued interest)
and the Change of Control Payment Date, which shall be a Business Day, that
is not earlier than 30 days or later than 60 days from the date such notice
is mailed;
(3) that any Security not tendered will continue to accrue
interest;
(4) that, unless the Company defaults in making payment therefor,
any Security accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest after the Change of Control Payment Date;
(5) that Holders electing to have a Security purchased pursuant to
a Change of Control Offer will be required to surrender the Security, with
the form entitled "Option of Holder to Elect Purchase" on the reverse of
the
<PAGE>
-64-
Security completed, to the Paying Agent at the address specified in the
notice prior to the close of business on the third Business Day prior to
the Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the second Business Day prior to the
Change of Control Payment Date, a telegram, telex, facsimile transmission
or letter setting forth the name of the Holder, the principal amount of the
Securities the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Security purchased;
(7) that Holders whose Securities are purchased only in part will
be issued new Securities in a principal amount equal to the unpurchased
portion of the Securities surrendered; and
(8) the circumstances and relevant facts regarding such Change of
Control.
On or before the Change of Control Payment Date, the Company shall (i)
accept for payment Securities or portions thereof tendered pursuant to the
Change of Control Offer, (ii) deposit with the Paying Agent U.S. Legal Tender
sufficient to pay the purchase price plus accrued interest, if any, of all
Securities so tendered and (iii) deliver to the Trustee Securities so accepted
together with an Officers' Certificate stating the Securities or portions
thereof being purchased by the Company. The Paying Agent shall promptly mail to
the Holders of Securities so accepted payment in an amount equal to the purchase
price plus accrued interest, if any, and upon written order of the Company the
Trustee shall promptly authenticate and mail to such Holders new Securities
equal in principal amount to any unpurchased portion of the Securities
surrendered. Any Securities not so accepted shall be promptly mailed by the
Company to the Holder thereof. For purposes of this Section 4.15, the Trustee
shall act as the Paying Agent.
Any amounts remaining with the Paying Agent after the purchase of
Securities pursuant to a Change of Control Offer shall be returned by the
Trustee to the Company.
The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Secu-
<PAGE>
-65-
rities pursuant to a Change of Control Offer. To the extent the provisions of
any securities laws or regulations conflict with the provisions of this Section
4.15, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 4.15 by virtue thereof.
SECTION 4.16. Limitation on Asset Sales.
-------------------------
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company or the
applicable Restricted Subsidiary, as the case may be, receives consideration at
the time of such Asset Sale at least equal to the fair market value of the
assets sold or otherwise disposed of (as determined in good faith by the
Company's Board of Directors), (ii) at least 75% of the consideration received
by the Company or the Restricted Subsidiary, as the case may be, from such Asset
Sale shall be in the form of cash or Cash Equivalents and is received at the
time of such disposition; provided that the amount of (a) any liabilities (as
--------
shown on the Company's or such Restricted Subsidiary's most recent balance
sheet) of the Company or any Restricted Subsidiary (other than liabilities that
are by their terms subordinated to the Securities) that are assumed by the
transferee of any such assets, and (b) any notes or other obligations received
by the Company or any such Restricted Subsidiary from such transferee that are
converted by the Company or such Restricted Subsidiary into cash within 180 days
after such Asset Sale (to the extent of the cash received) shall be deemed to be
cash for the purposes of this provision only; and (iii) upon the consummation of
an Asset Sale, the Company shall apply, or cause such Restricted Subsidiary to
apply, the Net Cash Proceeds relating to such Asset Sale within 360 days of
receipt thereof either (a) to prepay any Senior Debt or Guarantor Senior Debt
and, in the case of any Senior Debt or Guarantor Senior Debt under any revolving
credit facility, effect a permanent reduction in the availability under such
revolving credit facility, (b) to make an Investment (x) in properties and
assets that replace the properties and assets that were the subject of such
Asset Sale, (y) in properties and assets that will be used in the business of
the Company and its Restricted Subsidiaries as existing on the Issue Date or in
businesses the same, similar or reasonably related thereto or (z) permitted by
clause (i) of the definition of "Permitted Investments" hereunder("Replacement
-----------
Assets"), or (c) a combination of prepayment and investment permitted by the
- ------
foregoing clauses (iii)(a) and (iii)(b). On the 361st day after an Asset Sale
or such earlier date, if any, as the Board of Directors of the Company or of
<PAGE>
-66-
such Restricted Subsidiary determines not to apply the Net Cash Proceeds
relating to such Asset Sale as set forth in clauses (iii)(a), (iii)(b) and
(iii)(c) of the next preceding sentence (each, a "Net Proceeds Offer Trigger
--------------------------
Date"), such aggregate amount of Net Cash Proceeds which have not been applied
- ----
on or before such Net Proceeds Offer Trigger Date as permitted in clauses
(iii)(a), (iii)(b) and (iii)(c) of the next preceding sentence (each a "Net
---
Proceeds Offer Amount") shall be applied by the Company or such Restricted
- ---------------------
Subsidiary to make an offer to purchase (the "Net Proceeds Offer") on a date
------------------
(the "Net Proceeds Offer Payment Date") not less than 30 nor more than 60 days
-------------------------------
following the applicable Net Proceeds Offer Trigger Date, from all Holders on a
pro rata basis, that amount of Securities equal to the Net Proceeds Offer Amount
- --- ----
at a price equal to 100% of the principal amount of the Securities to be
purchased, plus accrued and unpaid interest thereon, if any, to the date of
purchase; provided, however, that if at any time any non-cash consideration
-------- -------
received by the Company or any Restricted Subsidiary of the Company, as the case
may be, in connection with any Asset Sale is converted into or sold or otherwise
disposed of for cash (other than interest received with respect to any such non-
cash consideration), then such conversion or disposition shall be deemed to
constitute an Asset Sale hereunder as of the date of such conversion or
disposition and the Net Cash Proceeds thereof shall be applied in accordance
with this covenant. The Company may defer the Net Proceeds Offer until there is
an aggregate unutilized Net Proceeds Offer Amount equal to or in excess of $5.0
million resulting from one or more Asset Sales (at which time, the entire
unutilized Net Proceeds Offer Amount, and not just the amount in excess of $5.0
million, shall be applied as required pursuant to this paragraph).
In the event of the transfer of substantially all (but not all) of the
property and assets of the Company and its Restricted Subsidiaries as an
entirety to a Person in a transaction permitted by Section 5.01, the successor
corporation shall be deemed to have sold the properties and assets of the
Company and its Restricted Subsidiaries not so transferred for purposes of this
covenant, and shall comply with the provisions of this covenant with respect to
such deemed sale as if it were an Asset Sale. In addition, the fair market
value of such properties and assets of the Company or its Restricted
Subsidiaries deemed to be sold shall be deemed to be Net Cash Proceeds for
purposes of this covenant.
Notice of each Net Proceeds Offer pursuant to this Section 4.16 shall
be mailed or caused to be mailed, by first class mail, by the Company within 45
days following the appli-
<PAGE>
-67-
cable Net Proceeds Offer Trigger Date to all Holders at their last registered
addresses, with a copy to the Trustee. A Net Proceeds Offer shall remain open
for a period of 20 Business Days or such longer period as may be required by
law. The notice shall contain all instructions and materials necessary to enable
such Holders to tender Securities pursuant to the Net Proceeds Offer and shall
state the following terms:
(1) that Holders may elect to have their Securities purchased by
the Company either in whole or in part (subject to prorationing as
hereinafter described in the event the Net Proceeds Offer is
oversubscribed) in integral multiples of $1,000 of principal amount, at the
applicable purchase price;
(2) that the Net Proceeds Offer is being made pursuant to this
Section 4.16 and that all Securities tendered will be accepted for payment;
provided, however, that if the principal amount of Securities tendered in
-------- -------
the Net Proceeds Offer exceeds the aggregate amount of Net Proceeds Offer
Amount, the Company shall select the Securities to be purchased on a pro
---
rata basis (based on amounts tendered);
----
(3) the purchase price (including the amount of accrued interest,
if any) and the purchase date (which shall be no earlier than 30 days nor
later than 60 days from the Net Proceeds Offer Trigger Date, other than as
may be required by applicable law);
(4) that any Security not tendered will continue to accrue
interest;
(5) that, unless the Company defaults in making payment therefor,
any Security accepted for payment pursuant to the Net Proceeds Offer shall
cease to accrue interest after the Net Proceeds Offer Payment Date;
(6) that Holders electing to have a Security purchased pursuant to
the Net Proceeds Offer will be required to surrender the Security, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Security completed, to the Paying Agent at the address specified in the
notice prior to the close of business on the Net Proceeds Offer Payment
Date;
(7) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the
<PAGE>
-68-
second Business Day prior to the Net Proceeds Offer Payment Date, a
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Security the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to have such
Security purchased; and
(8) that Holders whose Securities are purchased only in part will
be issued new Securities in a principal amount at maturity equal to the
unpurchased portion of the Securities surrendered.
On or before the Net Proceeds Offer Payment Date, the Company shall
(i) accept for payment Securities or portions thereof tendered pursuant to the
Net Proceeds Offer, (ii) deposit with the Paying Agent U.S. Legal Tender
sufficient to pay the purchase price, plus accrued interest, if any, of all
Securities to be purchased and (iii) deliver to the Trustee Securities so
accepted together with an Officers' Certificate stating the Securities or
portions thereof being purchased by the Company. The Paying Agent shall
promptly mail to the Holders of Securities so accepted payment in an amount
equal to the purchase price, plus accrued interest, if any, thereon set forth in
the notice of such Net Proceeds Offer. Any Security not so accepted shall be
promptly mailed by the Company to the Holder thereof. For purposes of this
Section 4.16, the Trustee shall act as the Paying Agent. Any amounts remaining
after the purchase of Securities pursuant to a Net Proceeds Offer shall be
returned by the Trustee to the Company. To the extent that the aggregate amount
of the Securities tendered pursuant to a Net Proceeds Offer is less than the Net
Proceeds Offer Amount, the Company may use such excess Net Proceeds Offer Amount
for general corporate purposes or for any other purposes not prohibited by this
Indenture. Upon completion of any such Net Proceeds Offer, the Net Proceeds
Offer Amount shall be reset at zero.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Securities pursuant to a Net Proceeds Offer. To the extent that
the provisions of any securities laws or regulations conflict with the
provisions of this Section 4.16, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under this Section 4.16 by virtue thereof.
<PAGE>
-69-
SECTION 4.17. Prohibition on Incurrence of
Senior Subordinated Debt.
----------------------------
The Company and the Guarantors shall not incur or suffer to exist
Indebtedness that is senior in right of payment to the Securities or the
Guarantees, as the case may be, and subordinate in right of payment by its terms
to any other Indebtedness of the Company or such Guarantor, as the case may be.
SECTION 4.18. Additional Subsidiary Guarantees.
--------------------------------
If the Company or any of its Restricted Subsidiaries transfers or
causes to be transferred, in one transaction or a series of related
transactions, any property to any domestic Restricted Subsidiary that is not a
Guarantor, or if the Company or any of its Restricted Subsidiaries shall
organize, acquire or otherwise invest in another domestic Restricted Subsidiary
having total equity value in excess of $1.0 million, then such transferee or
acquired or other Restricted Subsidiary shall (i) execute and deliver to the
Trustee a supplemental indenture, in form reasonably satisfactory to the
Trustee, pursuant to which such Restricted Subsidiary shall unconditionally
guarantee all of the Company's obligations under the Securities and this
Indenture on the terms set forth in this Indenture; (ii) deliver to the Trustee
an Opinion of Counsel that such supplemental indenture has been duly authorized,
executed and delivered by such Restricted Subsidiary and constitutes a legal,
valid, binding and enforceable obligation of such Restricted Subsidiary; and
(iii) execute a Guarantee. Thereafter, such Restricted Subsidiary shall be a
Guarantor for all purposes of this Indenture.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Merger, Consolidation and Sale of Assets.
----------------------------------------
(a) The Company shall not, in a single transaction or series of
related transactions, consolidate or merge with or into any Person, or sell,
assign, transfer, lease, convey or otherwise dispose of (or cause or permit any
Restricted Subsidiary of the Company to sell, assign, transfer, lease, convey or
otherwise dispose of) all or substantially all of the Company's assets
(determined on a consolidated basis for
<PAGE>
-70-
the Company and the Company's Restricted Subsidiaries) whether as an entirety or
substantially as an entirety to any Person unless: (i) either (1) the Company
shall be the surviving or continuing corporation or (2) the Person (if other
than the Company) formed by such consolidation or into which the Company is
merged or the Person which acquires by sale, assignment, transfer, lease,
conveyance or other disposition the properties and assets of the Company and of
the Company's Restricted Subsidiaries substantially as an entirety (the
"Surviving Entity") (x) shall be a corporation organized and validly existing
----------------
under the laws of the United States or any State thereof or the District of
Columbia and (y) shall expressly assume, by supplemental indenture (in form and
substance reasonably satisfactory to the Trustee), executed and delivered to the
Trustee, the due and punctual payment of the principal of, and premium, if any,
and interest on all of the Securities and the performance of every covenant of
the Securities and this Indenture on the part of the Company to be performed or
observed; (ii) immediately after giving effect to such transaction on a pro
---
forma basis and the assumption contemplated by clause (i)(2)(y) above (including
- -----
giving effect to any Indebtedness and Acquired Indebtedness incurred or
anticipated to be incurred in connection with or in respect of such
transaction), the Company or such Surviving Entity, as the case may be, shall be
able to incur at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) pursuant to Section 4.04; (iii) immediately before and immediately
after giving effect to such transaction on a pro forma basis and the assumption
--- -----
contemplated by clause (i)(2)(y) above (including, without limitation, giving
effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to
be incurred and any Lien granted in connection with or in respect of the
transaction), no Default or Event of Default shall have occurred or be
continuing; and (iv) the Company or the Surviving Entity, as the case may be,
shall have delivered to the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger, sale, assignment,
transfer, lease, conveyance or other disposition and, if a supplemental
indenture is required in connection with such transaction, such supplemental
indenture comply with the applicable provisions of this Indenture and that all
conditions precedent in this Indenture relating to such transaction have been
satisfied.
Notwithstanding clause (ii) and (iii) above, the merger of the Company
with an Affiliate incorporated solely for the purpose of reincorporating the
Company in another jurisdiction shall be permitted.
<PAGE>
-71-
(b) No Guarantor (other than any Guarantor whose Guarantee is to be
released in accordance with the terms of the Guarantee and this Indenture in
connection with any transaction complying with the provisions of Section 4.16)
shall, and the Company shall not cause or permit any Guarantor to, consolidate
with or merge with or into any Person other than the Company or any other
Guarantor unless: (i) the entity formed by or surviving any such consolidation
or merger (if other than the Guarantor) or to which such sale, lease, conveyance
or other disposition shall have been made is a corporation organized and
existing under the laws of the United States or any State thereof or the
District of Columbia; (ii) such entity assumes by supplemental indenture all of
the Obligations of the Guarantor under the Guarantee; (iii) immediately after
giving effect to such transaction on a pro forma basis, no Default or Event of
--- -----
Default shall have occurred and be continuing; (iv) immediately after giving
effect to such transaction and the use of any net proceeds therefrom on a pro
---
forma basis, the Company could satisfy the provisions of clause (ii) of Section
- -----
5.01(a); and(v) the Company or the Surviving Entity, as the case may be, shall
have delivered to the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger, sale, assignment,
transfer, lease, conveyance or other disposition and, if a supplemental
indenture is required in connection with such transaction, such supplemental
indenture comply with the applicable provisions of this Indenture and that all
conditions precedent in this Indenture relating to such transaction have been
satisfied. Any merger or consolidation of a Guarantor with and into the Company
(with the Company being the Surviving Entity) or another Guarantor that is a
Wholly Owned Restricted Subsidiary of the Company need only comply with clause
(iv) of Section 5.01(a).
(c) For purposes of the foregoing paragraph (a), the transfer (by
lease, assignment, sale or otherwise, in a single transaction or series of
transactions) of all or substantially all of the properties or assets of one or
more Restricted Subsidiaries of the Company the Capital Stock of which
constitutes all or substantially all of the properties and assets of the
Company, shall be deemed to be the transfer of all or substantially all of the
properties and assets of the Company.
SECTION 5.02. Successor Corporation Substituted.
---------------------------------
Upon any consolidation, combination or merger or any transfer of all
or substantially all of the assets of the Company in accordance with Section
5.01 in which the Company or any Guarantor, as applicable, is not the continuing
corpora-
<PAGE>
-72-
tion, the successor Person formed by such consolidation or into which the
Company or such Guarantor is merged or to which such conveyance, lease or
transfer is made shall succeed to, and be substituted for, and may exercise
every right and power of, the Company or such Guarantor under this Indenture and
the Securities or the Guarantee, as applicable, with the same effect as if such
Surviving Entity had been named as such.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.
-----------------
Each of the following shall be an "Event of Default":
----------------
(a) the failure to pay interest on any Securities when the same
becomes due and payable and the default continues for a period of 30 days
(whether or not such payment shall be prohibited by Article Ten or Twelve
of this Indenture);
(b) the failure to pay the principal on any Securities, when such
principal becomes due and payable, at maturity, upon redemption or
otherwise (including the failure to make a payment to purchase Securities
tendered pursuant to a Change of Control Offer or a Net Proceeds Offer)
(whether or not such payment shall be prohibited by Article Ten or Twelve
of this Indenture);
(c) a default in the observance or performance of any other covenant
or agreement contained in this Indenture, which default continues for a
period of 30 days after the Company receives written notice specifying the
default (and demanding that such default be remedied) from the Trustee or
from the Holders of at least 25% of the outstanding principal amount of the
Securities;
(d) the failure to pay at final stated maturity (giving effect to any
applicable grace periods and any extensions thereof) the principal amount
of any Indebtedness of the Company or any Restricted Subsidiary of the
Company, or the acceleration of the final stated maturity of any such
Indebtedness if the aggregate principal amount of such Indebtedness,
together with the principal amount of any other such Indebtedness in
default for failure to pay
<PAGE>
-73-
principal at final stated maturity or which has been accelerated,
aggregates $7.5 million or more at any time;
(e) one or more judgments in an aggregate amount in excess of $7.5
million shall have been rendered against the Company or any of its
Restricted Subsidiaries and such judgments remain undischarged, unpaid or
unstayed for a period of 60 days after such judgment or judgments become
final and non-appealable;
(f) the Company or any of its Significant Subsidiaries (i) commences
a voluntary case or proceeding under any Bankruptcy Law with respect to
itself, (ii) consents to the entry of a judgment, decree or order for
relief against it in an involuntary case or proceeding under any Bankruptcy
Law, (iii) consents to the appointment of a custodian of it or for
substantially all of its property, (iv) consents to or acquiesces in the
institution of a bankruptcy or an insolvency proceeding against it, (v)
makes a general assignment for the benefit of its creditors or (vi) takes
any corporate action to authorize or effect any of the foregoing;
(g) a court of competent jurisdiction enters a judgment, decree or
order for relief in respect of the Company or any of its Significant
Subsidiaries in an involuntary case or proceeding under any Bankruptcy Law,
which shall (i) approve as properly filed a petition seeking
reorganization, arrangement, adjustment or composition in respect of the
Company or any of its Significant Subsidiaries, (ii) appoint a Custodian of
the Company or any of its Significant Subsidiaries or for substantially all
of any of its property or (iii) order the winding-up or liquidation of its
affairs; and such judgment, decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or
(h) any of the Guarantees ceases to be in full force and effect or
any of the Guarantees is declared to be null and void and unenforceable or
any of the Guarantees is found to be invalid or any of the Guarantors
denies its liability under its Guarantee (other than by reason of release
of such Guarantor in accordance with the terms of this Indenture).
If, pursuant to clause (c) above, the Holders of at least 25% of the
then outstanding principal amount of Securities notify the Company as specified
in such clause, such Hold-
<PAGE>
-74-
ers shall similarly notify the Trustee. Any notice given pursuant to clause (c)
above or the immediately preceding sentence shall be given by registered or
certified mail, return receipt requested.
SECTION 6.02. Acceleration.
------------
If an Event of Default (other than an Event of Default specified in
clause (f) or (g) of Section 6.01 above with respect to the Company) shall occur
and be continuing, the Trustee or the Holders of at least 25% in principal
amount of outstanding Securities may declare the principal of and accrued
interest on all the Securities to be due and payable by notice in writing to the
Company (and the Trustee if given by the Holders) specifying the respective
Event of Default and that it is a "notice of acceleration" (the "Acceleration
------------
Notice"), and the same (i) shall become immediately due and payable or (ii) if
- ------
there are any amounts outstanding under the Credit Agreement, shall become
immediately due and payable upon the first to occur of an acceleration under the
Credit Agreement or five (5) Business Days after receipt by the Company and the
Representative under the Credit Agreement of such Acceleration Notice. If an
Event of Default specified in clause (f) or (g) of Section 6.01 above with
respect to the Company occurs and is continuing, then all unpaid principal of,
and premium, if any, and accrued and unpaid interest on all of the outstanding
Securities shall ipso facto become and be immediately due and payable without
---- -----
any declaration or other act on the part of the Trustee or any Holder.
At any time after a declaration of acceleration with respect to the
Securities as described in the preceding paragraph, the Holders of a majority in
principal amount of the Securities may rescind and cancel such declaration and
its consequences (i) if the rescission would not conflict with any judgment or
decree, (ii) if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of the
acceleration, (iii) to the extent the payment of such interest is lawful,
interest on overdue installments of interest and overdue principal, which has
become due otherwise than by such declaration of acceleration, has been paid,
(iv) if the Company has paid the Trustee its reasonable compensation and
reimbursed the Trustee for its expenses, disbursements and advances, and any
other amounts due to the Trustee under Section 7.07 and (v) in the event of the
cure or waiver of an Event of Default of the type described in clause (f) or (g)
of Section 6.01, the Trustee shall have received an Officers' Certificate and an
Opinion of
<PAGE>
-75-
Counsel that such Event of Default has been cured or waived. No such rescission
shall affect any subsequent Default or Event of Default or impair any right
consequent thereto.
SECTION 6.03. Other Remedies.
--------------
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
SECTION 6.04. Waiver of Past Defaults.
-----------------------
Subject to Sections 2.09, 6.07 and 9.02, the Holders of not less than
a majority in principal amount of the outstanding Securities by notice to the
Trustee may waive an existing Default or Event of Default and its consequences,
except a Default or Event of Default in the payment of principal of or interest
on any Security as specified in clauses (a) and (b) of Section 6.01. The
Company shall deliver to the Trustee an Officers' Certificate stating that the
requisite percentage of Holders have consented to such waiver and attaching
copies of such consents. When a Default or Event of Default is waived, it is
cured and ceases.
SECTION 6.05. Control by Majority.
-------------------
The Holders of not less than a majority in principal amount of the
outstanding Securities may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on it. Subject to Section 7.01, however, the Trustee may refuse
to follow any direction that conflicts with any law or this Indenture, that the
Trustee determines may be unduly prejudicial to the rights of another
Securityholder, or that may involve the Trustee in personal liability; provided
--------
that the Trustee may take any other action deemed proper by the Trustee which is
not inconsistent with such direction.
<PAGE>
-76-
In the event the Trustee takes any action or follows any direction
pursuant to this Indenture, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against any loss or expense caused by
taking such action or following such direction.
SECTION 6.06. Limitation on Suits.
-------------------
A Securityholder may not pursue any remedy with respect to this
Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(2) the Holder or Holders of at least 25% in principal amount of the
outstanding Securities make a written request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer and, if requested, provide to the
Trustee indemnity satisfactory to the Trustee against any loss, liability
or expense;
(4) the Trustee does not comply with the request within 45 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(5) during such 45-day period the Holder or Holders of a majority in
principal amount of the outstanding Securities do not give the Trustee a
direction which, in the opinion of the Trustee, is inconsistent with the
request.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over such other
Securityholder.
SECTION 6.07. Rights of Holders To Receive Payment.
------------------------------------
Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of principal of and interest on a Security, on or
after the respective due dates expressed in such Security, or to bring suit for
the enforcement of any such payment on or after such respective dates, shall not
be impaired or affected without the consent of the Holder.
<PAGE>
-77-
SECTION 6.08. Collection Suit by Trustee.
--------------------------
If an Event of Default in payment of principal or interest specified
in clause (a) or (b) of Section 6.01 occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company or any other obligor on the Securities for the whole amount of principal
and accrued interest and fees remaining unpaid, together with interest on
overdue principal and, to the extent that payment of such interest is lawful,
interest on overdue installments of interest, in each case at the rate per annum
--- -----
borne by the Securities and such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due to the Trustee under Section 7.07.
SECTION 6.09. Trustee May File Proofs of Claim.
--------------------------------
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due to the Trustee under Section 7.07) and the Securityholders allowed
in any judicial proceedings relating to the Company, its creditors or its
property and shall be entitled and empowered to collect and receive any monies
or other property payable or deliverable on any such claims and to distribute
the same, and any Custodian in any such judicial proceedings is hereby
authorized by each Securityholder to make such payments to the Trustee and, in
the event that the Trustee shall consent to the making of such payments directly
to the Securityholders, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agent and counsel, and any other amounts due the Trustee under Section 7.07.
Nothing herein contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Securityholder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Securityholder in any such proceeding.
<PAGE>
-78-
SECTION 6.10. Priorities.
----------
If the Trustee collects any money or property pursuant to this Article
Six, it shall pay out the money or property in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: subject to Articles Ten and Twelve, to Holders for interest
accrued on the Securities, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Securities for
interest;
Third: subject to Articles Ten and Twelve, to Holders for principal
amounts due and unpaid on the Securities, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal; and
Fourth: to the Company or, if applicable, the Guarantors, as their
respective interests may appear.
The Trustee, upon prior notice to the Company, may fix a record date
and payment date for any payment to Securityholders pursuant to this Section
6.10.
SECTION 6.11. Undertaking for Costs.
---------------------
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07, or a suit by a Holder or Holders of more than 10% in
principal amount of the outstanding Securities.
<PAGE>
-79-
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.
-----------------
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties as are specifically set
forth herein or in the TIA and no duties, covenants, responsibilities or
obligations shall be implied in this Indenture against the Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates (including Officers'
Certificates) or opinions (including Opinions of Counsel) furnished to the
Trustee and conforming to the requirements of this Indenture. However, the
Trustee shall examine the certificates and opinions to determine whether or
not they conform to the requirements of this Indenture.
(c) Notwithstanding anything to the contrary herein, the Trustee may
not be relieved from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b) of this
Section 7.01.
(2) The Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in ac-
<PAGE>
-80-
cordance with a direction received by it pursuant to Section 6.05.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or to take or omit to take any action
under this Indenture or take any action at the request or direction of Holders
if it shall have reasonable grounds for believing that repayment of such funds
is not assured to it.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to this Section 7.01.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
(g) In the absence of bad faith, negligence or willful misconduct on
the part of the Trustee, the Trustee shall not be responsible for the
application of any money by any Paying Agent other than the Trustee.
SECTION 7.02. Rights of Trustee.
-----------------
Subject to Section 7.01:
(a) The Trustee may rely on any document believed by it to be genuine
and to have been signed or presented by the proper Person. The Trustee
need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate and an Opinion of Counsel, which shall conform to
the provisions of Section 13.05. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on such
certificate or opinion.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent (other
than an agent who is an employee of the Trustee) appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it reasona-
<PAGE>
-81-
bly believes to be authorized or within its rights or powers.
(e) The Trustee may consult with counsel and the advice or opinion of
such counsel as to matters of law shall be full and complete authorization
and protection from liability in respect of any action taken, omitted or
suffered by it hereunder in good faith and in accordance with the advice or
opinion of such counsel.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders pursuant to the provisions of this
Indenture, unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may
be incurred therein or thereby.
(g) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate (including any
Officers' Certificate), statement, instrument, opinion (including any
Opinion of Counsel), notice, request, direction, consent, order, bond,
debenture, or other paper or document, but the Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters
as it may see fit and, if the Trustee shall determine to make such further
inquiry or investigation, it shall be entitled, upon reasonable notice to
the Company, to examine the books, records, and premises of the Company,
personally or by agent or attorney.
(h) The Trustee shall not be required to give any bond or surety in
respect of the performance of its powers and duties hereunder.
(i) The permissive rights of the Trustee to do things enumerated in
this Indenture shall not be construed as duties.
(j) The Trustee shall not be charged with knowledge of any Default or
Event of Default, of the identity of any Restricted Subsidiary or the existence
of any Change of Control or Asset Sale unless either (i) a Responsible Officer
shall have actual knowledge thereof or (ii) the Trustee shall have received
written notice thereof from the Company or any Holder.
<PAGE>
-82-
SECTION 7.03. Individual Rights of Trustee.
----------------------------
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company, its
Subsidiaries (including the Guarantors), or their respective Affiliates with the
same rights it would have if it were not Trustee. Any Agent may do the same
with like rights. However, the Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer.
--------------------
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture, the Guarantees or the
Securities, it shall not be accountable for the Company's use of the proceeds
from the Securities, and it shall not be responsible for any statement of the
Company in this Indenture or any document issued in connection with the sale of
Securities or any statement in the Securities other than the Trustee's
certificate of authentication. The Trustee makes no representations with
respect to the effectiveness or adequacy of this Indenture.
SECTION 7.05. Notice of Default.
-----------------
If a Default or an Event of Default occurs and is continuing and the
Trustee receives actual notice of such Default or Event of Default, the Trustee
shall mail to each Securityholder notice of the uncured Default or Event of
Default within 60 days after such Default or Event of Default occurs. Except in
the case of a Default or an Event of Default in payment of principal of, or
interest on, any Security, including an accelerated payment and the failure to
make payment on the Change of Control Payment Date pursuant to a Change of
Control Offer or the Net Proceeds Offer Payment Date pursuant to a Net Proceeds
Offer, the Trustee may withhold the notice if and so long as the Board of
Directors, the executive committee, or a trust committee of directors and/or
Responsible Officers, of the Trustee in good faith determines that withholding
the notice is in the interest of the Securityholders.
SECTION 7.06. Reports by Trustee to Holders.
-----------------------------
Within 60 days after each May 15, beginning with the first May 15
following the date of this Indenture, the Trustee shall, to the extent that any
of the events described in TIA (S) 313(a) occurred within the previous twelve
months, but not otherwise, mail to each Securityholder a brief report dated as
<PAGE>
-83-
of such date that complies with TIA (S) 313(a). The Trustee also shall comply
with TIA (S)(S) 313(b), 313(c) and 313(d).
A copy of each report at the time of its mailing to Securityholders
shall be mailed to the Company and filed with the Commission and each securities
exchange, if any, on which the Securities are listed.
The Company shall notify the Trustee if the Securities become listed
on any securities exchange or of any delisting thereof and the Trustee shall
comply with TIA (S) 313(d).
SECTION 7.07. Compensation and Indemnity.
--------------------------
The Company shall pay to the Trustee from time to time reasonable
compensation for its services hereunder. The Trustee's compensation shall not
be limited by any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee upon request for all reasonable
disbursements, expenses and advances (including reasonable fees and expenses of
counsel) incurred or made by it in addition to the compensation for its
services, except any such disbursements, expenses and advances as may be
attributable to the Trustee's negligence, bad faith or willful misconduct. Such
expenses shall include the reasonable fees and expenses of the Trustee's agents
and counsel.
The Company shall indemnify the Trustee and its agents, employees,
officers, stockholders and directors for, and hold them harmless against, any
loss, liability or expense incurred by them except for such actions to the
extent caused by any negligence, bad faith or willful misconduct on their part,
arising out of or in connection with the acceptance or administration of this
trust including the reasonable costs and expenses of defending themselves
against or investigating any claim or liability in connection with the exercise
or performance of any of the Trustee's rights, powers or duties hereunder. The
Trustee shall notify the Company promptly of any claim asserted against the
Trustee or any of its agents, employees, officers, stockholders and directors
for which it may seek indemnity. The Company may, subject to the approval of
the Trustee, defend the claim and the Trustee shall cooperate in the defense.
The Trustee and its agents, employees, officers, stockholders and directors
subject to the claim may have separate counsel and the Company shall pay the
reasonable fees and expenses of such counsel; provided, however, that the
-------- -------
Company will not be required to pay such fees and expenses if, subject to the
approval of the Trustee, it assumes the Trus-
<PAGE>
-84-
tee's defense and there is no conflict of interest between the Company and the
Trustee and its agents, employees, officers, stockholders and directors subject
to the claim in connection with such defense as reasonably determined by the
Trustee. The Company need not pay for any settlement made without its written
consent. The Company need not reimburse any expense or indemnify against any
loss or liability to the extent incurred by the Trustee through its negligence,
bad faith or willful misconduct.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a senior claim prior to the Securities against all money or
property held or collected by the Trustee, in its capacity as Trustee. The
obligations of the Company and the Guarantors under this Section shall not be
subordinated to the payment of Senior Debt pursuant to Article Ten or Article
Twelve except assets or money held in trust to pay principal of or interest on
particular Securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in clause (f) or (g) of Section 6.01 occurs, such expenses and
the compensation for such services shall be paid to the extent allowed under any
Bankruptcy Law.
Notwithstanding any other provision in this Indenture, the foregoing
provisions of this Section 7.07 shall survive the satisfaction and discharge of
this Indenture or the appointment of a successor Trustee.
SECTION 7.08. Replacement of Trustee.
----------------------
The Trustee may resign at any time by so notifying the Company in
writing. The Holders of a majority in principal amount of the outstanding
Securities may remove the Trustee by so notifying the Company and the Trustee
and may appoint a successor Trustee. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the Trustee
or its property; or
(4) the Trustee becomes incapable of acting.
<PAGE>
-85-
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall notify each Holder of such
event and shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in principal amount of
the Securities may appoint a successor Trustee to replace the successor Trustee
appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall transfer, after payment of all sums then owing to the
Trustee pursuant to Section 7.07, all property held by it as Trustee to the
successor Trustee, subject to the Lien provided in Section 7.07, the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. A successor Trustee shall mail notice of its succession to each
Securityholder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the outstanding Securities may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, Etc.
--------------------------------
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee; provided that such
--------
corporation shall be otherwise qualified and eligible under this Article Seven.
<PAGE>
-86-
SECTION 7.10. Eligibility; Disqualification.
-----------------------------
This Indenture shall always have a Trustee who satisfies the
requirement of TIA (S)(S) 310(a)(1), 310(a)(2) and 310(a)(5). The Trustee shall
have a combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition. In addition, if the Trustee
is a corporation included in a bank holding company system, the Trustee,
independently of the bank holding company, shall meet the capital requirements
of TIA (S) 310(a)(2). The Trustee shall comply with TIA (S) 310(b); provided,
--------
however, that there shall be excluded from the operation of TIA (S) 310(b)(1)
- -------
any indenture or indentures under which other securities, or certificates of
interest or participation in other securities, of the Company are outstanding,
if the requirements for such exclusion set forth in TIA (S) 310(b)(1) are met.
The provisions of TIA (S) 310 shall apply to the Company and any other obligor
of the Securities.
SECTION 7.11. Preferential Collection of Claims
Against Company.
---------------------------------
The Trustee, in its capacity as Trustee hereunder, shall comply with
TIA (S) 311(a), excluding any creditor relationship listed in TIA (S) 311(b). A
Trustee who has resigned or been removed shall be subject to TIA (S) 311(a) to
the extent indicated.
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Termination of the Company's Obligations.
----------------------------------------
The Company may terminate its obligations under the Securities and
this Indenture, except those obligations referred to in the penultimate
paragraph of this Section 8.01, if all Securities previously authenticated and
delivered (other than destroyed, lost or stolen Securities which have been
replaced or paid or Securities for whose payment U.S. Legal Tender has
theretofore been deposited with the Trustee or the Paying Agent in trust or
segregated and held in trust by the Company and thereafter repaid to the
Company, as provided in Section 8.05) have been delivered to the Trustee for
cancellation and the Company has paid all sums payable by it hereunder, or if:
<PAGE>
-87-
(a) either (i) pursuant to Article Three, the Company shall have
given notice to the Trustee and mailed a notice of redemption to each
Holder of the redemption of all of the Securities in accordance with the
provisions hereof or(ii) all Securities have otherwise become due and
payable hereunder;
(b) the Company shall have irrevocably deposited or caused to be
deposited with the Trustee or a trustee satisfactory to the Trustee, under
the terms of an irrevocable trust agreement in form and substance
satisfactory to the Trustee, as trust funds in trust solely for the benefit
of the Holders of that purpose, U.S. Legal Tender in such amount as is
sufficient without consideration of reinvestment of such interest, to pay
principal of, premium, if any, and interest on the outstanding Securities
to maturity or redemption; provided that the Trustee shall have been
--------
irrevocably instructed to apply such U.S. Legal Tender to the payment of
said principal, premium, if any, and interest with respect to the
Securities and provided, further, that from and after the time of deposit,
-------- -------
the money deposited shall not be subject to the rights of holders of Senior
Debt or Guarantor Senior Debt pursuant to the provisions of Article Ten or
Twelve, as the case may be;
(c) no Default or Event of Default with respect to this Indenture or
the Securities shall have occurred and be continuing on the date of such
deposit or shall occur as a result of such deposit and such deposit will
not result in a breach or violation of, or constitute a default under, any
other instrument to which the Company is a party or by which it is bound;
(d) the Company shall have paid all other sums payable by it
hereunder; and
(e) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent providing for or relating to the termination of the Company's
obligations under the Securities and this Indenture have been complied
with. Such Opinion of Counsel shall also state that such satisfaction and
discharge does not result in a default under the Credit Agreement or any
other material agreement or instrument then known to such counsel that
binds or affects the Company.
<PAGE>
-88-
Subject to the next sentence and notwithstanding the foregoing
paragraph, the Company's obligations in Sections 2.05, 2.06, 2.07, 2.08, 4.01,
4.02, 7.07, 8.05 and 8.06 shall survive until the Securities are no longer
outstanding pursuant to the last paragraph of Section 2.08. After the
Securities are no longer outstanding, the Company's obligations in Sections
7.07, 8.05 and 8.06 shall survive.
After such delivery or irrevocable deposit, the Trustee upon request
shall acknowledge in writing the discharge of the Company's obligations under
the Securities and this Indenture except for those surviving obligations
specified above.
SECTION 8.02. Legal Defeasance and Covenant Defeasance.
----------------------------------------
(a) The Company may, at its option by Board Resolution of the Board
of Directors of the Company, at any time, elect to have either paragraph (b) or
(c) below be applied to all outstanding Securities upon compliance with the
conditions set forth in Section 8.03.
(b) Upon the Company's exercise under paragraph (a) hereof of the
option applicable to this paragraph (b), the Company and each of the Guarantors
shall, subject to the satisfaction of the conditions set forth in Section 8.03,
be deemed to have been discharged from their respective obligations with respect
to all outstanding Securities and the corresponding Guarantees on the date the
conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For
----------------
this purpose, Legal Defeasance means that the Company shall be deemed to have
paid and discharged the entire Indebtedness represented by the outstanding
Securities, which shall thereafter be deemed to be "outstanding" only for the
purposes of Section 8.04 hereof and the other Sections of this Indenture
referred to in (i) and (ii) below, and to have satisfied all its other
obligations under such Securities and this Indenture (and the Trustee, on demand
of and at the expense of the Company, shall execute proper instruments
acknowledging the same), and Holders of the Securities and any amounts deposited
under Section 8.03 hereof shall cease to be subject to any obligations to, or
the rights of, any holder of Senior Debt under Article Ten or otherwise, except
for the following provisions, which shall survive until otherwise terminated or
discharged hereunder: (i) the rights of Holders of outstanding Securities to
receive solely from the trust fund described in Section 8.04 hereof, and as more
fully set forth in such Section, payments in respect of the principal of and
interest on such Securities when such payments are due, (ii) the Company's
obligations with respect to such Securities
<PAGE>
-89-
under Article Two and Section 4.02 hereof, (iii) the rights, powers, trusts,
duties and immunities of the Trustee hereunder and the Company's obligations in
connection therewith and (iv) this Article Eight. Subject to compliance with
this Article Eight, the Company may exercise its option under this paragraph (b)
notwithstanding the prior exercise of its option under paragraph (c) hereof.
(c) Upon the Company's exercise under paragraph (a) hereof of the
option applicable to this paragraph (c), the Company and each of the Guarantors
shall, subject to the satisfaction of the conditions set forth in Section 8.03
hereof, be released from their obligations, if any, under the covenants
contained in Sections 4.03, 4.04 and Sections 4.12 through 4.18 and Article Five
hereof with respect to the outstanding Securities and the corresponding
Guarantees on and after the date the conditions set forth below are satisfied
(hereinafter, "Covenant Defeasance"), and the Securities shall thereafter be
-------------------
deemed not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Securities shall
not be deemed outstanding for accounting purposes) and Holders of the Securities
and any amounts deposited under Section 8.03 hereof shall cease to be subject to
any obligations to, or the rights of, any holder of Senior Debt under Article
Ten or otherwise. For this purpose, such Covenant Defeasance means that, with
respect to the outstanding Securities, the Company may omit to comply with and
shall have no liability in respect of any term, condition or limitation set
forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of any reference in
any such covenant to any other provision herein or in any other document and
such omission to comply shall not constitute a Default or an Event of Default
under Section 6.01(c) hereof, but, except as specified above, the remainder of
this Indenture and such Securities shall be unaffected thereby. In addition,
upon the Company's exercise under paragraph (a) hereof of the option applicable
to this paragraph (c), subject to the satisfaction of the conditions set forth
in Section 8.03 hereof, Sections 6.01(c), 6.01(d) and 6.01(e) shall not
constitute Events of Default.
<PAGE>
-90-
SECTION 8.03. Conditions to Legal Defeasance
or Covenant Defeasance.
-----------------------
The following shall be the conditions to the application of either
Section 8.02(b) or 8.02(c) hereof to the outstanding Securities:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, U.S. Legal Tender or non-callable U.S.
Government Obligations which through the scheduled payment of principal and
interest in respect thereof in accordance with their terms, will provide,
not later than one day before the due date of any payment on the
Securities, U.S. Legal Tender, or a combination thereof, in such amounts as
will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if any,
and interest on the Securities on the stated date for payment thereof or on
the applicable redemption date, as the case may be;
(b) in the case of an election under Section 8.02(b) hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming that (A) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (B) since the date of the execution of this
Indenture, there has been a change in the applicable federal income tax
law, in either case to the effect that, and based thereon such Opinion of
Counsel shall confirm that, the Holders will not recognize income, gain or
loss for federal income tax purposes as a result of such Legal Defeasance
and will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Legal
Defeasance had not occurred;
(c) in the case of an election under Section 8.02(c) hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming that the
Holders of the Securities will not recognize income, gain or loss for
federal income tax purposes as a result of such Covenant Defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as
<PAGE>
-91-
would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the incurrence of Indebtedness all or a portion of
the proceeds of which will be used to defease the Securities pursuant to
this Article Eight concurrently with such incurrence) or insofar as
Sections 6.01(f) and 6.01(g) hereof are concerned, at any time in the
period ending on the 91st day after the date of such deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute a default under this Indenture or
any other material agreement or instrument to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders over any other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company or others;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with; and
(h) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that (i) the trust funds will not be subject to any
rights of any holders of Senior Debt, including, without limitation, those
arising under this Indenture, and (ii) assuming no intervening bankruptcy
or insolvency of the Company between the date of deposit and the 91st day
following the deposit and that no Holder is an insider of the Company,
after the 91st day following the deposit, the trust funds will not be
subject to the effect of any applicable Bankruptcy Law.
Notwithstanding the foregoing, the Opinion of Counsel required by
clause (b) above of this Section 8.03 need not be delivered if all Securities
not theretofore delivered to the Trustee for cancellation (i) have become due
and payable, (ii)
<PAGE>
-92-
will become due and payable on the Maturity Date within one year or (iii) are to
be called for redemption within one year under arrangements satisfactory to the
Trustee for the giving of notice of redemption by the Trustee in the name, and
at the expense, of the Company.
SECTION 8.04. Application of Trust Money.
--------------------------
The Trustee or Paying Agent shall hold in trust U.S. Legal Tender or
U.S. Government Obligations deposited with it pursuant to this Article Eight,
and shall apply the deposited U.S. Legal Tender and the money from U.S.
Government Obligations in accordance with this Indenture to the payment of
principal of and interest on the Securities.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Legal Tender or U.S.
Government Obligations deposited pursuant to Section 8.03 hereof or the
principal and interest received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the Holders of the
outstanding Securities.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the Company's
request any U.S. Legal Tender or U.S. Government Obligations held by it as
provided in Section 8.03 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, are in excess of the amount thereof that would
then be required to be deposited to effect an equivalent Legal Defeasance or
Covenant Defeasance.
SECTION 8.05. Repayment to the Company.
------------------------
The Trustee and the Paying Agent shall pay to the Company upon request
any money held by them for the payment of principal or interest that remains
unclaimed for two years; provided that the Trustee or such Paying Agent, before
--------
being required to make any payment, may at the expense of the Company cause to
be published once in a newspaper of general circulation in the City of New York
or mail to each Holder entitled to such money notice that such money remains
unclaimed and that after a date specified therein which shall be at least 30
days from the date of such publication or mailing any unclaimed balance of such
money then remaining will be repaid to the Company. After payment to the
Company, Holders entitled to such
<PAGE>
-93-
money must look to the Company for payment as general creditors unless an
applicable law designates another Person.
SECTION 8.06. Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any U.S. Legal
Tender or U.S. Government Obligations in accordance with this Article Eight by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to this Article Eight until such time as the Trustee or Paying Agent is
permitted to apply all such U.S. Legal Tender or U.S. Government Obligations in
accordance with this Article Eight; provided that if the Company has made any
--------
payment of interest on or principal of any Securities because of the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Securities to receive such payment from the U.S. Legal
Tender or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders.
--------------------------
The Company, the Guarantors and the Trustee, together, may amend or
supplement this Indenture, the Securities or the Guarantees without notice to or
consent of any Securityholder:
(1) to cure any ambiguity, defect or inconsistency, so long as such
change does not, in the opinion of the Trustee, adversely affect the rights
of any of the Holders in any material respect. In formulating its opinion
on such matters, the Trustee will be entitled to rely on such evidence as
it deems appropriate, including, without limitation, solely an Opinion of
Counsel;
(2) to evidence the succession in accordance with Article Five hereof
of another Person to the Company and the assumption by any such successor
of the covenants of the Company herein and in the Securities;
<PAGE>
-94-
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities;
(4) to make any other change that does not adversely affect the rights
of any Securityholders hereunder in any material respect;
(5) to comply with any requirements of the Commission in connection
with the qualification of this Indenture under the TIA;
(6) to add or release any Guarantor pursuant to the terms of this
Indenture; or
(7) to provide for issuance of the Exchange Notes, which will have
terms substantially identical in all material respects to the Initial Notes
(except that the transfer restrictions contained in the Initial Notes will
be modified or eliminated, as appropriate), and which will be treated
together with any outstanding Initial Notes, as a single issue of
securities, provided that for purposes of this clause (7), the terms
Initial Notes and Exchange Securities, shall include any other Securities
issued in accordance with clause (iii) of the fourth paragraph of Section
2.02 or Securities issued in exchange therefor which are identical in all
material respects to such Securities (except that the transfer restrictions
on the Securities issued in exchange for Securities issued in accordance
with clause (iii) of the fourth paragraph of Section 2.02 shall be modified
or eliminated, as appropriate);
provided that the Company has delivered to the Trustee an Opinion of Counsel and
- --------
an Officers' Certificate, each stating that such amendment or supplement
complies with the provisions of this Section 9.01.
SECTION 9.02. With Consent of Holders.
-----------------------
Subject to Section 6.07, the Company, the Guarantors and the Trustee,
together, with the written consent of the Holder or Holders of at least a
majority in aggregate principal amount of the outstanding Securities, may amend
or supplement this Indenture, the Securities or the Guarantees, without notice
to any other Securityholders. Subject to Section 6.07, the Holder or Holders of
a majority in aggregate principal amount of the outstanding Securities may waive
compliance by the Company with any provision of this Indenture, the Securities
or the Guarantees without notice to any other Security-
<PAGE>
-95-
holder. Without the consent of each Securityholder affected, however, no
amendment, supplement or waiver, including a waiver pursuant to Section 6.04,
may:
(1) reduce the amount of Securities whose Holders must consent to an
amendment, supplement or waiver;
(2) reduce the rate of or change or have the effect of changing the
time for payment of interest, including default interest, on any Security;
(3) reduce the principal of or change or have the effect of changing
the fixed maturity of any Security, or change the date on which any
Securities may be subject to redemption or repurchase, or reduce the
redemption or purchase price therefor;
(4) make any Securities payable in money other than that stated in the
Securities;
(5) make any change in provisions of this Indenture protecting the
right of each Holder to receive payment of principal of and interest on
such Security on or after the due date thereof or to bring suit to enforce
such payment, or permitting Holders of a majority in principal amount of
the Securities to waive Defaults or Events of Default;
(6) make any changes in Section 6.04, 6.07 or this Section 9.02;
(7) modify or change any provision of this Indenture or the related
definitions affecting the subordination or ranking of the Securities or any
Guarantee, in a manner which adversely affects the Holders;
(8) amend, modify or change in any material respect the obligation of
the Company to make and consummate a Change of Control Offer in the event
of a Change of Control or make and consummate a Net Proceeds Offer with
respect to any Asset Sale that has been consummated or, modify any of the
provisions or definitions with respect thereto; or
(9) release any Guarantor from any of its obligations under its
Guarantee or this Indenture otherwise than in accordance with the terms of
this Indenture.
<PAGE>
-96-
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture.
SECTION 9.03. Effect on Senior Debt.
---------------------
No amendment of this Indenture shall adversely affect the rights of
any holder of Senior Debt or Guarantor Senior Debt under Article Ten or Article
Twelve, as the case may be, of this Indenture, without the consent of such
holder.
SECTION 9.04. Compliance with TIA.
-------------------
From the date on which this Indenture is qualified under the TIA,
every amendment, waiver or supplement of this Indenture, the Securities or the
Guarantees shall comply with the TIA as then in effect.
SECTION 9.05. Revocation and Effect of Consents.
---------------------------------
Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Holder's Security, even if notation of the consent is not made on
any Security. However, any such Holder or subsequent Holder may revoke the
consent as to his Security or portion of his Security by notice to the Trustee
or the Company received before the date on which the Trustee receives an
Officers' Certificate certifying that the Holders of the requisite principal
amount of Securities have consented (and not theretofore revoked such consent)
to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then notwithstanding the last
sentence of the immediately preceding paragraph, those Persons who were Holders
at such record date (or their duly designated proxies), and
<PAGE>
-97-
only those Persons, shall be entitled to revoke any consent previously given,
whether or not such Persons continue to be Holders after such record date. No
such consent shall be valid or effective for more than 90 days after such record
date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(1) through (9) of Section 9.02, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Security who has consented to it and
every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder's Security; provided that any such waiver
--------
shall not impair or affect the right of any Holder to receive payment of
principal of and interest on a Security, on or after the respective due dates
expressed in such Security, or to bring suit for the enforcement of any such
payment on or after such respective dates without the consent of such Holder.
SECTION 9.06. Notation on or Exchange of Securities.
-------------------------------------
If an amendment, supplement or waiver changes the terms of a Security,
the Company may require the Holder of the Security to deliver it to the Trustee.
The Company shall provide the Trustee with an appropriate notation on the
Security about the changed terms and cause the Trustee to return it to the
Holder at the Company's expense. Alternatively, if the Company or the Trustee
so determines, the Company in exchange for the Security shall issue and the
Trustee shall authenticate a new Security that reflects the changed terms.
Failure to make the appropriate notation or issue a new Security shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.07. Trustee To Sign Amendments, Etc.
-------------------------------
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article Nine; provided that the Trustee may, but
--------
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel and an Officers' Certificate
each complying with Sections 13.04 and 13.05 and stating that the execution of
any amendment, supplement or waiver authorized pursuant to this Article Nine is
authorized or permitted by this Indenture and constituted the legal, valid and
binding obligations of the Company enforceable
<PAGE>
-98-
in accordance with its terms. Such Opinion of Counsel shall be at the expense of
the Company.
ARTICLE TEN
SUBORDINATION OF SECURITIES
SECTION 10.01. Securities Subordinated to
Senior Debt.
--------------------------
Anything herein to the contrary notwithstanding, the Company, for
itself and its successors, and each Holder, by his or her acceptance of
Securities, agrees that the payment of all Obligations owing to the Holders in
respect of the Securities is subordinated, to the extent and in the manner
provided in this Article Ten, to the prior payment in full in cash or Cash
Equivalents, or such payment duly provided for to the satisfaction of the
holders of Senior Debt, of all Obligations on Senior Debt.
This Article Ten shall constitute a continuing offer to all Persons
who become holders of, or continue to hold, Senior Debt, and such provisions are
made for the benefit of the holders of Senior Debt and such holders are made
obligees hereunder and any one or more of them may enforce such provisions.
SECTION 10.02. Suspension of Payment When Senior
Debt Is in Default.
---------------------------------
(a) Unless Section 10.03 shall be applicable, if any default occurs
and is continuing in the payment when due, whether at maturity, upon any
redemption, by declaration or otherwise, of any principal of, interest on,
unpaid drawings for letters of credit issued in respect of, or regularly
accruing fees with respect to, any Senior Debt (a "Payment Default"), then no
---------------
payment of any kind or character shall be made by or on behalf of the Company or
any other Person on its or their behalf with respect to any Obligations on the
Securities or to acquire any of the Securities for cash or property or otherwise
and until such Payment Default shall have been cured or waived or shall have
ceased to exist or such Senior Debt as to which such Payment Default relates
shall have been discharged or paid in full in cash or Cash Equivalents, after
which the Company shall resume making any and all required payments in respect
of the Securities, including any missed payments.
<PAGE>
-99-
(b) Unless Section 10.03 shall be applicable, if any other event of
default (other than a Payment Default) occurs and is continuing with respect to
any Designated Senior Debt (as such event of default is defined in the
instrument creating or evidencing such Designated Senior Debt) permitting the
holders of such Designated Senior Debt then outstanding to accelerate the
maturity thereof (a "Non-payment Default") and if the Representative for the
-------------------
respective issue of Designated Senior Debt gives written notice of the event of
default to the Trustee (a "Default Notice"), then, unless and until all events
--------------
of default have been cured or waived or have ceased to exist or the Trustee
receives notice thereof from the Representative for the respective issue of
Designated Senior Debt terminating the Payment Blockage Period (as defined
below), during the 180 days after the delivery of such Default Notice (the
"Payment Blockage Period"), neither the Company nor any other Person on its
- ------------------------
behalf shall (x) make any payment of any kind or character with respect to any
Obligations on the Securities or (y) acquire any of the Securities for cash or
property or otherwise. Notwithstanding anything herein to the contrary, (x) in
no event will a Payment Blockage Period extend beyond 180 days from the date the
payment on the Securities was due and (y) only one such Payment Blockage Period
may be commenced within any 360 consecutive days. For all purposes of this
Section 10.02(b), no event of default which existed or was continuing on the
date of the commencement of any Payment Blockage Period with respect to the
Designated Senior Debt shall be, or be made, the basis for the commencement of a
second Payment Blockage Period by the Representative of such Designated Senior
Debt whether or not within a period of 360 consecutive days, unless such event
of default shall have been cured or waived for a period of not less than 90
consecutive days (it being acknowledged that any subsequent action, or any
breach of any financial covenants for a period commencing after the date of
commencement of such Payment Blockage Period that, in either case, would give
rise to an event of default pursuant to any provisions under which an event of
default previously existed or was continuing shall constitute a new event of
default for this purpose).
(c) In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee or any Holder when such payment is prohibited
by the foregoing provisions of this Section 10.02, such payment shall be held in
trust for the benefit of, and shall be paid over or delivered to, the holders of
Senior Debt (pro rata to such holders on the basis of the respective amount of
--- ----
Senior Debt held by such holders) or their respective Representatives, as their
respective interests may appear. The Trustee shall be entitled to rely on
information
<PAGE>
-100-
regarding amounts then due and owing on the Senior Debt, if any, received from
the holders of Senior Debt (or their Representatives) or, if such information is
not received from such holders or their Representatives, from the Company and
only amounts included in the information provided to the Trustee shall be paid
to the holders of Senior Debt.
Nothing contained in this Article Ten shall limit the right of the
Trustee or the Holders of Securities to take any action to accelerate the
maturity of the Securities pursuant to Section 6.02 or to pursue any rights or
remedies hereunder; provided that all Senior Debt thereafter due or declared to
--------
be due shall first be paid in full in cash or Cash Equivalents before the
Holders are entitled to receive any payment of any kind or character with
respect to Obligations on the Securities.
SECTION 10.03. Securities Subordinated to Prior Payment
of All Senior Debt on Dissolution,
Liquidation or Reorganization of Company.
-----------------------------------------
(a) Upon any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to creditors upon
any liquidation, dissolution, winding-up, reorganization, assignment for the
benefit of creditors or marshaling of assets of the Company or in a bankruptcy,
reorganization, insolvency, receivership or other similar proceeding relating to
the Company or its property, whether voluntary or involuntary, all Obligations
due or to become due upon all Senior Debt shall first be paid in full in cash or
Cash Equivalents, or such payment duly provided for to the satisfaction of the
holders of Senior Debt, before any payment or distribution of any kind or
character is made on account of any Obligations on the Securities, or for the
acquisition of any of the Securities for cash or property or otherwise. Upon
any such dissolution, winding-up, liquidation, reorganization, receivership or
similar proceeding, any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to which the Holders
of the Securities or the Trustee under this Indenture would be entitled, except
for the provisions hereof, shall be paid by the Company or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other Person making such
payment or distribution, or by the Holders or by the Trustee under this
Indenture if received by them, directly to the holders of Senior Debt (pro rata
--------
to such holders on the basis of the respective amounts of Senior Debt held by
such holders) or their respective Representatives, or to the trustee or trustees
under any indenture pur-
<PAGE>
-101-
suant to which any of such Senior Debt may have been issued, as their respective
interests may appear, for application to the payment of Senior Debt remaining
unpaid until all such Senior Debt has been paid in full in cash or Cash
Equivalents after giving effect to any concurrent payment, distribution or
provision therefor to or for the holders of Senior Debt.
(b) To the extent any payment of Senior Debt (whether by or on behalf
of the Company, as proceeds of security or enforcement of any right of setoff or
otherwise) is declared to be fraudulent or preferential, set aside or required
to be paid to any receiver, trustee in bankruptcy, liquidating trustee, agent or
other similar Person under any bankruptcy, insolvency, receivership, fraudulent
conveyance or similar law, then, if such payment is recovered by, or paid over
to, such receiver, trustee in bankruptcy, liquidating trustee, agent or other
similar Person, the Senior Debt or part thereof originally intended to be
satisfied shall be deemed to be reinstated and outstanding as if such payment
had not occurred.
(c) In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, shall be received by any Holder when such payment or
distribution is prohibited by this Section 10.03, such payment or distribution
shall be held in trust for the benefit of, and shall be paid over or delivered
to, the holders of Senior Debt (pro rata to such holders on the basis of the
--------
respective amount of Senior Debt held by such holders) or their respective
Representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Senior Debt may have been issued, as their respective
interests may appear, for application to the payment of Senior Debt remaining
unpaid until all such Senior Debt has been paid in full in cash or Cash
Equivalents, after giving effect to any concurrent payment, distribution or
provision therefor to or for the holders of such Senior Debt.
(d) The consolidation of the Company with, or the merger of the
Company with or into, another corporation or the liquidation or dissolution of
the Company following the conveyance or transfer of all or substantially all of
its assets, to another corporation upon the terms and conditions provided in
Article Five hereof and as long as permitted under the terms of the Senior Debt
shall not be deemed a dissolution, winding-up, liquidation or reorganization for
the purposes of this Section if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, assume the Company's obligations
hereunder in accordance with Article Five hereof.
<PAGE>
-102-
SECTION 10.04. Payments May Be Paid Prior
to Dissolution.
--------------------------
Nothing contained in this Article Ten or elsewhere in this Indenture
shall prevent (i) the Company, except under the conditions described in Sections
10.02 and 10.03, from making payments at any time for the purpose of making
payments of principal of and interest on the Securities, or from depositing with
the Trustee any moneys for such payments, or (ii) in the absence of actual
knowledge by the Trustee that a given payment would be prohibited by Section
10.02 or 10.03, the application by the Trustee of any moneys deposited with it
for the purpose of making such payments of principal of, and interest on, the
Securities to the Holders entitled thereto unless at least two Business Days
prior to the date upon which such payment would otherwise become due and payable
a Responsible Officer shall have actually received the written notice provided
for in the first sentence of Section 10.02(b) or in Section 10.07 (provided
--------
that, notwithstanding the foregoing, such application shall otherwise be subject
to the provisions of Section 10.02(a) and Section 10.03). The Company shall
give prompt written notice to the Trustee of any dissolution, winding-up,
liquidation or reorganization of the Company.
SECTION 10.05. Holders To Be Subrogated to Rights
of Holders of Senior Debt.
----------------------------------
Subject to the payment in full in cash or Cash Equivalents of all
Senior Debt, the Holders of the Securities shall be subrogated to the rights of
the holders of Senior Debt to receive payments or distributions of cash,
property or securities of the Company applicable to the Senior Debt until the
Securities shall be paid in full; and, for the purposes of such subrogation, no
such payments or distributions to the holders of the Senior Debt by or on behalf
of the Company, or by or on behalf of the Holders by virtue of this Article Ten,
which otherwise would have been made to the Holders shall, as between the
Company and the Holders, be deemed to be a payment by the Company to or on
account of the Senior Debt, it being understood that the provisions of this
Article Ten are and are intended solely for the purpose of defining the relative
rights of the Holders, on the one hand, and the holders of Senior Debt, on the
other hand.
SECTION 10.06. Obligations of the Company Unconditional.
----------------------------------------
Nothing contained in this Article Ten or elsewhere in this Indenture
or in the Securities is intended to or shall im-
<PAGE>
-103-
pair, as among the Company, its creditors other than the holders of Senior Debt,
and the Holders, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders the principal of and any interest on the
Securities as and when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative rights of the
Holders and creditors of the Company other than the holders of the Senior Debt,
nor shall anything herein or therein prevent the Holder of any Security or the
Trustee on its behalf from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
in respect of cash, property or securities of the Company received upon the
exercise of any such remedy.
SECTION 10.07. Notice to Trustee.
-----------------
The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment to or
by the Trustee in respect of the Securities pursuant to the provisions of this
Article Ten. Regardless of anything to the contrary contained in this Article
Ten or elsewhere in this Indenture, the Trustee shall not be charged with
knowledge of the existence of any default or event of default with respect to
any Senior Debt or of any other facts which would prohibit the making of any
payment to or by the Trustee unless and until the Trustee shall have received
notice in writing from the Company, or from a holder of Senior Debt or a
Representative therefor, together with proof satisfactory to the Trustee of such
holding of Senior Debt or of the authority of such Representative, and, prior to
the receipt of any such written notice, the Trustee shall be entitled to assume
(in the absence of actual knowledge to the contrary) that no such facts exist.
In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Senior Debt to participate in any payment or distribution pursuant to this
Article Ten, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amounts of Senior Debt held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article Ten, and if such evidence is not furnished the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment.
<PAGE>
-104-
SECTION 10.08. Reliance on Judicial Order or
Certificate of Liquidating Agent.
--------------------------------
Upon any payment or distribution of assets of the Company referred to
in this Article Ten, the Trustee, subject to the provisions of Article Seven
hereof, and the Holders of the Securities shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which any
insolvency, bankruptcy, receivership, dissolution, winding-up, liquidation,
reorganization or similar case or proceeding is pending, or upon a certificate
of the receiver, trustee in bankruptcy, liquidating trustee, assignee for the
benefit of creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or the Holders of the Securities, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
Ten.
SECTION 10.09. Trustee's Relation to Senior Debt.
---------------------------------
The Trustee and any agent of the Company or the Trustee shall be
entitled to all the rights set forth in this Article Ten with respect to any
Senior Debt which may at any time be held by it in its individual or any other
capacity to the same extent as any other holder of Senior Debt and nothing in
this Indenture shall deprive the Trustee or any such agent of any of its rights
as such holder.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article Ten, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into this
Indenture against the Trustee. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Debt.
Whenever a distribution is to be made or a notice given to holders or
owners of Senior Debt, the distribution may be made and the notice may be given
to their Representative, if any.
<PAGE>
-105-
SECTION 10.10. Subordination Rights Not Impaired
by Acts or Omissions of the Company
or Holders of Senior Debt.
-----------------------------------
No right of any present or future holders of any Senior Debt to
enforce subordination as provided herein shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms of this Indenture, regardless of any
knowledge thereof which any such holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Debt may, at any time and from time to time, without the
consent of or notice to the Trustee, without incurring responsibility to the
Trustee or the Holders of the Securities and without impairing or releasing the
subordination provided in this Article Ten or the obligations hereunder of the
Holders of the Securities to the holders of the Senior Debt, do any one or more
of the following: (i) change the manner, place or terms of payment or extend
the time of payment of, or renew or alter, Senior Debt, or otherwise amend or
supplement in any manner Senior Debt, or any instrument evidencing the same or
any agreement under which Senior Debt is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Debt; (iii) release any Person liable in any manner for the
payment or collection of Senior Debt; and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.
SECTION 10.11. Securityholders Authorize Trustee To
Effectuate Subordination of Securities.
--------------------------------------
Each Holder of Securities by its acceptance of them authorizes and
expressly directs the Trustee on its behalf to take such action as may be
necessary or appropriate to effectuate, as between the holders of Senior Debt
and the Holders of Securities, the subordination provided in this Article Ten,
and appoints the Trustee its attorney-in-fact for such purposes, including, in
the event of any dissolution, winding-up, liquidation or reorganization of the
Company (whether in bankruptcy, insolvency, receivership, reorganization or
similar proceedings or upon an assignment for the benefit of creditors or
otherwise) tending towards liquidation of the business and/or assets of the
Company, the filing of a claim for the unpaid balance of
<PAGE>
-106-
its Securities and accrued interest in the form required in those proceedings.
If the Trustee does not file a proper claim or proof of debt in the
form required in such proceeding prior to 30 days before the expiration of the
time to file such claim or claims, then the holders of the Senior Debt or their
Representative are or is hereby authorized to have the right to file and are or
is hereby authorized to file an appropriate claim for and on behalf of the
Holders of said Securities. Nothing herein contained shall be deemed to
authorize the Trustee or the holders of Senior Debt or their Representative to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee or the holders
of Senior Debt or their Representative to vote in respect of the claim of any
Holder in any such proceeding.
SECTION 10.12. This Article Ten Not To
Prevent Events of Default.
-------------------------
The failure to make a payment on account of principal of or interest
on the Securities by reason of any provision of this Article Ten will not be
construed as preventing the occurrence of an Event of Default.
SECTION 10.13. Trustee's Compensation
Not Prejudiced.
----------------------
Nothing in this Article Ten will apply to amounts due to the Trustee
pursuant to other sections of this Indenture.
ARTICLE ELEVEN
GUARANTEE OF SECURITIES
SECTION 11.01. Unconditional Guarantee.
-----------------------
Subject to the provisions of this Article Eleven, each of the
Guarantors hereby, jointly and severally, unconditionally and irrevocably
guarantees, on a senior subordinated basis (such guarantees to be referred to
herein as a "Guarantee") to each Holder of a Security authenticated and
---------
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of
<PAGE>
-107-
this Indenture, the Securities or the obligations of the Company or any other
Guarantors to the Holders or the Trustee hereunder or thereunder, that: (a) the
principal of, premium, if any, and interest on the Securities shall be duly and
punctually paid in full when due, whether at maturity, upon redemption at the
option of Holders pursuant to the provisions of the Securities relating thereto,
by acceleration or otherwise, and interest on the overdue principal and (to the
extent permitted by law) interest, if any, on the Securities and all other
obligations of the Company or the Guarantors to the Holders or the Trustee
hereunder or thereunder (including amounts due the Trustee under Section 7.07
hereof) and all other obligations shall be promptly paid in full or performed,
all in accordance with the terms hereof and thereof; and (b) in case of any
extension of time of payment or renewal of any Securities or any of such other
obligations, the same shall be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at maturity, by
acceleration or otherwise. Failing payment when due of any amount so guaranteed,
or failing performance of any other obligation of the Company to the Holders
under this Indenture or under the Securities, for whatever reason, each
Guarantor shall be obligated to pay, or to perform or cause the performance of,
the same immediately. An Event of Default under this Indenture or the Securities
shall constitute an event of default under the Guarantees, and shall entitle the
Holders of Securities to accelerate the obligations of the Guarantors hereunder
in the same manner and to the same extent as the obligations of the Company.
Each of the Guarantors hereby agrees that its obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Securities or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Securities with
respect to any provisions hereof or thereof, any release of any other Guarantor,
the recovery of any judgment against the Company, any action to enforce the
same, whether or not a Guarantee is affixed to any particular Security, or any
other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a Guarantor. Each of the Guarantors hereby waives the
benefit of diligence, presentment, demand of payment, filing of claims with a
court in the event of insolvency or bankruptcy of the Company, any right to
require a proceeding first against the Company, protest, notice and all demands
whatsoever and covenants that its Guarantee shall not be discharged except by
complete performance of the obligations contained in the Securities, this
Indenture and the Guarantees. Each Guarantee is a guarantee of payment and not
of collection.
<PAGE>
-108-
If any Holder or the Trustee is required by any court or otherwise to return to
the Company or to any Guarantor, or any custodian, trustee, liquidator or other
similar official acting in relation to the Company or such Guarantor, any amount
paid by the Company or such Guarantor to the Trustee or such Holder, each
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect. Each Guarantor further agrees that, as between it, on the one
hand, and the Holders of Securities and the Trustee, on the other hand, (a)
subject to this Article Eleven, the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article Six hereof for the purposes of
the Guarantees, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the obligations guaranteed hereby,
and (b) in the event of any acceleration of such obligations as provided in
Article Six hereof, such obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantors for the purpose of the
Guarantees.
No stockholder, officer, director or employee, past, present or
future, of any Guarantor, as such, shall have any personal liability under such
Guarantor's Guarantee by reason of his, her or its status as such stockholder,
officer, director or employee.
SECTION 11.02. Limitations on Guarantees.
-------------------------
The obligations of each Guarantor under its Guarantee are limited to
the maximum amount which, after giving effect to all other contingent and fixed
liabilities of such Guarantor and after giving effect to any collections from or
payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under its Guarantee or pursuant to its
contribution obligations under this Indenture, will result in the obligations of
such Guarantor under the Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under federal or state law. Each Guarantor that makes a
payment or distribution under a Guarantee shall be entitled to a contribution
from each other Guarantor in an amount pro rata, based on the net assets of each
--- ----
Guarantor, determined in accordance with GAAP.
SECTION 11.03. Execution and Delivery of Guarantee.
-----------------------------------
To further evidence the Guarantees set forth in Section 11.01, each
Guarantor hereby agrees that a notation of its Guarantee, substantially in the
form of Exhibit C hereto, shall be endorsed on each Security authenticated and
delivered by the
<PAGE>
-109-
Trustee. The Guarantee of any Guarantor shall be executed on behalf of such
Guarantor by either manual or facsimile signature of two Officers of such
Guarantor, each of whom, in each case, shall have been duly authorized to so
execute by all requisite corporate action. The validity and enforceability of
any Guarantee shall not be affected by the fact that it is not affixed to any
particular Security.
Each of the Guarantors hereby agrees that its Guarantee set forth in
Section 11.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Security a notation of such Guarantee.
If an Officer of a Guarantor whose signature is on this Indenture or a
Guarantee no longer holds that office at the time the Trustee authenticates the
Security on which such Guarantee is endorsed or at any time thereafter, such
Guarantor's Guarantee of such Security shall nevertheless be valid.
The delivery of any Security by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of any Guarantee set forth in
this Indenture on behalf of each Guarantor.
SECTION 11.04. Release of a Guarantor.
----------------------
(a) If no Default or Event of Default exists or would exist under
this Indenture, upon the sale or disposition of all of the Capital Stock of a
Guarantor by the Company, in a transaction or series of related transactions
that either (i) does not constitute an Asset Sale or (ii) constitutes an Asset
Sale the Net Cash Proceeds of which are applied in accordance with Section 4.16,
or upon the consolidation or merger of a Guarantor with or into any Person in
compliance with Article Five (in each case, other than to the Company or an
Affiliate of the Company), or if any Guarantor is dissolved or liquidated in
accordance with this Indenture, such Guarantor's Guarantee will be automatically
discharged and such Guarantor shall be released from all obligations under this
Article Eleven without any further action required on the part of the Trustee or
any Holder. Any Guarantor not so released or the entity surviving such
Guarantor, as applicable, shall remain or be liable under its Guarantee as
provided in this Article Eleven.
(b) The Trustee shall deliver an appropriate instrument evidencing
the release of a Guarantor upon receipt of a request by the Company or such
Guarantor accompanied by an Officers' Certificate and an Opinion of Counsel
certifying as to
<PAGE>
-110-
the compliance with this Section 11.04; provided, however, that the legal
-------- -------
counsel delivering such Opinion of Counsel may rely as to matters of fact on one
or more Officers' Certificates of the Company.
The Trustee shall execute any documents reasonably requested by the
Company or a Guarantor in order to evidence the release of such Guarantor from
its obligations under its Guarantee endorsed on the Securities and under this
Article Eleven.
Except as set forth in Articles Four and Five and this Section 11.04,
nothing contained in this Indenture or in any of the Securities shall prevent
any consolidation or merger of a Guarantor with or into the Company or another
Guarantor or shall prevent any sale or conveyance of the property of a Guarantor
as an entirety or substantially as an entirety to the Company or another
Guarantor.
SECTION 11.05. Waiver of Subrogation.
---------------------
Until this Indenture is discharged and all of the Securities are
discharged and paid in full, each Guarantor hereby irrevocably waives and agrees
not to exercise any claim or other rights which it may now or hereafter acquire
against the Company that arise from the existence, payment, performance or
enforcement of the Company's obligations under the Securities or this Indenture
and such Guarantor's obligations under its Guarantee and this Indenture, in any
such instance, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution, indemnification, and any right to
participate in any claim or remedy of the Holders against the Company, whether
or not such claim, remedy or right arises in equity, or under contract, statute
or common law, including, without limitation, the right to take or receive from
the Company, directly or indirectly, in cash or other property or by set-off or
in any other manner, payment or security on account of such claim or other
rights. If any amount shall be paid to any Guarantor in violation of the
preceding sentence and any amounts owing to the Trustee or the Holders of
Securities under the Securities, this Indenture, or any other document or
instrument delivered under or in connection with such agreements or instruments,
shall not have been paid in full, such amount shall have been deemed to have
been paid to such Guarantor for the benefit of, and held in trust for the
benefit of, the Trustee or the Holders and shall forthwith be paid to the
Trustee for the benefit of itself or such Holders to be credited and applied to
the obligations in favor of the Trustee or the Hold-
<PAGE>
-111-
ers, as the case may be, whether matured or unmatured, in accordance with the
terms of this Indenture. Each Guarantor acknowledges that it will receive direct
and indirect benefits from the financing arrangements contemplated by this
Indenture and that the waiver set forth in this Section 11.05 is knowingly made
in contemplation of such benefits.
SECTION 11.06. Immediate Payment.
-----------------
Each Guarantor agrees to make immediate payment to the Trustee, on
behalf of the Holders or itself, of all Obligations due and owing or payable to
the respective Holders or the Trustee upon receipt of a demand for payment
therefor by the Trustee to such Guarantor in writing.
SECTION 11.07. No Set-Off.
----------
Each payment to be made by a Guarantor hereunder in respect of the
Obligations shall be payable in the currency or currencies in which such
Obligations are denominated, and shall be made without set-off, counterclaim,
reduction or diminution of any kind or nature.
SECTION 11.08. Obligations Absolute.
--------------------
The obligations of each Guarantor hereunder are and shall be absolute
and unconditional and any monies or amounts expressed to be owing or payable by
each Guarantor hereunder which may not be recoverable from such Guarantor on the
basis of a Guarantee shall be recoverable from such Guarantor as a primary
obligor and principal debtor in respect thereof.
SECTION 11.09. Obligations Continuing.
----------------------
The obligations of each Guarantor hereunder shall be continuing and
shall remain in full force and effect until all the obligations have been paid
and satisfied in full. Each Guarantor agrees with the Trustee that it will from
time to time deliver to the Trustee suitable acknowledgments of its continued
liability hereunder and under any other instrument or instruments in such form
as counsel to the Trustee may advise and as will prevent any action brought
against it in respect of any default hereunder being barred by any statute of
limitations now or hereafter in force and, in the event of the failure of a
Guarantor so to do, it hereby irrevocably appoints the Trustee the attorney and
agent of such Guarantor to make, execute and deliver such written acknowledgment
or acknowledgments or other instruments as may from time to time become
necessary
<PAGE>
-112-
or advisable, in the judgment of the Trustee on the advice of counsel, to fully
maintain and keep in force the liability of such Guarantor hereunder and under
its Guarantee.
SECTION 11.10. Obligations Not Reduced.
-----------------------
The obligations of each Guarantor hereunder shall not be satisfied,
reduced or discharged solely by the payment of such principal, premium, if any,
interest, fees and other monies or amounts as may at any time prior to discharge
of this Indenture pursuant to Article Eight be or become owing or payable under
or by virtue of or otherwise in connection with the Securities or this
Indenture.
SECTION 11.11. Obligations Reinstated.
----------------------
The obligations of each Guarantor hereunder shall continue to be
effective or shall be reinstated, as the case may be, if at any time any payment
which would otherwise have reduced the obligations of any Guarantor hereunder
(whether such payment shall have been made by or on behalf of the Company or by
or on behalf of a Guarantor) is rescinded or reclaimed from any of the Holders
upon the insolvency, bankruptcy, liquidation or reorganization of the Company or
any Guarantor or otherwise, all as though such payment had not been made. If
demand for, or acceleration of the time for, payment by the Company is stayed
upon the insolvency, bankruptcy, liquidation or reorganization of the Company,
all such Indebtedness otherwise subject to demand for payment or acceleration
shall nonetheless be payable by each Guarantor as provided herein.
SECTION 11.12. Obligations Not Affected.
------------------------
The obligations of each Guarantor hereunder shall not be affected,
impaired or diminished in any way by any act, omission, matter or thing
whatsoever, occurring before, upon or after any demand for payment hereunder
(and whether or not known or consented to by any Guarantor or any of the
Holders) which, but for this provision, might constitute a whole or partial
defense to a claim against any Guarantor hereunder or might operate to release
or otherwise exonerate any Guarantor from any of its obligations hereunder or
otherwise affect such obligations, whether occasioned by default of any of the
Holders or otherwise, including, without limitation:
(a) any limitation of status or power, disability, incapacity or
other circumstance relating to the company
<PAGE>
-113-
or any other Person, including any insolvency, bankruptcy, liquidation,
reorganization, readjustment, composition, dissolution, winding-up or other
proceeding involving or affecting the Company or any other Person;
(b) any irregularity, defect, unenforceability or invalidity in
respect of any indebtedness or other obligation of the Company or any other
Person under this Indenture, the Securities or any other document or
instrument;
(c) any failure of the Company, whether or not without fault on its
part, to perform or comply with any of the provisions of this Indenture or
the Securities, or to give notice thereof to a Guarantor;
(d) the taking or enforcing or exercising or the refusal or neglect
to take or enforce or exercise any right or remedy from or against the
Company or any other Person or their respective assets or the release or
discharge of any such right or remedy;
(e) the granting of time, renewals, extensions, compromises,
concessions, waivers, releases, discharges and other indulgences to the
Company or any other Person;
(f) any change in the time, manner or place of payment of, or in any
other term of, any of the Securities, or any other amendment, variation,
supplement, replacement or waiver of, or any consent to departure from, any
of the Securities or this Indenture, including, without limitation, any
increase or decrease in the principal amount of or premium, if any, or
interest on any of the Securities;
(g) any change in the ownership, control, name, objects, businesses,
assets, capital structure or constitution of the Company or a Guarantor;
(h) any merger or amalgamation of the Company or a Guarantor with any
Person or Persons;
(i) the occurrence of any change in the laws, rules, regulations or
ordinances of any jurisdiction by any present or future action of any
governmental authority or court amending, varying, reducing or otherwise
affecting, or purporting to amend, vary, reduce or otherwise affect, any of
the Obligations or the obligations of a Guarantor under its Guarantee; and
<PAGE>
-114-
(j) any other circumstance, including release of a Guarantor pursuant
to Section 11.04 (other than by complete, irrevocable payment) that might
otherwise constitute a legal or equitable discharge or defense of the
Company under this Indenture or the Securities or of another Guarantor in
respect of its Guarantee hereunder;
provided, that the provisions of this Section 11.12 are not intended to affect
- --------
in any way any release of a Guarantor in accordance with the provisions of
Section 11.04.
SECTION 11.13. Waiver.
------
Without in any way limiting the provisions of Section 11.01 hereof,
each Guarantor hereby waives notice of acceptance hereof, notice of any
liability of any Guarantor hereunder, notice or proof of reliance by the Holders
upon the obligations of any Guarantor hereunder, and diligence, presentment,
demand for payment on the Company, protest, notice of dishonor or non-payment of
any of the Obligations, or other notice or formalities to the Company or any
Guarantor of any kind whatsoever.
SECTION 11.14. No Obligation To Take Action Against
the Company.
------------------------------------
Neither the Trustee nor any other Person shall have any obligation to
enforce or exhaust any rights or remedies or to take any other steps under any
security for the Obligations or against the Company or any other Person or any
property of the Company or any other Person before the Trustee is entitled to
demand payment and performance by any or all Guarantors of their liabilities and
obligations under their Guarantees or under this Indenture.
SECTION 11.15. Dealing with the Company and Others.
-----------------------------------
The Holders, without releasing, discharging, limiting or otherwise
affecting in whole or in part the obligations and liabilities of any Guarantor
hereunder and without the consent of or notice to any Guarantor, may
(a) grant time, renewals, extensions, compromises, concessions,
waivers, releases, discharges and other indulgences to the Company or any
other Person;
<PAGE>
-115-
(b) take or abstain from taking security or collateral from the
Company or from perfecting security or collateral of the Company;
(c) release, discharge, compromise, realize, enforce or otherwise
deal with or do any act or thing in respect of (with or without
consideration) any and all collateral, mortgages or other security given by
the Company or any third party with respect to the obligations or matters
contemplated by this Indenture or the Securities;
(d) accept compromises or arrangements from the Company;
(e) apply all monies at any time received from the Company or from
any security upon such part of the Obligations as the Holders may see fit
or change any such application in whole or in part from time to time as the
Holders may see fit; and
(f) otherwise deal with, or waive or modify their right to deal with,
the Company and all other Persons and any security as the Holders or the
Trustee may see fit.
SECTION 11.16. Default and Enforcement.
-----------------------
If any Guarantor fails to pay in accordance with Section 11.06 hereof,
the Trustee may proceed in its name as trustee hereunder in the enforcement of
the Guarantee of any such Guarantor and such Guarantor's obligations thereunder
and hereunder by any remedy provided by law, whether by legal proceedings or
otherwise, and to recover from such Guarantor the obligations.
SECTION 11.17. Amendment, Etc.
--------------
No amendment, modification or waiver of any provision of this
Indenture relating to any Guarantor or consent to any departure by any Guarantor
or any other Person from any such provision will in any event be effective
unless it is signed by such Guarantor and the Trustee.
SECTION 11.18. Acknowledgment.
--------------
Each Guarantor hereby acknowledges communication of the terms of this
Indenture and the Securities and consents to and approves of the same.
<PAGE>
-116-
SECTION 11.19. Costs and Expenses.
------------------
Each Guarantor shall pay on demand by the Trustee any and all costs,
fees and expenses (including, without limitation, legal fees on a solicitor and
client basis) incurred by the Trustee, its agents, advisors and counsel or any
of the Holders in enforcing any of their rights under any Guarantee.
SECTION 11.20. No Merger or Waiver; Cumulative Remedies.
----------------------------------------
No Guarantee shall operate by way of merger of any of the obligations
of a Guarantor under any other agreement, including, without limitation, this
Indenture. No failure to exercise and no delay in exercising, on the part of
the Trustee or the Holders, any right, remedy, power or privilege hereunder or
under this Indenture or the Securities, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder or under this Indenture or the Securities preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges in the Guarantee and
under this Indenture, the Securities and any other document or instrument
between a Guarantor and/or the Company and the Trustee are cumulative and not
exclusive of any rights, remedies, powers and privilege provided by law.
SECTION 11.21. Survival of Obligations.
-----------------------
Without prejudice to the survival of any of the other obligations of
each Guarantor hereunder, the obligations of each Guarantor under Section 11.01
shall survive the payment in full of the Obligations under the Securities, but
only if and to the extent such payment is avoided, and in such case shall be
enforceable against such Guarantor to the same extent as prior to any such
payment and without regard to and without giving effect to any defense, right of
offset or counterclaim available to or which may be asserted by the Company or
any Guarantor.
SECTION 11.22. Guarantee in Addition to Other Obligations.
------------------------------------------
The Obligations of each Guarantor under its Guarantee and this
Indenture are in addition to and not in substitution for any other Obligations
to the Trustee or to any of the Holders in relation to this Indenture or the
Securities and any guarantees or security at any time held by or for the benefit
of any of them.
<PAGE>
-117-
SECTION 11.23. Severability.
------------
Any provision of this Article Eleven which is prohibited or
unenforceable in any jurisdiction shall not invalidate the remaining provisions
and any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction
unless its removal would substantially defeat the basic intent, spirit and
purpose of this Indenture and this Article Eleven.
SECTION 11.24. Successors and Assigns.
----------------------
Each Guarantee shall be binding upon and inure to the benefit of each
Guarantor and the Trustee and the other Holders and their respective successors
and permitted assigns, except that no Guarantor may assign any of its
obligations hereunder or thereunder.
ARTICLE TWELVE
SUBORDINATION OF GUARANTEE
SECTION 12.01. Guarantee Obligations Subordinated
to Guarantor Senior Debt.
----------------------------------
Anything herein to the contrary notwithstanding, each of the
Guarantors, for itself and its successors, and each Holder, by his or her
acceptance of Guarantees, agrees that the payment of all Obligations owing to
the Holders in respect of its Guarantee (collectively, as to any Guarantor, its
"Guarantee Obligations") is subordinated, to the extent and in the manner
---------------------
provided in this Article Twelve, to the prior payment in full in cash or Cash
Equivalents, or such payment duly provided for to the satisfaction of the
holders of Guarantor Senior Debt, of all Obligations on Guarantor Senior Debt of
such Guarantor.
This Article Twelve shall constitute a continuing offer to all Persons
who become holders of, or continue to hold, Guarantor Senior Debt, and such
provisions are made for the benefit of the holders of Guarantor Senior Debt and
such holders are made obligees hereunder and any one or more of them may enforce
such provisions.
<PAGE>
-118-
SECTION 12.02. Suspension of Guarantee Obligations
When Guarantor Senior Debt Is in Default.
-----------------------------------------
(a) Unless Section 12.03 shall be applicable, if any payment default
occurs and is continuing with respect to any Guarantor Senior Debt, then no
payment of any kind or character shall be made by or on behalf of such Guarantor
or any other Person on its behalf with respect to any Guarantee Obligations or
to acquire any of the Securities for cash or property or otherwise and until
such payment default shall have been cured or waived or shall have ceased to
exist or such Guarantor Senior Debt shall have been discharged or paid in full
in cash or Cash Equivalents, after which such Guarantor shall resume making any
and all required payments in respect of its obligations under this Guarantee,
including any missed payments.
(b) Unless Section 12.03 shall be applicable, if any Non-payment
Default occurs and is continuing with respect to any Designated Senior Debt
under which a Guarantor is a primary obligor or which is guaranteed by a
Guarantor (which obligation or guarantee constitutes Guarantor Senior Debt of
such Guarantor) (as such event of default is defined in the instrument creating
or evidencing such Designated Senior Debt) and if the Representative for the
respective issue of Designated Senior Debt gives a Default Notice to the
Trustee, then, unless and until all events of default have been cured or waived
or have ceased to exist or the Trustee receives notice thereof from the
Representative for the respective issue of Designated Senior Debt terminating
the Guarantor Payment Blockage Period (as defined below), during the 180 days
after the delivery of such Default Notice (the "Guarantor Payment Blockage
--------------------------
Period"), neither such Guarantor nor any other Person on its behalf shall (x)
- ------
make any payment of any kind or character with respect to any Obligations on its
Guarantee or (y) acquire any of the Securities for cash or otherwise.
Notwithstanding anything herein to the contrary, (x) in no event will a
Guarantor Payment Blockage Period extend beyond 180 days from the date the
payment on a Guarantee was due and (y) only one such Guarantor Payment Blockage
Period may be commenced within any 360 consecutive days. For all purposes of
this Section 12.02(b), no event of default which existed or was continuing on
the date of the commencement of any Guarantor Payment Blockage Period with
respect to the Designated Senior Debt of a Guarantor shall be, or be made, the
basis for the commencement of a second Guarantor Payment Blockage Period by the
Representative of such Designated Senior Debt whether or not within a period of
360 consecutive days, unless such event of default shall have been cured or
waived for a period of not less than 90 consecutive
<PAGE>
-119-
days (it being acknowledged that any subsequent action, or any breach of any
financial covenants for a period commencing after the date of commencement of
such Guarantor Payment Blockage Period that, in either case, would give rise to
an event of default pursuant to any provisions under which an event of default
previously existed or was continuing shall constitute a new event of default for
this purpose).
(c) In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee or any Holder when such payment is prohibited
by the foregoing provisions of this Section 12.02, such payment shall be held in
trust for the benefit of, and shall be paid over or delivered to, the holders of
Guarantor Senior Debt (pro rata to such holders on the basis of the respective
--- ----
amount of Guarantor Senior Debt held by such holders) or their respective
Representatives, as their respective interests may appear. The Trustee shall be
entitled to rely on information regarding amounts then due and owing on the
Guarantor Senior Debt, if any, received from the holders of Guarantor Senior
Debt (or their Representatives) or, if such information is not received from
such holders or their Representatives, from a Guarantor and only amounts
included in the information provided to the Trustee shall be paid to the holders
of Guarantor Senior Debt.
SECTION 12.03. Guarantee Obligations Subordinated
to Prior Payment of All Guarantor
Senior Debt on Dissolution, Liquidation
or Reorganization of Such Guarantor.
---------------------------------------
(a) Upon any payment or distribution of assets of any Guarantor of
any kind or character, whether in cash, property or securities, to creditors
upon any liquidation, dissolution, winding-up, reorganization, assignment for
the benefit of creditors or marshaling of assets of such Guarantor or in a
bankruptcy, reorganization, insolvency, receivership or other similar proceeding
relating to such Guarantor or its property, whether voluntary or involuntary,
all Obligations due or to become due upon all Guarantor Senior Debt shall first
be paid in full in cash or Cash Equivalents, or such payment duly provided for
to the satisfaction of the holders of Guarantor Senior Debt, before any payment
or distribution of any kind or character is made on account of any Guarantee
Obligations or for the acquisition of any of the Securities for cash or property
or otherwise. Upon any such dissolution, winding-up, liquidation,
reorganization, receivership or similar proceeding, any payment or distribution
of assets of such Guarantor of any kind or character, whether in cash, property
or securities, to which
<PAGE>
-120-
the Holders or the Trustee under this Indenture would be entitled, except for
the provisions hereof, shall be paid by such Guarantor or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other Person making such
payment or distribution, or by the Holders or by the Trustee under this
Indenture if received by them, directly to the holders of Guarantor Senior Debt
(pro rata to such holders on the basis of the respective amounts of Guarantor
--- ----
Senior Debt held by such holders) or their respective Representatives, or to the
trustee or trustees under any indenture pursuant to which any of such Guarantor
Senior Debt may have been issued, as their respective interests may appear, for
application to the payment of Guarantor Senior Debt remaining unpaid until all
such Guarantor Senior Debt has been paid in full in cash or Cash Equivalents
after giving effect to any concurrent payment, distribution or provision
therefor to or for the holders of Guarantor Senior Debt.
(b) To the extent any payment of Guarantor Senior Debt (whether by or
on behalf of a Guarantor, as proceeds of security or enforcement of any right of
setoff or otherwise) is declared to be fraudulent or preferential, set aside or
required to be paid to any receiver, trustee in bankruptcy, liquidating trustee,
agent or other similar Person under any bankruptcy, insolvency, receivership,
fraudulent conveyance or similar law, then, if such payment is recovered by, or
paid over to, such receiver, trustee in bankruptcy, liquidating trustee, agent
or other similar Person, the Guarantor Senior Debt or part thereof originally
intended to be satisfied shall be deemed to be reinstated and outstanding as if
such payment had not occurred.
(c) In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, shall be received by any Holder when such payment or
distribution is prohibited by this Section 12.03(c), such payment or
distribution shall be held in trust for the benefit of, and shall be paid over
or delivered to, the holders of Guarantor Senior Debt (pro rata to such holders
--- ----
on the basis of the respective amount of Guarantor Senior Debt held by such
holders) or their respective Representatives, or to the trustee or trustees
under any indenture pursuant to which any of such Guarantor Senior Debt may have
been issued, as their respective interests may appear, for application to the
payment of Guarantor Senior Debt remaining unpaid until all such Guarantor
Senior Debt has been paid in full in cash or Cash Equivalents, after giving
effect to any concurrent payment, distribution or provi-
<PAGE>
-121-
sion therefor to or for the holders of such Guarantor Senior Debt.
(d) The consolidation of any Guarantor with, or the merger of any
Guarantor with or into, another corporation or the liquidation or dissolution of
a Guarantor following the conveyance or transfer of all or substantially all of
its assets, to another corporation upon the terms and conditions provided in
Article Five hereof and as long as permitted under the terms of the Guarantor
Senior Debt shall not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section if such other corporation shall,
as a part of such consolidation, merger, conveyance or transfer, assumes the
Guarantee of such Guarantor hereunder in accordance with Article Five hereof.
SECTION 12.04. Payments May Be Paid Prior
to Dissolution.
--------------------------
Nothing contained in this Article Twelve or elsewhere in this
Indenture shall prevent (i) any Guarantor, except under the conditions described
in Sections 12.02 and 12.03, from making payments at any time for the purpose of
making payments on Guarantee Obligations, or from depositing with the Trustee
any moneys for such payments, or (ii) in the absence of actual knowledge by the
Trustee that a given payment would be prohibited by Section 12.02 or 12.03, the
application by the Trustee of any moneys deposited with it for the purpose of
making such payments on Guarantee Obligations to the Holders entitled thereto
unless at least two Business Days prior to the date upon which such payment
would otherwise become due and payable a Responsible Officer shall have actually
received the written notice provided for in the first sentence of Section
12.02(b) or in Section 12.07 (provided that, notwithstanding the foregoing, such
--------
application shall otherwise be subject to the provisions of Section 12.02(a) and
Section 12.03). Each Guarantor shall give prompt written notice to the Trustee
of any dissolution, winding-up, liquidation or reorganization of such Guarantor.
SECTION 12.05. Holders of Guarantee Obligations
To Be Subrogated to Rights of
Holders of Guarantor Senior Debt.
---------------------------------
Subject to the payment in full in cash or Cash Equivalents of all
Guarantor Senior Debt, the Holders of Guarantee Obligations of any Guarantor
shall be subrogated to the rights of the holders of Guarantor Senior Debt of
such Guaran-
<PAGE>
-122-
tor to receive payments or distributions of cash, property or securities of such
Guarantor applicable to such Guarantor Senior Debt until all amounts owing on or
in respect of the Guarantee Obligations shall be paid in full; and, for the
purposes of such subrogation, no such payments or distributions to the holders
of such Guarantor Senior Debt by or on behalf of such Guarantor, or by or on
behalf of the Holders by virtue of this Article Twelve, which otherwise would
have been made to the Holders shall, as between such Guarantor and the Holders,
be deemed to be a payment by such Guarantor to or on account of such Guarantor
Senior Debt, it being understood that the provisions of this Article Twelve are
and are intended solely for the purpose of defining the relative rights of the
Holders, on the one hand, and the holders of Guarantor Senior Debt, on the other
hand.
SECTION 12.06. Obligations of the Guarantors Unconditional.
-------------------------------------------
Nothing contained in this Article Twelve or elsewhere in this
Indenture or in the Guarantees is intended to or shall impair, as among the
Guarantors, their creditors other than the holders of Guarantor Senior Debt, and
the Holders, the obligation of the Guarantors, which is absolute and
unconditional, to pay to the Holders all amounts due and payable under the
Guarantees as and when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative rights of the
Holders and creditors of the Guarantors other than the holders of the Guarantor
Senior Debt, nor shall anything herein or therein prevent any Holder or the
Trustee on its behalf from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
in respect of cash, property or securities of the Guarantors received upon the
exercise of any such remedy.
SECTION 12.07. Notice to Trustee.
-----------------
Each Guarantor shall give prompt written notice to the Trustee of any
fact known to such Guarantor which would prohibit the making of any payment to
or by the Trustee in respect of the Guarantees pursuant to the provisions of
this Article Twelve. Regardless of anything to the contrary contained in this
Article Twelve or elsewhere in this Indenture, the Trustee shall not be charged
with knowledge of the existence of any default or event of default with respect
to any Guarantor Senior Debt or of any other facts which would prohibit the
making of any payment to or by the Trustee unless and until the Trustee shall
have received notice in writing from a Guarantor,
<PAGE>
-123-
or from a holder of Guarantor Senior Debt or a Representative therefor, together
with proof satisfactory to the Trustee of such holding of Guarantor Senior Debt
or of the authority of such Representative, and, prior to the receipt of any
such written notice, the Trustee shall be entitled to assume (in the absence of
actual knowledge to the contrary) that no such facts exist.
In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Guarantor Senior Debt to participate in any payment or distribution pursuant to
this Article Twelve, the Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Trustee as to the amounts of Guarantor Senior
Debt held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article Twelve, and if such evidence is not
furnished the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
SECTION 12.08. Reliance on Judicial Order or
Certificate of Liquidating Agent.
--------------------------------
Upon any payment or distribution of assets of a Guarantor referred to
in this Article Twelve, the Trustee, subject to the provisions of Article Seven
hereof, and the Holders shall be entitled to rely upon any order or decree made
by any court of competent jurisdiction in which any insolvency, bankruptcy,
receivership, dissolution, winding-up, liquidation, reorganization or similar
case or proceeding is pending, or upon a certificate of the trustee in
bankruptcy, liquidating trustee, receiver, assignee for the benefit of
creditors, agent or other Person making such payment or distribution, delivered
to the Trustee or the Holders, for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of the
Guarantor Senior Debt and other Indebtedness of such Guarantor, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article Twelve.
SECTION 12.09. Trustee's Relation to Guarantor Senior Debt.
-------------------------------------------
The Trustee and any agent of a Guarantor or the Trustee shall be
entitled to all the rights set forth in this Article Twelve with respect to any
Guarantor Senior Debt which may at any time be held by it in its individual or
any other capac-
<PAGE>
-124-
ity to the same extent as any other holder of Guarantor Senior Debt and nothing
in this Indenture shall deprive the Trustee or any such agent of any of its
rights as such holder.
With respect to the holders of Guarantor Senior Debt, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article Twelve, and no implied covenants
or obligations with respect to the holders of Guarantor Senior Debt shall be
read into this Indenture against the Trustee. The Trustee shall not be deemed
to owe any fiduciary duty to the holders of Guarantor Senior Debt.
Whenever a distribution is to be made or a notice given to holders or
owners of Guarantor Senior Debt, the distribution may be made and the notice may
be given to their Representative, if any.
SECTION 12.10. Subordination Rights Not Impaired
by Acts or Omissions of the Guarantors
or Holders of Guarantor Senior Debt.
--------------------------------------
No right of any present or future holders of any Guarantor Senior Debt
to enforce subordination as provided herein shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of any Guarantor
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by any Guarantor with the terms of this Indenture, regardless of
any knowledge thereof which any such holder may have or otherwise be charged
with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Guarantor Senior Debt may, at any time and from time to time,
without the consent of or notice to the Trustee, without incurring
responsibility to the Trustee or the Holders of the Securities and without
impairing or releasing the subordination provided in this Article Twelve or the
obligations hereunder of the Holders of the Securities to the holders of
Guarantor Senior Debt, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, Guarantor Senior Debt, or otherwise amend or supplement in any manner
Guarantor Senior Debt, or any instrument evidencing the same or any agreement
under which Guarantor Senior Debt is outstanding; (ii) sell, exchange, release
or otherwise deal with any property pledged, mortgaged or otherwise securing
Guarantor Senior Debt; (iii) release any Person liable in any manner for the
payment or collection of Guarantor Senior Debt; and
<PAGE>
-125-
(iv) exercise or refrain from exercising any rights against the Guarantors and
any other Person.
SECTION 12.11. Holders Authorize Trustee To Effectuate
Subordination of Guarantee Obligations.
---------------------------------------
Each Holder of Guarantee Obligations by its acceptance of them
authorizes and expressly directs the Trustee on its behalf to take such action
as may be necessary or appropriate to effectuate, as between the holders of
Guarantor Senior Debt and the Holders, the subordination provided in this
Article Twelve, and appoints the Trustee its attorney-in-fact for such purposes,
including, in the event of any dissolution, winding-up, liquidation or
reorganization of any Guarantor (whether in bankruptcy, insolvency,
receivership, reorganization or similar proceedings or upon an assignment for
the benefit of credits or otherwise) tending towards liquidation of the business
and assets of any Guarantor, the filing of a claim for the unpaid balance under
its Guarantee Obligations and accrued interest in the form required in those
proceedings.
If the Trustee does not file a proper claim or proof of debt in the
form required in such proceeding prior to 30 days before the expiration of the
time to file such claim or claims, then the holders of the Guarantor Senior Debt
or their Representative are or is hereby authorized to have the right to file
and are or is hereby authorized to file an appropriate claim for and on behalf
of the Holders of said Guarantee Obligations. Nothing herein contained shall be
deemed to authorize the Trustee or the holders of Guarantor Senior Debt or their
Representative to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Guarantee Obligations or the rights of any Holder thereof, or to
authorize the Trustee or the holders of Guarantor Senior Debt or their
Representative to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 12.12. This Article Twelve Not To
Prevent Events of Default.
--------------------------
The failure to make a payment on account of principal of or interest
on the Guarantees by reason of any provision of this Article Twelve will not be
construed as preventing the occurrence of an Event of Default.
<PAGE>
-126-
SECTION 12.13. Trustee's Compensation
Not Prejudiced.
----------------------
Nothing in this Article Twelve will apply to amounts due to the
Trustee pursuant to other sections of this Indenture.
ARTICLE THIRTEEN
MISCELLANEOUS
SECTION 13.01. TIA Controls.
------------
If any provision of this Indenture limits, qualifies, or conflicts
with another provision which is required to be included in this Indenture by the
TIA, the required provision shall control.
SECTION 13.02. Notices.
-------
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by telex, by telecopier or registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
if to the Company or a Guarantor:
MTL Inc.
3108 Central Drive
Plant City, FL 33563
Attention: Chief Financial Officer
Telephone: (813) 754-4725
Telecopy: (813) 757-2305
with a copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
Attention: Morton A. Pierce
Telephone: (212) 259-8000
Telecopy: (212) 259-6333
<PAGE>
-127-
if to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attention: Corporate Trust Administration
Telephone: (212) 852-1673
Telecopy: (212) 852-0846
Each of the Company and the Trustee by written notice to each other
such Person may designate additional or different addresses for notices to such
Person. Any notice or communication to the Company and the Trustee, shall be
deemed to have been given or made as of the date so delivered if personally
delivered; when answered back, if telexed; when receipt is acknowledged, if
telecopied; and five (5) calendar days after mailing if sent by registered or
certified mail, postage prepaid (except that a notice of change of address shall
not be deemed to have been given until actually received by the addressee).
Any notice or communication mailed to a Securityholder shall be mailed
to him by first class mail or other equivalent means at his address as it
appears on the registration books of the Registrar and shall be sufficiently
given to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 13.03. Communications by Holders
with Other Holders.
-------------------------
Securityholders may communicate pursuant to TIA (S) 312(b) with other
Securityholders with respect to their rights under this Indenture, the
Securities or the Guarantees. The Company, the Trustee, the Registrar and any
other Person shall have the protection of TIA (S) 312(c).
<PAGE>
-128-
SECTION 13.04. Certificate and Opinion as
to Conditions Precedent.
--------------------------
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee at the
request of the Trustee:
(1) an Officers' Certificate, in form and substance satisfactory to
the Trustee, stating that, in the opinion of the signers, all conditions
precedent to be performed or effected by the Company, if any, provided for
in this Indenture relating to the proposed action have been complied with;
and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, any and all such conditions precedent have been complied with.
SECTION 13.05. Statements Required in
Certificate or Opinion.
----------------------
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture, other than the Officers'
Certificate required by Section 4.08, shall include:
(1) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion of each such
Person, such condition or covenant has been complied with; provided,
--------
however, that with respect to matters of fact an Opinion of Counsel may
-------
rely on an Officers' Certificate or certificates of public officials.
<PAGE>
-129-
SECTION 13.06. Rules by Trustee, Paying Agent, Registrar.
-----------------------------------------
The Trustee, Paying Agent or Registrar may make reasonable rules for
its functions.
SECTION 13.07. Legal Holidays.
--------------
If a payment date is not a Business Day, payment may be made on the
next succeeding day that is a Business Day.
SECTION 13.08. Governing Law.
-------------
THIS INDENTURE, THE SECURITIES AND THE GUARANTEES WILL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED
TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. Each of the parties hereto agrees to submit to
the jurisdiction of the courts of the State of New York in any action or
proceeding arising out of or relating to this Indenture, the Securities or the
Guarantees.
SECTION 13.09. No Adverse Interpretation
of Other Agreements.
-------------------------
This Indenture may not be used to interpret another indenture, loan or
debt agreement of any of the Company or any of its Subsidiaries. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
SECTION 13.10. No Recourse Against Others.
--------------------------
No director, officer, employee or stockholder of the Company or any
Subsidiary, as such, shall have any liability for any obligations of the Company
under the Securities, this Indenture or the Guarantees or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Securityholder by accepting a Security waives and releases all such liability.
Such waiver and release are part of the consideration for the issuance of the
Securities.
SECTION 13.11. Successors.
----------
All agreements of the Company and the Guarantors in this Indenture,
the Securities and the Guarantees shall bind their respective successors. All
agreements of the Trustee in this Indenture shall bind its successor.
<PAGE>
-130-
SECTION 13.12. Duplicate Originals.
-------------------
All parties may sign any number of copies of this Indenture. Each
signed copy or counterpart shall be an original, but all of them together shall
represent the same agreement.
SECTION 13.13. Severability.
------------
In case any one or more of the provisions in this Indenture, in the
Securities or in the Guarantees shall be held invalid, illegal or unenforceable,
in any respect for any reason, the validity, legality and enforceability of any
such provision in every other respect and of the remaining provisions shall not
in any way be affected or impaired thereby, it being intended that all of the
provisions hereof shall be enforceable to the full extent permitted by law.
<PAGE>
S-1
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the date first written above.
MTL INC.,
as Issuer
By: __________________________
Name:
Title:
MONTGOMERY TANK LINES, INC.,
as Guarantor
By: __________________________
Name:
Title:
QUALITY CARRIERS, INC.,
as Guarantor
By: __________________________
Name:
Title:
LAKESHORE LEASING, INC.,
as Guarantor
By: __________________________
Name:
Title:
<PAGE>
-2-
MTL INVESTMENTS, INC,
as Guarantor
By: ____________________________
Name:
Title:
MEXICO INVESTMENTS, INC,
as Guarantor
By: __________________________
Name:
Title:
MTL OF NEVADA,
as Guarantor
By: __________________________
Name:
Title:
[NAME OF TRUSTEE],
as Trustee
By: ____________________________
Name:
Title:
<PAGE>
EXHIBIT A-1
-----------
[FORM OF FIXED RATE NOTE]
[FACE OF SECURITY]
MTL INC.
10% Senior Subordinated Note
due 2006
CUSIP No.
No. $
MTL INC., a Florida corporation (the "Company", which term includes
any successor corporation), for value received promises to pay to or
registered assigns, the principal sum of $ Dollars, on June 15, 2006.
Interest Payment Dates: June 15 and December 15, commencing December
15, 1998.
Record Dates: June 1 and December 1.
Reference is made to the further provisions of this Security contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
Dated:
MTL INC.
By: ______________________
Name:
Title:
By: ______________________
Name
Title:
<PAGE>
-2-
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the 10% Senior Subordinated Notes due 2006 described in
the within-mentioned Indenture.
Dated:
United States Trust Company of
New York, as Trustee
By: ________________________
Authorized Signatory
<PAGE>
-3-
[REVERSE OF SECURITY]
MTL INC.
10% Senior Subordinated Note
due 2006
1. Interest.
--------
MTL INC., a Florida corporation (the "Company"), promises to pay
interest on the principal amount of this Security at the rate per annum shown
above. The Company will pay interest semi-annually on June 15 and December 15
of each year (the "Interest Payment Date"), commencing December 15, 1998.
Interest on this Security will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from and including June
9, 1998. Interest on this Security will be computed on the basis of a 360-day
year of twelve 30-day months.
The Company shall pay interest on overdue principal from time to time
on demand at the rate borne by this Security plus 2% and on overdue installments
of interest (without regard to any applicable grace periods) to the extent
lawful.
2. Method of Payment.
-----------------
The Company shall pay interest on the Securities (except defaulted
interest) to the Persons who are the registered Holders at the close of business
on the Record Date immediately preceding the Interest Payment Date even if the
Securities are canceled on registration of transfer or registration of exchange
(including pursuant to an Exchange Offer (as defined in the Indenture)) after
such Record Date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company shall pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts ("U.S. Legal Tender"). However, the Company
may pay principal and interest by wire transfer of Federal funds, or interest by
check payable in such U.S. Legal Tender. The Company may deliver any such
interest payment to the Paying Agent or to a Holder at the Holder's registered
address.
<PAGE>
-4-
3. Paying Agent and Registrar.
--------------------------
Initially, United States Trust Company of New York (the "Trustee")
will act as Paying Agent and Registrar. The Company may change any Paying
Agent, Registrar or co-Registrar without notice to the Holders. The Company or
any of its Subsidiaries may, subject to certain exceptions, act as Registrar or
co-Registrar.
4. Indenture.
---------
The Company issued the Securities under an Indenture, dated as of June
9, 1998 (the "Indenture"), among the Company, the Guarantors named therein and
the Trustee. This Security is one of a duly authorized issue of Initial Notes
of the Company designated as its 10% Senior Subordinated Notes due 2006 (the
"Initial Fixed Rate Notes"). The Securities include the Fixed Rate Notes and
the Floating Rate Notes. The Fixed Rate Notes and the Floating Rate Notes are
treated as a single class of securities under the Indenture unless otherwise
specified in the Indenture or in the Securities. Capitalized terms herein are
used as defined in the Indenture unless otherwise defined herein. The terms of
the Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. (S)(S)
77aaa-77bbbb) (the "TIA"), as in effect on the date of the Indenture until such
time as the Indenture is qualified under the TIA, and thereafter as in effect on
the date on which the Indenture is qualified under the TIA. Notwithstanding
anything to the contrary herein, the Securities are subject to all such terms,
and Holders of Securities are referred to the Indenture and the TIA for a
statement of them. The Securities are general obligations of the Company
limited in aggregate principal amount to $275,000,000.
5. Subordination.
-------------
The Securities are subordinated in right of payment, in the manner and
to the extent set forth in the Indenture, to the prior payment in full in cash
or Cash Equivalents of all Senior Debt of the Company, whether outstanding on
the date of the Indenture or thereafter created, incurred, assumed or
guaranteed. Each Holder by his acceptance hereof agrees to be bound by such
provisions and authorizes and expressly directs the Trustee, on his behalf, to
take such action as may be necessary or appropriate to effectuate the
subordination provided for in the Indenture and appoints the Trustee his
attorney-in-fact for such purposes.
<PAGE>
-5-
6. Optional Redemption.
-------------------
The Fixed Rate Notes will be redeemable, at the Company's option, in
whole at any time or in part from time to time, on and after June 15, 2002, upon
not less than 30 nor more than 60 days' notice, at the following redemption
prices (expressed as percentages of the principal amount) if redeemed during the
twelve-month period commencing on June 15 of the years set forth below, plus, in
each case, accrued and unpaid interest thereon, if any, to the date of
redemption:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2002................................. 105.000%
2003................................. 102.500%
2004 and thereafter.................. 100.000%
</TABLE>
In addition, at any time prior to June 15, 2002, upon the occurrence
of a Change of Control, the Company may redeem the Securities, in whole but not
in part, at a redemption price equal to the principal amount thereof plus the
Applicable Premium plus accrued and unpaid interest, if any, to the date of
redemption. Notice of redemption of the Securities pursuant to this paragraph
shall be mailed to holders of the Securities not less than 30 days nor more than
60 days prior to the date of redemption (which shall in no event be more than
180 days following the occurrence of a Change of Control). The Company may not
redeem Securities pursuant to this paragraph if it has made an offer to
repurchase Securities with respect to such Change of Control.
7. Optional Redemption upon Equity Offering.
----------------------------------------
At any time, or from time to time, on or prior to June 15, 2001, the
Company may, at its option, use the net cash proceeds of one or more Equity
Offerings to redeem up to 35% aggregate principal amount of Fixed Rate Notes at
a redemption price equal to 110.000% of the principal amount thereof, plus
accrued and unpaid interest thereon, if any, to the date of redemption;
provided, however, that after any such redemption the aggregate principal amount
- -------- -------
of Fixed Rate Notes outstanding must equal at least 65% of the aggregate amount
of the Fixed Rate Notes originally issued on the Issue Date pursuant to the
Indenture. In order to effect the foregoing redemption with the net cash
proceeds of any Equity Offering, the Company shall make such redemption not more
than 120 days after the consummation of any such Equity Offering.
<PAGE>
-6-
As used in the preceding paragraph, "Equity Offering" means a public
or private offering of Qualified Capital Stock (other than public offerings with
respect to the Company's Common Stock on Form S-8) of the Company for aggregate
net cash proceeds to the Company of at least $20.0 million.
8. Notice of Redemption.
--------------------
Notice of redemption shall be mailed by first-class mail at least 30
days but not more than 60 days before the Redemption Date to each Holder of
Securities to be redeemed at such Holder's registered address. Securities in
denominations of $1,000 may be redeemed only in whole. The Trustee may select
for redemption portions (equal to $1,000 or any integral multiple thereof) of
the principal of Securities that have denominations larger than $1,000.
If any Security is to be redeemed in part only, the notice of
redemption that relates to such Security shall state the portion of the
principal amount thereof to be redeemed. A new Security in a principal amount
equal to the unredeemed portion thereof will be issued in the name of the Holder
thereof upon cancellation of the original Security. On and after the Redemption
Date, interest will cease to accrue on Securities or portions thereof called for
redemption, subject to the provisions of the Indenture.
9. Change of Control Offer.
-----------------------
Upon the occurrence of a Change of Control, the Company will be
required to offer to purchase all of the outstanding Securities at a purchase
price equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, thereon to the date of repurchase.
10. Limitation on Asset Sales.
-------------------------
The Company is, subject to certain conditions, obligated to make an
offer to purchase Securities at 100% of their principal amount, plus accrued and
unpaid interest, if any, thereon to the date of repurchase with certain net cash
proceeds of certain sales or other dispositions of assets in accordance with the
Indenture.
11. Registration Rights.
-------------------
Pursuant to the Registration Rights Agreement, the Company will be
obligated to consummate an exchange offer pur-
<PAGE>
-7-
suant to which the Holder of this Security shall have the right to exchange this
Security for the Company's 10% Series B Senior Subordinated Notes due 2006 (the
"Exchange Fixed Rate Notes"), which shall have been registered under the
Securities Act, in like principal amount and having terms identical in all
material respects to the Initial Fixed Rate Notes. The Holders of the Initial
Fixed Rate Notes shall be entitled to receive certain additional interest
payments in the event such exchange offer is not consummated and upon certain
other conditions, all pursuant to and in accordance with the terms of the
Registration Rights Agreement.
12. Denominations; Transfer; Exchange.
---------------------------------
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder shall
register the transfer of or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay certain transfer
taxes or similar governmental charges payable in connection therewith as
permitted by the Indenture. The Registrar need not register the transfer of or
exchange any Securities or portions thereof selected for redemption, except the
unredeemed portion of any security being redeemed in part.
13. Persons Deemed Owners.
---------------------
The registered Holder of a Security shall be treated as the owner of
it for all purposes.
14. Unclaimed Funds.
---------------
If funds for the payment of principal or interest remain unclaimed for
one year, the Trustee and the Paying Agent will repay the funds to the Company
at its request. After that, all liability of the Trustee and such Paying Agent
with respect to such funds shall cease.
15. Discharge Prior to Redemption or Maturity.
-----------------------------------------
The Company and the Guarantors may be discharged from their
obligations under the Indenture, the Securities and the Guarantees except for
certain provisions thereof, and may be discharged from obligations to comply
with certain covenants contained in the Indenture, the Securities and the
Guarantees, in each case upon satisfaction of certain conditions specified in
the Indenture.
<PAGE>
-8-
16. Amendment; Supplement; Waiver.
-----------------------------
Subject to certain exceptions, the Indenture, the Securities and the
Guarantees may be amended or supplemented with the written consent of the
Holders of at least a majority in aggregate principal amount of the Securities
then outstanding, and any existing Default or Event of Default or compliance
with any provision may be waived with the consent of the Holders of a majority
in aggregate principal amount of the Securities then outstanding. Without
notice to or consent of any Holder, the parties thereto may amend or supplement
the Indenture, the Securities and the Guarantees to, among other things, cure
any ambiguity, defect or inconsistency, provide for uncertificated Securities in
addition to or in place of certificated Securities or comply with any
requirements of the Commission in connection with the qualification of the
Indenture under the TIA, or make any other change that does not materially
adversely affect the rights of any Holder of a Security.
17. Restrictive Covenants.
---------------------
The Indenture contains certain covenants that, among other things,
limit the ability of the Company and its Restricted Subsidiaries to make
restricted payments, to incur indebtedness, to create liens, to sell assets, to
permit restrictions on dividends and other payments by Restricted Subsidiaries
of the Company to the Company, to consolidate, merge or sell all or
substantially all of its assets or to engage in transactions with affiliates.
The limitations are subject to a number of important qualifications and
exceptions. The Company must annually report to the Trustee on compliance with
such limitations.
18. Defaults and Remedies.
---------------------
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of Securities
may not enforce the Indenture, the Securities or the Guarantees except as
provided in the Indenture. The Trustee is not obligated to enforce the
Indenture, the Securities or the Guarantees unless it has received indemnity
satisfactory to it. The Indenture permits, subject to certain limitations
therein provided, Holders of a majority in aggregate principal amount of the
Securities then outstanding to direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from
<PAGE>
-9-
Holders of Securities notice of certain continuing Defaults or Events of Default
if it determines that withholding notice is in their interest.
19. Trustee Dealings with Company.
-----------------------------
The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal
with the Company, its Subsidiaries or their respective Affiliates as if it were
not the Trustee.
20. No Recourse Against Others.
--------------------------
No stockholder, director, officer or employee, as such, of the Company
shall have any liability for any obligation of the Company under the Securities
or the Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation. Each Holder of a Security by accepting a
Security waives and releases all such liability. The waiver and release are
part of the consideration for the issuance of the Securities.
21. Authentication.
--------------
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on this Security.
22. Abbreviations and Defined Terms.
-------------------------------
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
23. Governing Law.
-------------
This Security shall be governed by, and construed in accordance with,
the laws of the State of New York without giving effect to applicable principles
of conflicts of laws to the extent that the application of the laws of another
jurisdiction would be required thereby.
<PAGE>
-10-
24. CUSIP Numbers.
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
25. Indenture.
---------
Each Holder, by accepting a Security, agrees to be bound by all of the
terms and provisions of the Indenture, as the same may be amended from time to
time.
The Company will furnish to any Holder of a Security upon written
request and without charge a copy of the Indenture which has the text of this
Security in larger type. Requests may be made to: MTL Inc., 3108 Central
Drive, Plant City, FL 33563, Attn: General Counsel.
<PAGE>
ASSIGNMENT FORM
I or we assign and transfer this Security to
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code of assignee or transferee)
________________________________________________________________________________
(Insert Social Security or other identifying number of assignee or transferee)
and irrevocably appoint _______________________________________ agent to
transfer this Security on the books of the Company. The agent may substitute
another to act for him.
Dated: _________________ Signed: _______________________________________
(Sign exactly as name
appears on the other
side of this Security)
Signature Guarantee: ______________________________________________________
Participant in a recognized Signature
Guarantee Medallion Program (or other
signature guarantor program reasonably
acceptable to the Trustee)
In connection with any transfer of this Security occurring prior to
the date which is the earlier of (i) the date of the declaration by the
Commission of the effectiveness of a registration statement under the Securities
Act of 1933, as amended (the "Securities Act") covering resales of this Security
(which effectiveness shall not have been suspended or terminated at the date of
the transfer) and (ii) June 9, 2000, the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer and that this Security is being transferred:
<PAGE>
-2-
[Check One]
---------
(1) __ to the Company or a subsidiary thereof; or
(2) __ pursuant to and in compliance with Rule 144A under the
Securities Act; or
(3) __ to an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act) that has furnished to the Trustee a
signed letter containing certain representations and
agreements (the form of which letter can be obtained
from the Trustee); or
(4) __ outside the United states to a "foreign person" in
compliance with Rule 904 of Regulation S under the
Securities Act; or
(5) __ pursuant to the exemption from registration provided
by Rule 144 under the Securities Act; or
(6) __ pursuant to an effective registration statement under
the Securities Act; or
(7) __ pursuant to another available exemption from the
registration requirements of the Securities Act;
and unless the box below is checked, the undersigned confirms that such Security
is not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate"):
[_] The transferee is an Affiliate of the Company.
Unless one of the items is checked, the Trustee will refuse to
register any of the Securities evidenced by this certificate in the name of any
person other than the registered Holder thereof; provided that if box (3), (4),
--------
(5) or (7) is checked, the Company or the Trustee may require, prior to
registering any such transfer of the Securities, in its sole discretion, such
legal opinions, certifications (including an investment letter in the case of
box (3) or (4)) and other information as the Trustee or the Company has
reasonably requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act.
<PAGE>
-3-
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Security in the name of any person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.17 of the Indenture shall have
been satisfied.
Dated: __________________ Signed: _________________________________________
(Sign exactly as name appears on the
other side of this Security)
Signature Guarantee: __________________________________________________________
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated: __________________ __________________________________________________
NOTICE: To be executed by
an executive officer
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.15 or Section 4.16 of the Indenture, check the appropriate
box:
Section 4.15 [ ] Section 4.16 [ ]
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state the
amount: $___________
Dated: _________________ Signed: _______________________________________
(Sign exactly as name
appears on the other
side of this Security)
Signature Guarantee: ______________________________________________________
Participant in a recognized Signature
Guarantee Medallion Program (or other
signature guarantor program reasonably
acceptable to the Trustee)
<PAGE>
EXHIBIT A-2
-----------
[FORM OF FLOATING RATE NOTE]
[FACE OF SECURITY]
MTL INC.
FIRSTS/(SM)/*/ due 2006
CUSIP No.
No. $
MTL INC., a Florida corporation (the "Company" which term includes any
successor corporation), for value received, promises to pay to or
registered assigns, the principal sum of $ Dollars, on June 15, 2006.
Interest Payment Dates: June 15 and December 15, commencing December
15, 1998.
Record Dates: June 1 and December 15.
Reference is made to the further provisions of this Security contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
Dated: MTL INC.
By:_______________________________
Name:
Title:
By:_______________________________
Name:
Title:
__________________________
* FIRSTS/(SM)/ is a service mark of BT Alex. Brown Incorporated
<PAGE>
-2-
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Floating Interest Rate Subordinated Term Securities
due 2006 described in the within-mentioned Indenture.
Dated:
United States Trust Company of
New York, as Trustee
BY:____________________________________
Authorized Signatory
<PAGE>
-3-
[REVERSE OF SECURITY]
MTL INC.
Floating Interest Rate Subordinated Term Securities due 2006
1. Interest.
--------
MTL INC., a Florida corporation (the "Company"), promises to pay
interest on the principal amount of this Security at the rate per annum,
determined on June 9, 1998 and reset on each March 15, June 15, September 15 and
December 15 (each, a "Reset Date"), commencing September 15, 1998, equal to
LIBOR (as defined below) plus 4.81%, as determined by the Calculation Agent.
Interest on this Security will accrue from the most recent date on which
interest has been paid or, if no interest has been paid, from June 9, 1998. The
Company will pay interest semi-annually on each June 15 and December 15 (each,
an "Interest Payment Date"), commencing December 15, 1998, for the period
commencing on and including the immediately preceding Interest Payment Date and
ending on and including the day next preceding the Interest Payment Date (an
"Interest Period"), with the exception that the first Interest Period shall
commence on and include June 9, 1998 and end on and include December 14, 1998,
and at stated maturity.
The Company shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by this
Security and on overdue installments of interest (without regard to any
applicable grace periods) to the extent lawful.
"LIBOR" shall be the rate (expressed as a percentage per annum) for
deposits in United States dollars for a three-month period that appears on
Telerate Page 3750 (as defined) as of 11:00 a.m., London time, on a
Determination Date (as defined). If Telerate Page 3750 does not include such a
rate or is unavailable on a Determination Date, LIBOR for such Determination
Date shall be the arithmetic mean of the rates (expressed as a percentage per
annum) for deposits in a Representative Amount (as defined) in United States
dollars for a three-month period that appears on Reuters Screen LIBO Page (as
defined) as of 11:00 a.m., London time, on such Determination Date. If Reuters
Screen LIBO Page does not include two or more
<PAGE>
-4-
rates or is unavailable on a Determination Date, the Calculation Agent will
request the principal London office of each of four major banks in the London
interbank market, as selected by the Calculation Agent, to provide such bank's
offered quotation (expressed as a percentage per annum), as of approximately
11:00 a.m., London time, on such Determination Date, to prime banks in the
London interbank market for deposits in a Representative Amount in United States
dollars for a three-month period beginning on the second London Banking Day
after the Determination Date. If at least two such offered quotations are so
provided, LIBOR for such Determination Date will be the arithmetic mean of such
quotations. If fewer than two such quotations are so provided, the Calculation
Agent will request each of three major banks in New York City, as selected by
the Calculation Agent, to provide such bank's rate (expressed as a percentage
per annum), as of approximately 11:00 a.m., New York City time, on such
Determination Date, for loans in a Representative Amount in United States
dollars to leading European banks for a three-month period. If at least two such
rates are so provided, LIBOR for such Determination Date will be the arithmetic
mean of such rates. If fewer than two such rates are so provided, then LIBOR for
such Determination Date will be LIBOR in effect with respect to the immediately
preceding Determination Date.
"Determination Date," with respect to the period commencing on June 9,
1998 to and including September 14, 1998 and for each period thereafter
commencing on a Reset Date and ending on the day next preceding the succeeding
Reset Date (each, a "LIBOR Period"), will be the second London Banking Day
preceding the first day of the LIBOR Period.
"London Banking Day" is any day in which dealings in United States
dollars are transacted or, with respect to any future date, are expected to be
transacted in the London interbank market.
"Representative Amount" means a principal amount of not less than
U.S. $1,000,000 for a single transaction in the relevant market at the relevant
time.
"Telerate Page 3750" means the display designated as "Page 3750" on
the Dow Jones Telerate Service (or such other page as may replace Page 3750 on
that service).
"Reuters Screen LIBO Page" means the display designated as page "LIBO"
on The Reuters Monitor Money Rates Service
<PAGE>
-5-
(or such other page as may replace the LIBO page on that service).
The amount of interest for each day that this Security is outstanding
(the "Daily Interest Amount") will be calculated by dividing the interest rate
in effect for such day by 360 and multiplying the result by the principal amount
of this Security. The amount of interest to be paid on this Security for each
Interest Period will be calculated by adding the Daily Interest Amounts for each
day in the Interest Period.
All percentages resulting from any of the above calculations will be
rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point rounded upwards (e.g.,
9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)) and all dollar
amounts used in or resulting from such calculations will be rounded to the
nearest cent (with one-half cent being rounded upwards).
The interest rate on this Security will in no event be higher than the
maximum rate permitted by New York law as the same may be modified by United
States law of general application. Under current New York law, the maximum rate
of interest is 25% per annum on a simple interest basis. This limit may not
apply to Securities in which $2,500,000 or more has been invested.
The Calculation Agent will, upon the request of the holder of any
Floating Rate Note, provide the interest rate then in effect with respect to
this Security. All calculations made by the Calculation Agent in the absence of
manifest error shall be conclusive for all purposes and binding on the Company
and the Holders of this Security.
2. Method of Payment.
-----------------
The Company shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of business
on the Record Date immediately preceding the Interest Payment Date even if the
Securities are canceled on registration of transfer or registration of exchange
(including pursuant to an Exchange Offer (as defined in the Registration Rights
Agreement)) after such Record Date. Holders must surrender Securities to a
Paying Agent to collect principal payments. The Company shall pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts
<PAGE>
-6-
("U.S. Legal Tender"). However, the Company may pay principal and interest by
wire transfer of Federal funds, or interest by check payable in such U.S. Legal
Tender. The Company may deliver any such interest payment to the Paying Agent or
to a Holder at the Holder's registered address.
3. Paying Agent, Registrar and
Calculation Agent.
---------------------------
Initially, United States Trust Company of New York (the "Trustee")
will act as Paying Agent, Registrar and Calculation Agent. The Company may
change any Paying Agent, Registrar, co-Registrar or Calculation Agent without
notice to the Holders. The Company or any of its Subsidiaries may, subject to
certain exceptions, act as Registrar or co-Registrar.
4. Indenture.
---------
The Company issued the Securities under an Indenture, dated as of June
9, 1998 (the "Indenture"), among the Company, each of the Guarantors named
therein and the Trustee. This Security is one of a duly authorized issue of
Initial Notes of the Company designated as its Floating Interest Rate
Subordinated Term Securities due 2006 (the "Initial Floating Rate Notes"). The
Securities include the Floating Rate Notes and the Fixed Rate Notes. The
Floating Rate Notes and the Fixed Rate Notes are treated as a single class of
securities under the Indenture unless otherwise specified in the Indenture or in
the Securities. Capitalized terms used herein shall have the meanings assigned
to them in the Indenture unless otherwise defined herein. The terms of the
Securities include those stated in this Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. (S)(S)
77aaa-77bbbb) (the "TIA"), as in effect on the date of this Indenture until such
time as the Indenture is qualified under the TIA. Notwithstanding anything to
the contrary herein, the Securities are subject to all such terms, and Holders
of Securities are referred to the Indenture and the TIA for a statement of them.
The Securities are general obligations of the Company limited in aggregate
principal amount to $275,000,000.
5. Subordination.
-------------
The Securities are subordinated in right of payment, in the manner and
to the extent set forth in the Indenture, to the prior payment in full in cash
or Cash Equivalents of all Senior Debt of the Company, whether outstanding on
the date of the Indenture or thereafter created, incurred, assumed or
guar-
<PAGE>
-7-
anteed. Each Holder by his acceptance hereof agrees to be bound by such
provisions and authorizes and expressly directs the Trustee, on his behalf, to
take such action as may be necessary or appropriate to effectuate the
subordination provided for in the Indenture and appoints the Trustee his
attorney-in-fact for such purposes.
6. Optional Redemption.
-------------------
The Floating Rate Notes will be redeemable, at the Company's option,
in whole at any time or in part from time to time, upon not less than 30 nor
more than 60 days' notice, at the following redemption prices (expressed as
percentages of the principal amount thereof) if redeemed during the twelve-month
period commencing on June 15 of the year set forth below, plus, in each case,
accrued and unpaid interest thereon, if any, to the date of redemption:
YEAR PERCENTAGE
---- ----------
1998 105.000%
1999 104.000%
2000 103.000%
2001 102.000%
2002 101.000%
2003 and thereafter 100.000%
In addition, at any time prior to June 15, 2002, upon the occurrence
of a Change of Control, the Company may redeem the Securities, in whole but not
in part, at a redemption price equal to the principal amount thereof plus the
Applicable Premium plus accrued and unpaid interest, if any, to the date of
redemption. Notice of redemption of the Securities pursuant to this paragraph
shall be mailed to holders of the Securities not less than 30 days nor more than
60 days prior to the date of redemption (which shall in no event be more than
180 days following the occurrence of a Change of Control). The Company may not
redeem Securities pursuant to this paragraph if it has made an offer to
repurchase Securities with respect to such Change of Control.
7. Notice of Redemption.
--------------------
Notice of redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each Holder of Securities to be redeemed
at such Holder's registered address. Securities in denominations larger than
$1,000 may be redeemed only in whole. The Trustee may select for redemption
<PAGE>
-8-
portions (equal to $1,000 or any integral multiple thereof) of the principal of
Securities that have denominations larger than $1,000.
If any Security is to be redeemed in part only, the notice of
redemption that relates to such Security shall state the portion of the
principal amount thereof to be redeemed. A new Security in a principal amount
equal to the unredeemed portion thereof will be issued in the name of the Holder
thereof upon cancellation of the original Security. On and after the Redemption
Date, interest will cease to accrue on Securities or portions thereof called for
redemption, subject to the provisions of the Indenture.
8. Change of Control Offer.
-----------------------
Upon the occurrence of a Change of Control, the Company will be
required to offer to purchase all of the outstanding Securities at a purchase
price equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, thereon to the date of repurchase.
9. Limitation on Asset Sales.
-------------------------
The Company is, subject to certain conditions, obligated to make an
offer to purchase Securities at 100% of their principal amount, plus accrued and
unpaid interest, if any, thereon to the date of repurchase with certain net cash
proceeds of certain sales or other dispositions of assets in accordance with the
Indenture.
10. Registration Rights.
-------------------
Pursuant to the Registration Rights Agreement, the Company will be
obligated to consummate an exchange offer pursuant to which the Holder of this
Security shall have the right to exchange this Security for the Company's Series
B Floating Interest Rate Subordinated Term Securities due 2006 (the "Exchange
Floating Rate Notes"), which shall have been registered under the Securities
Act, in like principal amount and having terms identical in all material
respects to the Initial Floating Rate Notes. The Holders of the Initial
Floating Rate Notes shall be entitled to receive certain additional interest
payments in the event such exchange offer is not consummated and upon certain
other conditions, all pursuant to and in accordance with the terms of the
Registration Rights Agreement.
<PAGE>
-9-
11. Denominations; Transfer; Exchange.
---------------------------------
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder shall
register the transfer of or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay certain transfer
taxes or similar governmental charges payable in connection therewith as
permitted by the Indenture. The Registrar need not register the transfer of or
exchange any Securities or portions thereof selected for redemption, except the
unredeemed portion of any security being redeemed in part.
12. Persons Deemed Owners.
---------------------
The registered Holder of a Security shall be treated as the owner of
it for all purposes.
13. Unclaimed Funds.
---------------
If funds for the payment of principal or interest remain unclaimed for
one year, the Trustee and the Paying Agent will repay the funds to the Company
at its request. After that, all liability of the Trustee and such Paying Agent
with respect to such funds shall cease.
14. Discharge Prior to Redemption or Maturity.
-----------------------------------------
The Company and the Guarantors may be discharged from their
obligations under the Indenture, the Securities and the Guarantees except for
certain provisions thereof, and may be discharged from obligations to comply
with certain covenants contained in the Indenture, the Securities and the
Guarantees, in each case upon satisfaction of certain conditions specified in
the Indenture.
15. Amendment; Supplement; Waiver.
-----------------------------
Subject to certain exceptions, the Indenture, the Securities and the
Guarantees may be amended or supplemented with the written consent of the
Holders of at least a majority in aggregate principal amount of the Securities
then outstanding, and any existing Default or Event of Default or compliance
with any provision may be waived with the consent of the Holders of a majority
in aggregate principal amount of the Securities then outstanding. Without
notice to or consent of any Holder, the
<PAGE>
-10-
parties thereto may amend or supplement the Indenture, the Securities and the
Guarantees to, among other things, cure any ambiguity, defect or inconsistency,
provide for uncertificated Securities in addition to or in place of certificated
Securities or comply with any requirements of the Commission in connection with
the qualification of the Indenture under the TIA, or make any other change that
does not materially adversely affect the rights of any Holder of a Security.
16. Restrictive Covenants.
---------------------
The Indenture contains certain covenants that, among other things,
limit the ability of the Company and its Restricted Subsidiaries to make
restricted payments, to incur indebtedness, to create liens, to sell assets, to
permit restrictions on dividends and other payments by Restricted Subsidiaries
of the Company to the Company, to consolidate, merge or sell all or
substantially all of its assets or to engage in transactions with affiliates.
The limitations are subject to a number of important qualifications and
exceptions. The Company must annually report to the Trustee on compliance with
such limitations.
17. Defaults and Remedies.
---------------------
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of Securities
may not enforce the Indenture, the Securities or the Guarantees except as
provided in the Indenture. The Trustee is not obligated to enforce the
Indenture, the Securities or the Guarantees unless it has received indemnity
satisfactory to it. The Indenture permits, subject to certain limitations
therein provided, Holders of a majority in aggregate principal amount of the
Securities then outstanding to direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Holders of Securities notice of certain
continuing Defaults or Events of Default if it determines that withholding
notice is in their interest.
18. Trustee Dealings with Company.
-----------------------------
The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal
with the Company, its Subsidiaries or their respective Affiliates as if it were
not the Trustee.
<PAGE>
-11-
19. No Recourse Against Others.
--------------------------
No stockholder, director, officer or employee, as such, of the Company
shall have any liability for any obligation of the Company under the Securities
or the Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation. Each Holder of a Security by accepting a
Security waives and releases all such liability. The waiver and release are
part of the consideration for the issuance of the Securities.
20. Authentication.
--------------
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on this Security.
21. Abbreviations and Defined Terms.
-------------------------------
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
22. Governing Law.
-------------
This Security shall be governed by, and construed in accordance with,
the laws of the State of New York without giving effect to applicable principles
of conflicts of laws to the extent that the application of the laws of another
jurisdiction would be required thereby.
23. CUSIP Numbers.
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
<PAGE>
-12-
24. Indenture.
---------
Each Holder, by accepting a Security, agrees to be bound by all of the
terms and provisions of the Indenture, as the same may be amended from time to
time.
The Company will furnish to any Holder of a Security upon written
request and without charge a copy of the Indenture which has the text of this
Security in larger type. Requests may be made to: MTL Inc., 3108 Central
Drive, Plant City, FL 33563, Attn: General Counsel.
<PAGE>
ASSIGNMENT FORM
I or we assign and transfer this Security to
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code of assignee or transferee)
________________________________________________________________________________
(Insert Social Security or other identifying number of assignee or transferee)
and irrevocably appoint _______________________________________ agent to
transfer this Security on the books of the Company. The agent may substitute
another to act for him.
Dated: _________________ Signed: _________________________
(Sign exactly as name
appears on the other
side of this Security)
Signature Guarantee: ______________________________________
Participant in a recognized Signature
Guarantee Medallion Program (or other
signature guarantor program reasonably
acceptable to the Trustee)
In connection with any transfer of this Security occurring prior to
the date which is the earlier of (i) the date of the declaration by the
Commission of the effectiveness of a registration statement under the Securities
Act of 1933, as amended (the "Securities Act") covering resales of this Security
(which effectiveness shall not have been suspended or terminated at the date of
the transfer) and (ii) June 9, 2000, the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer and that this Security is being transferred:
<PAGE>
-2-
[Check One]
---------
(1) __ to the Company or a subsidiary thereof; or
(2) __ pursuant to and in compliance with Rule 144A under the
Securities Act; or
(3) __ to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) that has
furnished to the Trustee a signed letter containing certain
representations and agreements (the form of which letter can be
obtained from the Trustee); or
(4) __ outside the United states to a "foreign person" in compliance with
Rule 904 of Regulation S under the Securities Act; or
(5) __ pursuant to the exemption from registration provided
by Rule 144 under the Securities Act; or
(6) __ pursuant to an effective registration statement under
the Securities Act; or
(7) __ pursuant to another available exemption from the
registration requirements of the Securities Act;
and unless the box below is checked, the undersigned confirms that such Security
is not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate"):
[_] The transferee is an Affiliate of the Company.
Unless one of the items is checked, the Trustee will refuse to
register any of the Securities evidenced by this certificate in the name of any
person other than the registered Holder thereof; provided that if box (3), (4),
--------
(5) or (7) is checked, the Company or the Trustee may require, prior to
registering any such transfer of the Securities, in its sole discretion, such
legal opinions, certifications (including an investment letter in the case of
box (3) or (4)) and other information as the Trustee or the Company has
reasonably requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act.
<PAGE>
-3-
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Security in the name of any person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.17 of the Indenture shall have
been satisfied.
Dated: __________________ Signed: _________________________
(Sign exactly as name
appears on the other
side of this Security)
Signature Guarantee: _________________________________________
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated: __________________ ________________________________
NOTICE: To be executed by
an executive officer
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.15 or Section 4.16 of the Indenture, check the appropriate
box:
Section 4.15 [ ] Section 4.16 [ ]
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state the
amount: $___________
Dated: _________________ Signed: __________________________
(Sign exactly as name
appears on the other
side of this Security)
Signature Guarantee: ______________________________________
Participant in a recognized Signature
Guarantee Medallion Program (or other
signature guarantor program reasonably
acceptable to the Trustee)
<PAGE>
EXHIBIT B-1
-----------
[FORM OF EXCHANGE FIXED RATE NOTE]
[FACE OF SECURITY]
MTL INC.
10% Senior Subordinated Note
due 2006
CUSIP No.
No. $
MTL INC., a Florida corporation (the "Company", which term includes
any successor corporation), for value received promises to pay to or
registered assigns, the principal sum of $ Dollars, on June 15, 2006.
Interest Payment Dates: June 15 and December 15, commencing December
15, 1998.
Record Dates: June 1 and December 1.
Reference is made to the further provisions of this Security contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
Dated:
MTL INC.
By: ______________________
Name:
Title:
By: ______________________
Name
Title:
<PAGE>
-2-
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the 10% Senior Subordinated Notes due 2006 described in
the within-mentioned Indenture.
Dated:
United States Trust Company of
New York, as Trustee
By: _________________________
Authorized Signatory
<PAGE>
-3-
[REVERSE OF SECURITY]
MTL INC.
10% Senior Subordinated Note
due 2006
1. Interest.
--------
MTL INC., a Florida corporation (the "Company"), promises to pay
interest on the principal amount of this Security at the rate per annum shown
above. The Company will pay interest semi-annually on June 15 and December 15
of each year (the "Interest Payment Date"), commencing December 15, 1998.
Interest on this Security will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from and including June
9, 1998. Interest on this Security will be computed on the basis of a 360-day
year of twelve 30-day months.
The Company shall pay interest on overdue principal from time to time
on demand at the rate borne by this Security plus 2% and on overdue installments
of interest (without regard to any applicable grace periods) to the extent
lawful.
2. Method of Payment.
-----------------
The Company shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of business
on the Record Date immediately preceding the Interest Payment Date even if the
Securities are canceled on registration of transfer or registration of exchange
after such Record Date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company shall pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts ("U.S. Legal Tender"). However, the Company
may pay principal and interest by wire transfer of Federal funds, or interest by
check payable in such U.S. Legal Tender. The Company may deliver any such
interest payment to the Paying Agent or to a Holder at the Holder's registered
address.
3. Paying Agent and Registrar.
--------------------------
Initially, United States Trust Company of New York (the "Trustee")
will act as Paying Agent and Registrar. The
<PAGE>
-4-
Company may change any Paying Agent, Registrar or co-Registrar without notice to
the Holders. The Company or any of its Subsidiaries may, subject to certain
exceptions, act as Registrar or co-Registrar.
4. Indenture.
---------
The Company issued the Securities under an Indenture, dated as of June
9, 1998 (the "Indenture"), among the Company, the Guarantors named therein and
the Trustee. This Security is one of a duly authorized issue of Exchange Notes
of the Company designated as its 10% Senior Subordinated Notes due 2006 (the
"Exchange Fixed Rate Notes"). The Securities include the Fixed Rate Notes and
the Floating Rate Notes. The Fixed Rate Notes and the Floating Rate Notes are
treated as a single class of securities under the Indenture unless otherwise
specified in the Indenture or in the Securities. Capitalized terms herein are
used as defined in the Indenture unless otherwise defined herein. The terms of
the Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. (S)(S)
77aaa-77bbbb) (the "TIA"), as in effect on the date of the Indenture until such
time as the Indenture is qualified under the TIA, and thereafter as in effect on
the date on which the Indenture is qualified under the TIA. Notwithstanding
anything to the contrary herein, the Securities are subject to all such terms,
and Holders of Securities are referred to the Indenture and the TIA for a
statement of them. The Securities are general obligations of the Company
limited in aggregate principal amount to $275,000,000.
5. Subordination.
-------------
The Securities are subordinated in right of payment, in the manner and
to the extent set forth in the Indenture, to the prior payment in full in cash
or Cash Equivalents of all Senior Debt of the Company, whether outstanding on
the date of the Indenture or thereafter created, incurred, assumed or
guaranteed. Each Holder by his acceptance hereof agrees to be bound by such
provisions and authorizes and expressly directs the Trustee, on his behalf, to
take such action as may be necessary or appropriate to effectuate the
subordination provided for in the Indenture and appoints the Trustee his
attorney-in-fact for such purposes.
<PAGE>
-5-
6. Optional Redemption.
-------------------
The Fixed Rate Notes will be redeemable, at the Company's option, in
whole at any time or in part from time to time, on and after June 15, 2002, upon
not less than 30 nor more than 60 days' notice, at the following redemption
prices (expressed as percentages of the principal amount) if redeemed during the
twelve-month period commencing on June 15 of the years set forth below, plus, in
each case, accrued and unpaid interest thereon, if any, to the date of
redemption:
Year Percentage
---- ----------
2002............................. 105.000%
2003............................. 102.500%
2004 and thereafter.............. 100.000%
In addition, at any time prior to June 15, 2002, upon the occurrence
of a Change of Control, the Company may redeem the Securities, in whole but not
in part, at aredemption price equal to the principal amount thereof plus the
Applicable Premium plus accrued and unpaid interest, if any, to the date of
redemption. Notice of redemption of the Securities pursuant to this paragraph
shall be mailed to holders of the Securities not less than 30 days nor more than
60 days prior to the date of redemption (which shall in no event be more than
180 days following the occurrence of a Change of Control). The Company may not
redeem Securities pursuant to this paragraph if it has made an offer to
repurchase Securities with respect to such Change of Control.
7. Optional Redemption upon Equity Offering.
----------------------------------------
At any time, or from time to time, on or prior to June 15, 2001, the
Company may, at its option, use the net cash proceeds of one or more Equity
Offerings to redeem up to 35% aggregate principal amount of Fixed Rate Notes at
a redemption price equal to 110.000% of the principal amount thereof, plus
accrued and unpaid interest thereon, if any, to the date of redemption;
provided, however, that after any such redemption the aggregate principal amount
- -------- -------
of Fixed Rate Notes outstanding must equal at least 65% of the aggregate amount
of the Fixed Rate Notes originally issued on the Issue Date pursuant to the
Indenture. In order to effect the foregoing redemption with the net cash
proceeds of any Equity Offering, the Company shall make such redemption not more
than 120 days after the consummation of any such Equity Offering.
<PAGE>
-6-
As used in the preceding paragraph, "Equity Offering" means a public
or private offering of Qualified Capital Stock (other than public offerings with
respect to the Company's Common Stock on Form S-8) of the Company for aggregate
net cash proceeds to the Company of at least $20.0 million.
8. Notice of Redemption.
--------------------
Notice of redemption shall be mailed by first-class mail at least 30
days but not more than 60 days before the Redemption Date to each Holder of
Securities to be redeemed at such Holder's registered address. Securities in
denominations of $1,000 may be redeemed only in whole. The Trustee may select
for redemption portions (equal to $1,000 or any integral multiple thereof) of
the principal of Securities that have denominations larger than $1,000.
If any Security is to be redeemed in part only, the notice of
redemption that relates to such Security shall state the portion of the
principal amount thereof to be redeemed. A new Security in a principal amount
equal to the unredeemed portion thereof will be issued in the name of the Holder
thereof upon cancellation of the original Security. On and after the Redemption
Date, interest will cease to accrue on Securities or portions thereof called for
redemption, subject to the provisions of the Indenture.
9. Change of Control Offer.
-----------------------
Upon the occurrence of a Change of Control, the Company will be
required to offer to purchase all of the outstanding Securities at a purchase
price equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, thereon to the date of repurchase.
10. Limitation on Asset Sales.
-------------------------
The Company is, subject to certain conditions, obligated to make an
offer to purchase Securities at 100% of their principal amount, plus accrued and
unpaid interest, if any, thereon to the date of repurchase with certain net cash
proceeds of certain sales or other dispositions of assets in accordance with the
Indenture.
11. Denominations; Transfer; Exchange.
---------------------------------
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of
<PAGE>
-7-
$1,000. A Holder shall register the transfer of or exchange Securities in
accordance with the Indenture. The Registrar may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
certain transfer taxes or similar governmental charges payable in connection
therewith as permitted by the Indenture. The Registrar need not register the
transfer of or exchange any Securities or portions thereof selected for
redemption, except the unredeemed portion of any security being redeemed in
part.
12. Persons Deemed Owners.
---------------------
The registered Holder of a Security shall be treated as the owner of
it for all purposes.
13. Unclaimed Funds.
---------------
If funds for the payment of principal or interest remain unclaimed for
one year, the Trustee and the Paying Agent will repay the funds to the Company
at its request. After that, all liability of the Trustee and such Paying Agent
with respect to such funds shall cease.
14. Discharge Prior to Redemption or Maturity.
-----------------------------------------
The Company and the Guarantors may be discharged from their
obligations under the Indenture, the Securities and the Guarantees except for
certain provisions thereof, and may be discharged from obligations to comply
with certain covenants contained in the Indenture, the Securities and the
Guarantees, in each case upon satisfaction of certain conditions specified in
the Indenture.
15. Amendment; Supplement; Waiver.
-----------------------------
Subject to certain exceptions, the Indenture, the Securities and the
Guarantees may be amended or supplemented with the written consent of the
Holders of at least a majority in aggregate principal amount of the Securities
then outstanding, and any existing Default or Event of Default or compliance
with any provision may be waived with the consent of the Holders of a majority
in aggregate principal amount of the Securities then outstanding. Without
notice to or consent of any Holder, the parties thereto may amend or supplement
the Indenture, the Securities and the Guarantees to, among other things, cure
any ambiguity, defect or inconsistency, provide for uncertificated Securities in
addition to or in place of certificated Securities or comply with any
requirements of the Commission in con-
<PAGE>
-8-
nection with the qualification of the Indenture under the TIA, or make any other
change that does not materially adversely affect the rights of any Holder of a
Security.
16. Restrictive Covenants.
---------------------
The Indenture contains certain covenants that, among other things,
limit the ability of the Company and its Restricted Subsidiaries to make
restricted payments, to incur indebtedness, to create liens, to sell assets, to
permit restrictions on dividends and other payments by Restricted Subsidiaries
of the Company to the Company, to consolidate, merge or sell all or
substantially all of its assets or to engage in transactions with affiliates.
The limitations are subject to a number of important qualifications and
exceptions. The Company must annually report to the Trustee on compliance with
such limitations.
17. Defaults and Remedies.
---------------------
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of Securities
may not enforce the Indenture, the Securities or the Guarantees except as
provided in the Indenture. The Trustee is not obligated to enforce the
Indenture, the Securities or the Guarantees unless it has received indemnity
satisfactory to it. The Indenture permits, subject to certain limitations
therein provided, Holders of a majority in aggregate principal amount of the
Securities then outstanding to direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Holders of Securities notice of certain
continuing Defaults or Events of Default if it determines that withholding
notice is in their interest.
18. Trustee Dealings with Company.
-----------------------------
The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal
with the Company, its Subsidiaries or their respective Affiliates as if it were
not the Trustee.
19. No Recourse Against Others.
--------------------------
No stockholder, director, officer or employee, as such, of the Company
shall have any liability for any obliga-
<PAGE>
-9-
tion of the Company under the Securities or the Indenture or for any claim based
on, in respect of or by reason of, such obligations or their creation. Each
Holder of a Security by accepting a Security waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Securities.
20. Authentication.
--------------
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on this Security.
21. Abbreviations and Defined Terms.
-------------------------------
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
22. Governing Law.
-------------
This Security shall be governed by, and construed in accordance with,
the laws of the State of New York without giving effect to applicable principles
of conflicts of laws to the extent that the application of the laws of another
jurisdiction would be required thereby.
23. CUSIP Numbers.
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
24. Indenture.
---------
Each Holder, by accepting a Security, agrees to be bound by all of the
terms and provisions of the Indenture, as the same may be amended from time to
time.
The Company will furnish to any Holder of a Security upon written
request and without charge a copy of the Indenture
<PAGE>
-10-
which has the text of this Security in larger type. Requests may be made to: MTL
Inc., 3108 Central Drive, Plant City, FL 33563, Attn: General Counsel.
<PAGE>
ASSIGNMENT FORM
I or we assign and transfer this Security to
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code of assignee or transferee)
________________________________________________________________________________
(Insert Social Security or other identifying number of assignee or transferee)
and irrevocably appoint _______________________________________ agent to
transfer this Security on the books of the Company. The agent may substitute
another to act for him.
Dated: ______________________ Signed: _________________________
(Sign exactly as name
appears on the other
side of this Security)
Signature Guarantee: __________________________________________
Participant in a recognized Signature
Guarantee Medallion Program (or other
signature guarantor program reasonably
acceptable to the Trustee)
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.15 or Section 4.16 of the Indenture, check the appropriate
box:
Section 4.15 [ ] Section 4.16 [ ]
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state the
amount: $___________
Dated: ______________________ Signed: _________________________
(Sign exactly as name
appears on the other
side of this Security)
Signature Guarantee: __________________________________________
Participant in a recognized Signature
Guarantee Medallion Program (or other
signature guarantor program reasonably
acceptable to the Trustee)
<PAGE>
EXHIBIT B-2
-----------
[FORM OF EXCHANGE FLOATING RATE NOTE]
[FACE OF SECURITY]
MTL INC.
FIRSTS(SM)/*/ due 2006
CUSIP No.
No. $
MTL INC., a Florida corporation (the "Company" which term includes any
successor corporation), for value received, promises to pay to or
registered assigns, the principal sum of $ Dollars, on June 15, 2006.
Interest Payment Dates: June 15 and December 15, commencing December
15, 1998.
Record Dates: June 1 and December 15.
Reference is made to the further provisions of this Security contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
Dated: MTL INC.
By:________________________________
Name:
Title:
By:________________________________
Name:
Title:
__________________________
/*/ FIRSTS is a service mark of BT Alex. Brown Incorporated
<PAGE>
-2-
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Floating Interest Rate Subordinated Term Securities
due 2006 described in the within-mentioned Indenture.
Dated:
United States Trust Company of
New York, as Trustee
By: ____________________________
Authorized Signatory
<PAGE>
-3-
[REVERSE OF SECURITY]
MTL INC.
Floating Interest Rate Subordinated Term Securities due 2006
1. Interest.
--------
MTL INC., a Florida corporation (the "Company"), promises to pay
interest on the principal amount of this Security at the rate per annum,
determined on June 9, 1998 and reset on each March 15, June 15, September 15 and
December 15 (each, a "Reset Date"), commencing September 15, 1998, equal to
LIBOR (as defined below) plus 4.81%, as determined by the Calculation Agent.
Interest on this Security will accrue from the most recent date on which
interest has been paid or, if no interest has been paid, from June 9, 1998. The
Company will pay interest semi-annually on each June 15 and December 15 (each,
an "Interest Payment Date"), commencing December 15, 1998, for the period
commencing on and including the immediately preceding Interest Payment Date and
ending on and including the day next preceding the Interest Payment Date (an
"Interest Period"), with the exception that the first Interest Period shall
commence on and include June 9, 1998 and end on and include December 14, 1998,
and at stated maturity.
The Company shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by this
Security and on overdue installments of interest (without regard to any
applicable grace periods) to the extent lawful.
"LIBOR" shall be the rate (expressed as a percentage per annum) for
deposits in United States dollars for a three-month period that appears on
Telerate Page 3750 (as defined) as of 11:00 a.m., London time, on a
Determination Date. If Telerate Page 3750 does not include such a rate or is
unavailable on a Determination Date, LIBOR for such Determination Date shall be
the arithmetic mean of the rates (expressed as a percentage per annum) for
deposits in a Representative Amount (as defined) in United States dollars for a
three-month period that appears on Reuters Screen LIBO Page (as defined) as of
11:00 a.m., London time, on such Determination Date (as defined). If Reuters
Screen LIBO Page does not include two or more rates or is un-
<PAGE>
-4-
available on a Determination Date, the Calculation Agent will request the
principal London office of each of four major banks in the London interbank
market, as selected by the Calculation Agent, to provide such bank's offered
quotation (expressed as a percentage per annum), as of approximately 11:00 a.m.,
London time, on such Determination Date, to prime banks in the London interbank
market for deposits in a Representative Amount in United States dollars for a
three-month period beginning on the second London Banking Day after the
Determination Date. If at least two such offered quotations are so provided,
LIBOR for such Determination Date will be the arithmetic mean of such
quotations. If fewer than two such quotations are so provided, the Calculation
Agent will request each of three major banks in New York City, as selected by
the Calculation Agent, to provide such bank's rate (expressed as a percentage
per annum), as of approximately 11:00 a.m., New York City time, on such
Determination Date, for loans in a Representative Amount in United States
dollars to leading European banks for a three-month period. If at least two such
rates are so provided, LIBOR for such Determination Date will be the arithmetic
mean of such rates. If fewer than two such rates are so provided, then LIBOR for
such Determination Date will be LIBOR in effect with respect to the immediately
preceding Determination Date.
"Determination Date," with respect to the period commencing on June 9,
1998 to and including September 14, 1998 and for each period thereafter
commencing on a Reset Date and ending on the day next preceding the succeeding
Reset Date (each, a "LIBOR Period"), will be the second London Banking Day
preceding the first day of the LIBOR Period.
"London Banking Day" is any day in which dealings in United States
dollars are transacted or, with respect to any future date, are expected to be
transacted in the London interbank market.
"Representative Amount" means a principal amount of not less than
U.S. $1,000,000 for a single transaction in the relevant market at the relevant
time.
"Telerate Page 3750" means the display designated as "Page 3750" on
the Dow Jones Telerate Service (or such other page as may replace Page 3750 on
that service).
"Reuters Screen LIBO Page" means the display designated as page "LIBO"
on The Reuters Monitor Money Rates Service (or such other page as may replace
the LIBO page on that service).
<PAGE>
-5-
The amount of interest for each day that this Security is outstanding
(the "Daily Interest Amount") will be calculated by dividing the interest rate
in effect for such day by 360 and multiplying the result by the principal amount
of this Security. The amount of interest to be paid on this Security for each
Interest Period will be calculated by adding the Daily Interest Amounts for each
day in the Interest Period.
All percentages resulting from any of the above calculations will be
rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point rounded upwards (e.g.,
9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)) and all dollar
amounts used in or resulting from such calculations will be rounded to the
nearest cent (with one-half cent being rounded upwards).
The interest rate on this Security will in no event be higher than the
maximum rate permitted by New York law as the same may be modified by United
States law of general application. Under current New York law, the maximum rate
of interest is 25% per annum on a simple interest basis. This limit may not
apply to Securities in which $2,500,000 or more has been invested.
The Calculation Agent will, upon the request of the holder of any
Floating Rate Note, provide the interest rate then in effect with respect to
this Security. All calculations made by the Calculation Agent in the absence of
manifest error shall be conclusive for all purposes and binding on the Company
and the Holders of this Security.
2. Method of Payment.
-----------------
The Company shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of business
on the Record Date immediately preceding the Interest Payment Date even if the
Securities are canceled on registration of transfer or registration of exchange
after such Record Date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company shall pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts ("U.S. Legal Tender"). However, the Company
may pay principal and interest by wire transfer of Federal funds, or interest by
check payable in such U.S. Legal Tender. The Company may deliver any such
interest payment to
<PAGE>
-6-
the Paying Agent or to a Holder at the Holder's registered address.
3. Paying Agent, Registrar and
Calculation Agent.
------------------
Initially, United States Trust Company of New York (the "Trustee")
will act as Paying Agent, Registrar and Calculation Agent. The Company may
change any Paying Agent, Registrar, co-Registrar or Calculation Agent without
notice to the Holders. The Company or any of its Subsidiaries may, subject to
certain exceptions, act as Registrar or co-Registrar.
4. Indenture.
---------
The Company issued the Securities under an Indenture, dated as of June
9, 1998 (the "Indenture"), among the Company, each of the Guarantors named
therein and the Trustee. This Security is one of a duly authorized issue of
Exchange Notes of the Company designated as its Exchange Floating Interest Rate
Subordinated Term Securities due 2006 (the "Exchange Floating Rate Notes"). The
Securities include the Floating Rate Notes and the Fixed Rate Notes (as defined
in the Indenture). The Floating Rate Notes and the Fixed Rate Notes are treated
as a single class of securities under the Indenture unless otherwise specified
in the Indenture. Capitalized terms used herein shall have the meanings
assigned to them in the Indenture unless otherwise defined herein or in the
Securities. The terms of the Securities include those stated in this Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939 (15 U.S.C. (S)(S) 77aaa-77bbbb) (the "TIA"), as in effect on the date of
this Indenture until such time as the Indenture is qualified under the TIA.
Notwithstanding anything to the contrary herein, the Securities are subject to
all such terms, and Holders of Securities are referred to the Indenture and the
TIA for a statement of them. The Securities are general obligations of the
Company limited in aggregate principal amount to $275,000,000.
5. Subordination.
-------------
The Securities are subordinated in right of payment, in the manner and
to the extent set forth in the Indenture, to the prior payment in full in cash
or Cash Equivalents of all Senior Debt of the Company, whether outstanding on
the date of the Indenture or thereafter created, incurred, assumed or
guaranteed. Each Holder by his acceptance hereof agrees to be bound by such
provisions and authorizes and expressly directs
<PAGE>
-7-
the Trustee, on his behalf, to take such action as may be necessary or
appropriate to effectuate the subordination provided for in the Indenture and
appoints the Trustee his attorney-in-fact for such purposes.
6. Optional Redemption.
-------------------
The Floating Rate Notes will be redeemable, at the Company's option,
in whole at any time or in part from time to time, upon not less than 30 nor
more than 60 days' notice, at the following redemption prices (expressed as
percentages of the principal amount thereof) if redeemed during the twelve-month
period commencing on June 15 of the year set forth below, plus, in each case,
accrued and unpaid interest thereon, if any, to the date of redemption:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
----- ----------
<S> <C>
1998 105.000
1999 104.000
2000 103.000
2001 102.000
2002 101.000
2003 and thereafter 100.000%
</TABLE>
In addition, at any time prior to June 15, 2002, upon the occurrence
of a Change of Control, the Company may redeem the Securities, in whole but not
in part, at a redemption price equal to the principal amount thereof plus the
Applicable Premium plus accrued and unpaid interest, if any, to the date of
redemption. Notice of redemption of the Securities pursuant to this paragraph
shall be mailed to holders of the Securities not less than 30 days nor more than
60 days prior to the date of redemption (which shall in no event be more than
180 days following the occurrence of a Change of Control). The Company may not
redeem Securities pursuant to this paragraph if it has made an offer to
repurchase Securities with respect to such Change of Control.
7. Notice of Redemption.
--------------------
Notice of redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each Holder of Securities to be redeemed
at such Holder's registered address. Securities in denominations larger than
$1,000 may be redeemed only in whole. The Trustee may select for redemption
portions (equal to $1,000 or any integral multiple thereof) of
<PAGE>
-8-
the principal of Securities that have denominations larger than $1,000.
If any Security is to be redeemed in part only, the notice of
redemption that relates to such Security shall state the portion of the
principal amount thereof to be redeemed. A new Security in a principal amount
equal to the unredeemed portion thereof will be issued in the name of the Holder
thereof upon cancellation of the original Security. On and after the Redemption
Date, interest will cease to accrue on Securities or portions thereof called for
redemption, subject to the provisions of the Indenture.
8. Change of Control Offer.
-----------------------
Upon the occurrence of a Change of Control, the Company will be
required to offer to purchase all of the outstanding Securities at a purchase
price equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, thereon to the date of repurchase.
9. Limitation on Asset Sales.
-------------------------
The Company is, subject to certain conditions, obligated to make an
offer to purchase Securities at 100% of their principal amount, plus accrued and
unpaid interest, if any, thereon to the date of repurchase with certain net cash
proceeds of certain sales or other dispositions of assets in accordance with the
Indenture.
10. Denominations; Transfer; Exchange.
---------------------------------
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder shall
register the transfer of or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay certain transfer
taxes or similar governmental charges payable in connection therewith as
permitted by the Indenture. The Registrar need not register the transfer of or
exchange any Securities or portions thereof selected for redemption, except the
unredeemed portion of any security being redeemed in part.
11. Persons Deemed Owners.
---------------------
The registered Holder of a Security shall be treated as the owner of
it for all purposes.
<PAGE>
-9-
12. Unclaimed Funds.
---------------
If funds for the payment of principal or interest remain unclaimed for
one year, the Trustee and the Paying Agent will repay the funds to the Company
at its request. After that, all liability of the Trustee and such Paying Agent
with respect to such funds shall cease.
13. Discharge Prior to Redemption or Maturity.
-----------------------------------------
The Company and the Guarantors may be discharged from their
obligations under the Indenture, the Securities and the Guarantees except for
certain provisions thereof, and may be discharged from obligations to comply
with certain covenants contained in the Indenture, the Securities and the
Guarantees, in each case upon satisfaction of certain conditions specified in
the Indenture.
14. Amendment; Supplement; Waiver.
-----------------------------
Subject to certain exceptions, the Indenture, the Securities and the
Guarantees may be amended or supplemented with the written consent of the
Holders of at least a majority in aggregate principal amount of the Securities
then outstanding, and any existing Default or Event of Default or compliance
with any provision may be waived with the consent of the Holders of a majority
in aggregate principal amount of the Securities then outstanding. Without
notice to or consent of any Holder, the parties thereto may amend or supplement
the Indenture, the Securities and the Guarantees to, among other things, cure
any ambiguity, defect or inconsistency, provide for uncertificated Securities in
addition to or in place of certificated Securities or comply with any
requirements of the Commission in connection with the qualification of the
Indenture under the TIA, or make any other change that does not materially
adversely affect the rights of any Holder of a Security.
15. Restrictive Covenants.
---------------------
The Indenture contains certain covenants that, among other things,
limit the ability of the Company and its Restricted Subsidiaries to make
restricted payments, to incur indebtedness, to create liens, to sell assets, to
permit restrictions on dividends and other payments by Restricted Subsidiaries
of the Company to the Company, to consolidate, merge or sell all or
substantially all of its assets or to engage in transactions with affiliates.
The limitations are subject to a number of important qualifications and
exceptions. The Company
<PAGE>
-10-
must annually report to the Trustee on compliance with such limitations.
16. Defaults and Remedies.
---------------------
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of Securities
may not enforce the Indenture, the Securities or the Guarantees except as
provided in the Indenture. The Trustee is not obligated to enforce the
Indenture, the Securities or the Guarantees unless it has received indemnity
satisfactory to it. The Indenture permits, subject to certain limitations
therein provided, Holders of a majority in aggregate principal amount of the
Securities then outstanding to direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Holders of Securities notice of certain
continuing Defaults or Events of Default if it determines that withholding
notice is in their interest.
17. Trustee Dealings with Company.
-----------------------------
The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal
with the Company, its Subsidiaries or their respective Affiliates as if it were
not the Trustee.
18. No Recourse Against Others.
--------------------------
No stockholder, director, officer or employee, as such, of the Company
shall have any liability for any obligation of the Company under the Securities
or the Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation. Each Holder of a Security by accepting a
Security waives and releases all such liability. The waiver and release are
part of the consideration for the issuance of the Securities.
19. Authentication.
--------------
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on this Security.
<PAGE>
-11-
20. Abbreviations and Defined Terms.
-------------------------------
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
21. Governing Law.
-------------
This Security shall be governed by, and construed in accordance with,
the laws of the State of New York without giving effect to applicable principles
of conflicts of laws to the extent that the application of the laws of another
jurisdiction would be required thereby.
22. CUSIP Numbers.
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
23. Indenture.
---------
Each Holder, by accepting a Security, agrees to be bound by all of the
terms and provisions of the Indenture, as the same may be amended from time to
time.
The Company will furnish to any Holder of a Security upon written
request and without charge a copy of the Indenture which has the text of this
Security in larger type. Requests may be made to: MTL Inc., 3108 Central
Drive, Plant City, FL 33563, Attn: General Counsel.
<PAGE>
ASSIGNMENT FORM
I or we assign and transfer this Security to
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type name, address and zip code of assignee or transferee)
_______________________________________________________________________________
(Insert Social Security or other identifying number of assignee or transferee)
and irrevocably appoint _______________________________________ agent to
transfer this Security on the books of the Company. The agent may substitute
another to act for him.
Dated: _________________ Signed: _________________________
(Sign exactly as name
appears on the other
side of this Security)
Signature Guarantee: ______________________________________
Participant in a recognized Signature
Guarantee Medallion Program (or other
signature guarantor program reasonably
acceptable to the Trustee)
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.15 or Section 4.16 of the Indenture, check the appropriate
box:
Section 4.15 [ ] Section 4.16 [ ]
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state the
amount: $___________
Dated: _________________ Signed: _________________________
(Sign exactly as name
appears on the other
side of this Security)
Signature Guarantee: ______________________________________
Participant in a recognized Signature
Guarantee Medallion Program (or other
signature guarantor program reasonably
acceptable to the Trustee)
<PAGE>
EXHIBIT C
---------
GUARANTEE
---------
For value received, the undersigned hereby unconditionally guarantees,
as principal obligor and not only as a surety, to the Holder of this Security
the cash payments in United States dollars of principal of, premium, if any, and
interest on this Security in the amounts and at the times when due and interest
on the overdue principal, premium, if any, and interest, if any, of this
Security, if lawful, and the payment or performance of all other obligations of
the Company under the Indenture (as defined below) or the Securities, to the
Holder of this Security and the Trustee, all in accordance with and subject to
the terms and limitations of this Security, Article Eleven of the Indenture and
this Guarantee. This Guarantee will become effective in accordance with Article
Eleven of the Indenture and its terms shall be evidenced therein. The validity
and enforceability of any Guarantee shall not be affected by the fact that it is
not affixed to any particular Security.
Capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Indenture dated as of June 9, 1998, among MTL Inc., a
Florida corporation, as issuer (the "Company"), the Guarantors named therein and
United States Trust Company of New York, as trustee (the "Trustee"), as amended
or supplemented (the "Indenture").
The obligations of the undersigned to the Holders of Securities and to
the Trustee pursuant to this Guarantee and the Indenture are expressly set forth
in Article Eleven of the Indenture and reference is hereby made to the Indenture
for the precise terms of the Guarantee and all of the other provisions of the
Indenture to which this Guarantee relates.
THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAW. The undersigned Guarantor hereby agrees to submit to the
jurisdiction of the courts of the State of New York in any action or proceeding
arising out of or relating to this Guarantee.
This Guarantee is subject to release upon the terms set forth in the
Indenture.
<PAGE>
-2-
IN WITNESS WHEREOF, each Guarantor has caused its Guarantee to be duly
executed.
Date:
MONTGOMERY TANK LINES
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
QUALITY CARRIERS, INC.
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
<PAGE>
-3-
LAKESHORE LEASING, INC.
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
MEXICO INVESTMENTS, INC.
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
MTL OF NEVADA
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
<PAGE>
EXHIBIT D
---------
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
-----------------------------------------
[ ], [ ]
Attention:
Re: MTL Inc.
10% Senior Subordinated Notes due 2006
(the "Fixed Rate Notes") or Floating Interest Rate
Subordinated Term Securities due 2006 (the "Floating
Rate Notes," and together with the Fixed Rate Notes,
the "Securities")
-----------------------------------------------------
Ladies and Gentlemen:
In connection with our proposed purchase of [Fixed Rate Notes]
[Floating Rate Notes] of MTL Inc. (the "Company"), we confirm that:
1. We have received a copy of the Offering Memorandum (the "Offering
Memorandum"), dated June 4, 1998 relating to the Securities and such other
information as we deem necessary in order to make our investment decision. We
acknowledge that we have read and agreed to the matters stated on pages (i)-(iv)
of the Offering Memorandum and in the section entitled "Transfer Restrictions"
of the Offering Memorandum, including the restrictions on duplication and
circulation of the Offering Memorandum.
2. We understand that any subsequent transfer of the Securities is
subject to certain restrictions and conditions set forth in the Indenture
relating to the Securities (as described in the Offering Memorandum) and the
undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Securities except in compliance with, such re-
<PAGE>
-2-
strictions and conditions and the Securities Act of 1933, as amended (the
"Securities Act").
3. We understand that the offer and sale of the Securities have not
been registered under the Securities Act, and that the Securities may not be
offered or sold except as permitted in the following sentence. We agree, on our
own behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell or otherwise transfer any Securities prior to the
date which is two years after the original issuance of the Securities, we will
do so only (i) to the Company or any of its subsidiaries, (ii) inside the United
States in accordance with Rule 144A under the Securities Act to a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act), (iii)
inside the United States to an institutional "accredited investor" (as defined
below) that, prior to such transfer, furnishes (or has furnished on its behalf
by a U.S. broker-dealer) to the Trustee (as defined in the Indenture relating to
the Securities), a signed letter containing certain representations and
agreements relating to the restrictions on transfer of the Securities, (iv)
outside the United States in accordance with Rule 904 of Regulation S under the
Securities Act, (v) pursuant to the exemption from registration provided by Rule
144 under the Securities Act (if available), or (vi) pursuant to an effective
registration statement under the Securities Act, and we further agree to provide
to any person purchasing any of the Securities from us a notice advising such
purchaser that resales of the Securities are restricted as stated herein.
4. We are not acquiring the Securities for or on behalf of, and will
not transfer the Securities to, any pension or welfare plan (as defined in
Section 3 of the Employee Retirement Income Security Act of 1974), except as
permitted in the section entitled "Transfer Restrictions" of the Offering
Memorandum.
5. We understand that, on any proposed resale of any Securities, we
will be required to furnish to the Trustee and the Company such certification,
legal opinions and other information as the Trustee and the Company may
reasonably require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Securities purchased by us will
bear a legend to the foregoing effect.
6. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experi-
<PAGE>
-3-
ence in financial and business matters as to be capable of evaluating the merits
and risks of our investment in the Securities, and we and any accounts for which
we are acting are each able to bear the economic risk of our or their
investment, as the case may be.
7. We are acquiring the Securities purchased by us for our account
or for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
By:_______________________________________
Name:
Title:
<PAGE>
Exhibit E
---------
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S
------------------------------------
[ ], [ ]
Attention:
Re: MTL INC. (the "Company")
10% Senior Subordinated Notes due 2006 (the "Fixed Rate Notes")
or Floating Interest Rate Subordinated Term Securities due 2006
(the "Floating Rate Notes," and together with the Fixed Rate
----------
Notes, the "Securities")
-----------------------------------------------------------------
Ladies and Gentlemen:
In connection with our proposed sale of $ aggregate principal
amount of the [Fixed Rate Notes] [Floating Rate Notes], we confirm that such
sale has been effected pursuant to and in accordance with Regulation S under the
U.S. Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, we represent that:
(1) the offer of the Securities was not made to a person in the United
States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been pre-
arranged with a buyer in the United States;
<PAGE>
-2-
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions
applicable to the Securities.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:______________________________
Authorized Signature
<PAGE>
EXHIBIT 4.3
MTL INC.,
as Issuer,
the NEW GUARANTORS named herein,
as Guarantors
and
UNITED STATES TRUST COMPANY OF NEW YORK
as Trustee
FIRST SUPPLEMENTAL INDENTURE
Dated as of August 28, 1998
to
INDENTURE
Dated as of June 9,1998
between
MTL INC., as Issuer
the GUARANTORS named therein, as Guarantors
and
UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee
up to $275,000,000
$100,000,000
10% Senior Subordinated Notes due 2006
$40,000,000
Floating Interest Rate Subordinated Term Securities ("FIRSTS")(SM)/*/ due 2006
________________________________________________________________________________
_______________________
*FIRSTS(SM) is a service mark of BT Alex. Brown Incorporated
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of August 28, 1998, by and between
MTL Inc., a Florida corporation (the "Company"), Chemical Leaman Corporation, a
Pennsylvania corporation ("Chemical Leaman"), the subsidiaries of Chemical
Leaman listed on the signature page hereof (the "CLC Subsidiaries" and, together
with Chemical Leaman, the "New Guarantors"), and United States Trust Company of
New York, a New York banking corporation, as Trustee (the "Trustee").
WHEREAS, the Company has heretofore executed and delivered to the Trustee
an Indenture dated as of June 9, 1998 (the "Indenture"), providing for the
issuance of its 10% Senior Subordinated Notes due 2006 and Floating Interest
Rate Subordinated Term Securities ("FIRSTS")(SM) due 2006 (the "Initial Notes")
and, when and if issued as provided in the Registration Rights Agreement, Series
B Senior Subordinated Notes due 2006 and Series B Floating Interest Rate
Subordinated Term Securities due 2006 (the "Exchange Notes" and, together with
the Initial Notes, the "Securities"); and
WHEREAS, the Company, through its wholly-owned subsidiary, Palestra
Acquisition Corp., a Delaware corporation, Chemical Leaman and the shareholders
of Chemical Leaman have entered into an Agreement and Plan of Merger dated as of
June 23,1998, as amended, which contemplates the purchase by the Company of all
of the outstanding capital stock of Chemical Leaman; and
WHEREAS, the Company desires to have Chemical Leaman and the CLC
Subsidiaries become Restricted Subsidiaries under the Indenture; and
WHEREAS, domestic Restricted Subsidiaries are required to become Guarantors
pursuant to Section 4.18 of the Indenture prior to guaranteeing Indebtedness of
the Company; and
WHEREAS, each of Chemical Leaman and the CLC Subsidiaries desires to become
a Guarantor by guaranteeing the obligations of the Company under the Indenture
in accordance with the terms thereof; and
WHEREAS, Chemical Leaman and the CLC Subsidiaries have been duly authorized
by each of their respective Board of Directors to enter into, execute and
deliver this First Supplemental Indenture; and
NOW THEREFORE, for and in consideration of the premises and covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company, the New
Guarantors and the Trustee agree as follows:
- ------------------------
* FIRSTS(SM) is a service mark of BT Alex. Brown Incorporated.
<PAGE>
ADDITIONAL GUARANTORS
SECTION 1. Simultaneously with the execution of this First Supplemental
Indenture, each of the New Guarantors shall be deemed to be a "Guarantor" under
and as defined in the Indenture, shall assume all the obligations of a Guarantor
under the Securities and the Indenture as described in the Indenture, and
hereby, jointly and severally, unconditionally and irrevocably guarantees, as
principal obligor and not only as a surety, to each Holder of the Securities
the cash payments in United States dollars of principal of, premium, if any, and
interest on the Securities in the amounts and at the times when due and interest
on the overdue principal and (to the extent permitted by law) interest, if any,
on the Securities and all other obligations of the Company or the Guarantors to
the Holders or the Trustee under the Indenture or the Securities and all other
obligations shall be promptly paid in full or performed, all in accordance with
the terms of the Securities and the Indenture.
SECTION 2. Except as expressly supplemented by this First Supplemental
Indenture, the Indenture and the Securities issued thereunder are in all
respects ratified and confirmed and all of the rights, remedies, terms,
conditions, covenants and agreements of the Indenture and Securities issued
thereunder shall remain in full force and effect. Capitalized terms used herein
but not defined herein shall have the meaning provided in the Indenture.
SECTION 3. This First Supplemental Indenture is executed and shall
constitute an indenture supplemental to the Indenture and shall be construed in
connection with and as part of the Indenture. This First Supplemental Indenture
shall be governed by and construed in accordance with the laws of the
jurisdiction that governs the Indenture and its construction.
SECTION 4. This First Supplemental Indenture may be executed in any number
of counterparts, each of which shall be deemed to be an original for all
purposes; but such counterparts shall together be deemed to constitute but one
and the same instrument.
SECTION 5. Any and all notices, requests, certificates and other instrument
executed and delivered after the execution and delivery of this First
Supplemental Indenture may refer to the Indenture without making specific
reference to this First Supplemental Indenture, but nevertheless all such
references shall include this First Supplemental Indenture unless the context
otherwise requires.
SECTION 6. This First Supplemental Indenture shall be deemed to have become
effective upon the date first above written.
SECTION 7. In the event of a conflict between the terms of this First
Supplemental Indenture and the Indenture, this First Supplemental Indenture
shall control.
SECTION 8. The Trustee shall not be responsible in any manner whatsoever for
or in respect of the validity or sufficiency of this First Supplemental
Indenture or for or in
2
<PAGE>
respect of the recitals contained herein, all of which recitals are made solely
by the Company and the New Guarantors.
IN WITNESS WHEREOF, the parties have caused this First Supplemental
Indenture to be duly executed, and their respective corporate seals, if any, to
be hereunto affixed and attested, all as of the day and year first above
written.
UNITED STATES TRUST COMPANY
OF NEW YORK, as Trustee
By:________________________
Name:
Title:
CHEMICAL LEAMAN CORPORATION
By:______________________________________
Name:
Title:
CHEMICAL PROPERTIES, INC.
By:______________________________________
Name:
Title:
CAPACITY MANAGEMENT SYSTEMS, INC.
By:______________________________________
Name:
Title:
CORE LOGISTICS MANAGEMENT, INC.
By:______________________________________
Name:
Title:
ENVIROPOWER, INC.
By:______________________________________
Name:
Title:
3
<PAGE>
LEAMAN AIR SERVICES, INC.
By:______________________________________
Name:
Title:
PICKERING WAY FUNDING CORP.
By:______________________________________
Name:
Title:
POWER PURCHASING, INC.
By:______________________________________
Name: :
Title:
AMERICAN TRANSINSURANCE
GROUP, INC.
By:______________________________________
Name:
Title:
CHEMICAL LEAMAN TANK LINES, INC.
By:______________________________________
Name:
Title:
FLEET TRANSPORT COMPANY, INC.
By:______________________________________
Name:
Title:
QUALA SYSTEMS, INC.
By:______________________________________
Name:
Title:
4
<PAGE>
CLT SERVICES, INC.
By:______________________________________
Name:
Title:
QSI SERVICES, INC.
By:______________________________________
Name:
Title:
LEAMAN LOGISTICS, INC.
By:______________________________________
Name:
Title:
TRANSPLASTICS, INC.
By:______________________________________
Name:
Title:
MTL INC.,
as Issuer
By:______________________________________
Name:
Title:
5
<PAGE>
OFFICERS' CERTIFICATE
FIRST SUPPLEMENTAL INDENTURE
The undersigned, Charles J. O'Brien, the President and Chief Executive
Officer, and Robert Kasak, the Secretary of MTL Inc. (the "Company"), are
-------
furnishing this Certificate in connection with the Company's execution and
delivery of the First Supplemental Indenture dated the date hereof (the "First
-----
Supplemental Indenture") by and among the Company, Chemical Leaman Corporation,
- ----------------------
a Florida corporation, and the subsidiaries of Chemical Leaman listed therein
and you, as Trustee (the "Trustee"). The First Supplemental Indenture amends
-------
the Company's existing indenture dated as of June 9, 1998 (the "Indenture")
---------
providing for the issuance of its 10% Senior Subordinated Notes due 2006 and
Floating Interest Rate Subordinated Term Securities due 2006 (the "Initial
Notes") and, when and if issued as provided in the Registration Rights
Agreement, Series B Senior Subordinated Notes due 2006 and Series B Floating
Interest Rate Subordinated Term Securities due 2006 (the "Exchange Notes" and,
together with the Initial Notes, the "Securities"). This letter is delivered to
you pursuant to Section 13.04 of the Indenture. Capitalized terms used herein
and not defined herein have the meanings given to such terms in the Indenture,
as amended.
We have reviewed Sections 4.18, 9.01, 9.06, 13.04 and 13.05 of the
Indenture, including each of the conditions and the definitions relating thereto
included in the Indenture, and have made such examinations and investigations
which, in our opinion, are reasonably necessary to enable us to express an
informed opinion regarding the matters set forth herein.
Based on the foregoing, we are of the opinion that all conditions precedent
required under the Indenture in connection with the Trustee's acceptance and
execution of the First Supplemental Indenture have been complied with.
SIGNATURES APPEAR ON NEXT PAGE
<PAGE>
IN WITNESS WHEREOF, we have hereunto set our hands as of the 28th day of
August, 1998.
By:_______________________________________
Name: Charles J. O'Brien
Title: President and Chief
Executive Officer
By:_______________________________________
Name: Robert Kasak
Title: Secretary
2
<PAGE>
United States Trust Company of New York, as Trustee
114 West 47th Street
New York, New York 10036-1532
Attention: Corporate Trust
Re: First Supplemental Indenture of MTL Inc.
----------------------------------------
Ladies and Gentlemen:
We have acted as counsel for MTL Inc., a Florida corporation (the
"Company"), Chemical Leaman Corporation, a Pennsylvania corporation and a wholly
-------
owned subsidiary of the Company ("Chemical Leaman"), and each of the Chemical
---------------
Leaman subsidiaries listed on Annex A hereto (the "CLC Subsidiaries"), in
----------------
connection with the negotiation, execution and delivery of the First
Supplemental Indenture dated the date hereof (the "First Supplemental
------------------
Indenture") by and among the Company, Chemical Leaman, the CLC Subsidiaries and
- ---------
you, as Trustee (the "Trustee"). The First Supplemental Indenture amends the
-------
Company's existing indenture dated as of June 9, 1998 (the "Indenture")
---------
providing for the issuance of its 10% Senior Subordinated Notes due 2006 and
Floating Interest Rate Subordinated Term Securities due 2006 (the "Initial
Notes") and, when and if issued as provided in the Registration Rights
Agreement, Series B Senior Subordinated Notes due 2006 and Series B Floating
Interest Rate Subordinated Term Securities due 2006 (the "Exchange Notes" and,
together with the Initial Notes, the "Securities"). This letter is delivered to
you pursuant to Section 13.04 of the Indenture. Capitalized terms used herein
without definition shall have the meanings ascribed thereto in the Indenture.
As counsel to the Company, we have reviewed Sections 4.18, 9.01, 9.06,
13.04 and 13.05 of the Indenture, including each of the conditions and the
definitions relating thereto included in the Indenture, and have made such
examinations and investigations which, in our opinion, are necessary to enable
us to express an option regarding the matters set forth herein.
Based on the foregoing, we are of the opinion that (i) the execution of the
First Supplemental Indenture is authorized or permitted by the Indenture and all
conditions required under the Indenture in connection with the Trustee's
acceptance and execution of the First Supplemental Indenture have been
satisfied, (ii) the First Supplemental Indenture complies in all material
respects to the Trust Indenture Act of 1939, as amended and in effect on the
date hereof and (iii) the First Supplemental Indenture has been duly authorized,
executed and delivered by Chemical Leaman and the CLC Subsidiaries and
constitutes a legal, valid, binding and enforceable obligation of each of them.
<PAGE>
In rendering the foregoing opinion, we express no opinion, either directly
or indirectly, as to laws other than the laws of the State of New York, the
Federal Laws of the United States of America and the General Corporation Law of
the State of Delaware.
This letter is provided to you solely in connection with the transactions
referred to herein. This letter may not be relied by you for any other purpose
or relied upon or furnished to any other person without, in each instance, our
prior written consent.
Very truly yours,
<PAGE>
ANNEX A
<TABLE>
<CAPTION>
Name of Subsidiary Foreign Jurisdiction Qualifications
- ------------------ -----------------------------------
<S> <C>
1. Chemical Properties, Inc., LA, MD, MI, NC, NY, OH, SC, WV, WI
a Pennsylvania corporation
2. Capacity Management Systems, Inc., None
a Pennsylvania corporation
3. Core Logistics Management, Inc., None
a Delaware corporation
4. EnviroPower, Inc., NJ, PA, WV
a Delaware corporation
5. Leaman Air Services, Inc., None
a Delaware corporation
6. Pickering Way Funding Corp., PA
a Delaware corporation
7. Power Purchasing, Inc., IL, OH, PA
a Delaware corporation
8. American Transinsurance Group, Inc., IL, PA, MO
a Delaware corporation
9. Chemical Leaman Tank Lines, Inc., AL, AK, CA, CT, FL, GA, IL, IN, KY, LA,
a Delaware corporation MA, MD, MI, MO, NV, NH, NJ, NY, OH, OK,
OR, PA, RI, SC, TN, TX, VA, WA, WV, WI,
Ontario, Quebec
10. Fleet Transport Company, Inc., CA, GA, IL, IN, KY, LA, MD, MI, MO, NY,
a Delaware corporation NC, OH, PA, SC, TX
11. Quala Systems, Inc., CA, CT, GA, IL, KY, LA, MI, MO, NC, NJ,
a Delaware corporation OH, PA, SC, TX, WV
12. CLT Services, Inc., None
a Delaware corporation
13. Leaman Logistics, Inc., None
a Delaware corporation
14. Transplastics, Inc. AL, CA, CT, FL, GA, IL, IN, KY, LA, ME,
a Delaware corporation MD, MA, MI, MN, MS, MO, NH, NJ, NY, NC,
OH, PA, RI, VT, WV, WI
15. QSI Services, Inc., None
a Delaware corporation
</TABLE>
<PAGE>
GUARANTEE
---------
For value received, the undersigned hereby unconditionally guarantees, as
principal obligor and not only as a surety, to the Holder of this Security the
cash payments in United States dollars of principal of, premium, if any, and
interest on this Security in the amounts and at the times when due and interest
on the overdue principal, premium, if any, and interest and Additional Interest,
if any, of this Security, if lawful, and the payment or performance of all other
obligations of the Company under the Indenture (as defined below) or the
Securities, to the Holder of this Security and the Trustee, all in accordance
with and subject to the terms and limitations of this Security, Article Eleven
of the Indenture and this Guarantee. This Guarantee will become effective in
accordance with Article Eleven of the Indenture and its terms shall be evidenced
therein. The validity and enforceability of any Guarantee shall not be affected
by the fact that it is not affixed to any particular Security.
Capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Indenture dated as of June 9, 1998, among MTL Inc., a
Florida corporation, as issuer (the "Company"), the Guarantors named therein and
United States Trust Company of New York, as trustee (the "Trustee"), as amended
or supplemented (the "Indenture").
The obligations of the undersigned to the Holders of Securities and to the
Trustee pursuant to this Guarantee and the Indenture are expressly set forth in
Article Eleven of the Indenture and reference is hereby made to the Indenture
for the precise terms of this Guarantee and all of the other provisions of the
Indenture to which this Guarantee relates.
THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS
OF LAW. The undersigned Guarantors hereby agree to submit to the jurisdiction
of the courts of the State of New York in any action or proceeding arising out
of or relating to this Guarantee.
This Guarantee is subject to release upon the terms set forth in the
Indenture.
IN WITNESS WHEREOF, each Guarantor has caused its Guarantee to be duly
executed.
Date: August 28, 1998
CHEMICAL LEAMAN CORPORATION
By:__________________________________
Name:
Title:
<PAGE>
CHEMICAL PROPERTIES, INC.
By:__________________________________
Name:
Title:
CAPACITY MANAGEMENT SYSTEMS, INC.
By:__________________________________
Name:
Title:
CORE LOGISTICS MANAGEMENT, INC.
By:__________________________________
Name:
Title:
ENVIROPOWER, INC.
By:__________________________________
Name:
Title:
LEAMAN AIR SERVICES, INC.
By:__________________________________
Name:
Title:
PICKERING WAY FUNDING CORP.
By:__________________________________
Name:
Title:
POWER PURCHASING, INC.
By:__________________________________
Name:
Title:
<PAGE>
AMERICAN TRANSINSURANCE
GROUP, INC.
By:__________________________________
Name:
Title:
CHEMICAL LEAMAN TANK LINES, INC.
By:__________________________________
Name:
Title:
FLEET TRANSPORT COMPANY, INC.
By:__________________________________
Name:
Title:
QUALA SYSTEMS, INC.
By:__________________________________
Name:
Title:
CLT SERVICES, INC.
By:__________________________________
Name:
Title:
QSI SERVICES, INC.
By:__________________________________
Name:
Title:
LEAMAN LOGISTICS, INC.
By:__________________________________
Name:
Title:
<PAGE>
TRANSPLASTICS, INC.
By:__________________________________
Name:
Title:
<PAGE>
EXHIBIT 4.4
MTL, INC.
AMENDMENT SETTING FORTH
THE PREFERENCES, LIMITATIONS, AND RELATIVE RIGHTS
OF THE 13.75% SENIOR EXCHANGEABLE PREFERRED STOCK
________________________________________________________________________________
Pursuant to Section 607.0602 of the
Florida Business Corporation Act
________________________________________________________________________________
MTL, Inc. (the "Corporation"), a corporation organized and existing
under the Florida Business Corporation Act, does hereby certify that, pursuant
to the authority conferred upon the board of directors of the Corporation (the
"Board of Directors") by its Articles of Incorporation, and pursuant to the
provisions of Section 607.0602 of the Florida Business Corporation Act, said
Board of Directors, by unanimous written consent dated as of August 25, 1998,
duly approved and adopted the following amendment (the "Amendment") to the
Corporation's Articles of Incorporation:
RESOLVED, that, pursuant to the authority vested in the
Board of Directors by the Corporation's Articles of
Incorporation, the Board of Directors does hereby create,
authorize and provide for the issuance of 13.75% Senior
Exchangeable Preferred Stock, par value $.01 per share, with a
stated value of $100.00 per share, consisting initially of an
aggregate of 105,000 shares, having the preferences, limitations
and relative rights set forth in the Articles of Incorporation
and in this Amendment as follows:
(a) Designation. There is hereby created out of the authorized and
-----------
unissued shares of preferred stock of the Corporation a class of preferred
stock, designated as the "13.75% Senior Exchangeable Preferred Stock." The
13.75% Senior Exchangeable Preferred Stock is hereby referred to as the
"Exchangeable Preferred Stock." The number of shares constituting Exchangeable
Preferred Stock shall be 250,000. 105,000 shares of the Exchangeable Preferred
Stock shall be initially issued, with an aggregate of 145,000 additional shares
reserved for issuance in accordance with paragraph (c)(i) hereof. The
liquidation preference of the Exchangeable Preferred Stock shall be $100.00 per
share.
(b) Rank. The Exchangeable Preferred Stock shall, with respect to
----
dividend rights and rights upon liquidation, winding-up and dissolution of the
Corporation, rank (i) senior to all classes of Common Stock of the Corporation
and to each other class of preferred stock of the Corporation established by the
Board of Directors, the terms of which do not expressly provide that it ranks
senior or on a parity with the Exchangeable Preferred Stock as to dividend
rights and rights upon liquidation, winding-up and dissolution of the
Corporation (collectively referred to, together with all classes of common stock
of the Corporation, as "Junior Stock"); and (ii) subject to certain
<PAGE>
conditions, on a parity with each other class of preferred stock of the
Corporation established hereafter by the Board of Directors, the terms of which
expressly provide that such class or series will rank on a parity with the
Exchangeable Preferred Stock as to dividend rights and rights upon liquidation,
winding-up and dissolution (collectively referred to as "Parity Stock");
(c) Dividends.
---------
(i) The Holders of the outstanding shares of Exchangeable
Preferred Stock shall be entitled to receive, when, as and if declared by
the Board of Directors, out of funds legally available therefor,
distributions in the form of cash dividends on each share of Exchangeable
Preferred Stock, at a rate per annum equal to 13.75% of the liquidation
preference per share of the Exchangeable Preferred Stock, payable
quarterly. All dividends shall be cumulative, whether or not earned or
declared, on a daily basis from the Issue Date and shall be payable
quarterly in arrears on each Dividend Payment Date, commencing on December
15, 1998, to Holders of record on each Dividend Record Date immediately
preceding the relevant Dividend Payment Date, provided that if any dividend
--------
payable on any Dividend Payment Date on or before September 15, 2001 is not
paid in full in cash on such Dividend Payment Date, the amount payable as
dividends on such Dividend Payment Date that is not paid in cash on such
Dividend Payment Date shall be paid in additional shares of Exchangeable
Preferred Stock (including fractional shares) (calculated by dividing (x)
the amount of the cash dividend payable to each holder of record of the
Exchangeable Preferred Stock on the basis of all shares held of record by
such Holder, whether evidenced by one or more certificates, by (y)
$100.00), on such Dividend Payment Date and shall be deemed paid in full
and shall not accumulate. After September 15, 2001, all dividends shall be
paid in cash. Each dividend shall be payable to Holders of record of the
Exchangeable Preferred Stock as they appear on the stock books of the
Corporation on the Dividend Record Date immediately preceding the related
Dividend Payment Date. Dividends shall cease to accumulate in respect of
the Exchangeable Preferred Stock on the Exchange Date or on the date of
their earlier redemption unless the Corporation shall have failed to issue
the appropriate aggregate principal amount of Exchange Debentures in
respect of the Exchangeable Preferred Stock on such Exchange Date or shall
have failed to pay the relevant redemption price on the date fixed for
redemption.
(ii) All dividends paid with respect to shares of the
Exchangeable Preferred Stock pursuant to paragraph (c)(i) shall be paid pro
rata to the Holders entitled thereto.
(iii) Nothing herein contained shall in any way or under any
circumstances be construed or deemed to require the Board of Directors to
declare, or the Corporation to pay or set apart for payment, any dividends
on shares of the Exchangeable Preferred Stock at any time.
2
<PAGE>
(iv) Dividends on account of arrears for any past Dividend Period
and dividends in connection with any optional redemption pursuant to
paragraph (e)(i) may be declared and paid at any time, without reference to
any regular Dividend Payment Date, to Holders of record on such date, not
more than forty-five (45) days prior to the payment thereof, as may be
fixed by the Board of Directors.
(v) No full dividends may be declared by the Board of Directors
or paid or funds set apart for the payment of dividends by the Corporation
on any Parity Stock for any period unless full cumulative dividends shall
have been or contemporaneously are declared and paid (or are deemed
declared and paid) in full or declared and, if payable in cash, a sum in
cash sufficient for such payment is set apart for such payment on the
Exchangeable Preferred Stock for all Dividend Periods terminating on or
prior to the date of payment of such full dividends on such Parity Stock.
If full dividends are not so paid, all dividends declared upon shares of
the Exchangeable Preferred Stock and any other Parity Stock shall be
declared pro rata so that the amount of dividends declared per share on the
--- ----
Exchangeable Preferred Stock and such Parity Stock shall in all cases bear
to each other the same ratio that accumulated and unpaid dividends per
share on the Exchangeable Preferred Stock and such Parity Stock bear to
each other.
(vi) (A) Holders of shares of the Exchangeable Preferred Stock
shall be entitled to receive the dividends provided for in paragraph (c)(i)
hereof in preference to and in priority over any dividends upon any of the
Junior Stock
(B) So long as any share of the Exchangeable Preferred Stock
is outstanding, the Corporation shall not declare, pay or set apart for
payment any dividend on any of the Junior Stock or make any payment on
account of, or set apart for payment money for a sinking or other similar
fund for, the purchase, redemption or other retirement of, any of the
Junior Stock or any warrants, rights, calls or options exercisable for or
convertible into any of the Junior Stock whether in cash, obligations or
shares of the Corporation or other property (other than dividends in Junior
Stock to the Holders of Junior Stock or dividends on Acquired Preferred
Stock), and shall not permit any Person directly or indirectly controlled
by the Corporation to purchase or redeem any of the Junior Stock or any
such warrants, rights, calls or options (other than Acquired Preferred
Stock) unless full cumulative dividends determined in accordance herewith
on the Exchangeable Preferred Stock have been paid (or are deemed paid) in
full or declared and, if payable in cash, a sum in cash set apart
sufficient for such payment on the Exchangeable Preferred Stock for all
Dividend Periods terminating on or prior to the date of such dividends or
payments on such Junior Stock.
(C) So long as any share of the Exchangeable Preferred Stock
is outstanding, the Corporation shall not make any payment on account of,
or set apart for payment money for a sinking or other similar fund for, the
purchase, redemption or other retirement of, any of the Parity Stock or any
warrants, rights,
3
<PAGE>
calls or options exercisable for or convertible into any of the Parity
Stock and shall not permit any Person directly or indirectly controlled by
the Corporation to purchase or redeem any of the Parity Stock or any such
warrants, rights, calls or options unless full cumulative dividends
determined in accordance herewith on the Exchangeable Preferred Stock have
been paid (or are deemed paid) in full.
(vii) Dividends payable on the Exchangeable Preferred Stock for
any period less than a year shall be computed on the basis of a 360-day
year of twelve 30-day months.
(d) Liquidation Preference.
----------------------
(i) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, the Holders of
shares of Exchangeable Preferred Stock then outstanding shall be entitled
to be paid, out of the assets of the Corporation available for distribution
to its shareholders, an amount in cash equal to the liquidation preference
for each share outstanding, plus, without duplication, an amount in cash
equal to accumulated and unpaid dividends thereon to the date fixed for
liquidation, dissolution or winding up (including an amount equal to a
prorated dividend for the period from the last Dividend Payment Date to the
date fixed for liquidation, dissolution or winding up) before any payment
shall be made or any assets distributed to the Holders of any of the Junior
Stock, including, without limitation, Common Stock of the Corporation. If,
upon any voluntary or involuntary liquidation, dissolution or winding up of
the Corporation, the assets of the Corporation are not sufficient to pay in
full the liquidation payments payable to the Holders of outstanding shares
of the Exchangeable Preferred Stock and all other Parity Stock, then the
Holders of all such shares shall share equally and ratably in any such
distribution of assets in proportion to the full liquidation preference and
amounts of accumulated but unpaid dividends to which each is entitled until
such liquidation preferences and dividends are paid in full. The Holders of
outstanding shares of Exchangeable Preferred Stock and all other Parity
Stock shall not be entitled to any further participation in any
distribution of assets of the Corporation after payment of the full amount
of the liquidation preferences and accumulated and unpaid dividends to
which such Holders are entitled.
(ii) For the purposes of this paragraph (d), neither the sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all of the property or assets
of the Corporation nor the consolidation or merger of the Corporation with
or into one or more entities shall be deemed to be a liquidation,
dissolution or winding-up of the affairs of the Corporation.
4
<PAGE>
(e) Redemption.
(i) Optional Redemption.
-------------------
The Corporation may, at the option of the Board of Directors, redeem at any time
on or after September 15, 2003, subject to contractual and other restrictions
with respect thereto and to the legal availability of funds therefor, in whole
or in part, in the manner provided for in paragraph (e)(iii) hereof, any or all
of the shares of the Exchangeable Preferred Stock, at the redemption prices
(expressed as a percentage of the liquidation preference) set forth below, plus,
without duplication, an amount in cash equal to all accumulated and unpaid
dividends per share to the Redemption Date (including an amount in cash equal to
a prorated dividend for the period from the Dividend Payment Date immediately
prior to the Redemption Date to the Redemption Date) (the "Optional Redemption
Price"), if redeemed during the twelve-month period commencing on September 15
of each of the years set forth below:
2003...................... 106.88%
2004 and thereafter....... 103.44%
2005 and thereafter....... 100.00%
(A) In addition to the foregoing paragraph (e)(i)(A), prior to
September 15, 2003, the Corporation may, at its option, use the net cash
proceeds of one or more Public Equity Offerings to redeem in whole, or in
part, from any source of funds legally available therefor, in the manner
provided for in paragraph (e)(iii) hereof, the Exchangeable Preferred
Stock, at a redemption price of 113.75% of the liquidation preference
thereof, plus, without duplication, an amount in cash equal to all
accumulated and unpaid dividends to the Redemption Date including an amount
in cash equal to a prorated dividend for the period from the Dividend
Payment Date immediately prior to the Redemption Date to the Redemption
Date (the "Cash Proceeds Redemption Price"). In order to effect the
foregoing redemption with the proceeds of any Public Equity Offering, the
Corporation shall make such redemption not more than 120 days after the
consummation of any such Public Equity Offering.
(ii) Mandatory Redemption. On September 15, 2006, the Corporation
--------------------
shall redeem (subject to the legal availability of funds therefor) in the
manner provided for in paragraph (e)(iii) hereof, all of the shares of the
Exchangeable Preferred Stock then outstanding at a redemption price equal
to 100% of the liquidation preference per share, plus, without duplication,
an amount in cash equal to all accumulated and unpaid dividends per share
to the Redemption Date (including an amount equal to a prorated dividend
for the period
5
<PAGE>
from the Dividend Payment Date immediately prior to the Redemption Date to
the Redemption Date) (the "Mandatory Redemption Price").
(iii) Procedures for Redemption. (A) At least thirty (30) days and
-------------------------
not more than sixty (60) days prior to the date fixed for any redemption of
the Exchangeable Preferred Stock, the Corporation shall send written notice
(the "Redemption Notice") by first class mail, postage prepaid, to each
Holder of record on the record date fixed for such redemption of the
Exchangeable Preferred Stock at such Holder's address as it appears on the
stock books of the Corporation, provided that no failure to give such
--------
notice nor any deficiency therein shall affect the validity of the
procedure for the redemption of any shares of Exchangeable Preferred Stock
to be redeemed except as to the Holder or Holders to whom the Corporation
has failed to give said notice or except as to the Holder or Holders whose
notice was defective. The Redemption Notice shall state:
(1) whether the redemption is pursuant to paragraph (e)(i)(A),
(e)(i)(B) or (e)(ii);
(2) the Optional Redemption Price, the Cash Proceeds Redemption
Price or the Mandatory Redemption Price, as the case may be;
(3) in the case of an optional redemption pursuant to (e)(i)(A)
or (e)(i)(B) hereof, whether all or less than all the outstanding
shares of the Exchangeable Preferred Stock are to be redeemed and the
total number of shares of the Exchangeable Preferred Stock being
redeemed;
(4) the date fixed for redemption;
(5) that the Holder is to surrender to the Corporation, in the
manner, at the place or places and at the price designated, his/her
certificate or certificates representing the shares of Exchangeable
Preferred Stock to be redeemed; and
(6) that dividends on the shares of the Exchangeable Preferred
Stock to be redeemed shall cease to accumulate on such Redemption Date
unless the Corporation defaults in the payment of the Optional
Redemption Price, the Cash Proceeds Redemption Price or the Mandatory
Redemption Price, as the case may be.
(B) Each Holder of Exchangeable Preferred Stock called for
redemption shall surrender the certificate or certificates representing
such shares of Exchangeable Preferred Stock to the Corporation, duly
endorsed (or otherwise in proper form for transfer, as determined by the
Corporation), in the manner and at the place designated in the Redemption
Notice, and on the Redemption Date the full Optional Redemption Price, the
Cash Proceeds Redemption Price or Mandatory Redemption Price, as the case
may be, for such shares shall be payable in cash to the Person whose name
appears on such certificate or certificates as the
6
<PAGE>
owner thereof, and each surrendered certificate shall be canceled and
retired. In the event that less than all of the shares represented by any
such certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares.
(C) On and after the Redemption Date, unless the Corporation
defaults in the payment in full of the applicable redemption price,
dividends on the Exchangeable Preferred Stock called for redemption shall
cease to accumulate, and all rights of the Holders of such shares shall
terminate with respect thereto on the Redemption Date, other than the right
to receive the Optional Redemption Price, the Cash Proceeds Redemption
Price or the Mandatory Redemption Price, as the case may be, without
interest; provided, however, that if a notice of redemption shall have been
-------- -------
given as provided in paragraph (iii)(A) above and the funds necessary for
redemption (including an amount in respect of all dividends that will
accumulate to the Redemption Date) shall have been segregated and
irrevocably set apart by the Corporation, in trust for the equal and
ratable benefit of the Holders of the shares to be redeemed, then, at the
close of business on the day on which such funds are segregated and set
apart, the Holders of the shares to be redeemed shall cease to be
shareholders of the Corporation and shall be entitled only to receive the
Optional Redemption Price, the Cash Proceeds Redemption Price or the
Mandatory Redemption Price, as the case may be, without interest.
(D) In the event of a redemption pursuant to paragraph
(e)(i)(A) or (e)(i)(B) hereof of only a portion of the then outstanding
shares of the Exchangeable Preferred Stock, the Corporation shall effect
such redemption on a pro rata basis according to the number of shares held
by each Holder of the Exchangeable Preferred Stock, except that the
Corporation may redeem such shares held by Holders of fewer than 100 shares
(or shares held by Holders who would hold less than 100 shares as a result
of such redemption), as may be determined by the Corporation.
(f) Voting Rights.
-------------
(i) The Holders of Exchangeable Preferred Stock, except as
otherwise required under Florida law or as set forth in paragraphs (ii),
(iii) and (iv) below, shall not be entitled or permitted to vote on any
matter required or permitted to be voted upon by the shareholders of the
Corporation.
(ii) (A) So long as any shares of the Exchangeable Preferred Stock
are outstanding, the Corporation shall not authorize any class of Parity
Stock without the affirmative vote or consent of Holders of at least a
majority of the then outstanding shares of Exchangeable Preferred Stock,
voting or consenting, as the case may be, as one class, given in Person or
by proxy, either in writing or by resolution adopted at an annual or
special meeting; provided, however, that no such vote or consent shall be
-------- -------
necessary in connection with the authorization of the issuance of
Exchangeable Preferred Stock to satisfy dividend payments in lieu of cash
on outstanding shares of Exchangeable Preferred Stock.
7
<PAGE>
(B) So long as any shares of the Exchangeable Preferred Stock
are outstanding, the Corporation shall not amend this Amendment so as to
affect materially and adversely the specified rights, preferences,
privileges or voting rights of the then outstanding shares of Exchangeable
Preferred Stock or to authorize the issuance of any additional shares of
Exchangeable Preferred Stock without the affirmative vote or consent of
Holders of at least a majority of the issued and outstanding shares of
Exchangeable Preferred Stock, voting or consenting, as the case may be, as
one class, given in Person or by proxy, either in writing or by resolution
adopted at an annual or special meeting.
(C) Prior to the exchange of Exchangeable Preferred Stock for
Exchange Debentures, the Corporation shall not amend or modify the Exchange
Indenture for the Exchange Debentures in the form as executed on the
Effective Date (the "Exchange Indenture") (except as expressly provided
therein in respect of amendments without the consent of Holders of Exchange
Debentures) without the affirmative vote or consent of Holders of at least
a majority of the shares of Exchangeable Preferred Stock then outstanding,
voting or consenting, as the case may be, as one class, given in Person or
by proxy, either in writing or by resolution adopted at an annual or
special meeting.
(ii) (A) If (1) after September 15, 2001, cash dividends on the
Exchangeable Preferred Stock are in arrears and unpaid for six or more
Dividend Periods (whether or not consecutive) (a "Dividend Default") or (2)
the Corporation fails to redeem all of the then outstanding shares of
Exchangeable Preferred Stock on September 15, 2006, then in the case of any
of clauses (1) or (2) the number of directors constituting the Board of
Directors shall be adjusted by the number, if any, necessary to permit the
Holders of Exchangeable Preferred Stock, voting separately and as one class
(together with the Holders of any Parity Stock having similar voting
rights), to elect the lesser of two directors or that number of directors
constituting 25% of the members of the Board of Directors. Each such event
described in clauses (1) or (2) is a "Voting Rights Triggering Event."
Holders of a majority of the issued and outstanding shares of Exchangeable
Preferred Stock, voting separately and as one class (together with the
Holders of any Parity Stock having similar voting rights), shall have the
exclusive right to elect the lesser of two directors or 25% of the number
of members constituting the Board of Directors at a meeting therefor called
upon occurrence of such Voting Rights Triggering Event, and at every
subsequent meeting at which the terms of office of the directors so elected
by the Holders of the Exchangeable Preferred Stock expire (other than as
described in (f)(iv)(B) below). The voting rights provided herein shall be
the exclusive remedy at law or in equity of the Holders of the Exchangeable
Preferred Stock for any Voting Rights Triggering Event.
(B) The right of the Holders of Exchangeable Preferred Stock
voting separately and as one class (together with the Holders of any Parity
Stock then having similar rights) to elect members of the Board of
Directors as set forth in subparagraph (f)(iv)(A) above shall continue
until such time as (x) in the event
8
<PAGE>
such right arises due to a Dividend Default, all accumulated dividends that
are in arrears on the Exchangeable Preferred Stock are paid in full in
cash; and (y) in all other cases, the failure, breach or default giving
rise to such Voting Rights Triggering Event is remedied or waived by the
Holders of at least a majority of the shares of Exchangeable Preferred
Stock then outstanding and entitled to vote thereon, at which time (1) the
special right of the Holders of Exchangeable Preferred Stock so to vote as
a class for the election of directors and (2) the term of office of the
directors elected by the Holders of the Exchangeable Preferred Stock shall
each terminate and the directors elected by the Holders of Capital Stock
(other than the Exchangeable Preferred Stock or Parity Stock having similar
voting rights) shall constitute the entire Board of Directors. At any time
after voting power to elect directors shall have become vested and be
continuing in the Holders of Exchangeable Preferred Stock pursuant to
paragraph (f)(iv) hereof, or if vacancies shall exist in the offices of
directors elected by the Holders of Exchangeable Preferred Stock, a proper
officer of the Corporation may, and upon the written request of the Holders
of record of at least twenty percent (20%) of the shares of Exchangeable
Preferred Stock then outstanding addressed to the secretary of the
Corporation shall, call a special meeting of the Holders of Exchangeable
Preferred Stock, for the purpose of electing the directors which such
Holders are entitled to elect. If such meeting shall not be called by a
proper officer of the Corporation within twenty (20) days after personal
service of said written request upon the secretary of the Corporation, or
within twenty (20) days after mailing the same within the United States by
certified mail, addressed to the secretary of the Corporation at its
principal executive offices, then the Holders of record of at least twenty
percent (20%) of the outstanding shares of Exchangeable Preferred Stock may
designate in writing one of their number to call such meeting at the
expense of the Corporation, and such meeting may be called by the Person so
designated upon the notice required for the annual meetings of shareholders
of the Corporation and shall be held at the place for holding the annual
meetings of shareholders. Any Holder of Exchangeable Preferred Stock so
designated shall have, and the Corporation shall provide, access to the
lists of shareholders to be called pursuant to the provisions hereof.
(C) At any meeting held for the purpose of electing directors
at which the Holders of Exchangeable Preferred Stock (and any Parity Stock
having similar voting rights) shall have the right, voting together as a
separate class, to elect directors as aforesaid, the presence in Person or
by proxy of the Holders of at least a majority of the outstanding shares of
Exchangeable Preferred Stock (and any Parity Stock having similar voting
rights) shall be required to constitute a quorum of such Exchangeable
Preferred Stock.
(D) Any vacancy occurring in the office of a director elected
by the Holders of Exchangeable Preferred Stock (and any Parity Stock having
similar voting rights) may be filled by the remaining directors elected by
the Holders of Exchangeable Preferred Stock and Holders of such Parity
Stock unless and until such vacancy shall be filled by the Holders of
Exchangeable Preferred Stock and Holders of such Parity Stock.
9
<PAGE>
In any case in which the Holders of Exchangeable Preferred Stock shall
be entitled to vote pursuant to this paragraph (f) or pursuant to Florida law,
each Holder of Exchangeable Preferred Stock entitled to vote with respect to
such matter shall be entitled to one vote for each share of Exchangeable
Preferred Stock held.
(g) Exchange.
--------
(i) Requirements. The outstanding shares of Exchangeable
------------
Preferred Stock are exchangeable in whole but not in part, at the option of
the Corporation at any time on any Dividend Payment Date for the
Corporation's 13.75% Subordinated Exchange Debentures due 2006 (the
"Exchange Debentures") to be substantially in the form of Exhibit A to the
form of Exchange Indenture, a copy of which is on file with the secretary
of the Corporation, provided that any such exchange may only be made if on
--------
or prior to the Exchange Date (i) the Corporation has paid (or is deemed to
have paid) all accumulated dividends on the Exchangeable Preferred Stock
(including the dividends payable on the date of exchange) and there shall
be no contractual impediment to such exchange; (ii) there shall be funds
legally available sufficient therefor; (iii) immediately after giving
effect to such exchange, no Default or Event of Default (each as defined in
the Exchange Indenture) would exist under the Exchange Indenture, no
Default or Event of Default (each as defined in the Indenture) would exist
under the Indenture, no default or event of default (each as defined in the
New Credit Facility) would exist under the New Credit Facility and no
default or event of default under any other material instrument governing
Indebtedness outstanding at the time would be caused thereby; and (iv) the
Exchange Indenture has been qualified under the TIA, if such qualification
is required at the time of exchange. The exchange rate shall be $1.00
principal amount of Exchange Debentures for each $1.00 of liquidation
preference of Exchangeable Preferred Stock. Exchange Debentures issued in
exchange for Exchangeable Preferred Stock shall be issued in principal
amounts of $1,000 and integral multiples thereof to the extent possible and
also will be issued in principal amounts less than $1,000 so that each
holder of Exchangeable Preferred Stock will receive certificates
representing the entire amount of Exchange Debentures to which such
holder's shares of Exchangeable Preferred Stock entitle such holder;
provided that the Corporation may pay cash in lieu of issuing an Exchange
--------
Debenture in a principal amount less than $1,000.
(ii) Procedure for Exchange.
----------------------
(A) At least thirty (30) days and not more than sixty (60) days
prior to the date fixed for exchange, the Corporation shall send written
notice (the "Exchange Notice") by first-class mail, postage prepaid, to
each Holder of record on the record date fixed for such exchange of the
Exchangeable Preferred Stock at such Holder's address as the same appears
on the stock books of the Corporation, provided that no failure to give
--------
such notice nor any deficiency therein shall affect the validity of the
procedure for the exchange of any shares of Exchangeable Preferred Stock to
be exchanged except as to the Holder or Holders to whom the
10
<PAGE>
Corporation has failed to give said notice or except as to the Holder or
Holders whose notice was defective. The Exchange Notice shall state:
(1) the date fixed for exchange;
(2) that the Holder is to surrender to the Corporation, in the
manner and at the place or places designated, his/her certificate or
certificates representing the shares of Exchangeable Preferred Stock
to be exchanged;
(3) that dividends on the shares of Exchangeable Preferred
Stock to be exchanged shall cease to accrue on such Exchange Date
whether or not certificates for shares of Exchangeable Preferred Stock
are surrendered for exchange on such Exchange Date unless the
Corporation shall default in the delivery of Exchange Debentures; and
(4) that interest on the Exchange Debentures shall accrue from
the Exchange Date whether or not certificates for shares of
Exchangeable Preferred Stock are surrendered for exchange on such
Exchange Date.
(B) On or before the Exchange Date, each Holder of Exchangeable
Preferred Stock shall surrender the certificate or certificates
representing such shares of Exchangeable Preferred Stock, in the manner and
at the place designated in the Exchange Notice. The Corporation shall cause
the Exchange Debentures to be executed on the Exchange Date and, upon
surrender in accordance with the Exchange Notice of the certificates for
any shares of Exchangeable Preferred Stock so exchanged, duly endorsed (or
otherwise in proper form for transfer, as determined by the Corporation),
such shares shall be exchanged by the Corporation into Exchange Debentures.
The Corporation shall pay interest on the Exchange Debentures at the rate
and on the dates specified therein from the Exchange Date.
(C) If notice has been mailed as aforesaid, and if before
the Exchange Date specified in such notice (1) the Exchange Indenture shall
have been duly executed and delivered by the Corporation and the Debenture
Trustee thereunder and (2) all Exchange Debentures necessary for such
exchange shall have been duly executed by the Corporation and delivered to
the Debenture Trustee under the Exchange Indenture with irrevocable
instructions to authenticate the Exchange Debentures necessary for such
exchange, then the rights of the Holders of Exchangeable Preferred Stock so
exchanged as shareholders of the Corporation shall cease (except the right
to receive Exchange Debentures, an amount in cash, to the extent
applicable, equal to the amount of accrued and unpaid dividends to the
Exchange Date and, if the Corporation so elects, cash in lieu of any
Exchange Debenture that is in a principal amount that is not an integral
multiple of $1,000), and the Person or Persons entitled to receive the
Exchange Debentures issuable upon exchange shall be treated for all
purposes
11
<PAGE>
as the registered holder or Holders of such Exchange Debentures as of the
Exchange Date.
(iii) No Exchange in Certain Cases. Notwithstanding the foregoing
provisions of this paragraph (g), the Corporation shall not be entitled to
exchange the Exchangeable Preferred Stock for Exchange Debentures if such
exchange, or any term or provision of the Exchange Indenture or the
Exchange Debentures, or the performance of the Corporation's obligations
under the Exchange Indenture or the Exchange Debentures, shall materially
violate or conflict with any applicable law or agreement or instrument then
binding on the Corporation or if, at the time of such exchange, the
Corporation is insolvent or if it would be rendered insolvent by such
exchange.
(h) Conversion or Exchange. The Holders of shares of Exchangeable
----------------------
Preferred Stock shall not have any rights hereunder to convert such shares into
or exchange such shares for shares of any other class or classes or of any other
series of any class or classes of Capital Stock of the Corporation.
(i) Reissuance of Exchangeable Preferred Stock. Shares of
------------------------------------------
Exchangeable Preferred Stock that have been issued and reacquired in any manner,
including shares purchased or redeemed or exchanged, shall (upon compliance with
any applicable provisions of the laws of Florida) have the status of authorized
but unissued shares of preferred stock undesignated as to series and may be
redesignated and reissued as part of any series of preferred stock, provided
--------
that any issuance or reissuance of such shares as Exchangeable Preferred Stock
must be in compliance with the terms hereof.
(j) Business Day. If any payment, redemption or exchange shall be
------------
required by the terms hereof to be made on a day that is not a Business Day,
such payment, redemption or exchange shall be made on the immediately succeeding
Business Day.
(k) Definitions. As used in this Amendment, the following terms
-----------
shall have the following meanings (with terms defined in the singular having
comparable meanings when used in the plural and vice versa), unless the context
otherwise requires:
"Acquired Preferred Stock" means the preferred stock of CLC acquired
------------------------
on the effective date, and by operation, of the Merger and the preferred stock
of a Person of any of its Subsidiaries at the time such Person becomes a
Subsidiary which will remain outstanding after the Merger of the Corporation or
at the time it merges or consolidates with the Corporation or any of its
Subsidiaries or assumed in connection with the acquisition of assets from such
Person and in each case not incurred by such Person in connection with, or in
anticipation or contemplation of, such Person becoming a Subsidiary of the
Corporation or such acquisition, merger or consolidation unless issued in
connection with a tax-advantaged asset acquisition.
"Affiliate" means, with respect to any specified Person, any other
---------
Person who directly or indirectly through one or more intermediaries controls,
or is controlled
12
<PAGE>
by, or is under common control with, such specified Person. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative of the foregoing.
"Board of Directors" shall have the meaning ascribed to it in the
------------------
first paragraph of this Resolution.
"Board Resolution" means, with respect to any Person, a copy of a
----------------
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Transfer Agent.
"Business Day" means any day that is not a Saturday, a Sunday or a day
------------
on which banking institutions in New York, New York are required to be closed.
"Capital Stock" means (i) with respect to any Person that is a
-------------
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of Common Stock and preferred stock of such Person and (ii) with
respect to any Person that is not a corporation, any and all partnership or
other equity interests of such Person.
"Commission" means the Securities and Exchange Commission.
----------
"Common Stock" of any Person means any and all shares, interests or
------------
other participations in, and other equivalents (however designated and whether
voting or non-voting) of such Person's common stock, whether outstanding on the
Effective Date or issued after the Effective Date, and includes, without
limitation, all series and classes of such common stock.
"Continuing Directors" means, as of any date of determination, any
--------------------
member of the Board of Directors of the Corporation who (i) was a member of such
Board of Directors on the first day of the two-year period immediately preceding
such date of determination or (ii) was nominated for election or elected to such
Board of Directors with, or whose election to such Board of Directors was
approved by, the affirmative vote of a majority of the Continuing Directors who
were members of such Board of Directors at the time of such nomination or
election or (iii) is any designee of the Principal or its Affiliates or was
nominated by the Principal or its Affiliates or any designees of the Principal
or its Affiliates on the Board of Directors.
"Debenture Trustee" means Wilmington Trust Company, the trustee under
-----------------
the Exchange Indenture.
"Disqualified Capital Stock" means that portion of any Capital Stock
--------------------------
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the
13
<PAGE>
sole option of the holder thereof on or prior to the date of the mandatory
redemption of the Exchangeable Preferred Stock.
"Dividend Payment Date" means September 15, December 15, March 15 and
---------------------
June 15 of each year.
"Dividend Period" means the Initial Dividend Period and, thereafter,
---------------
each Quarterly Dividend Period.
"Dividend Record Date" means September 1, December 1, March 1 and June
--------------------
1 of each year.
"Effective Date" means August 28, 1998, the date the first share of
--------------
Exchangeable Preferred Stock is issued.
"Exchangeable Preferred Stock" shall have the meaning ascribed to it
------------------------------
in paragraph (a) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
or any successor statute or statutes thereto.
"Exchange Date" means a date on which shares of Exchangeable Preferred
-------------
Stock are exchanged by the Corporation for Exchange Debentures.
"Exchange Debentures" shall have the meaning ascribed to it in
-------------------
paragraph (g) hereof.
"Exchange Indenture" shall mean the indenture dated as of August 28,
------------------
1998 by and between the Corporation and Wilmington Trust Company, as Trustee
governing the Exchange Debentures, if issued.
"Exchange Notice" shall have the meaning ascribed to it in paragraph
---------------
(g) hereof.
"Fair market value" means, with respect to any asset or property, the
-----------------
price which could be negotiated in an arm's-length, free market transaction, for
cash, between a willing seller and a willing and able buyer, neither of whom is
under undue pressure or compulsion to complete the transaction. Fair market
value shall be determined by the Board of Directors of the Corporation acting
reasonably and in good faith and shall be evidenced by a Board Resolution of the
Board of Directors of the Corporation delivered to the Transfer Agent.
"GAAP" means generally accepted accounting principles set forth in the
----
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, which are in effect as of the Effective Date.
Except as otherwise set forth herein,
14
<PAGE>
all ratios and computations based on GAAP contained in this Amendment shall be
computed in conformity with GAAP applied on a consistent basis.
"Holder" means a holder of shares of Exchangeable Preferred Stock as
------
reflected in the stock books of the Corporation.
"Indenture" means the indenture, governing the Notes and the Exchange
---------
Notes.
"Initial Dividend Period" means the dividend period commencing on the
-----------------------
Issue Date and ending on the next succeeding Dividend Payment Date.
"Issue Date" means, with respect to each share of Exchangeable
----------
Preferred Stock, the date of original issuance of such share.
"Merger" means the merger of Chemical Leaman Corporation ("CLC") with
------
and into a subsidiary of the Corporation on the Effective Date pursuant to the
Agreement and Plan of Merger ("Merger Agreement") among Palestra Acquisition
Corp., CLC and the shareholders of CLC dated as of June 23, 1998 as amended by
Amendment No. 1 to the Merger Agreement dated as of July 27, 1998, and Amendment
No. 2 to the Merger Agreement dated as of August 25, 1998.
"Person" means an individual, partnership, limited liability company,
------
unincorporated organization, trust or joint venture, or a governmental agency or
political subdivision thereof.
"Principal" means Apollo Management L.P. and its Affiliates.
---------
"Public Equity Offering" means an underwritten public offering of
----------------------
Qualified Capital Stock of the Corporation, pursuant to a registration statement
filed with the Commission in accordance with the Securities Act.
"Qualified Capital Stock" means any Capital Stock that is not
-----------------------
Disqualified Capital Stock.
"Quarterly Dividend Period" shall mean the quarterly period commencing
-------------------------
on each March 15, June 15, September 15 and December 15 and ending on the day
preceding the next succeeding Dividend Payment Date, respectively.
"Redemption Date," with respect to any shares of Exchangeable
---------------
Preferred Stock, means the date on which such shares of Exchangeable Preferred
Stock are to be redeemed by the Corporation.
"Redemption Notice" shall have the meaning ascribed to it in paragraph
-----------------
(e) (iii) hereof.
"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
successor statute or statutes thereto.
15
<PAGE>
"Subsidiary", with respect to any Person, means (i) any corporation of
----------
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person or (ii) any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"TIA" shall mean the Trust Indenture Act of 1939, as amended.
---
"Transfer Agent" shall mean Wilmington Trust Company.
--------------
"Voting Rights Triggering Event" shall have the meaning ascribed to it
------------------------------
in paragraph (f)(iv) hereof.
16
<PAGE>
IN WITNESS WHEREOF, said MTL has caused this Amendment to be signed by
Charles J. O'Brien, Jr., its President and Chief Executive Officer, this 27th
day of August, 1998.
MTL Inc.
By:_______________________________
Name: Charles J. O'Brien Jr.
Title: President and Chief
Executive Officer
17
<PAGE>
EXHIBIT 4.5
[SEAL OF THE STATE OF FLORIDA]
FLORIDA DEPARTMENT OF STATE
Sandra B. Mortham
Secretary of State
August 31, 1998
CSC
JANNA WILSON
TALLAHASSEE, FL
Re: Document Number P94000029737
The Articles of Amendment to the Articles of Incorporation for MTL Inc., a
Florida corporation, were filed on August 28, 1998.
The certification requested is enclosed.
Should you have any question regarding this matter, please telephone (850)
487-6050, the Amendment Filing Section.
Teresa Brown
Corporate Specialist
Division of Corporations Letter Number: 998A00044756
Account number: 072100000032 Account charged: 87.50
Division of Corporations - P.O. BOX 6327 - Tallahassee, Florida 32314
<PAGE>
STATE OF FLORIDA
[GRAPHIC]
DEPARTMENT OF STATE
I certify the attached is a true and correct copy of the Articles of Amendment,
filed on August 28, 1998, to Articles of Incorporation for MTL INC., a Florida
corporation, as shown by the records of this office.
The document number of this corporation is P94000029737.
Given under my hand and the
Great Seal of the State of Florida
at Tallahassee, the Capitol, this the
Thirty-first day of August, 1998
[Seal of the State of Florida] /s/ Sandra B. Mortham
CR2EO22 (2-95) Sandra B. Mortham
Secretary of State
<PAGE>
ARTICLES OF AMENDMENT
$.01 PAR VALUE PER SHARE
OF
MTL, INC.
A FLORIDA CORPORATION
----------------------------------------
Pursuant to Section 607.0602 of the
Florida General Corporation Act
----------------------------------------
MTL, Inc. (the "Corporation"), a corporation organized and existing under
-----------
the Florida Business Corporation Act, does hereby certify that, pursuant to the
authority conferred upon the board of directors of the Corporation (the "Board
-----
of Directors") by its Articles of Incorporation, and pursuant to the provisions
- ------------
of Section 607.0602 of the Florida Business Corporation Act, said Board of
Directors, by unanimous written consent dated as of August 25, 1998, duly
approved and adopted the following amendment (the "Amendment") to the
---------
Corporation's Articles of Incorporation:
RESOLVED, that, pursuant to the authority vested in the Board of
Directors by the Corporation's Articles of Incorporation, the Board of
Directors does hereby create, authorize and provide for the issuance of 8%
Redeemable Preferred Stock, par value $.01 per share, with a stated value
of $100.00 per share, consisting of an aggregate of 100,000 shares, having
the preferences, limitations and relative rights set forth in the Articles
of Incorporation and in this Amendment as follows:
1. NUMBER OF SHARES AND DESIGNATIONS
100,000 of the shares of the Corporation's preferred stock, $.01 par value,
are hereby designated the "Redeemable Preferred Stock." 50,000 of such shares
of Redeemable Preferred Stock shall be issued as of the date of filing and the
remainder shall be reserved for future issuance by the Corporation as payment-
in-kind dividends pursuant to Section 4 of these Articles of Amendment.
2. VOTING RIGHTS
Except as otherwise required by law, these Articles of Amendment or the
Amended and Restated Certificate of Incorporation of the Corporation, shares of
Redeemable Preferred Stock shall not be entitled to voting rights.
3. CONVERSION RIGHTS
The shares of the Redeemable Preferred Stock shall not have any conversion
rights.
<PAGE>
4. DISTRIBUTIONS
(a) Dividends. Subject to the restrictions contained in any Senior Stock,
---------
each holder of shares of outstanding Redeemable Preferred Stock shall be
entitled to receive when and as declared by the Board of Directors of the
Corporation, out of funds legally available therefor, dividends on the shares of
the Redeemable Preferred Stock held by such holder, at the rate of 8.0% per
annum on the Stated Value (as defined herein) of the shares of Redeemable
Preferred Stock held by such holder on the applicable dividend payment date
(including all Closing Date Shares and all shares previously issued as PIK
Shares). Dividends shall be payable annually in arrears on December 31 of each
year. Dividends on the Redeemable Preferred Stock shall be payable, at the
option of the Corporation, in kind from the Closing Date until the third
anniversary of the Closing Date, and thereafter in cash. Dividends on the
Redeemable Preferred Stock shall be payable in preference to and in priority
over dividends on any Junior Stock. Dividends shall be cumulative.
(b) Record Date. The dividends payable with respect to the Redeemable
-----------
Preferred Stock shall be paid to each holder of shares of the Redeemable
Preferred Stock as such holder's name appears on the stock register maintained
by the Corporation or its agent on such date as shall be fixed by the Board of
Directors of the Corporation, which record date shall not be more than 60 days
prior to the applicable dividend payment date.
(c) Restrictions in Respect of Junior Stock. Except as set forth herein, or
---------------------------------------
to the extent approval is provided in writing by the holders of a majority of
the outstanding shares of Redeemable Preferred Stock (voting as a separate
class), unless the Corporation has paid or simultaneously pays all accrued
dividends that are due and payable in respect of the Redeemable Preferred Stock,
the Corporation shall not declare or pay any dividends on its Junior Stock,
except that the Corporation may: (i) effect a stock split of, or declare or pay
any dividend on, the Junior Stock consisting solely of additional shares of
Junior Stock; (ii) comply with any specific provision of the terms of any
subsequently designated series of Preferred Stock approved by the holders of the
Redeemable Preferred Stock as provided for herein; or (iii) redeem or repurchase
any stock of any director, officer, employee, consultant or other person or
entity, pursuant to a stock repurchase agreement or stock restriction agreement
approved by the board of directors under which the Corporation has the right or
obligation to repurchase (in the event of death, termination of employment or of
the consulting arrangement, or other similar discontinuation of a business
relationship) vested shares at no more than their fair market value and unvested
shares at no more than their initial issuance price.
5. LIQUIDATION, DISSOLUTION OR WINDING UP
In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, before any distribution or
payment is made to any holders of Junior Stock, after the holders of Senior
Stock have been paid all amounts payable to them under the terms of such Senior
Stock on a liquidation, dissolution or winding up of the Corporation, the
holders of each share of Redeemable Preferred Stock shall be entitled to be paid
first out of the assets of the Corporation available for
2
<PAGE>
distribution to holders of the Redeemable Preferred Stock and the Pari Passu
Stock, whether such assets are capital, surplus or earnings ("Available
---------
Assets"), an amount in respect of each share of Redeemable Preferred Stock equal
- ------
to the Redemption Price.
If, upon liquidation, dissolution or winding up of the Corporation, the
Available Assets shall be insufficient to pay the holders of Redeemable
Preferred Stock and Pari Passu Stock the full amounts to which they otherwise
would be entitled, the holders of Redeemable Preferred Stock and the Pari Passu
Stock shall share ratably in any distribution of Available Assets pro rata in
proportion to the respective liquidation preference amounts which would
otherwise be payable upon liquidation with respect to the outstanding shares of
the Redeemable Preferred Stock and such Pari Passu Stock if all liquidation
preference dollar amounts with respect to such shares were paid in full.
6. OPTIONAL REDEMPTION
(a) Redemption Right; Redemption Price. Shares of Redeemable Preferred
----------------------------------
Stock shall be redeemable, in whole or in part, at the option of the
Corporation, for a Redemption Price (the "Redemption Price") equal to (i) the
----------------
Stated Value multiplied by the amount set forth below under the applicable
column entitled "Premium to Stated Value" determined based on the actual
Redemption Date as set forth below under the column entitled "Day Following C
losing Date", plus (ii) accrued and unpaid dividends:
----
Premium to
Day Following Closing Date Stated Value
- -------------------------- -------------------
From first day to last day of 42nd month 100%
From first day of 43rd month to last day of 54th month 105%
From first day of 54th month to last day of 66th month 110%
From first day of 66th month to last day of 78th month 115%
Thereafter 120%
(b) Notice. The Corporation may exercise its rights pursuant to this
------
Section 6 by delivering a notice to each holder of record at such holder's
address as the same appears on the stock register maintained by the Corporation
or its agent on such date as shall be fixed by the Board of Directors of the
Corporation, provided that no failure to give such notice or any deficiency
--------
therein shall affect the Corporation's right to redeem the shares of Redeemable
Preferred Stock to be redeemed (but if the Corporation does not provide such
notice to any holder, or provides deficient notice to any holder, and such
holder does not deliver the applicable certificates, dividends shall continue to
accrue until the earlier to occur of the provision of adequate notice and the
delivery of certificates). Such notice shall set forth the date of the
applicable redemption, the number of shares to be redeemed from the holders
(and, if less than all shares are to be redeemed, the percentage of the
outstanding shares to be redeemed), the redemption price and where certificates
representing the shares to be redeemed should be mailed. In the event of a
redemption, shares of Redeemable Preferred stock shall be redeemed pro rata in
accordance with each holder's percentage ownership of the outstanding shares of
Redeemable Preferred Stock.
3
<PAGE>
(c) Rights of Holders After Redemption Date. At any time on or after any
---------------------------------------
redemption date, the holders of record of shares of Redeemable Preferred Stock
shall be entitled to receive the applicable redemption price upon actual
delivery to the Corporation or its agents of the certificates representing the
shares to be redeemed.
7. MANDATORY REDEMPTION
(a) Maturity. Subject to the Corporation having funds legally available
--------
for such purpose, the Corporation shall redeem all of the shares of Redeemable
Preferred Stock on the ninth anniversary of the Closing Date. The price payable
for any redemption pursuant to this Section 7(a) shall be the Redemption Price
for all shares being redeemed, plus accrued and unpaid dividends thereon.
(b) Sale Event. Subject to the Corporation having funds legally available
----------
for such purpose, upon the consummation of a Sale Event, the Corporation shall
redeem all of the shares of Redeemable Preferred Stock. The price payable for
any redemption pursuant to this Section 7(b) shall be the Redemption Price for
all shares being redeemed.
(c) Qualified IPO. Subject to the Corporation having funds legally
-------------
available for such purpose, upon the consummation of a Qualified IPO, the
Corporation shall use 50% of the IPO Net Proceeds to redeem shares of Redeemable
Preferred Stock pursuant to Section 6. Such redemption shall take place within
30 days following the consummation of a Qualified IPO.
(d) Notice. Prior to any redemption pursuant to this Section 7, the
------
Corporation shall deliver a notice to each holder of record at such holder's
address as the same appears on the stock register maintained by the Corporation
or its agent on such date as shall be fixed by the Board of Directors of the
Corporation on such date as shall be fixed by the Board of Directors of the
Corporation, provided that no failure to give such notice or any deficiency
therein shall affect the Corporation's obligation to redeem the shares of
Redeemable Preferred Stock to be so redeemed. Such notice shall set forth the
date of the applicable redemption, the number of shares to be redeemed from the
holders (and, if less than all shares are to be redeemed, the percentage of the
outstanding shares to be redeemed), the redemption price and where certificates
representing the shares to be redeemed should be mailed (but if the Corporation
does not provide such notice to any holder, or provides deficient notice to any
holder, and such holder does not deliver the applicable certificates, dividends
shall continue to accrue until the earlier to occur of the provision of adequate
notice and the delivery of certificates). In the event of a redemption, shares
of Redeemable Preferred Stock shall be redeemed pro rata in accordance with each
holder's percentage ownership of the outstanding shares of Redeemable Preferred
Stock.
(e) Rights of Holders After Redemption Date. At any time on or after any
---------------------------------------
redemption date pursuant to this Section 7, the holders of record of shares of
Redeemable Preferred Stock shall be entitled to receive the applicable
redemption price upon actual delivery to the Corporation or its agents of the
certificates representing the shares of Redeemable Preferred Stock to be
redeemed.
4
<PAGE>
8. EXCHANGE
(a) Requirements. The outstanding shares of Redeemable Preferred Stock are
------------
exchangeable, in whole but not in part, at the option of the Corporation, at any
time for the Corporation's Exchange Debentures; provided, that any such exchange
--------
may only be made if there shall be no contractual impediment to such exchange.
The exchange rate shall be $1.00 principal amount of Exchange Debentures for
each $1.00 of Stated Value of Redeemable Preferred Stock. The Exchange
Debentures shall be issued in principal amounts of $100 and integral multiples
thereof to the extent possible.
(b) Procedure for Exchange.
----------------------
At least thirty (30) days and not more than sixty (60) days prior to
the date fixed for exchange, written notice (the "Exchange Notice") shall be
---------------
given by the Corporation by first-class mail, postage prepaid, to each holder of
record at such holder's address as the same appears on the stock register
maintained by the Corporation or its agent, provided, that no failure to give
--------
such notice or any deficiency therein shall affect the validity of the procedure
for the exchange of shares of Redeemable Preferred Stock to be exchanged. The
Exchange Notice shall state (i) the date fixed for exchange (the "Exchange
--------
Date"), (ii) that the holder is to surrender to the Corporation, in the manner
- ----
and at the place or places designated, his certificate or certificates
representing all his shares of Redeemable Preferred Stock to be exchanged, (iii)
that interest on the Exchange Debentures shall accrue from the Exchange Date
whether or not certificates for shares of Redeemable Preferred Stock are
surrendered for exchange on the Exchange Date.
On or before the Exchange Date, each holder of shares of Redeemable
Preferred Stock shall surrender the certificates representing such shares of
Redeemable Preferred Stock, in the manner and at the place designated in the
Exchange Notice. The Corporation shall cause the Exchange Indenture and the
Exchange Debentures to be executed on the Exchange Date and, upon surrender in
accordance with the Exchange Notice of the certificates for the shares of
Redeemable Preferred Stock so exchanged, duly endorsed (or otherwise in proper
form for transfer, as determined by the Corporation), such shares shall be
exchanged by the Corporation into Exchange Debentures. The Corporation shall
pay interest on the Exchange Debentures at the rate and on the dates specified
therein from the Exchange Date. If notice has been mailed as aforesaid, and if
before the Exchange Date specified in such notice all Exchange Debentures
necessary for such exchange shall have been duly executed by the Corporation and
delivered to the trustee under the Exchange Indenture with irrevocable
instructions to authenticate the Exchange Debentures necessary for such
exchange, then the rights of the holders of Redeemable Preferred Stock so
exchanged as stockholders of the Corporation shall cease (except the right to
receive Exchange Debentures (including Exchange Debentures issued in exchange
for shares of Redeemable Preferred Stock) and, if the Corporation so elects,
cash in lieu of any Exchange Debenture not an integral multiple of $100), and
the Person or Persons entitled to receive the Exchange Debentures issuable upon
exchange shall be treated for all purposes as the registered holder or holders
of such Exchange Debentures as of the Exchange Date.
5
<PAGE>
(c) No Exchange in Certain Cases. Notwithstanding the foregoing provisions
----------------------------
of this Section 8, the Corporation shall not be entitled or required to exchange
the Redeemable Preferred Stock for Exchange Debentures if (i) such exchange, any
term or provision of the Exchange Indenture or the Exchange Debentures, or the
performance of the Corporation's obligations under the Exchange Indenture or the
Exchange Debentures, shall materially violate or conflict with any applicable
law or agreement or instrument then binding on the Corporation, including
agreements with the holders of indebtedness of the Corporation or its
subsidiaries, or if, at the time of such exchange or (ii) the Corporation is
insolvent or would be rendered insolvent by such exchange.
9. RESTRICTIONS AND LIMITATIONS ON AMENDMENTS
The Corporation shall not amend the rights, preferences, privileges of or
limitations provided for herein for the benefit of holders of shares of
Redeemable Preferred Stock in a manner that is adverse to such holders without
the approval by vote or written consent of the holders of at least a majority of
the then outstanding shares of Redeemable Preferred Stock, voting as a single
class (each share of Redeemable Preferred Stock to be entitled to one vote in
each instance). The Corporation shall not increase the number of shares
designated as Redeemable Preferred Stock, issue any of the shares of Redeemable
Preferred Stock that are reserved for issuance as payment-in-kind dividends
other than as payment-in-kind dividends, or reissue any share of Redeemable
Preferred Stock after such share has been redeemed.
10. FORFEITURE/REDUCTION OF STATED VALUE
(a) Initial PIK Shares. The Stated Value of outstanding Initial PIK Shares
------------------
held by each holder shall be reduced from time to time by such holder's Pro Rata
Initial PIK Reduction Amount. "Pro Rata Initial PIK Reduction Amount" means,
-------------------------------------
with respect to each holder, as of any time, the product of (i) the aggregate
amount of Purchaser Losses for which Purchaser is entitled to receive payments
referred to in Section 8.4 of the Merger Agreement, but excluding those
Purchaser Losses arising out of conditions identified on Schedule 7.3(p)(2) of
the Merger Agreement, incurred since the time of the most recently preceding
reduction of the Stated Value pursuant to this Section 10(a), if any, to the
extent that the Purchaser has not drawn on the Qualified Letters of Credit in
respect of such Purchaser Losses, multiplied by (ii) a fraction, the numerator
of which is the Stated Value of the outstanding Initial PIK Shares held by such
holder at such time (giving effect to all reductions of the Stated Value that
occurred prior to such time but without giving effect to the reduction
contemplated by this Section 10(a) at such time) and the denominator of which is
the Stated Value of the outstanding Initial PIK Shares held by all holders
thereof at such time (giving effect to all reductions of the Stated Value that
occurred prior to such time but without giving effect to the reduction
contemplated by this Section 10(a) at such time).
(b) PIK on PIK Shares. The Stated Value of outstanding PIK on PIK Shares
-----------------
held by each holder shall be reduced from time to time by such holder's Pro Rata
PIK on PIK Reduction Amount. "Pro Rata PIK on PIK Reduction Amount" means, with
------------------------------------
respect to each holder, at the time of any determination of the Pro Rata Initial
PIK Reduction Amount, the product of (i) the aggregate Stated Value of all PIK
on PIK Shares held by
6
<PAGE>
such holder at such time (giving effect to all reductions of the Stated Value
that occurred prior to such time but without giving effect to any reduction
pursuant to this Section 10(b) at such time), multiplied by (ii) a fraction not
to exceed one, the numerator of which is the aggregate reduction of the Stated
Value of the Initial PIK Shares held by such holder pursuant to Section 10(a) at
such time and the denominator of which is the aggregate Stated Value of the
Initial PIK Shares on which PIK on PIK Shares have been issued prior to or at
such time (before giving effect to the reduction contemplated by Section 10(a)
at such time). Notwithstanding anything to the contrary contained herein, if the
Stated Value of the Initial PIK Shares shall be reduced to zero pursuant to
Section 10(a), then the Stated Value of the PIK on PIK Shares shall be reduced
to zero.
(c) Closing Date Shares. If the Stated Value of all outstanding PIK
-------------------
Shares, if any, is reduced to zero pursuant to Sections 10(a) and (b), the
Stated Value of all Closing Date Shares that are held by each holder shall be
reduced by such holders Original Issuance Reduction Amount. "Original Issuance
-----------------
Reduction Amount" means, with respect to each holder, (i) the aggregate amount
- ----------------
of Purchaser Losses for which Purchaser is entitled to receive payments referred
to in Section 8.4 of the Merger Agreement, but excluding those Purchaser Losses
arising out of conditions identified on Schedule 7.3(p)(2) of the Merger
Agreement, incurred since the time of the most recent reduction of the Stated
Value pursuant to this Section 10(c), if any, but only to the extent that (A)
such Purchaser Losses have not been provided for or satisfied pursuant to
Section 10(a) and (B) the Purchaser has not drawn on the Qualified Letters of
Credit in respect of such Purchaser Losses, multiplied by (ii) a fraction, the
numerator of which is the Stated Value of the outstanding Closing Date Shares
held by such holder at such time (giving effect to all reductions of the Stated
Value that occurred prior to such time but without giving effect to the
reduction contemplated by this Section 10(c) at such time) and the denominator
of which is the Stated Value of all outstanding Closing Date Shares (giving
effect to all reductions of the Stated Value that occurred prior to such time
but without giving effect to the reduction contemplated by this Section 10(c) at
such time).
(d) Notice of Stated Value Reduction; Amendment to Stock Certificates.
-----------------------------------------------------------------
From time to time, the Corporation will deliver a notice to each holder of the
amount of the aggregate reduction of the Stated Value of shares of Redeemable
Preferred Stock. Such notice will indicate the portion of such reduction
applicable to Initial PIK Shares, PIK on PIK Shares and Closing Date Shares and
will indicate the aggregate Stated Value of all such outstanding shares
immediately before giving effect to any reduction pursuant to this Section 10.
Each holder agrees to attach such notices to the certificates representing
shares of Redeemable Preferred Stock held by such holder and such notice shall
become a part of such certificate.
11. RESTRICTIONS ON TRANSFER
Shares of Redeemable Preferred Stock may not be sold or otherwise
transferred without the prior written consent of the Corporation, other than to
family members of the holder thereof and to trusts for the purpose of estate
planning (provided that any such transfer shall not, in any way, limit the
Corporation's rights hereunder). Any sale or
7
<PAGE>
transfer made in violation of this Section 11 shall be void and the Corporation
and its agents shall have no obligation to record any such transfer on its
books.
12. NOTICES
In the event of (a) any taking by the Corporation of a record of the
holders of shares of Redeemable Preferred Stock for the purpose of determining
the holders thereof who are entitled to receive any dividends or other
distribution or (b) any voluntary or involuntary dissolution, liquidation or
winding up of the Corporation, then and in each such event the Corporation shall
deliver or cause to be delivered to each holder of Redeemable Preferred Stock as
they appear on the stock records of the Corporation a notice specifying (i) the
date on which any such record is to be taken for the purpose of such dividend,
distribution or right and a description of such dividend, distribution or right,
(ii) the date on which any such event is expected to become effective, and (iii)
the time, if any, that is to be fixed, as to when the holders of record of
Common Stock (or other securities) shall be entitled to exchange their shares of
Common Stock (or other securities) for securities or other property deliverable
upon such event. Such notice shall be mailed by first class mail, postage
prepaid, at least ten (10) days prior to the date specified in such notice on
which action is being taken.
13. DEFINITIONS
As used herein, the following terms have the following meanings:
"Affiliate" means, with respect to any Person, any other Person that
---------
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with such Person. For the purpose of
the above definition, the term "control" (including, with correlative meaning,
the terms "controlling", "controlled by", and "under common control with"), as
used with respect to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise.
"CLC" means Chemical Leaman Corporation, a Pennsylvania corporation.
---
"Closing Date" means the date of consummation of the merger of Palestra
------------
Acquisition Corp., a Delaware corporation, with and into CLC.
"Closing Date Shares" means shares of Redeemable Preferred Stock issued on
-------------------
the Closing Date.
"Exchange Debentures" means the junior subordinated notes with terms
-------------------
consistent with the terms and conditions of the Redeemable Preferred Stock,
including but not limited to an annual interest rate equal to the per annum
dividend rate, a maturity on the ninth anniversary of the Closing Date, optional
prepayment terms that will provide the same premium to principal and accrued
interest as the premium to stated value and accrued but unpaid dividends set
forth herein, and mandatory prepayment terms that will provide the same premium
to principal and accrued interest as the premium to stated value and accrued but
unpaid dividends set forth herein.
8
<PAGE>
"Exchange Indenture" shall mean an indenture to be prepared by the
------------------
Corporation at the time of the exchange of the Redeemable Preferred Stock for
Exchange Debentures, such indenture to be in a form customary for an indenture
of its type and in a form reasonably acceptable to the holders of a majority of
the outstanding shares of Redeemable Preferred Stock.
"Initial PIK Shares" means PIK Shares that are issued as a payment-in-kind
------------------
dividend on Closing Date Shares.
"IPO Net Proceeds" means (a) the proceeds from the sale by the Corporation
----------------
of newly issued shares of common stock of the Corporation in a Qualified IPO
less (b) all fees and expenses (including underwriting discounts and
commissions) incurred in connection therewith.
"Junior Stock" means common stock of the Corporation (whether or not it is
------------
so titled) and any other capital stock that expressly states that it shall rank
junior to the Redeemable Preferred Stock with respect to dividends, whether
issued prior to, on or after the Closing Date.
"Merger Agreement" means the Agreement and Plan of Merger dated as of June
----------------
23, 1998, between Palestra Acquisition Corp. and Chemical Leaman Corporation, as
amended, supplemented or restated from time to time.
"Pari Passu Stock" means capital stock of the Corporation that is not
----------------
Junior Stock or Senior Stock.
"Person" shall be construed broadly and shall include, without limitation,
------
an individual, a partnership, an investment fund, a limited liability
corporation, a corporation, an association, a joint stock corporation, a trust,
a joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"PIK Shares" means shares of Redeemable Preferred Stock issued as a
----------
payment-in-kind dividend pursuant to Section 4.
"PIK on PIK Shares" means PIK Shares issued as a payment-in-kind dividend
-----------------
on PIK Shares pursuant to Section 4.
"Purchaser Losses" has the meaning set forth in the Merger Agreement.
----------------
"Qualified IPO" means the sale of newly issued shares of common stock of
-------------
the Corporation in an underwritten initial public offering that is registered
under the Securities Act.
"Qualified Letter of Credit" has the meaning set forth in the Merger
--------------------------
Agreement.
"Sale Event" means the occurrence of any of the following events (each a
----------
"Sale Event"):
- -----------
9
<PAGE>
(a) The merger or consolidation of the Corporation with or into a
Third Party or the merger of a Third Party with or into the Corporation,
and, in the case of any such merger or consolidation, shares of common
stock of the Corporation that are outstanding immediately prior to such
transaction are changed into or exchanged for cash, securities or
property, unless pursuant to such transaction such securities are
changed into or exchanged for, in addition to any other consideration,
securities of the surviving Person or transferee that represent,
immediately after such transaction, at least a majority of the
outstanding shares of common stock of the surviving Person.
(b) The sale of all or substantially all of the assets of the
Corporation to any Third Party.
(c) A Third Party becomes the owner of at least a majority of the
outstanding shares of common stock of the Corporation that are entitled
to vote generally in the election of the Corporation's directors.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Senior Stock" means capital stock of the Corporation that expressly states
------------
that it shall rank senior to the Redeemable Preferred Stock, whether issued
prior to, on or after the Closing Date. Common Stock, whether or not so called,
shall never be Senior Stock.
"Stated Value" means $100 per share of Redeemable Preferred Stock, as the
------------
same shall be reduced pursuant to Section 10.
"Third Party" means any Person that is not an Affiliate of the Corporation.
-----------
10
<PAGE>
IN WITNESS WHEREOF, the officers named below, acting for and on behalf of
the Corporation, have hereunto subscribed their names on this 27th day of
August, 1998.
MTL, INC.
By: /s/ Charles J. O'Brien, Jr.
----------------------------------
Name: Charles J. O'Brien. Jr.
Title: President and Chief
Executive Officer
11
<PAGE>
EXHIBIT 4.6
________________________________________________
MTL INC.
as Issuer
and
WILMINGTON TRUST COMPANY
as Trustee
___________________
INDENTURE
Dated as of August 28, 1998
___________________
13.75% Subordinated Exchange Debentures due 2006
_________________________________________________
<PAGE>
CROSS-REFERENCE TABLE
---------------------
<TABLE>
<CAPTION>
TIA Section Indenture Section
- ------------------------------------------------------- ---------------------------
<S> <C>
310(a)(1)............................................ 7.10
(a)(2)............................................ 7.10
(a)(3)............................................ N.A.
(a)(4)............................................ N.A.
(a)(5)............................................ 7.08; 7.10
(b)............................................... 7.08; 7.10; 11.02
(c)............................................... N.A.
311(a)............................................... 7.11
(b)............................................... 7.11
(c)............................................... N.A.
312(a)............................................... 2.05
(b)............................................... 11.03
(c)............................................... 11.03
313(a)............................................... 7.06
(b)(1)............................................ N.A.
(b)(2)............................................ 7.06
(c)............................................... 7.06; 11.02
(d)............................................... 7.06
314(a)............................................... 4.07; 4.08; 11.02
(b)............................................... N.A.
(c)(1)............................................ 11.04
(c)(2)............................................ 11.04
(c)(3)............................................ N.A.
(d)............................................... N.A.
(e)............................................... 11.05
(f)............................................... N.A.
315(a)............................................... 7.01(b)
(b)............................................... 7.05; 11.02
(c)............................................... 7.01(a)
(d)............................................... 7.01(c)
(e)............................................... 6.11
316(a)(last sentence)................................ 2.09
(a)(1)(A)......................................... 6.05
(a)(1)(B)......................................... 6.04
(a)(2)............................................ N.A.
(b)............................................... 6.07
(c)............................................... 9.05
317(a)(1)............................................ 6.08
(a)(2)............................................ 6.09
(b)............................................... 2.04
318(a)............................................... 11.01
(c)............................................... 11.01
</TABLE>
__________________
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
a part of the Indenture.
ii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions................................................ 1
Section 1.02. Incorporation by Reference of TIA.......................... 19
Section 1.03. Rules of Construction...................................... 20
ARTICLE TWO THE DEBENTURES
Section 2.01. Form and Dating............................................ 20
Section 2.02. Execution and Authentication; Aggregate Principal Amount... 21
Section 2.03. Registrar and Paying Agent................................. 22
Section 2.04. Paying Agent To Hold Assets in Trust....................... 23
Section 2.05. Securityholder Lists....................................... 23
Section 2.06. Transfer and Exchange...................................... 23
Section 2.07. Replacement Debentures..................................... 24
Section 2.08. Outstanding Debentures..................................... 24
Section 2.09. Treasury Debentures........................................ 24
Section 2.10. Temporary Debentures....................................... 25
Section 2.11. Cancellation............................................... 25
Section 2.12. Defaulted Interest......................................... 25
Section 2.13. CUSIP Numbers.............................................. 25
Section 2.14. Deposit of Moneys or Preferred Stock....................... 26
Section 2.15. Restrictive Legends........................................ 26
Section 2.16. Book-Entry Provisions for Global Security.................. 27
ARTICLE THREE REDEMPTION
Section 3.01. Notices to Trustee......................................... 28
Section 3.02. Selection of Debentures To Be Redeemed..................... 28
Section 3.03. Notice of Redemption....................................... 29
Section 3.04. Effect of Notice of Redemption............................. 30
Section 3.05. Deposit of Redemption Price................................ 30
Section 3.06. Debentures Redeemed in Part................................ 30
ARTICLE FOUR COVENANTS
Section 4.01. Payment of Debentures...................................... 30
Section 4.02. Maintenance of Office or Agency............................ 31
Section 4.03. Corporate Existence........................................ 31
Section 4.04. Payment of Taxes and Other Claims.......................... 31
Section 4.05. Maintenance of Properties and Insurance.................... 31
Section 4.06. Compliance Certificate; Notice of Default.................. 32
Section 4.07. Compliance with Laws....................................... 33
Section 4.08. Waiver of Stay, Extension or Usury Laws.................... 33
Section 4.09. Limitation on Restricted Payments.......................... 33
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Section 4.10. Limitation on Incurrence of Additional Indebtedness........ 35
ARTICLE FIVE SUCCESSOR CORPORATION
Section 5.01. Merger, Consolidation and Sale of Assets................... 36
Section 5.02. Successor Corporation Substituted.......................... 37
ARTICLE SIX DEFAULT AND REMEDIES
Section 6.01. Events of Default.......................................... 37
Section 6.02. Acceleration............................................... 38
Section 6.03. Other Remedies............................................. 39
Section 6.04. Waiver of Past Defaults.................................... 40
Section 6.05. Control by Majority........................................ 40
Section 6.06. Limitation on Suits........................................ 40
Section 6.07. Rights of Holders To Receive Payment....................... 41
Section 6.08. Collection Suit by Trustee................................. 41
Section 6.09. Trustee May File Proofs of Claim........................... 41
Section 6.10. Priorities................................................. 42
Section 6.11. Undertaking for Costs...................................... 42
ARTICLE SEVEN TRUSTEE
Section 7.01. Duties of Trustee.......................................... 42
Section 7.02. Rights of Trustee.......................................... 43
Section 7.03. Individual Rights of Trustee............................... 45
Section 7.04. Trustee's Disclaimer....................................... 45
Section 7.05. Notice of Default.......................................... 45
Section 7.06. Reports by Trustee to Holders.............................. 45
Section 7.07. Compensation and Indemnity................................. 45
Section 7.08. Replacement of Trustee..................................... 47
Section 7.09. Successor Trustee by Merger, Etc........................... 48
Section 7.10. Eligibility; Disqualification.............................. 48
Section 7.11. Preferential Collection of Claims Against Corporation...... 48
ARTICLE EIGHT DISCHARGE OF INDENTURE; DEFEASANCE
Section 8.01. Termination of the Company's Obligations................... 48
Section 8.02. Legal Defeasance and Covenant Defeasance................... 50
Section 8.03. Conditions to Legal Defeasance or Covenant Defeasance...... 51
Section 8.04. Application of Trust Money................................. 52
Section 8.05. Repayment to the Company................................... 53
Section 8.06. Reinstatement.............................................. 53
ARTICLE NINE AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.01. Without Consent of Holders................................. 54
Section 9.02. With Consent of Holders.................................... 54
Section 9.03. Effect on Senior Debt...................................... 55
Section 9.04. Compliance with TIA........................................ 56
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Section 9.05. Revocation and Effect of Consents.................................................................. 56
Section 9.06. Notation on or Exchange of Debentures.............................................................. 56
Section 9.07. Trustee To Sign Amendments, Etc.................................................................... 57
ARTICLE TEN SUBORDINATION
Section 10.01. Debentures Subordinated to Senior Debt............................................................ 57
Section 10.02. No Payment on Debentures in Certain Circumstances................................................. 57
Section 10.03. Payment Over of Proceeds upon Dissolution, Etc.................................................... 58
Section 10.04. Payments May Be Paid Prior to Dissolution......................................................... 60
Section 10.05. Subrogation....................................................................................... 60
Section 10.06. Obligations of the Company Unconditional.......................................................... 60
Section 10.07. Notice to Trustee................................................................................. 61
Section 10.08. Reliance on Judicial Order or Certificate of Liquidating Agent.................................... 61
Section 10.09. Trustee's Relation to Senior Debt................................................................. 62
Section 10.10. Subordination Rights Not Impaired by Acts or Omissions of the Company or Holders of Senior Debt... 62
Section 10.11. Securityholders Authorize Trustee To Effectuate Subordination of Debentures....................... 62
Section 10.12. This Article Ten Not To Prevent Events of Default................................................. 63
Section 10.13. Trustee's Compensation Not Prejudiced............................................................. 63
ARTICLE ELEVEN MISCELLANEOUS
Section 11.01. TIA Controls...................................................................................... 63
Section 11.02. Notices........................................................................................... 63
Section 11.03. Communications by Holders with Other Holders...................................................... 65
Section 11.04. Certificate and Opinion as to Conditions Precedent................................................ 65
Section 11.05. Statements Required in Certificate or Opinion..................................................... 65
Section 11.06. Rules by Trustee, Paying Agent, Registrar......................................................... 65
Section 11.07. Legal Holidays.................................................................................... 66
Section 11.08. Governing Law..................................................................................... 66
Section 11.09. No Adverse Interpretation of Other Agreements..................................................... 66
Section 11.10. No Recourse Against Others........................................................................ 66
Section 11.11. Successors........................................................................................ 66
Section 11.12. Duplicate Originals............................................................................... 66
Section 11.13. Severability...................................................................................... 67
SIGNATURES
Exhibit A..................................................................................................... A-1
</TABLE>
Note: This Table of Contents shall not, for any purpose, be deemed to be
part of the Indenture.
iii
<PAGE>
INDENTURE, dated as of August 28, 1998, between MTL, Inc., a Florida
corporation (the "Company"), and WILMINGTON TRUST COMPANY, a Delaware banking
corporation, as Trustee (the "Trustee").
Each party hereto agrees as follows for the benefit of the other party
and for the equal and ratable benefit of the Holders of the Debentures.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
-----------
"Acceleration Notice" has the meaning provided in Section 6.02(a).
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary of
the Company or at the time it merges or consolidates with the Company or any of
its Restricted Subsidiaries or assumed in connection with the acquisition of
assets from such Person and in each case not incurred by such Person in
connection with, or in anticipation or contemplation of, such Person becoming a
Restricted Subsidiary of the Company or such acquisition, merger or
consolidation, unless such Indebtedness is incurred in connection with a tax-
advantaged Asset Acquisition.
"Affiliate" means, with respect to any specified Person, any other
Person who directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with, such specified Person.
The term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative of the
foregoing.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Agent Members" has the meaning provided in Section 2.16.
"Asset Acquisition" means (a) an Investment by the Company or any
Restricted Subsidiary of the Company in any other Person pursuant to which such
Person shall become a Restricted Subsidiary of the Company or any Restricted
Subsidiary of the Company or shall be merged with or into the Company or any
Restricted Subsidiary of the Company, or (b) the acquisition by the Company or
any Restricted Subsidiary of the Company of the assets of any Person (other than
a Restricted Subsidiary of the Company) which constitute all or substantially
all of the assets of such Person or comprise any division or line of business of
such Person or any other properties or assets of such Person other than in the
ordinary course of business.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary course
of
<PAGE>
business), assignment or other transfer for value by the Company or any of its
Restricted Subsidiaries (including any Sale and Leaseback Transaction) to any
Person other than the Company or a Wholly Owned Restricted Subsidiary of the
Company of (a) any Capital Stock of any Restricted Subsidiary of the Company or
(b) any other property or assets of the Company or any Restricted Subsidiary of
the Company other than in the ordinary course of business; provided, however,
that Asset Sales shall not include (i) a transaction or series of related
transactions for which the Company or its Restricted Subsidiaries receive
aggregate consideration of less than $1.5 million, (ii) the sale, lease,
conveyance, disposition or other transfer of all or substantially all of the
assets of the Company as permitted under Section 5.01, (iii) the sale or
exchange of equipment in connection with the purchase or other acquisition of
other equipment, in each case used in the business of the Company and its
Restricted Subsidiaries, (iv) disposals of tractors and trailers in connection
with the reinvestment in or the replacement of its fleet and disposals or
replacements of worn-out or obsolete equipment, in each case in the ordinary
course of business of the Company or its Restricted Subsidiaries, and (v) the
sale of accounts receivable pursuant to a Qualified Receivables Transaction.
"Authenticating Agent" has the meaning provided in Section 2.02.
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors.
"Blockage Period" has the meaning provided in Section 10.02.
"Board of Directors" means, as to any Person, the board of directors
of such Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means any day that is not a Legal Holiday.
"Capitalized Lease Obligation" means, as to any Person, the
obligations of such Person under a lease that are required to be classified and
accounted for as capital lease obligations under GAAP and, for purposes of this
definition, the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, determined in accordance with GAAP.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of Common Stock and preferred stock of such Person, and (ii) with
respect to any Person that is not a corporation, any and all partnership or
other equity interests of such Person.
"Cash Equivalents" means (i) marketable direct obligations issued by,
or unconditionally guaranteed by, the United States Government or issued by any
agency
2
<PAGE>
thereof and backed by the full faith and credit of the United States, in each
case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Corporation ("S&P") or Moody's
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more
than one year from the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 from S&P or at least P-1 from Moody's; (iv)
certificates of deposit or bankers' acceptances maturing within one year from
the date of acquisition thereof issued by any bank organized under the laws of
the United States of America or any state thereof or the District of Columbia or
any U.S. branch of a foreign bank having at the date of acquisition thereof
combined capital and surplus of not less than $250,000,000; (v) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (iv) above; and (vi) investments in money
market funds which invest substantially all their assets in securities of the
types described in clauses (i) through (v) above.
"Common Stock" of any Person means any and all shares, interests or
other participations in, and other equivalents (however designated and whether
voting or non-voting) of such Person's common stock, whether outstanding on the
Effective Date or issued after the Effective Date, and includes, without
limitation, all series and classes of such common stock.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means such
successor.
"Consolidated EBITDA" means, with respect to any Person, for any
period, the sum (without duplication) of (i) Consolidated Net Income and (ii) to
the extent Consolidated Net Income has been reduced thereby, (A) all income
taxes and foreign withholding taxes of such Person and its Restricted
Subsidiaries paid or accrued in accordance with GAAP for such period (other than
income taxes attributable to extraordinary, unusual or nonrecurring gains or
losses or taxes attributable to sales or dispositions outside the ordinary
course of business), (B) Consolidated Interest Expense and (C) Consolidated Non-
cash Charges less, to the extent Consolidated Net Income has been increased
thereby, any non-cash items increasing Consolidated Net Income for such period,
all as determined on a consolidated basis for such Person and its Restricted
Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any
Person, the ratio of Consolidated EBITDA of such Person during the four full
fiscal quarters (the "Four Quarter Period") ending on or prior to the date of
the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of
such Person for the Four Quarter Period. In addition to and without limitation
of the foregoing, for purposes of this definition, "Consolidated EBITDA" and
"Consolidated Fixed Charges" shall be
3
<PAGE>
calculated after giving effect on a pro forma basis for the period of such
calculation to (i) the incurrence or repayment of any Indebtedness of such
Person or any of its Restricted Subsidiaries (and the application of the
proceeds thereof) giving rise to the need to make such calculation and any
incurrence or repayment of other Indebtedness (and the application of the
proceeds thereof), other than the incurrence or repayment of Indebtedness in the
ordinary course of business for working capital purposes pursuant to working
capital facilities, occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or prior to the
Transaction Date, as if such incurrence or repayment, as the case may be (and
the application of the proceeds thereof), occurred on the first day of the Four
Quarter Period and (ii) any Asset Sales or Asset Acquisitions (including,
without limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of such Person or one of its Restricted Subsidiaries
(including any Person who becomes a Restricted Subsidiary as a result of the
Asset Acquisition) incurring, assuming or otherwise being liable for Acquired
Indebtedness and also including any Consolidated EBITDA (including any pro forma
expense and cost reductions adjustments and other operating improvements or
synergies both achieved by such Person during such period and to be achieved by
such Person and with respect to the acquired assets, all as determined in good
faith by a responsible financial or accounting officer of the Company and as
reported on or otherwise confirmed consistent with auditing standards, to the
Company by an independent public accounting firm attributable to the assets
which are the subject of the Asset Acquisition or Asset Sale during the Four
Quarter Period) occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or prior to the
Transaction Date, as if such Asset Sale or Asset Acquisition (including the
incurrence, assumption or liability for any such Indebtedness or Acquired
Indebtedness) occurred on the first day of the Four Quarter Period. If such
Person or any of its Restricted Subsidiaries directly or indirectly guarantees
Indebtedness of a third Person, the preceding sentence shall give effect to the
incurrence of such guaranteed Indebtedness as if such Person or any Restricted
Subsidiary of such Person had directly incurred or otherwise assumed such
guaranteed Indebtedness. Furthermore, in calculating "Consolidated Fixed
Charges" for purposes of determining the denominator (but not the numerator) of
this "Consolidated Fixed Charge Coverage Ratio," (1) interest on outstanding
Indebtedness determined on a fluctuating basis as of the Transaction Date and
which will continue to be so determined thereafter shall be deemed to have
accrued at a fixed rate per annum equal to the rate of interest on such
Indebtedness in effect on the Transaction Date and (2) notwithstanding clause
(1) above, interest on Indebtedness determined on a fluctuating basis, to the
extent such interest is covered by agreements relating to Interest Swap
Obligations, shall be deemed to accrue at the rate per annum resulting after
giving effect to the operation of such agreements.
"Consolidated Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of (i) Consolidated Interest Expense
(excluding amortization or write-off of deferred financing costs), plus (ii)
the product of (x) the amount of all dividend payments on any series of
Preferred Stock of such Person (other than dividends paid in Qualified Capital
Stock) paid, accrued or scheduled to be paid or accrued during such period times
(y) a fraction, the numerator of which is one and the
4
<PAGE>
denominator of which is one minus the then current effective consolidated
federal, state and local tax rate of such Person, expressed as a decimal.
"Consolidated Interest Expense" means, with respect to any Person for
any period, the sum of, without duplication: (i) the aggregate of the interest
expense of such Person and its Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, including, without
limitation, (a) any amortization of debt discount and amortization or write-off
of deferred financing costs (including the amortization of costs relating to
interest rate caps or other similar agreements), (b) the net costs under
Interest Swap Obligations, (c) all capitalized interest and (d) the interest
portion of any deferred payment obligation; and (ii) the interest component of
Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or
accrued by such Person and its Restricted Subsidiaries during such period as
determined on a consolidated basis in accordance with GAAP, minus interest
income for such period.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate net income (or loss) of such Person and its Restricted
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP; provided that there shall be excluded therefrom (a) after-tax gains
and losses from Asset Sales (without giving effect to the proviso therein) or
abandonments or reserves relating thereto, (b) after-tax items classified as
extraordinary or nonrecurring gains and losses, (c) the net income or loss of
any Person acquired in a "pooling of interests" transaction accrued prior to the
date it becomes a Restricted Subsidiary of the referent Person or is merged or
consolidated with the referent Person or any Restricted Subsidiary of the
referent Person, (d) the net income (but not loss) of any Restricted Subsidiary
of the referent Person to the extent that the declaration of dividends or
similar distributions by that Restricted Subsidiary of that income is restricted
by a contract, operation of law or otherwise, (e) the net loss of any Person
other than a Restricted Subsidiary of the Company, (f) the net income of any
Person, other than a Restricted Subsidiary of the referent Person, except to the
extent of cash dividends or distributions paid to the referent Person or to a
Wholly Owned Restricted Subsidiary of the referent Person by such Person, (g)
income or loss attributable to discontinued operations (including, without
limitation, operations disposed of during such period whether or not such
operations were classified as discontinued), (h) in the case of a successor to
the referent Person by consolidation or merger or as a transferee of the
referent Person's assets, any earnings of the successor corporation prior to
such consolidation, merger or transfer of assets.
"Consolidated Non-cash Charges" means, with respect to any Person, for
any period, the aggregate depreciation, amortization and other non-cash expenses
of such Person and its Restricted Subsidiaries reducing Consolidated Net Income
of such Person and its Restricted Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.
"Consolidated Tangible Assets" means, with respect to any Person, as
of any date of determination, the total assets, less goodwill, deferred
financing costs and other intangibles and less accumulated amortization, shown
on the most recent balance sheet of such Person, determined on a consolidated
basis in accordance with GAAP.
5
<PAGE>
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the first day of the two-year period immediately preceding
such date of determination or (ii) was nominated for election or elected to such
Board of Directors with, or whose election to such Board of Directors was
approved by, the affirmative vote of a majority of the Continuing Directors who
were members of such Board of Directors at the time of such nomination or
election or (iii) is any designee of the Principal or its Affiliates or was
nominated by the Principal or its Affiliates or any designees of the Principal
or its Affiliates on the Board of Directors.
"Covenant Defeasance" has the meaning provided in Section 8.02.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect the
Company or any Restricted Subsidiary of the Company against fluctuations in
currency values.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Debentures" means the 13.75% Subordinated Exchange Debentures due
2006, as amended or supplemented from time to time in accordance with the terms
hereof, that are issued pursuant to this Indenture.
"Default" means an event or condition the occurrence of which, with
the lapse of time or the giving of notice or both, would be an Event of Default.
"Default Notice" has the meaning provided in Section 10.02.
"Depository" means The Depository Trust Company, its nominees and
successors.
"Designated Senior Debt" means (i) Indebtedness under or in respect of
the New Credit Agreement and (ii) any other Indebtedness constituting Senior
Debt which, at the time of determination, has an aggregate principal amount of
at least $25.0 million and is specifically designated in the instrument
evidencing such Senior Debt as "Designated Senior Debt" by the Company.
"Disqualified Capital Stock" means that portion of any Capital Stock
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the sole option of the holder
thereof on or prior to the final maturity date of the Debentures.
"Effective Date" means the date of this Indenture.
"Event of Default" has the meaning provided in Section 6.01.
6
<PAGE>
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor statute or statutes thereto.
"Exchange Date" means the date on which shares of Preferred Stock are
exchanged by the Company for Debentures.
"fair market value" means, with respect to any asset or property, the
price which could be negotiated in an arm's-length, free market transaction, for
cash, between a willing seller and a willing and able buyer, neither of whom is
under undue pressure or compulsion to complete the transaction. Fair market
value shall be determined by the Board of Directors of the Company acting
reasonably and in good faith and shall be evidenced by a Board Resolution of the
Board of Directors of the Company delivered to the Trustee.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, which are in effect as of the Effective Date.
Except as otherwise set forth herein, all ratios and computations based on GAAP
contained in this Indenture shall be computed in conformity with GAAP applied on
a consistent basis.
"Global Debentures" has the meaning provided in Section 2.01.
"Holder" or "Securityholder" means the Person in whose name a
Debenture is registered on the Registrar's books.
"incur" has the meaning provided in Section 4.10.
"Indebtedness" means with respect to any Person, without duplication,
(i) all obligations of such Person for borrowed money, including, without
limitation, Senior Debt, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all Capitalized Lease
Obligations of such Person, (iv) all obligations of such Person issued or
assumed as the deferred purchase price of property, all conditional sale
obligations and all obligations under any title retention agreement (but
excluding trade accounts payable and other accrued liabilities arising in the
ordinary course of business), (v) all obligations of such Person for the
reimbursement of any obligor on any letter of credit, banker's acceptance or
similar credit transaction, (vi) guarantees and other contingent obligations of
such Person in respect of Indebtedness referred to in clauses (i) through (v)
above and clause (viii) below, (vii) all obligations of any other Person of the
type referred to in clauses (i) through (vi) which are secured by any Lien on
any property or asset of such Person, the amount of such obligation being deemed
to be the lesser of the fair market value of such property or asset or the
amount of the obligation so secured, (viii) all obligations under currency
agreements and interest swap agreements of such Person and (ix) all Disqualified
Capital Stock issued by such Person with the amount of Indebtedness represented
by such Disqualified Capital Stock
7
<PAGE>
being equal to the greater of its voluntary or involuntary liquidation
preference and its maximum fixed repurchase price, but excluding accrued
dividends, if any. For purposes hereof, the "maximum fixed repurchase price" of
any Disqualified Capital Stock which does not have a fixed repurchase price
shall be calculated in accordance with the terms of such Disqualified Capital
Stock as if such Disqualified Capital Stock were purchased on any date on which
Indebtedness shall be required to be determined pursuant to this Indenture, and
if such price is based upon, or measured by, the fair market value of such
Disqualified Capital Stock, such fair market value shall be determined
reasonably and in good faith by the Board of Directors of the issuer of such
Disqualified Capital Stock.
"Indenture" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof.
"Independent Financial Advisor" means a firm (i) which does not, and
whose directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in the Company and (ii) which, in the judgment of
the Board of Directors of the Company, is otherwise independent and qualified to
perform the task for which it is to be engaged.
"Interest Payment Date" means the stated maturity of an installment of
interest on the Debentures.
"Interest Swap Obligations" means the obligations of any Person,
pursuant to any arrangement with any other Person, whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such other
Person calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.
"Investment" means, with respect to any Person, any direct or indirect
loan or other extension of credit (including, without limitation, a guarantee)
or capital contribution to (by means of any transfer of cash or other property
to others or any payment for property or services for the account or use of
others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness issued
by, any Person. "Investment" shall exclude extensions of trade credit by the
Company and its Restricted Subsidiaries on commercially reasonable terms in
accordance with normal trade practices of the Company or such Restricted
Subsidiary, as the case may be. For the purposes of Section 4.09, (i)
"Investment" shall include and be valued at the fair market value of the net
assets of any Restricted Subsidiary at the time that such Restricted Subsidiary
is designated an Unrestricted Subsidiary and shall exclude the fair market value
of the net assets of any Unrestricted Subsidiary at the time that such
Unrestricted Subsidiary is designated a Restricted Subsidiary and (ii) the
amount of any Investment shall be the
8
<PAGE>
original cost of such Investment plus the cost of all additional Investments by
the Company or any of its Restricted Subsidiaries, without any adjustments for
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment, reduced by the payment of dividends or distributions
in connection with such Investment or any other amounts received in respect of
such Investment; provided that no such payment of dividends or distributions or
receipt of any such other amounts shall reduce the amount of any Investment if
such payment of dividends or distributions or receipt of any such amounts would
be included in Consolidated Net Income. If the Company or any Restricted
Subsidiary of the Company sells or otherwise disposes of any Common Stock of any
direct or indirect Restricted Subsidiary of the Company such that, after giving
effect to any such sale or disposition, the Company no longer owns, directly or
indirectly, 100% of the outstanding Common Stock of such Restricted Subsidiary,
the Company shall be deemed to have made an Investment on the date of any such
sale or disposition equal to the fair market value of the Common Stock of such
Restricted Subsidiary not sold or disposed of.
"Legal Defeasance" has the meaning provided in Section 8.02.
"Legal Holiday" has the meaning provided in Section 11.07.
"Lien" means any lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest).
"Maturity Date" means September 15, 2006.
"Merger Agreement" means the Agreement and Plan of Merger, dated as of
June 23, 1998 among Palestra Acquisition Corp., Chemical Leaman Corporation, and
the shareholders of CLC, as amended on July 27, 1998 and August 25, 1998.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds in the form of cash or Cash Equivalents including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents (other than the portion of any such deferred payment constituting
interest) received by the Company or any of its Restricted Subsidiaries from
such Asset Sale net of (a) out-of-pocket expenses and fees relating to such
Asset Sale (including, without limitation, legal, accounting and investment
banking fees and sales commissions), (b) taxes paid or payable after taking into
account any reduction in consolidated tax liability due to available tax credits
or deductions and any tax sharing arrangements, (c) repayment of Indebtedness
that is required to be repaid in connection with such Asset Sale and (d)
appropriate amounts to be provided by the Company or any Restricted Subsidiary,
as the case may be, as a reserve, in accordance with GAAP, against any
liabilities associated with such Asset Sale and retained by the Company or any
Restricted Subsidiary, as the case may be, after such Asset Sale, including,
without limitation, post-closing adjustments, pension and other post-employment
benefit liabilities, liabilities related to
9
<PAGE>
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale.
"New Credit Agreement" means the credit agreement dated as of June 9,
1998, among the Company, Levy Transport, Ltd., the lenders party thereto in
their capacities as lenders thereunder and Credit Suisse First Boston
Corporation, as administrative agent, together with the related documents
thereto (including, without limitation, any guarantee agreements and security
documents), in each case as such agreements may be amended (including any
amendment and restatement thereof), supplemented or otherwise modified from time
to time, including any agreement extending the maturity of, refinancing,
replacing or otherwise restructuring (including increasing the amount of
available borrowings thereunder in connection with any of the foregoing
(provided that such increase in borrowings is permitted by Section 4.04) or
--------
adding Restricted Subsidiaries of the Company as additional and/or replacement
borrowers or guarantors thereunder) all or any portion of the Indebtedness under
such agreement or any successor or replacement agreement and whether by the same
or any other agent, lender or group of lenders.
"Note Indenture" means the Indenture dated June 9, 1998, by and among
the Company, the guarantors named therein and United States Trust Company of New
York, as trustee, governing the Notes, as amended or supplemented from time to
time.
"Notes" means the $100,000,000 aggregate principal amount of 10%
Senior Subordinated Notes and $40,000,000 aggregate principal amount of Floating
Interest Rate Subordinated Term Securities due 2006, both issued by the Company
on June 9, 1998, and any other notes issued thereafter in accordance with the
Note Indenture, as amended or supplemented from time to time in accordance with
the terms of the Note Indenture.
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Treasurer, the Controller, or the Secretary of such
Person, or any other officer designated by the Board of Directors serving in a
similar capacity.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Officers or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of such Person and otherwise complying with
the requirements of Sections 11.04 and 11.05, as they relate to the making of an
Officers' Certificate.
"Opinion of Counsel" means a written opinion from legal counsel, who
may be counsel for the Company, and who is reasonably acceptable to the Trustee
and not rendered by any employee of the Company or any of its Affiliates or
Subsidiaries
10
<PAGE>
complying with the requirements of Sections 11.04 and 11.05, as they relate to
the giving of an Opinion of Counsel.
"Option Plan" means the Company's 1998 Stock Option Plan.
"Paying Agent" has the meaning provided in Section 2.03.
"Permitted Holders" means the Principal and its Affiliates.
"Permitted Indebtedness" means, without duplication, each of the
following:
(i) Indebtedness under the Notes in an aggregate principal amount
not to exceed $140.0 million and Indebtedness under the Debentures;
(ii) Indebtedness incurred pursuant to the New Credit Agreement in
an aggregate principal amount at any time outstanding not to exceed $360.0
million less the amount of all repayments of term debt and permanent
commitment reductions under the Credit Agreement with Net Cash Proceeds of
Asset Sales applied thereto; provided, further, that the aggregate
-------- -------
principal amount of Indebtedness under this clause (ii) shall be reduced
dollar for dollar for any Indebtedness outstanding under clause (xii)
below;
(iii) other Indebtedness of the Company and its Restricted
Subsidiaries outstanding on the Effective Date reduced by the amount of any
scheduled amortization payments or mandatory prepayments when actually paid
or permanent reductions thereon;
(iv) Interest Swap Obligations of the Company or any of its
Restricted Subsidiaries covering Indebtedness of the Company or any of its
Restricted Subsidiaries; provided, however, that such Interest Swap
Obligations are entered into to protect the Company and its Restricted
Subsidiaries from fluctuations in interest rates on Indebtedness incurred
in accordance with this Indenture to the extent the notional principal
amount of such Interest Swap Obligation does not exceed the principal
amount of the Indebtedness to which such Interest Swap Obligation relates;
(v) Indebtedness under Currency Agreements; provided that, in the
--------
case of Currency Agreements which relate to Indebtedness, such Currency
Agreements do not increase the Indebtedness of the Company and its
Restricted Subsidiaries outstanding other than as a result of fluctuations
in foreign currency exchange rates or by reason of fees, indemnities and
compensation payable thereunder;
(vi) Indebtedness of a Wholly Owned Restricted Subsidiary of the
Company to the Company or to a Wholly Owned Restricted Subsidiary of the
Company for so long as such Indebtedness is held by the Company or a Wholly
Owned Restricted Subsidiary of the Company; provided that if as of any date
any Person other than the Company or a Wholly Owned Restricted Subsidiary
of the
11
<PAGE>
Company owns or holds any such Indebtedness, such date shall be deemed the
incurrence of Indebtedness not constituting Permitted Indebtedness by the
issuer of such Indebtedness;
(vii) Indebtedness of the Company to a Wholly Owned Restricted
Subsidiary of the Company for so long as such Indebtedness is held by a
Wholly Owned Restricted Subsidiary of the Company; provided that (a) any
Indebtedness of the Company to any Wholly Owned Restricted Subsidiary of
the Company is unsecured and subordinated, pursuant to a written agreement,
to the Company's obligations under this Indenture and the Debentures and
(b) if as of any date any Person other than a Wholly Owned Restricted
Subsidiary of the Company owns or holds any such Indebtedness, such date
shall be deemed the incurrence of Indebtedness not constituting Permitted
Indebtedness by the Company;
(viii) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient
funds in the ordinary course of business; provided, however, that such
Indebtedness is extinguished within five Business Days of incurrence;
(ix) Indebtedness of the Company or any of its Restricted
Subsidiaries represented by letters of credit for the account of the
Company or such Restricted Subsidiary, as the case may be, in order to
provide security for workers' compensation claims, payment obligations in
connection with self-insurance or similar requirements in the ordinary
course of business;
(x) Indebtedness represented by Capitalized Lease Obligations,
Purchase Money Indebtedness or Acquired Indebtedness of the Corporation and
its Restricted Subsidiaries incurred in the ordinary course of business not
to exceed $25.0 million (as reduced dollar for dollar for any amounts
incurred pursuant to the proviso to this clause (x)) at any one time
outstanding; provided that all or a portion of the $25.0 million permitted
--------
to be incurred under this clause (x) may, at the option of the Company, be
incurred under the Credit Agreement or pursuant to clause (xiv) below
instead of pursuant to Capitalized Lease Obligations, Purchase Money
Indebtedness or Acquired Indebtedness;
(xi) Indebtedness arising from agreements of the Company or a
Restricted Subsidiary of the Company providing for indemnification,
adjustment of purchase price, or similar obligations, in each case incurred
or assumed in connection with the disposition of any business, assets or a
Subsidiary, other than guarantees of Indebtedness incurred by any Person
acquiring all or any portion of such business, assets or a Subsidiary for
the purpose of financing such acquisition; provided, however, that (a) such
-------- -------
Indebtedness is not reflected on the balance sheet of the Company or any
Restricted Subsidiary of the Company (contingent obligations referred to in
a footnote to financial statements and not otherwise reflected on the
balance sheet will not be deemed to be reflected on such balance sheet for
purposes of this clause (a)), and (b) the maximum
12
<PAGE>
assumable liability in respect of all such Indebtedness shall at no time
exceed the gross proceeds including non-cash proceeds (the fair market
value of such non-cash proceeds being measured at the time it is received
and without giving effect to any subsequent changes in value) actually
received by the Company and its Restricted Subsidiaries in connection with
such disposition;
(xii) the incurrence by a Receivables Subsidiary of Indebtedness in a
Qualified Receivables Transaction that is without recourse to the Company
or to any Restricted Subsidiary of the Company or their assets (other than
such Receivables Subsidiary and its assets), and is not guaranteed by any
such Person; provided that any outstanding Indebtedness incurred under this
--------
clause (xii) shall reduce the aggregate amount permitted to be incurred
under clause (ii) above to the extent set forth therein;
(xiii) Refinancing Indebtedness; and
(xiv) additional Indebtedness of the Company and its Restricted
Subsidiaries in an aggregate principal amount not to exceed $25.0 million
at any one time outstanding (which amount may, but need not, be incurred in
whole or in part under the Credit Agreement) plus any amounts incurred in
accordance with the proviso to clause (x) above; provided that any
--------
Indebtedness incurred in excess of $25.0 million in accordance with the
proviso to clause (x) above shall reduce the aggregate amount permitted to
be incurred under clause (x) above to the extent set forth therein.
"Permitted Investments" means: (i) Investments by the Company or any
Restricted Subsidiary of the Company in any Person that is or will become
immediately after such Investment a Wholly Owned Restricted Subsidiary of the
Company or that will merge or consolidate into the Company or a Wholly Owned
Restricted Subsidiary of the Company; (ii) Investments in the Company by any
Restricted Subsidiary of the Company; provided that any Indebtedness evidencing
such Investment is unsecured and subordinated, pursuant to a written agreement,
to the Company's obligations under the Debentures and this Indenture; (iii)
Investments in cash and Cash Equivalents; (iv) loans and advances to employees
and officers of the Company and its Restricted Subsidiaries in the ordinary
course of business for bona fide business purposes not in excess of $500,000 at
any one time outstanding; (v) Currency Agreements and Interest Swap Obligations
entered into in the ordinary course of the Company's or its Restricted
Subsidiaries' businesses and otherwise in compliance with this Indenture; (vi)
Investments not to exceed the greater of $7.5 million and 5% of Consolidated
Tangible Assets of the Company at the time of such Investment at any one time
outstanding; (vii) Investments in securities of trade creditors or customers
received pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such trade creditors or customers; (viii)
Investments made by the Company or its Restricted Subsidiaries as a result of
consideration received in connection with an Asset Sale; and (ix) Investments of
a Person or any of its Subsidiaries existing at the time such Person becomes a
Restricted Subsidiary of the Company or at the time such Person merges or
consolidates with the Company or any of its Restricted Subsidiaries, in either
case in compliance with this
13
<PAGE>
Indenture; provided that such Investments were not made by such Person in
--------
connection with, or in anticipation or contemplation of, such Person becoming a
Restricted Subsidiary of the Company or such merger or consolidation; and (x)
Investments in the Debentures.
"Person" means an individual, partnership, limited liability company,
corporation, unincorporated organization, trust or joint venture, or a
governmental agency or political subdivision thereof.
"Physical Debentures" has the meaning provided in Section 2.01.
"preferred stock" of any Person means any Capital Stock of such Person
that has preferential rights to any other Capital Stock of such Person with
respect to dividends or redemptions or upon liquidation.
"Preferred Stock" means the Company's 13.75% Senior Exchangeable
Preferred Stock.
"principal" of any Indebtedness (including the Debentures) means the
principal amount of such Indebtedness plus, when due, the premium, if any, on
such Indebtedness.
"Public Equity Offering" means an underwritten public offering of
Qualified Capital Stock of the Company pursuant to a registration statement
filed with the SEC in accordance with the Securities Act.
"Purchase Money Indebtedness" means Indebtedness of the Company and
its Restricted Subsidiaries incurred in the normal course of business for the
purpose of financing all or any part of the purchase price, or the cost of
installation, construction or improvement, of property or equipment and any
refinancing thereof.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Qualified Receivables Transaction" means any transaction or series of
transactions that may be entered into by the Company or any of its Restricted
Subsidiaries pursuant to which the Company or any of its Restricted Subsidiaries
may sell, convey or otherwise transfer to (i) a Receivables Subsidiary (in the
case of a transfer by the Company or any of its Restricted Subsidiaries) and
(ii) any other person (in the case of a transfer by a Receivables Subsidiary),
or may grant a security interest in, any accounts receivable (whether now
existing or arising in the future) of the Company or any of its Restricted
Subsidiaries, and any assets related thereto including, without limitation, all
collateral securing such accounts receivable, all contracts and all guarantees
or other obligations in respect of such accounts receivable, proceeds of such
accounts receivable and other assets which are customarily transferred or in
respect of which security interests are customarily granted in connection with
asset securitization transactions involving accounts receivable.
14
<PAGE>
"Receivables Subsidiary" means a Wholly Owned Restricted Subsidiary of
the Company that engages in no activities other than in connection with the
financing of accounts receivable and that is designated by the Board of
Directors of the Company (as provided below) as a Receivables Subsidiary (a) no
portion of the Indebtedness or any other Obligations (contingent or otherwise)
of which (i) is guaranteed by the Company or any Restricted Subsidiary of the
Company (excluding guarantees of Obligations (other than the principal of, and
interest on, Indebtedness) pursuant to representations, warranties, covenants
and indemnities entered into in the ordinary course of business in connection
with a Qualified Receivables Transaction), (ii) is recourse to or obligates the
Company or any Restricted Subsidiary of the Company in any way other than
pursuant to representations, warranties, covenants and indemnities entered into
in the ordinary course of business in connection with a Qualified Receivables
Transaction) or (iii) subjects any property or asset of the Company or any
Restricted Subsidiary of the Company, directly or indirectly, contingently or
otherwise, to the satisfaction thereof, other than pursuant to representations,
warranties, covenants and indemnities entered into in the ordinary course of
business in connection with a Qualified Receivables Transaction), (b) with which
neither the Company nor any Restricted Subsidiary of the Company has any
material contract, agreement, arrangement or understanding other than on terms
no less favorable to the Company or such Restricted Subsidiary than those that
might be obtained at the time from Persons who are not Affiliates of the
Company, other than fees payable in the ordinary course of business in
connection with servicing accounts receivable and (c) with which neither the
Company nor any Restricted Subsidiary of the Company has any obligation to
maintain or preserve such Restricted Subsidiary's financial condition or cause
such Restricted Subsidiary to achieve certain levels of operating results. Any
such designation by the Board of Directors of the Company shall be evidenced to
the Trustee by filing with the Trustee a Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions.
"Record Date" means the Record Dates specified in the Debentures,
whether or not a Legal Holiday.
"Redemption Date," when used with respect to any Debenture to be
redeemed, means the date fixed for such redemption pursuant to this Indenture
and the Debentures.
"Redemption Price," when used with respect to any Debenture to be
redeemed, means the price fixed for such redemption pursuant to this Indenture
and the Debentures.
"Reference Date" has the meaning provided in Section 4.09.
"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
15
<PAGE>
"Refinancing Indebtedness" means any Refinancing by the Company or any
Restricted Subsidiary of the Company of (A) for purposes of clause (xv) of the
definition of Permitted Indebtedness, Indebtedness incurred in accordance with
Section 4.10 (other than pursuant to clauses (ii), (iv), (v), (vi), (vii),
(viii), (ix), (x), (xi), (xii), (xiii), (xiv) or (xvi) of the definition of
"Permitted Indebtedness") or (B) for any other purpose, Indebtedness incurred in
accordance with Section 4.10, in each case that does not (1) result in an
increase in the aggregate principal amount of Indebtedness of such Person as of
the date of such proposed Refinancing (plus the amount of any premium required
to be paid under the terms of the instrument governing such Indebtedness and
plus the amount of reasonable expenses incurred by the Company in connection
with such Refinancing) except to the extent such increase is otherwise permitted
to be incurred under this Indenture or (2) create Indebtedness with a Weighted
Average Life to Maturity that is less than the Weighted Average Life to Maturity
of the Indebtedness being Refinanced; provided that (x) if such Indebtedness
being Refinanced is Indebtedness solely of the Company, then such Refinancing
Indebtedness shall be Indebtedness solely of the Company and (y) if such
Indebtedness being Refinanced is subordinate or junior to the Debentures, then
such Refinancing Indebtedness is subordinate or junior to the Debentures at
least to the same extent and in the same manner as the Indebtedness being
Refinanced.
"Registrar" has the meaning provided in Section 2.03.
"Representative" means the indenture trustee or other trustee, agent
or representative in respect of any Designated Senior Debt; provided that if,
and for so long as, any Designated Senior Debt lacks such a representative, then
the Representative for such Designated Senior Debt shall at all times constitute
the holders of a majority in outstanding principal amount of such Designated
Senior Debt in respect of any Designated Senior Debt.
"Restricted Payment" has the meaning provided in Section 4.09.
"Restricted Subsidiary" of any Person means any Subsidiary of such
Person which at the time of determination is not an Unrestricted Subsidiary.
"Sale and Leaseback Transaction" means any direct or indirect
arrangement with any Person or to which any such Person is a party, providing
for the leasing to the Company or a Restricted Subsidiary of any property,
whether owned by the Company or any Restricted Subsidiary at the Issue Date or
later acquired, which has been or is to be sold or transferred by the Company or
such Restricted Subsidiary to such Person or to any other Person from whom funds
have been or are to be advanced by such Person on the security of such Property.
"SEC" means the Securities and Exchange Commission.
"Secondary Debentures" has the meaning specified in paragraph 1 to the
form of Debenture attached hereto as Exhibit A.
16
<PAGE>
"Securities Act" means, the Securities Act of 1933, as amended, or any
successor statute or statutes thereto.
"Senior Debt" means the principal of, premium, if any, and interest
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under applicable law) on any
Indebtedness of the Company, whether outstanding on the Effective Date or
thereafter created, incurred or assumed, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness shall
not be senior in right of payment to the Debentures. Without limiting the
generality of the foregoing, "Senior Debt" shall also include the principal of,
premium, if any, interest (including any interest accruing subsequent to the
filing of a petition of bankruptcy at the rate provided for in the documentation
with respect thereto, whether or not such interest is an allowed claim under
applicable law) on, and all other amounts owing in respect of, (w) all monetary
obligations of every nature of the Company under the Notes, including, without
limitation, obligations to pay principal and interest, (x) all monetary
obligations (including guarantees thereof) of every nature of the Company under
the New Credit Agreement, including, without limitation, obligations to pay
principal and interest, reimbursement obligations under letters of credit, fees,
expenses and indemnities, (y) all Interest Swap Obligations (including
guarantees thereof) and (z) all obligations (including guarantees thereof) under
Currency Agreements, in each case whether outstanding on the Effective Date or
thereafter incurred. Notwithstanding the foregoing, "Senior Debt" shall not
include (i) any Indebtedness of the Company to a Subsidiary of the Company or
any Affiliate of the Company or any of such Affiliate's Subsidiaries, (ii)
Indebtedness to, or guaranteed on behalf of, any shareholder, director, officer
or employee of the Company or any Subsidiary of the Company (including, without
limitation, amounts owed for compensation), (iii) Indebtedness to trade
creditors and other amounts incurred in connection with obtaining goods,
materials or services, (iv) Indebtedness represented by Disqualified Capital
Stock, (v) any liability for federal, state, local or other taxes owed or owing
by the Company, (vi) that portion of any Indebtedness incurred in violation of
the provisions set forth under Section 4.10 (but, as to any such obligation, no
such violation shall be deemed to exist for purposes of this clause (vi) if the
holder(s) of such obligation or their representative and the Trustee shall have
received an Officers' Certificate of the Company to the effect that the
incurrence of such Indebtedness does not (or, in the case of revolving credit
indebtedness, that the incurrence of the entire committed amount thereof at the
date on which the initial borrowing thereunder is made would not) violate such
provisions of this Indenture), (vii) Indebtedness which, when incurred and
without respect to any election under Section 1111(b) of Title 11, United States
Code, is without recourse to the Company and (viii) any Indebtedness (other than
Indebtedness under the Notes) which is, by its express terms, subordinated in
right of payment to any other Indebtedness of the Company.
"Shareholders Agreement" means the Shareholders' Agreement dated as of
February 10, 1998 among certain affiliates of Apollo Management, L.P.
(collectively, "Apollo") and certain shareholders of the Company, as it may be
amended or supplemented in accordance with its terms.
17
<PAGE>
"Significant Subsidiary", with respect to any Person, means any
Restricted Subsidiary of such Person that satisfies the criteria for a
"significant subsidiary" set forth in Rule 1.02(w) of Regulation S-X under the
Securities Act.
"Subsidiary", with respect to any Person, means (i) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person or (ii) any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"Surviving Entity" has the meaning provided in Section 5.01.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S)77aaa-
77bbbb), as amended, as in effect on the date of this Indenture, except as
otherwise provided in Section 9.04.
"Trust Officer" means any officer of the Trustee assigned by the
Trustee to administer this Indenture, or in the case of a successor trustee, an
officer assigned to the department, division or group performing the Company
trust work of such successor and assigned to administer this Indenture.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"Unrestricted Subsidiary" of any Person means (i) any Subsidiary of
such Person that at the time of determination shall be or continue to be
designated an Unrestricted Subsidiary by the Board of Directors of such Person
in the manner provided below and (ii) any Subsidiary of an Unrestricted
Subsidiary. The Board of Directors may designate any Subsidiary (including any
newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary
unless such Subsidiary owns any Capital Stock of, or owns or holds any Lien on
any property of, the Company or any other Subsidiary of the Company that is not
a Subsidiary of the Subsidiary to be so designated; provided that (x) the
Company certifies to the Trustee in an Officers' Certificate that such
designation complies with Section 4.09 and (y) each Subsidiary to be so
designated and each of its Subsidiaries has not at the time of designation, and
does not thereafter, create, incur, issue, assume, guarantee or otherwise become
directly or indirectly liable with respect to any Indebtedness pursuant to which
the lender has recourse to any of the assets of the Company or any of its
Restricted Subsidiaries. The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary only if (x) immediately after giving
effect to such designation, the Company is able to incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) in compliance with
Section 4.10 and (y) immediately before and immediately after giving effect to
such designation, no Default or Event of Default shall have occurred and be
continuing. Any such designation by the Board of Directors shall be evidenced
to the Trustee by promptly filing with the
18
<PAGE>
Trustee a copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing provisions.
"U.S. Government Obligations" means direct obligations of, and
obligations guaranteed by, the United States of America for the payment of which
the full faith and credit of the United States of America is pledged.
"U.S. Legal Tender" means such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the sum of
the total of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including payment at final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly Owned Restricted Subsidiary" of any Person means any
Restricted Subsidiary of such Person of which all the outstanding voting
securities (other than in the case of a foreign Restricted Subsidiary,
directors' qualifying shares or an immaterial amount of shares required to be
owned by other Persons pursuant to applicable law) are owned by such Person or
any Wholly Owned Restricted Subsidiary of such Person.
Section 1.02. Incorporation by Reference of TIA.
---------------------------------
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in, and made a part of, this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Debentures.
"indenture security holder" means a Holder or a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on these Debentures means the Company or any other obligor
on the Debentures.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them therein.
19
<PAGE>
Section 1.03. Rules of Construction.
---------------------
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP as in effect on the date hereof;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the
plural include the singular; and
(5) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or
other subdivision.
ARTICLE TWO
THE DEBENTURES
Section 2.01. Form and Dating.
---------------
The Debentures and the Trustee's certificate of authentication
relating thereto shall be substantially in the form of Exhibit A hereto. The
Debentures may have notations, legends or endorsements required by law, stock
exchange rule or depository rule or usage. The Company and the Trustee shall
approve the form of the Debentures and any notation, legend or endorsement on
them. Each Debenture shall be dated the date of its authentication.
The terms and provisions contained in the Debentures, annexed hereto
as Exhibit A, shall constitute, and are hereby expressly made, a part of this
Indenture and, to the extent applicable, the Company and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
Debentures shall be issued in the form of (i) one or more permanent
global Debentures (the "Global Debentures"), in registered form, substantially
in the form of Exhibit A hereto deposited with the Trustee, as custodian for the
Depository, duly executed by the Company and authenticated by the Trustee as
hereinafter provided and shall bear the legends set forth in Section 2.15 and/or
(ii) one or more permanent certificated Debentures, in registered form (the
"Physical Debentures"), substantially in the form of Exhibit A.
20
<PAGE>
Section 2.02. Execution and Authentication; Aggregate Principal
-------------------------------------------------
Amount.
- ------
Two Officers, or an Officer and an Assistant Secretary, shall sign, or
one Officer shall sign and one Officer or an Assistant Secretary (each of whom
shall, in each case, have been duly authorized by all requisite corporate
actions) shall attest to, the Debentures for the Company by manual or facsimile
signature. The Company's seal shall also be reproduced on the Debentures.
If an Officer or Assistant Secretary whose signature is on a Debenture
was an Officer or Assistant Secretary at the time of such execution but no
longer holds that office or position at the time the Trustee authenticates the
Debenture, the Debenture shall nevertheless be valid.
A Debenture shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Debenture. The
signature shall be conclusive evidence that the Debenture has been authenticated
under this Indenture.
The Trustee shall authenticate Debentures for original issue in the
aggregate principal amount of the liquidation preference of the outstanding
shares of Preferred Stock on the Exchange Date (including Preferred Stock issued
in lieu of cash dividends on the Preferred Stock), plus accumulated and unpaid
dividends (such Debentures to be substantially in the form of Exhibit A), upon
receipt of a written order of the Company in the form of an Officers'
Certificate. Such Officers' Certificate shall specify the amount of Debentures
to be authenticated and the date on which the Debentures are to be
authenticated. The aggregate principal amount of Debentures outstanding at any
time may not exceed the principal amount of the liquidation preference of the
outstanding shares of Preferred Stock on the Exchange Date (including Preferred
Stock issued in lieu of cash dividends on the Preferred Stock), plus accumulated
and unpaid dividends, except that the principal amount of Debentures outstanding
at any time may exceed such amount, as provided in Section 2.07 hereof or if
Secondary Debentures are issued in lieu of cash interest payments on the
Debentures.
The Trustee may appoint an authenticating agent (the "Authenticating
Agent") reasonably acceptable to the Company to authenticate Debentures. Unless
otherwise provided in the appointment, an Authenticating Agent may authenticate
Debentures whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such Authenticating
Agent. An Authenticating Agent has the same rights as an Agent to deal with the
Company or with any Affiliate of the Company.
The Debentures shall be issuable in fully registered form only,
without coupons, in denominations of $1,000 and any integral multiple thereof;
provided, however, that Debentures may be issued, at the option of the Company,
in denominations of less than $1,000 (but not less than $1.00) upon the initial
exchange of the Preferred Stock for the Debentures such that each holder of
Preferred Stock shall receive Debentures in a principal amount equal to the full
liquidation preference of the Preferred
21
<PAGE>
Stock on the Exchange Date (including Preferred Stock issued in lieu of cash
dividends on the Preferred Stock), plus accumulated and unpaid dividends (as
specified to the Trustee in the Officers' Certificate delivered pursuant to this
Section 2.02) and upon registration of the transfer thereof; provided, further,
however, that Secondary Debentures may be issued in denominations of less than
$1,000 (but not less than $1.00).
In the event that the Company shall issue and the Trustee shall
authenticate any Debentures issued under this Indenture subsequent to the
Exchange Date pursuant to paragraph 1 of the Debenture, the Company shall use
its reasonable efforts to obtain the same "CUSIP" number for such Debentures as
is printed on the Debentures outstanding at such time; provided, however, that
if any series of Debentures issued under this Indenture subsequent to the
Exchange Date is either determined, pursuant to an Opinion of Counsel of the
Company in a form reasonably satisfactory to the Trustee, or deemed under
standard practices to be a different class of security than the Debentures
outstanding at such time for federal income tax purposes, the Company shall
obtain a "CUSIP" number for such Debentures that is different than the "CUSIP"
number printed on the Debentures then outstanding.
Notwithstanding the foregoing, all Debentures issued under this
Indenture shall vote and consent together on all matters (as to which any of
such Debentures may vote or consent) as one class and no series of Debentures
will have the right to vote or consent as a separate class on any matter.
Section 2.03. Registrar and Paying Agent.
--------------------------
The Company shall maintain an office or agency (which shall be located
in the Borough of Manhattan in the City of New York, State of New York) where
(a) Debentures may be presented or surrendered for registration of transfer
("Registrar"), (b) Debentures may be presented or surrendered for payment
("Paying Agent") and (c) notices and demands to or upon the Company in respect
of the Debentures and this Indenture may be served. The Registrar shall keep a
register of the Debentures and of their transfer and exchange. The Company,
upon prior written notice to the Trustee, may have one or more co-Registrars and
one or more additional paying agents reasonably acceptable to the Trustee. The
term "Paying Agent" includes any additional Paying Agent. Neither the Company
nor any Affiliate of the Company may act as Paying Agent.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which agreement shall incorporate the
provisions of the TIA and implement the provisions of this Indenture that relate
to such Agent. The Company shall notify the Trustee, in advance, of the name
and address of any such Agent. If the Company fails to maintain a Registrar or
Paying Agent, or fails to give the foregoing notice, the Trustee shall act as
such.
The Company initially appoints the Trustee as Registrar, Paying Agent
and agent for service of demands and notices in connection with the Debentures,
until such time as the Trustee has resigned or a successor has been appointed.
The Paying Agent or Registrar may resign upon 30 days notice to the Company.
22
<PAGE>
Section 2.04. Paying Agent To Hold Assets in Trust.
------------------------------------
The Company shall require each Paying Agent other than the Trustee to
agree in writing that each Paying Agent shall hold in trust for the benefit of
the Holders or the Trustee all assets held by the Paying Agent for the payment
of principal of, or interest on, the Debentures (whether such assets have been
distributed to it by the Company or any other obligor on the Debentures), and
the Company and the Paying Agent shall notify the Trustee of any Default by the
Company (or any other obligor on the Debentures) in making any such payment.
The Company at any time may require a Paying Agent to distribute all assets held
by it to the Trustee and account for any assets disbursed and the Trustee may at
any time during the continuance of any payment Default, upon written request to
a Paying Agent, require such Paying Agent to distribute all assets held by it to
the Trustee and to account for any assets distributed. Upon distribution to the
Trustee of all assets that shall have been delivered by the Company to the
Paying Agent, the Paying Agent shall have no further liability for such assets.
Section 2.05. Securityholder Lists.
--------------------
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders. If the Trustee is not the Registrar, the Company shall furnish or
cause the Registrar to furnish to the Trustee five (5) Business Days before each
Record Date and at such other times as the Trustee may request in writing a list
as of such date and in such form as the Trustee may reasonably require of the
names and addresses of the Holders, which list may be conclusively relied upon
by the Trustee.
Section 2.06. Transfer and Exchange.
---------------------
Subject to the provisions of Section 2.15 and 2.16, when Debentures
are presented to the Registrar or a co-Registrar with a request to register the
transfer of such Debentures or to exchange such Debentures for an equal
principal amount of Debentures of other authorized denominations (as provided in
Section 2.02), the Registrar or co-Registrar shall register the transfer or make
the exchange as requested if its requirements for such transaction are met;
provided, however, that the Debentures presented or surrendered for registration
of transfer or exchange shall be duly endorsed or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Registrar or
co-Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing. To permit registrations of transfer and exchanges, the
Company shall execute and the Trustee shall authenticate Debentures at the
Registrar's or co-Registrar's request. No service charge shall be made for any
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any transfer tax or similar governmental charge payable
in connection therewith (other than any such transfer taxes or similar
governmental charge payable upon exchanges or transfers pursuant to Sections
2.10, 3.06 or 9.06, in which event the Company shall be responsible for the
payment of such taxes).
23
<PAGE>
The Registrar or co-Registrar shall not be required to register the
transfer of or exchange of any Debenture (i) during a period beginning at the
opening of business 15 days before the mailing of a notice of redemption of
Debentures and ending at the close of business on the day of such mailing and
(ii) selected for redemption in whole or in part pursuant to Article Three,
except the unredeemed portion of any Debenture being redeemed in part.
Section 2.07. Replacement Debentures.
----------------------
If a mutilated Debenture is surrendered to the Trustee or if the
Holder of a Debenture claims that the Debenture has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Debenture if the Trustee's requirements are met. If required by the
Trustee or the Company, such Holder must provide an affidavit of lost
certificate and an indemnity bond or other indemnity, sufficient in the judgment
of both the Company and the Trustee, to protect the Company, the Trustee or any
Agent from any loss which any of them may suffer if a Debenture is replaced.
The Company may charge such Holder for its reasonable, out-of-pocket expenses in
replacing a Debenture, including reasonable fees and expenses of counsel. Every
replacement Debenture shall constitute an additional obligation of the Company.
Section 2.08. Outstanding Debentures.
----------------------
Debentures outstanding at any time are all the Debentures that have
been authenticated by the Trustee except those cancelled by it, those delivered
to it for cancellation and those described in this Section as not outstanding.
Subject to the provisions of Section 2.09, a Debenture does not cease to be
outstanding because the Company or any of its Affiliates holds the Debenture.
If a Debenture is replaced pursuant to Section 2.07 (other than a
mutilated Debenture surrendered for replacement), it ceases to be outstanding
unless the Trustee receives an Opinion of Counsel that the replaced Debenture is
held by a bona fide purchaser. A mutilated Debenture ceases to be outstanding
upon surrender of such Debenture and replacement thereof pursuant to Section
2.07.
If on a Redemption Date or the Maturity Date the Paying Agent holds
U.S. Legal Tender sufficient to pay all of the principal and interest due on the
Debentures payable on that date and is not prohibited from paying such money to
the Holders thereof pursuant to the terms of this Indenture, then on and after
that date such Debentures cease to be outstanding and interest on them ceases to
accrue.
Section 2.09. Treasury Debentures.
-------------------
In determining whether the Holders of the required principal amount of
Debentures have concurred in any direction, waiver, consent or notice,
Debentures owned by the Company or any of its Affiliates shall be considered as
though they are not outstanding, except that for the purposes of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Debentures which a Trust Officer of the Trustee actually knows
are so owned shall be so considered. The
24
<PAGE>
Company shall notify the Trustee, in writing, when it or any of its Affiliates
repurchases or otherwise acquires Debentures, of the aggregate principal amount
of such Debentures so repurchased or otherwise acquired.
Section 2.10. Temporary Debentures.
--------------------
Until definitive Debentures are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Debentures upon receipt of
a written order of the Company in the form of an Officers' Certificate. The
Officers' Certificate shall specify the amount of temporary Debentures to be
authenticated and the date on which the temporary Debentures are to be
authenticated. Temporary Debentures shall be substantially in the form of
definitive Debentures but may have variations that the Company considers
appropriate for temporary Debentures. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate upon receipt of a written order
of the Company pursuant to Section 2.02 definitive Debentures in exchange for
temporary Debentures.
Section 2.11. Cancellation.
------------
The Company at any time may deliver Debentures to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Debentures surrendered to them for transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent,
and no one else, shall cancel and shall dispose of all Debentures surrendered
for registration of transfer, exchange, payment or cancellation, in each case in
accordance with its customary procedures. Subject to Section 2.07, the Company
may not issue new Debentures to replace Debentures that it has paid or delivered
to the Trustee for cancellation. If the Company shall acquire any of the
Debentures, such acquisition shall not operate as a redemption or satisfaction
of the Indebtedness represented by such Debentures unless and until the same are
surrendered to the Trustee for cancellation pursuant to this Section 2.11.
Section 2.12. Defaulted Interest.
------------------
If the Company defaults in a payment of interest on the Debentures, it
shall pay the defaulted interest, plus (to the extent lawful) any interest
payable on the defaulted interest at the rate of interest then borne by the
Debentures to the Persons who are Holders on a subsequent special record date,
which date shall be the fifteenth day next preceding the date fixed by the
Company for the payment of defaulted interest or the next succeeding Business
Day if such date is not a Business Day. At least 15 days before the subsequent
special record date, the Company shall mail to each Holder, as of a recent date
selected by the Company, with a copy to the Trustee, a notice that states the
subsequent special record date, the payment date and the amount of defaulted
interest, and interest payable on such defaulted interest, if any, to be paid.
Section 2.13. CUSIP Numbers.
-------------
The Company in issuing the Debentures may use one or more "CUSIP"
numbers, and if so, the Trustee shall use the CUSIP numbers in notices of
redemption or
25
<PAGE>
exchange as a convenience to Holders; provided that no representation is hereby
deemed to be made by the Trustee as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Debentures, and that reliance may be
placed only on the other identification numbers printed on the Debentures. The
Company shall promptly notify the Trustee of any change in the CUSIP numbers.
Section 2.14. Deposit of Moneys or Preferred Stock.
------------------------------------
Except where the Company has elected to pay interest in Secondary
Debentures in accordance with paragraph 1 of the Debentures, prior to 10:00 a.m.
New York City time on each Interest Payment Date and on the Maturity Date, the
Company shall deposit with the Paying Agent in immediately available funds money
sufficient to make cash payments, if any, due on such Interest Payment Date or
Maturity Date, as the case may be, in a timely manner which permits the Paying
Agent to remit payment to the Holders on such Interest Payment Date or Maturity
Date, as the case may be.
In the event Secondary Debentures will be issued in lieu of cash
interest payments on the Debentures in accordance with paragraph 1 of the
Debentures, prior to 10:00 a.m. New York City time on the day prior to each
applicable Record Date, the Company shall authorize the Trustee to authenticate
the specified amount of Secondary Debentures by transmitting to the Trustee a
written order in the form of an Officer's Certificate.
Section 2.15. Restrictive Legends.
-------------------
Each Global Note shall also bear the following legend on the face
thereof:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN
PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE
DEPOSITORY, OR BY ANY SUCH NOMINEE OF THE DEPOSITORY, OR BY THE
DEPOSITORY OR NOMINEE OF SUCH SUCCESSOR DEPOSITORY OR ANY SUCH NOMINEE
TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE
& CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
26
<PAGE>
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN
PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE.
Section 2.16. Book-Entry Provisions for Global Security.
-----------------------------------------
(a) Any Global Debenture initially shall (i) be registered in the
name of the Depository or the nominee of such Depository, (ii) be delivered to
the Trustee as custodian for such Depository and (iii) bear a legend as set
forth in Section 2.15.
Members of, or participants in, the Depository ("Agent Members") shall
have no rights under this Indenture with respect to any Global Debenture held on
their behalf by the Depository, or the Trustee as its custodian, or under the
Global Debenture, and the Depository may be treated by the Company, the Trustee
and any agent of the Company or the Trustee as the absolute owner of the Global
Debenture for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between the Depository
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a holder of any Debenture.
(b) Transfers of the Global Debenture shall be limited to transfers
in whole, but not in part, to the Depository, its successors or their respective
nominees. Interests of beneficial owners in the Global Note may be transferred
or, subject to Section 2.01, exchanged for Physical Debentures in accordance
with the rules and procedures of the Depository. In addition, Physical
Debentures shall be transferred to all beneficial owners in exchange for their
beneficial interests in the Global Debenture if (i) the Depository notifies the
Company that it is unwilling or unable to continue as Depository for the Global
Debenture and a successor depositary is not appointed by the Company within 90
days of such notice or (ii) an Event of Default has occurred and is continuing
and the Registrar has received a written request from the Depository or the
Trustee to issue Physical Debentures.
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in the Global Debenture to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Debentures are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of the Global Debenture in an amount equal to the principal
amount of the beneficial interest in the Global Debenture to be transferred, and
the Company shall execute, and the Trustee shall authenticate and deliver, one
or more Physical Debentures of like tenor and amount.
(d) In connection with the transfer of the entire Global Debenture
to beneficial owners pursuant to paragraph (b), the Global Debenture shall be
deemed to be surrendered to the Trustee for cancellation, and the Company shall
execute, and the Trustee shall authenticate and deliver, to each beneficial
owner identified by the
27
<PAGE>
Depository in exchange for its beneficial interest in the Global Debenture, an
equal aggregate principal amount of Physical Debentures of authorized
denominations.
(e) The Holder of the Global Debenture may grant proxies and
otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Debenture.
ARTICLE THREE
REDEMPTION
Section 3.01. Notices to Trustee.
------------------
If the Company elects to redeem Debentures pursuant to Paragraph 6 (a)
or (b) of the Debentures, it shall notify the Trustee and the Paying Agent in
writing of the Redemption Date and the principal amount of the Debentures to be
redeemed.
Except as set forth in the succeeding paragraph, the Company shall
give each notice provided for in this Section 3.01 at least 45 days, but not
more than 60 days, before the Redemption Date (unless a shorter notice period
shall be satisfactory to the Trustee, as evidenced in a writing signed on behalf
of the Trustee), together with an Officers' Certificate stating that such
redemption shall comply with the conditions contained herein and in the
Debentures.
Section 3.02. Selection of Debentures To Be Redeemed.
--------------------------------------
If fewer than all of the Debentures are to be redeemed, selection of
the Debentures to be redeemed will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Debentures are listed or, if the Debentures are not then listed on a national
securities exchange, on a pro rata basis, by lot or in such other fair and
reasonable manner chosen at the discretion of the Trustee; provided, however,
that if a partial redemption is made with the proceeds of a Public Equity
Offering, selection of the Debentures or portion thereof for redemption shall be
made by the Trustee only on a pro rata basis or on as nearly a pro rata basis as
practicable (subject to the Depository's procedures), unless such method is
otherwise prohibited. The Company shall promptly notify the Trustee and the
Paying Agent in writing of the date of listing and the name of the securities
exchange if and when the Debentures are listed on a principal national
securities exchange. The Trustee shall make the selection from the Debentures
outstanding and not previously called for redemption and shall promptly notify
the Company in writing of the Debentures selected for redemption and, in the
case of any Debenture selected for partial redemption, the principal amount
thereof to be redeemed. Debentures in denominations of $1,000 or less may be
redeemed only in whole. The Trustee may select for redemption portions (equal
to $1,000 or any integral multiple thereof) of the principal of Debentures that
have denominations larger than $1,000. Provisions of this Indenture that apply
to Debentures called for redemption also apply to portions of Debentures called
for redemption. On and
28
<PAGE>
after the date of redemption, interest will cease to accrue on the Debentures or
portions thereof called for redemption as long as the Company has deposited with
the Paying Agent funds in satisfaction of the applicable redemption price
pursuant to this Indenture.
Section 3.03. Notice of Redemption.
--------------------
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail or cause to be mailed a notice of redemption by first
class mail, postage prepaid, to each Holder whose Debentures are to be redeemed,
with a copy to the Trustee and any Paying Agent. At the Company's written
request, the Trustee shall give the notice of redemption in the Company's name
and at the Company's expense.
Each notice for redemption shall identify the Debentures to be
redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price and the amount of accrued interest, if
any, to be paid;
(3) the name and address of the Paying Agent;
(4) the subparagraph of the Debentures pursuant to which such
redemption is being made;
(5) that Debentures called for redemption must be surrendered to
the Paying Agent to collect the Redemption Price plus accrued interest, if
any;
(6) that, unless the Company defaults in making the redemption
payment, interest on Debentures called for redemption ceases to accrue on
and after the Redemption Date, and the only remaining right of the Holders
of such Debentures is to receive payment of the Redemption Price plus
accrued interest, if any, upon surrender to the Paying Agent of the
Debentures redeemed;
(7) if any Debenture is being redeemed in part, the portion of the
principal amount of such Debenture to be redeemed and that, after the
Redemption Date, and upon surrender of such Debenture, a new Debenture or
Debentures in the aggregate principal amount equal to the unredeemed
portion thereof will be issued; and
(8) if fewer than all the Debentures are to be redeemed, the
identification of the particular Debentures (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Debentures to be
redeemed and the aggregate principal amount of Debentures to be outstanding
after such partial redemption.
29
<PAGE>
Section 3.04 Effect of Notice of Redemption.
------------------------------
Once notice of redemption is mailed in accordance with Section 3.03,
Debentures called for redemption become due and payable on the Redemption Date
and at the Redemption Price plus accrued interest, if any. Upon surrender to
the Trustee or Paying Agent, such Debentures called for redemption shall be paid
at the Redemption Price (which shall include accrued interest thereon to the
Redemption Date, except that installments of interest, the maturity of which is
on or prior to the Redemption Date, shall be payable to Holders of record at the
close of business on the relevant record dates referred to in the Debentures).
Section 3.05. Deposit of Redemption Price.
---------------------------
On or before 10:00 a.m. New York City time on the Redemption Date, the
Company shall deposit with the Paying Agent U.S. Legal Tender sufficient to pay
the Redemption Price plus accrued interest, if any, of all Debentures to be
redeemed on that date. The Paying Agent shall promptly return to the Company
any U.S. Legal Tender so deposited which is not required for that purpose,
except with respect to monies owed as obligations to the Trustee pursuant to
Article Seven.
If the Company complies with the preceding paragraph, then, unless the
Company defaults in the payment of such Redemption Price plus accrued interest,
if any, interest on the Debentures to be redeemed will cease to accrue on and
after the applicable Redemption Date, whether or not such Debentures are
presented for payment.
Section 3.06. Debentures Redeemed in Part.
---------------------------
Upon surrender of a Debenture that is to be redeemed in part, the
Company shall execute and the Trustee shall authenticate for the Holder a new
Debenture or Debentures equal in principal amount to the unredeemed portion of
the Debenture surrendered.
ARTICLE FOUR
COVENANTS
Section 4.01. Payment of Debentures.
---------------------
The Company shall pay the principal of and interest on the Debentures
(including the Secondary Debentures) on the dates and in the manner provided in
the Debentures and in this Indenture. An installment of principal of or
interest on the Debentures shall be considered paid on the date it is due if the
Trustee or Paying Agent (other than the Company or an Affiliate of the Company)
holds on that date U.S. Legal Tender designated for and sufficient to pay the
installment in full and is not prohibited from paying such money to the Holders
pursuant to the terms of this Indenture.
The Company shall pay, to the extent such payments are lawful,
interest on overdue principal and on overdue installments of interest (without
regard to any
30
<PAGE>
applicable grace periods) from time to time on demand at the rate
borne by the Debentures. Interest will be computed on the basis of a 360-day
year comprised of twelve 30-day months.
Notwithstanding anything to the contrary contained in this Indenture,
the Company may, to the extent it is required to do so by law, deduct or
withhold income or other similar taxes imposed by the United States of America
from principal or interest payments hereunder.
Section 4.02. Maintenance of Office or Agency.
-------------------------------
The Company shall maintain the office or agency required under Section
2.03. The Company shall give prior written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee set forth in Section 11.02.
Section 4.03. Corporate Existence.
-------------------
Except as otherwise permitted by Article Five, the Company shall do or
cause to be done, at its own cost and expense, all things necessary to preserve
and keep in full force and effect its corporate existence and the corporate
existence of each of its Restricted Subsidiaries in accordance with the
respective organizational documents of each such Restricted Subsidiary and the
material rights (charter and statutory) and franchises of the Company and each
such Restricted Subsidiary.
Section 4.04. Payment of Taxes and Other Claims.
---------------------------------
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all material taxes, assessments and
governmental charges (including withholding taxes and any penalties, interest
and additions to taxes) levied or imposed upon it or any of its Subsidiaries or
properties of it or any of its Subsidiaries and (ii) all lawful claims for
labor, materials and supplies that, if unpaid, might by law become a Lien upon
the property of it or any of its Subsidiaries; provided, however, that the
Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings properly
instituted and diligently conducted for which adequate reserves, to the extent
required under GAAP, have been taken.
Section 4.05. Maintenance of Properties and Insurance.
---------------------------------------
(a) The Company shall, and shall cause each of its Restricted
Subsidiaries to, maintain its material properties in good working order and
condition (subject to ordinary wear and tear) and make all necessary repairs,
renewals, replacements, additions, betterments and improvements thereto, all as
in the judgment of the Company or such Restricted Subsidiary may be appropriate
in order to conduct and
31
<PAGE>
carry on its business; provided, however, that nothing in this Section 4.05
shall prevent the Company or any of its Restricted Subsidiaries from
discontinuing the operation and maintenance of any of its properties, if such
discontinuance is, in the good faith judgment of the Board of Directors of the
Company or the Restricted Subsidiary, as the case may be, desirable in the
conduct of their respective businesses.
(b) The Company shall provide or cause to be provided, for itself
and each of its Restricted Subsidiaries, insurance (including appropriate self-
insurance) against loss or damage of the kinds that, in the good faith judgment
of the Board of Directors of the Company, are adequate and appropriate for the
conduct of the business of the Company and such Restricted Subsidiaries, with
reputable insurers or with the government of the United States of America or an
agency or instrumentality thereof, in such amounts, with such deductibles, and
by such methods as shall be customary, in the good faith judgment of the Board
of Directors of the Company, for companies similarly situated in the industry.
Section 4.06. Compliance Certificate; Notice of Default.
-----------------------------------------
(a) The Company shall deliver to the Trustee within 120 days after
the end of the Company's fiscal year, an Officers' Certificate stating that a
review of its activities and the activities of its Subsidiaries during the
preceding fiscal year, has been made under the supervision of the signing
Officers with a view to determining whether the Company has complied with its
obligations under this Indenture and further stating, as to each such Officer
signing such certificate, that to the best of such Officer's knowledge the
Company during such preceding fiscal year has complied with each and every such
covenant and no Default or Event of Default occurred during such year and at the
date of such certificate there is no Default or Event of Default that has
occurred and is continuing or, if such signers do know of such Default or Event
of Default, the certificate shall describe the Default or Event of Default and
its status with particularity. The Officers' Certificate shall also notify the
Trustee should the Company elect to change the manner in which it fixes its
fiscal year end.
(b) The annual financial statements delivered pursuant to Section
4.11 shall be accompanied by a written report of the Company's independent
accountants (who shall be a firm of established national reputation) that in
conducting their audit of such financial statements nothing has come to their
attention that would lead them to believe that the Company has violated any
provisions of Article Four, Five or Six of this Indenture insofar as they relate
to accounting matters or, if any such violation has occurred, specifying the
nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.
(c) Upon becoming aware of any Default or Event of Default in the
performance of any covenant agreement or condition contained in this Indenture,
the Company shall deliver to the Trustee, at its address set forth in Section
11.02 hereof, by registered or certified mail or by telegram, telex or facsimile
transmission followed by
32
<PAGE>
hard copy by registered or certified mail an Officers' Certificate specifying
such event, notice or other action.
Section 4.07. Compliance with Laws.
--------------------
The Company shall comply, and shall cause each of its Restricted
Subsidiaries to comply, with all applicable statutes, rules, regulations, orders
and restrictions of the United States of America, all states and municipalities
thereof, and of any governmental department, commission, board, regulatory
authority, bureau, agency and instrumentality of the foregoing, in respect of
the conduct of their respective businesses and the ownership of their respective
properties, except for such noncompliances as are not in the aggregate
reasonably likely to have a material adverse effect on the financial condition
or results of operations of the Company and its Restricted Subsidiaries, taken
as a whole.
Section 4.08. Waiver of Stay, Extension or Usury Laws.
---------------------------------------
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Company from paying all or any
portion of the principal of or interest on the Debentures as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Indenture; and (to the extent
that it may lawfully do so) the Company hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
Section 4.09. Limitation on Restricted Payments.
---------------------------------
The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, (a) declare or pay any
dividend or make any distribution (other than dividends or distributions payable
in Qualified Capital Stock of the Company) on or in respect of shares of the
Company's Capital Stock to holders of such Capital Stock, (b) purchase, redeem
or otherwise acquire or retire for value any Capital Stock of the Company or any
warrants, rights or options to purchase or acquire shares of any class of such
Capital Stock, (c) make any principal payment on, purchase, defease, redeem,
prepay, decrease or otherwise acquire or retire for value, prior to any
scheduled final maturity, scheduled repayment or scheduled sinking fund payment,
any Indebtedness of the Company that is subordinate or junior in right of
payment to the Debentures or (d) make any Investment (other than Permitted
Investments) (each of the foregoing actions set forth in clauses (a), (b), (c)
and (d) being referred to as a "Restricted Payment"), if at the time of such
Restricted Payment or immediately after giving effect thereto, (i) a Default or
an Event of Default shall have occurred and be continuing or (ii) the Company is
not able to incur at least $1.00 of additional Indebtedness (other than
Permitted Indebtedness) in compliance with Section 4.10 or (iii) the aggregate
amount of Restricted Payments (including such proposed Restricted Payment) made
subsequent to
33
<PAGE>
the Effective Date (the amount expended for such purposes, if other than in
cash, being the fair market value of such property as determined reasonably and
in good faith by the Board of Directors of the Company) shall exceed the sum of:
(w) 50% of the cumulative Consolidated Net Income (or if cumulative Consolidated
Net Income shall be a loss, minus 100% of such loss) of the Company earned
subsequent to February 26, 1998 and on or prior to the date the Restricted
Payment occurs (the "Reference Date") (treating such period as a single
accounting period); plus (x) 100% of the aggregate net cash proceeds received by
the Company from any Person (other than a Subsidiary of the Company) from the
issuance and sale subsequent to the Effective Date and on or prior to the
Reference Date of Qualified Capital Stock of the Company; plus (y) without
duplication of any amounts included in clause (iii)(x) above, 100% of the
aggregate net cash proceeds of any equity contribution received by the Company
from a holder of the Company's Capital Stock); plus (z) without duplication, the
sum of (1) the aggregate amount returned in cash on or with respect to
Investments (other than Permitted Investments) made subsequent to the Effective
Date whether through interest payments, principal payments, dividends or other
distributions or payments, (2) the net cash proceeds received by the Company or
any of its Restricted Subsidiaries from the disposition of all or any portion of
such Investments (other than to a Subsidiary of the Company) and (3) upon
redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary, the fair
market value of such Subsidiary; provided, however, that the sum of clauses (1),
(2) and (3) above shall not exceed the aggregate amount of all such Investments
made subsequent to the Effective Date.
Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph do not prohibit: (1) the payment of any
dividend or the consummation of any irrevocable redemption within 60 days after
the date of declaration of such dividend or notice of such redemption if the
dividend or the payment of the redemption price, as the case may be, would have
been permitted on the date of declaration or notice; (2) if no Default or Event
of Default shall have occurred and be continuing, the acquisition of any shares
of Capital Stock of the Company, either (i) solely in exchange for shares of
Qualified Capital Stock of the Company or (ii) through the application of net
proceeds of a substantially concurrent sale for cash (other than to a Subsidiary
of the Company) of shares of Qualified Capital Stock of the Company; (3) if no
Default or Event of Default shall have occurred and be continuing, the
acquisition of any Indebtedness of the Company that is subordinate or junior in
right of payment to the Debentures either (i) solely in exchange for shares of
Qualified Capital Stock of the Company, or (ii) through the application of net
proceeds of a substantially concurrent sale for cash (other than to a Subsidiary
of the Company) of (A) shares of Qualified Capital Stock of the Company or (B)
Refinancing Indebtedness; (4) so long as no Default or Event of Default shall
have occurred and be continuing, repurchases by the Company of Capital Stock of
the Company from (i) employees of or consultants to the Company or any of its
Subsidiaries or their authorized representatives (a) upon the death, disability
or termination of employment of such employees or consultants or to the extent
required pursuant to employee benefit plans, employment agreements or consulting
agreements, (b) pursuant to any other agreements with such employees of or
consultants to the Company or any of its Subsidiaries, in an aggregate amount
not to exceed $2.5 million in any calendar year (with unused amounts in any
calendar year being carried over to
34
<PAGE>
succeeding years subject to a maximum of $5.0 million in any calendar year) or
(c) to the extent required pursuant to the Shareholders' Agreement or the Option
Plan or (ii) Elton Babbitt; (5) the declaration and payment of dividends to
holders of any class or series of preferred stock (other than Disqualified
Capital Stock) issued after the Issue Date, provided that for the most recently
ended four full fiscal quarters for which internal financial statements are
available immediately preceding the date of issuance of such preferred stock,
after giving effect to such issuance on a pro forma basis, the Company would
--- -----
have had a Consolidated Fixed Charge Coverage Ratio of at least 1.75 to 1.00;
(6) the payment of dividends on the Company's Common Stock, following the first
public offering of the Company's Common Stock after the Effective Date, of up to
6% per annum of the net proceeds received by the Company in such public
offering, other than public offerings with respect to the Company's Common Stock
registered on Form S-8; (7) the repurchase, retirement or other acquisition or
retirement for value of equity interests of the Company in existence on the
Effective Date and from the persons holding such equity interests on the
Effective Date and which are not held by Apollo or members of management of the
Company and its Subsidiaries on the Effective Date (including any equity
interests issued in respect of such equity interests as a result of a stock
split, recapitalization, merger, combination, consolidation or similar
transaction), provided, however, that the Company shall be permitted to
-------- -------
make Restricted Payments under this clause only if, after giving effect thereto,
the Company would be permitted to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to Section 4.10; and
(8) other Restricted Payments in an aggregate amount not to exceed $7.5 million.
In determining the aggregate amount of Restricted Payments made subsequent to
the Issue Date in accordance with clause (iii) of the immediately preceding
paragraph, amounts expended pursuant to clauses (1), (2)(ii), (4), (5), (6),
(7), and (8) shall be included in such calculation.
Section 4.10. Limitation on Incurrence of Additional Indebtedness.
---------------------------------------------------
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume, guarantee,
acquire, become liable, contingently or otherwise, with respect to, or otherwise
become responsible for payment of (collectively, "incur") any Indebtedness
(other than Permitted Indebtedness); provided, however, that if no Default or
Event of Default shall have occurred and be continuing at the time of or as a
consequence of the incurrence of any such Indebtedness, the Company may incur
Indebtedness (including, without limitation, Acquired Indebtedness) and
Restricted Subsidiaries of the Company may incur Acquired Indebtedness, in each
case if on the date of the incurrence of such Indebtedness, after giving effect
to the incurrence thereof, the Consolidated Fixed Charge Coverage Ratio of the
Company is greater than 1.9 to 1.0.
Section 4.11. Reports to Holders.
------------------
The Company will deliver to the Trustee within 15 days after the
filing of the same with the Commission, copies of the quarterly and annual
reports and of the information, documents and other reports, if any, which the
Company is required to file with the Commission pursuant to Section 13 or 15(d)
of the Exchange Act.
35
<PAGE>
Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company will file
with the Commission, to the extent permitted, and provide the Trustee and
Holders with such annual reports and such information, documents and other
reports specified in Sections 13 and 15(d) of the Exchange Act. The Company will
upon request provide to prospective purchasers of the Securities the foregoing
reports. The Company will also comply with the other provisions of TIA (S)
314(a).
ARTICLE FIVE
SUCCESSOR CORPORATION
Section 5.01. Merger, Consolidation and Sale of Assets.
----------------------------------------
The Company will not, in a single transaction or series of related
transactions, consolidate or merge with or into any Person, or sell, assign,
transfer, lease, convey or otherwise dispose of (or cause or permit any
Restricted Subsidiary of the Company to sell, assign, transfer, lease, convey or
otherwise dispose of) all or substantially all of the Company's assets
(determined on a consolidated basis for the Company and the Company's Restricted
Subsidiaries) whether as an entirety or substantially as an entirety to any
Person unless: (i) either (1) the Company shall be the surviving or continuing
corporation or (2) the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or the Person which acquires
by sale, assignment, transfer, lease, conveyance or other disposition the
properties and assets of the Company and of the Company's Restricted
Subsidiaries substantially as an entirety (the "Surviving Entity") (x) shall be
a corporation organized and validly existing under the laws of the United States
or any State thereof or the District of Columbia and (y) shall expressly assume,
by supplemental indenture (in form and substance satisfactory to the Trustee),
executed and delivered to the Trustee, the due and punctual payment of the
principal and interest on all of the Debentures and the performance of every
covenant of the Debentures and the Indenture on the part of the Company to be
performed or observed; (ii) immediately after giving effect to such transaction
and the assumption contemplated by clause (i)(2)(y) above (including giving
effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to
be incurred in connection with or in respect of such transaction), the Company
or such Surviving Entity, as the case may be, shall be able to incur at least
$1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to
Section 4.10; (iii) immediately before and immediately after giving effect to
such transaction and the assumption contemplated by clause (i)(2)(y) above
(including, without limitation, giving effect to any Indebtedness and Acquired
Indebtedness incurred or anticipated to be incurred and any Lien granted in
connection with or in respect of the transaction), no Default or Event of
Default shall have occurred or be continuing; and (iv) the Company or the
Surviving Entity shall have delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger, sale,
assignment, transfer, lease, conveyance or other disposition and, if a
supplemental indenture is required in connection with such transaction, such
supplemental indenture comply with the applicable provisions of this Indenture
and that all conditions precedent in this Indenture relating to such transaction
have been satisfied.
36
<PAGE>
Notwithstanding clause (ii) of the preceding sentence, (a) any Restricted
Subsidiary of the Company may consolidate with, merge into or transfer all or
part of its properties and assets to the Company and (b) the Company may merge
with an Affiliate incorporated solely for the purpose of reincorporating the
Company in another jurisdiction.
For purposes of the foregoing, the transfer (by lease, assignment,
sale or otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Restricted
Subsidiaries of the Company the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Company.
Section 5.02. Successor Corporation Substituted.
---------------------------------
Upon any consolidation, combination or merger or any transfer of all
or substantially all of the assets of the Company in accordance with the
foregoing, in which the Company is not the continuing corporation, the successor
Person formed by such consolidation or into which the Company is merged or to
which such conveyance, lease or transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture and the Debentures with the same effect as if such surviving
entity had been named as such.
ARTICLE SIX
DEFAULT AND REMEDIES
Section 6.01. Events of Default.
-----------------
An "Event of Default" occurs if:
(1) the Company fails to pay interest on any Debentures when the
same becomes due and payable and the Default continues for a period of 30
days (whether or not such payment shall be prohibited by Article Ten of
this Indenture); or
(2) the Company fails to pay the principal on any Debentures when
such principal becomes due and payable, at maturity, upon redemption or
otherwise (whether or not such payment shall be prohibited by Article Ten);
or
(3) the Company defaults in the observance or performance of any
other covenant or agreement contained in this Indenture, which default
continues for a period of 30 days after the Company receives written notice
specifying the default (and demanding that such default be remedied) from
the Trustee or the Company and the Trustee receive such notice from the
Holders of at least 25% of the outstanding principal amount of the
Debentures (except in the case of a default with respect to Section 5.01,
which will constitute an Event of Default with such notice requirement but
without such passage of time requirement); or
37
<PAGE>
(4) the Company fails to pay at final stated maturity (giving effect
to any applicable grace periods and any extensions thereof) the principal
amount of any Indebtedness for borrowed money of the Company or any
Restricted Subsidiary of the Company, and such failure continues for a
period of 30 days or more, or the acceleration of the final stated maturity
of any such Indebtedness (which acceleration is not rescinded, annulled or
otherwise cured within 30 days of receipt by the Company or such Restricted
Subsidiary of notice of any such acceleration) if the aggregate principal
amount of such Indebtedness, together with the principal amount of any
other such Indebtedness in default for failure to pay principal at final
stated maturity or which has been accelerated, in each case with respect to
which the 30-day period described above has passed, aggregates $10.0
million or more at any time; or
(5) one or more judgments for the payment of money in an aggregate
amount in excess of $10.0 million shall have been rendered against the
Company or any of its Restricted Subsidiaries and such judgments remain
undischarged, unpaid or unstayed for a period of 60 days after such
judgment or judgments become final and non-appealable; or
(6) the Company or any Significant Subsidiary of the Company (A)
commences a voluntary case or proceeding under any Bankruptcy Law with
respect to itself, (B) consents to the entry of a judgment, decree or order
for relief against it in an involuntary case or proceeding under any
Bankruptcy Law, (C) consents to the appointment of a Custodian of it or for
substantially all of its property, (D) consents to or acquiesces in the
institution of a bankruptcy or an insolvency proceeding against it, (E)
makes a general assignment for the benefit of its creditors, or (F) takes
any corporate action to authorize or effect any of the foregoing; or
(7) a court of competent jurisdiction enters a judgment, decree or
order for relief in respect of the Company or any Significant Subsidiary of
the Company in an involuntary case or proceeding under any Bankruptcy Law,
which shall (A) approve as properly filed a petition seeking
reorganization, arrangement, adjustment or composition in respect of the
Company or any such Significant Subsidiary, (B) appoint a Custodian of the
Company or any such Significant Subsidiary or for substantially all of its
property or (C) order the winding-up or liquidation of its affairs; and
such judgment, decree or order shall remain unstayed and in effect for a
period of 60 consecutive days.
Section 6.02. Acceleration.
------------
(a) If an Event of Default (other than an Event of Default
specified in Section 6.01(6) or (7) with respect to the Company) occurs and is
continuing and has not been waived pursuant to Section 6.04, then the Trustee or
the Holders of at least 25% in principal amount of outstanding Debentures may
declare the principal of and accrued interest on all the Debentures to be due
and payable by notice in writing to the Company and the Trustee specifying the
respective Event of Default and that it is a "notice of
38
<PAGE>
acceleration" (the "Acceleration Notice"), and the same (i) shall become
immediately due and payable or (ii) if there are any amounts outstanding under
the New Credit Agreement, shall become immediately due and payable upon the
first to occur of an acceleration under the New Credit Agreement or 5 Business
Days after receipt by the Company and the Representative under the New Credit
Agreement of such Acceleration Notice but only if such Event of Default is then
continuing. Upon any such declaration, but subject to the immediately preceding
sentence, such amount shall be immediately due and payable.
(b) If an Event of Default specified in Section 6.01(6) or (7)
occurs and is continuing with respect to the Company, all unpaid principal and
accrued and unpaid interest on all of the outstanding Debentures shall ipso
facto become and be immediately due and payable without any declaration or other
act on the part of the Trustee or any Holder.
(c) At any time after a declaration of acceleration with respect to
the Debentures in accordance with Section 6.02(a), the Holders of a majority in
principal amount of the outstanding Debentures may, on behalf of the Holders of
all of the Debentures, rescind and cancel such declaration and its consequences
(i) if the rescission would not conflict with any judgment or decree, (ii) if
all existing Events of Default have been cured or waived except nonpayment of
principal or interest that has become due solely because of the acceleration,
(iii) to the extent the payment of such interest is lawful, interest on overdue
installments of interest and overdue principal, which has become due otherwise
than by such declaration of acceleration, has been paid, (iv) if the Company has
paid the Trustee its reasonable compensation and reimbursed the Trustee for its
expenses, disbursements and advances, and all other amounts due the Trustee
under Section 7.07 and (v) in the event of the cure or waiver of an Event of
Default of the type described in Section 6.01(6) or (7), the Trustee shall have
received an Officers' Certificate and an Opinion of Counsel that such Event of
Default has been cured or waived. No such rescission shall affect any
subsequent Default or impair any right consequent thereto. The Holders of a
majority in principal amount of the outstanding Debentures may waive any
existing Default or Event of Default under this Indenture, and its consequences,
except a default in the payment of the principal of or interest on any
Debentures.
Section 6.03. Other Remedies.
--------------
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of or interest on the Debentures or to enforce the
performance of any provision of the Debentures or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Debentures or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in
39
<PAGE>
the Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults.
-----------------------
Subject to Sections 2.09, 6.02, 6.07 and 9.02, the Holders of a
majority in principal amount of the outstanding Debentures by notice to the
Trustee may waive an existing Default or Event of Default and its consequences,
except a Default in the payment of principal of or interest on any Debenture as
specified in clauses (1) and (2) of Section 6.01. When a Default or Event of
Default is waived, it is cured and ceases.
Section 6.05. Control by Majority.
-------------------
Subject to Section 2.09, the Holders of a majority in principal amount
of the outstanding Debentures may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on it, including, without limitation, any remedies
provided for in Section 6.03. Subject to Section 7.01, however, the Trustee may
refuse to follow any direction that the Trustee reasonably believes conflicts
with any law or this Indenture, that the Trustee determines may be unduly
prejudicial to the rights of another Holder, or that may involve the Trustee in
personal liability; provided that the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such direction; and
provided further that this provision shall not affect the rights of the Trustee
set forth in Section 7.01(d).
Section 6.06. Limitation on Suits.
-------------------
A Holder may not pursue any remedy with respect to this Indenture or
the Debentures unless:
(1) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(2) Holders of at least 25% in principal amount of the outstanding
Debentures make a written request to the Trustee to pursue the remedy;
(3) such Holders offer to the Trustee indemnity in its sole
discretion satisfactory to the Trustee against any loss, liability, claim
or expense (including, without limitation, attorney's fees) to be incurred
in compliance with such request;
(4) the Trustee does not comply with the request within 45 days
after receipt of the request and the offer of satisfactory indemnity; and
(5) during such 45-day period the Holders of a majority in principal
amount of the outstanding Debentures do not give the Trustee a direction
which, in the opinion of the Trustee, is inconsistent with the request.
40
<PAGE>
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over such other Holder.
Section 6.07. Rights of Holders To Receive Payment.
------------------------------------
Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of principal of and interest on a Debenture, on or
after the respective due dates expressed in such Debenture, or to bring suit for
the enforcement of any such payment on or after such respective dates, shall not
be impaired or affected without the consent of such Holder.
Section 6.08. Collection Suit by Trustee.
--------------------------
If an Event of Default in payment of principal or interest specified
in clause (1) or (2) of Section 6.01 occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company or any other obligor on the Debentures for the whole amount of principal
and accrued interest remaining unpaid, together with interest on overdue
principal and, to the extent that payment of such interest is lawful, interest
on overdue installments of interest at the rate set forth in Section 4.01 and
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents, consultants and counsel, and any other
amounts due the Trustee under Section 7.07.
Section 6.09. Trustee May File Proofs of Claim.
--------------------------------
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses, taxes,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relating to the Company or any other
obligor upon the Debentures, any of their respective creditors or any of their
respective property and shall be entitled and empowered to collect and receive
any monies or other securities or property payable or deliverable upon the
exchange of the Debentures or upon any such claims and to distribute the same,
and any Custodian in any such judicial proceedings is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due to it for the reasonable compensation, expenses,
taxes, disbursements and advances of the Trustee, its agents, consultants and
counsel, and any other amounts due the Trustee under Section 7.07. The
Company's payment obligations under this Section 6.09 shall be secured in
accordance with the provisions of Section 7.07 hereunder. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Debentures or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Holder in any such proceeding.
41
<PAGE>
Section 6.10. Priorities.
----------
If the Trustee collects any money or property pursuant to this Article
Six, it shall pay out the money in the following order:
First: to the Trustee for amounts due under Sections 6.09 and 7.07;
-----
Second: if the Holders are forced to proceed against the Company
------
directly without the Trustee, to Holders for their collection costs;
Third: to Holders for amounts due and unpaid on the Debentures for
-----
principal and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Debentures for principal and
interest, respectively; and
Fourth: to the Company or any other obligor on the Debentures, as
------
their interests may appear, or as a court of competent jurisdiction may direct.
The Trustee, upon prior notice to the Company, may fix a record date
and payment date for any payment to Holders pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
---------------------
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07, or a suit by a Holder or Holders of more than 10% in
principal amount of the outstanding Debentures.
ARTICLE SEVEN
TRUSTEE
Section 7.01. Duties of Trustee.
-----------------
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in its exercise thereof as a
prudent person would exercise or use under the circumstances in the conduct of
his own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties as are specifically
set forth in this Indenture and the TIA and no covenants or obligations
shall be implied in this Indenture against the Trustee.
42
<PAGE>
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates (including Officers'
Certificates) or opinions (including Opinions of Counsel) furnished to the
Trustee and conforming to the requirements of this Indenture. However, as
to any certificates or opinions which are required to be delivered or
provided to the Trustee, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements of
this Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).
(c) Notwithstanding anything to the contrary herein contained, the
Trustee may not be relieved from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b) of
this Section 7.01.
(2) The Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.02, 6.04 or 6.05.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(e) Whether or not herein expressly provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), (c) and (d) of this Section 7.01.
(f) The Trustee shall not be liable for interest on any money or
assets received by it except as the Trustee may agree in writing with the
Company. Assets held in trust by the Trustee need not be segregated from other
assets except to the extent required by law.
Section 7.02. Rights of Trustee.
-----------------
Subject to Section 7.01:
(a) The Trustee may rely and shall be fully protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, note or other
paper or document
43
<PAGE>
believed by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it may consult
with counsel and may require an Officers' Certificate, an Opinion of Counsel or
both, which shall conform to Sections 11.04 and 11.05. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel.
(c) The Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or indirectly or by or through
agents or attorneys and the Trustee shall not be responsible for the misconduct
or negligence of any agent or attorney appointed with due care.
(d) The Trustee shall not be liable for any action that it takes or
omits to take in good faith which it reasonably believes to be authorized or
within its rights or powers conferred upon it by this Indenture.
(e) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond,
debenture, or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters as it may
see fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled, upon reasonable notice to the Company, to
examine the books, records, and premises of the Company, personally or by agent
or attorney and to consult with the officers and representatives of the Company,
including the Company's accountants and attorneys, at the sole cost of the
Company and shall incur no liability or additional liability of any kind by
reason of such inquiry or investigation.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Trustee security or indemnity
satisfactory to the Trustee in its sole discretion against the costs, expenses
and liabilities which may be incurred by it in compliance with such request,
order or direction.
(g) The Trustee shall not be required to give any bond or surety in
respect of the performance of its powers and duties hereunder.
(h) The permissive rights of the Trustee to do things enumerated in
this Indenture shall not be construed as duties.
(i) The Trustee shall not be charged with knowledge of an Event of
Default, of the identity of any Restricted Subsidiary or the existence of any
Asset Sale unless either (i) a Responsible Officer shall have actual knowledge
thereof or (ii) the Trustee shall have received written notice thereof from the
Company or any Holder.
44
<PAGE>
Section 7.03. Individual Rights of Trustee.
----------------------------
The Trustee in its individual or any other capacity may become the
owner or pledgee of Debentures and may otherwise deal with the Company, any
Subsidiary of the Company, or their respective Affiliates with the same rights
it would have if it were not Trustee. Any Agent may do the same with like
rights. However, the Trustee must comply with Sections 7.10 and 7.11.
Section 7.04. Trustee's Disclaimer.
--------------------
The recitals contained herein and in the Debentures shall be taken as
statements of the Company and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representation as to the validity or adequacy
of this Indenture or the Debentures, and it shall not be accountable for the
Company's use of the proceeds from the Debentures, and it shall not be
responsible for any statement of the Company in this Indenture or the Debentures
other than the Trustee's certificate of authentication.
Section 7.05. Notice of Default.
-----------------
If a Default or an Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to each Holder notice of the
uncured Default or Event of Default within 60 days after such Default or Event
of Default occurs. Except in the case of a Default or an Event of Default in
payment of principal of, or interest on, any Debenture and, except in the case
of a failure to comply with Article Five hereof, the Trustee may withhold the
notice if and so long as its Board of Directors, the executive committee of its
Board of Directors or a committee of its directors and/or Trust Officers in good
faith determines that withholding the notice is in the interest of the Holders.
Section 7.06. Reports by Trustee to Holders.
-----------------------------
Within 60 days after each May 15, the Trustee shall, to the extent
that any of the events described in TIA (S) 313(a) occurred within the previous
twelve months, but not otherwise, mail to each Holder a brief report dated as of
such date that complies with TIA (S) 313(a). The Trustee also shall comply with
TIA (S)(S) 313(b), (c) and (d).
A copy of each report at the time of its mailing to Holders shall be
mailed to the Company and filed with the SEC and each stock exchange, if any, on
which the Debentures are listed.
The Company shall promptly notify the Trustee if the Debentures become
listed on any stock exchange and the Trustee shall comply with TIA (S) 313(d).
Section 7.07. Compensation and Indemnity.
--------------------------
The Company shall pay to the Trustee from time to time reasonable
compensation for its services (including, without limitation, as Paying Agent,
Registrar and agent for service of demands and notices). The Trustee's
compensation shall not be
45
<PAGE>
limited by any law on compensation of a trustee of an express trust. The Company
shall reimburse the Trustee upon request for all reasonable fees and expenses,
including out-of-pocket expenses incurred or made by it in connection with the
performance of its duties under this Indenture. Such expenses shall include the
reasonable fees and expenses of the Trustee's agents, consultants and counsel.
The Company shall indemnify the Trustee and its agents, employees,
stockholders and directors and officers for, and hold them harmless against, any
loss, liability or expense incurred by them except for such actions to the
extent caused by any negligence, bad faith or willful misconduct on their part,
arising out of or in connection with the administration of this trust
(including, without limitation, as Paying Agent, Registrar and agent for service
of demands and notices) including the reasonable costs and expenses of enforcing
this Indenture against the Company (including, without limitation, Section 7.07
hereof) and defending themselves against any claim (whether asserted by a
Securityholder or the Company) or liability in connection with the exercise or
performance of any of their rights, powers or duties hereunder. The Trustee
shall notify the Company promptly of any claim asserted against the Trustee for
which it may seek indemnity. At the Trustee's reasonable discretion, the
Company shall defend the claim and the Trustee shall cooperate and may
participate in the defense; provided that any settlement of a claim shall be
approved in writing by the Trustee, if such settlement would result in an
admission of liability by the Trustee or if such settlement would not be
accompanied by a full release of the Trustee for all liability arising out of
the events giving rise to such claim. Alternatively, the Trustee may at its
option have separate counsel of its own choosing and the Company shall pay the
reasonable fees and expenses of such counsel; provided that the Company will not
be required to pay such fees and expenses if, subject to the approval of the
Trustee, it assumes the Trustee's defense and there is no conflict of interest
between the Company and the Trustee in connection with such defense as
reasonably determined by the Trustee. The Company need not pay for any
settlement made without its written consent. The Company need not reimburse any
expense or indemnify against any loss or liability to the extent incurred by the
Trustee through its negligence, bad faith or willful misconduct.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Debentures on all assets or money held or
collected by the Trustee, in its capacity as Trustee, except assets or money
held in trust to pay principal of or interest on particular Debentures. The
Trustee's right to receive payment of any amounts due under this Section 7.07
shall not be subordinate to any other liability or indebtedness of the Company
(even though the Debentures may be subordinate to such other liability or
indebtedness).
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(6) or (7) occurs, such expenses and the
compensation for such services are intended to constitute expenses of
administration under any Bankruptcy Law; provided, however, that this shall not
affect the Trustee's rights as set forth in the preceding paragraph or Section
6.10.
46
<PAGE>
Notwithstanding any other provision in this Indenture, the foregoing
provisions of this Section 7.07 shall survive the satisfaction and discharge of
this Indenture or the appointment of a successor Trustee.
Section 7.08. Replacement of Trustee.
----------------------
The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the outstanding Debentures may remove the
Trustee by so notifying the Company and the Trustee and may appoint a successor
Trustee. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee or
its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall notify each Holder of such
event and shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in principal amount of
the Debentures may appoint a successor Trustee to replace the successor Trustee
appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided in Section 7.07, the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. A successor Trustee shall mail notice of its succession to each
Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the outstanding Debentures may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
47
<PAGE>
Section 7.09. Successor Trustee by Merger, Etc.
---------------------------------
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee; provided that such
corporation shall be otherwise qualified and eligible under this Article Seven.
Section 7.10. Eligibility; Disqualification.
-----------------------------
This Indenture shall always have a Trustee who satisfies the
requirements of TIA (S)(S) 310(a)(1), (2) and (5). The Trustee (or, in the case
of a corporation included in a bank holding company system, the related bank
holding company) shall have a combined capital and surplus of at least $50
million as set forth in its most recent publicly available annual report of
condition. In addition, if the Trustee is a corporation included in a bank
holding company system, the Trustee, independently of such bank holding company,
shall meet the capital requirements of TIA (S) 310(a)(2). The Trustee shall
comply with TIA (S) 310(b); provided, however, that there shall be excluded from
the operation of TIA (S) 310(b)(1) any indenture or indentures under which other
securities, or certificates of interest or participation in other securities, of
the Company are outstanding, if the requirements for such exclusion set forth in
TIA (S) 310(b)(1) are met. The provisions of TIA (S) 310 shall apply to the
Company, as obligor on the Debentures, and any other obligor on the Debentures.
Section 7.11. Preferential Collection of Claims Against Corporation.
-----------------------------------------------------
The Trustee shall comply with TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein. The
provisions of TIA (S) 311 shall apply to the Company, as obligor on the
Debentures, and any other obligor on the Debentures.
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
Section 8.01. Termination of the Company's Obligations.
----------------------------------------
The Company may terminate its obligations under the Debentures and
this Indenture, except those obligations referred to in the penultimate
paragraph of this Section 8.01, if all Debentures previously authenticated and
delivered (other than destroyed, lost or stolen Debentures which have been
replaced or paid or Debentures for whose payment U.S. Legal Tender or non-
callable U.S. Government Obligations, or a combination thereof, has theretofore
been deposited with the Trustee or the Paying Agent in trust or segregated and
held in trust by the Company and thereafter repaid to the Company, as provided
in Section 8.05) have been delivered to the Trustee for cancellation and the
Company has paid all sums payable by it hereunder, or if:
48
<PAGE>
(a) either (i) pursuant to Article Three, the Company shall have
given notice to the Trustee and mailed a notice of redemption to each Holder of
the redemption of all of the Debentures under arrangements satisfactory to the
Trustee for the giving of such notice or (ii) all Debentures have otherwise
become due and payable hereunder;
(b) the Company shall have irrevocably deposited or caused to be
deposited with the Trustee or a trustee satisfactory to the Trustee, under the
terms of an irrevocable trust agreement in form and substance satisfactory to
the Trustee, as trust funds in trust solely for the benefit of the Holders for
that purpose, U.S. Legal Tender or non-callable U.S. Government Obligations, or
a combination thereof, in such amount as is sufficient without consideration of
reinvestment of such interest, to pay principal of, premium, if any, and
interest on the outstanding Debentures to maturity or redemption, as well as the
Trustee's fees and expenses; provided that the Trustee shall have been
irrevocably instructed to apply such U.S. Legal Tender to the payment of said
principal and interest with respect to the Debentures; provided, further, that
no deposits made pursuant to this Section 8.01(b) shall cause the Trustee to
have a conflicting interest as defined in and for the purposes of the TIA;
provided, further, that from and after the time of deposit, the money deposited
shall not be subject to the rights of holders of Senior Debt pursuant to the
provisions of Article Ten and provided, further, that, as confirmed by an
Opinion of Counsel, no such deposit shall result in the Company, the Trustee or
the trust becoming or being deemed to be an "investment company" under the
Investment Company Act of 1940;
(c) no Default or Event of Default with respect to this Indenture
or the Debentures shall have occurred and be continuing on the date of such
deposit or shall occur as a result of such deposit and such deposit will not
result in a breach or violation of, or constitute a default under, any other
material instrument to which the Company is a party or by which it is bound
(other than a Default or Event of Default resulting from the incurrence of
Indebtedness, all or a portion of which will be used to defease the Debentures
concurrently with such incurrence);
(d) the Company shall have paid all other sums payable by it
hereunder; and
(e) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent providing for or relating to the termination of the Company's
obligations under the Debentures and this Indenture have been complied with.
Such Opinion of Counsel shall also state that such satisfaction and discharge
does not result in a default under the Note Indenture (if then in effect) or the
New Credit Agreement (if then in effect) or any other agreement or instrument
then known to such counsel that binds or affects the Company.
Notwithstanding the foregoing paragraph, the Company's obligations in
Sections 2.05, 2.06, 2.07, 2.08, 4.01, 4.02, 7.07, 8.05 and 8.06 shall survive
until the Debentures are no longer outstanding pursuant to the last paragraph of
Section 2.08. After the Debentures are no longer outstanding, the Company's
obligations in Sections 7.07, 8.05 and 8.06 shall survive.
49
<PAGE>
After such delivery or irrevocable deposit, the Trustee upon request
shall acknowledge in writing the discharge of the Company's obligations under
the Debentures and this Indenture except for those surviving obligations
specified above.
Section 8.02. Legal Defeasance and Covenant Defeasance.
----------------------------------------
(a) The Company may, at its option by Board Resolution of the Board
of Directors of the Company, at any time, elect to have either paragraph (b) or
(c) below be applied to all outstanding Debentures upon compliance with the
conditions set forth in Section 8.03.
(b) Upon the Company's exercise under paragraph (a) hereof of the
option applicable to this paragraph (b), the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.03, be deemed to have been
discharged from its obligations with respect to all outstanding Debentures on
the date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Debentures, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 8.04 hereof and the other Sections of this
Indenture referred to in (i) and (ii) below, and to have satisfied all its other
obligations under such Debentures and this Indenture (and the Trustee, on demand
of and at the expense of the Company, shall execute proper instruments
acknowledging the same), and Holders of the Debentures and any amounts deposited
under Section 8.03 hereof shall cease to be subject to any obligations to, or
the rights of, any holder of Senior Debt under Article Ten or otherwise, except
for the following provisions, which shall survive until otherwise terminated or
discharged hereunder: (i) the rights of Holders of outstanding Debentures to
receive solely from the trust fund described in Section 8.04 hereof, and as more
fully set forth in such Section, payments in respect of the principal of and
interest on such Debentures when such payments are due, (ii) the Company's
obligations with respect to such Debentures under Article Two and Section 4.02
hereof, (iii) the rights, powers, trusts, duties and immunities of the Trustee
hereunder and the Company's obligations in connection therewith and (iv) this
Article Eight. Subject to compliance with this Article Eight, the Company may
exercise its option under this paragraph (b) notwithstanding the prior exercise
of its option under paragraph (c) hereof.
(c) Upon the Company's exercise under paragraph (a) hereof of the
option applicable to this paragraph (c), the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.03 hereof, be released
from its obligations under the covenants contained in Sections 4.09 and 4.10 and
Article Five hereof with respect to the outstanding Debentures on and after the
date the conditions set forth below are satisfied (hereinafter, "Covenant
Defeasance"), and the Debentures shall thereafter be deemed not "outstanding"
for the purposes of any direction, waiver, consent or declaration or act of
Holders (and the consequences of any thereof) in connection with such covenants,
but shall continue to be deemed "outstanding" for all other purposes hereunder
(it being understood that such Debentures shall not be deemed outstanding for
accounting purposes) and Holders of the Debentures and any amounts deposited
under Section 8.03 hereof shall cease to be subject to any obligations to, or
the rights of, any holder of Senior
50
<PAGE>
Debt under Article Ten or otherwise. For this purpose, such Covenant Defeasance
means that, with respect to the outstanding Debentures, the Company may omit to
comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such covenant or by reason of
any reference in any such covenant to any other provision herein or in any other
document and such omission to comply shall not constitute a Default or an Event
or Default under Section 6.01(3) hereof, but, except as specified above, the
remainder of this Indenture and such Debentures shall be unaffected thereby. In
addition, upon the Company's exercise under paragraph (a) hereof of the option
applicable to this paragraph (c), subject to the satisfaction of the conditions
set forth in Section 8.03 hereof, Sections 6.01(3), 6.01(4) and 6.01(5) shall
not constitute Events of Default.
Section 8.03. Conditions to Legal Defeasance or Covenant Defeasance.
-----------------------------------------------------
The following shall be the conditions to the application of either
Section 8.02(b) or 8.02(c) hereof to the outstanding Debentures:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders, U.S. Legal Tender or U.S. Government
Obligations which through the scheduled payment of principal and interest in
respect thereof in accordance with their terms, will provide, not later than one
day before the due date of any payment on the Debentures, U.S. Legal Tender in
such amounts as will be sufficient, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay the principal of, premium, if any, and
interest on the outstanding Debentures on the stated date for payment thereof or
on the applicable redemption date, as the case may be, of such principal or
installment of principal of or interest on the Debentures; provided that the
Trustee shall have received an irrevocable written order from the Company
instructing the Trustee to apply such U.S. Legal Tender or the proceeds of such
U.S. Government Obligations to said payments with respect to the Debentures;
(b) in the case of an election under Section 8.02(b) hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
Debentures will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred; provided,
however, that notwithstanding the foregoing, the Opinion of Counsel required by
this Section 8.03(b) with respect to Legal Defeasance need not be delivered if
all of the Debentures not theretofore delivered to the Trustee for cancellation
(x) have become due and payable, (y) will become due and
51
<PAGE>
payable on the maturity date within one year or (z) are to be called for
redemption within one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in the name, and at the
expense, of the Company;
(c) in the case of an election under Section 8.02(c) hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that the Holders of the
Debentures will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of Default
resulting from the incurrence of Indebtedness all or a portion of the proceeds
of which will be used to defease the Debentures pursuant to this Article Eight
concurrently with such incurrence) or insofar as Sections 6.01(6) and 6.01(7)
hereof are concerned, at any time in the period ending on the 91st day after the
date of such deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result
in a breach or violation of or constitute a default under this Indenture or any
other material agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
(f) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders over any other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Company or others;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with; and
(h) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that (i) the trust funds will not be subject to any rights
of any holders of Senior Debt, including, without limitation, those arising
under this Indenture, and (ii) assuming no intervening bankruptcy or insolvency
of the Company between the date of deposit and the 91st day following the date
of deposit and that no Holder is an insider of the Company, after the 91st day
following the date of deposit, the trust funds will not be subject to the effect
of any applicable Bankruptcy Law.
Section 8.04. Application of Trust Money.
--------------------------
The Trustee or Paying Agent shall hold in trust U.S. Legal Tender or
U.S. Government Obligations deposited with it pursuant to Article Eight, and
shall apply the deposited U.S. Legal Tender and the money from U.S. Government
Obligations in
52
<PAGE>
accordance with this Indenture to the payment of principal of and interest on
the Debentures.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Legal Tender or U.S.
Government Obligations deposited pursuant to Section 8.03 hereof or the
principal and interest received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the Holders of the
outstanding Debentures.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the Company's
request any U.S. Legal Tender or U. S. Government Obligations held by it as
provided in Section 8.03 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, are in excess of the amount thereof that would
then be required to be deposited to effect an equivalent Legal Defeasance or
Covenant Defeasance.
Section 8.05. Repayment to the Company.
------------------------
Subject to Article Eight, the Trustee and the Paying Agent shall
promptly pay to the Company upon request any excess U.S. Legal Tender or U.S.
Government Obligations held by them at any time and thereupon shall be relieved
from all liability with respect to such money. The Trustee and the Paying Agent
shall pay to the Company upon request any money held by them for the payment of
principal or interest that remains unclaimed for two years; provided that the
Trustee or such Paying Agent, before being required to make any payment, may at
the expense of the Company cause to be published once in a newspaper of general
circulation in the City of New York or mail to each Holder entitled to such
money notice that such money remains unclaimed and that after a date specified
therein which shall be at least 30 days from the date of such publication or
mailing any unclaimed balance of such money then remaining will be repaid to the
Company. After payment to the Company, Holders entitled to such money must look
to the Company for payment as general creditors unless an applicable law
designates another Person.
Section 8.06. Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any U.S. Legal
Tender or U.S. Government Obligations in accordance with Article Eight by reason
of any legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Indenture and the Debentures
shall be revived and reinstated as though no deposit had occurred pursuant to
Article Eight until such time as the Trustee or Paying Agent is permitted to
apply all such U.S. Legal Tender or U.S. Government Obligations in accordance
with Article Eight; provided that if the Company has made any payment of
interest on or principal of any Debentures because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such
53
<PAGE>
Debentures to receive such payment from the U.S. Legal Tender or U.S.
Obligations held by the Trustee or Paying Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.01. Without Consent of Holders.
--------------------------
The Company, when authorized by a Board Resolution, and the Trustee,
together, may amend or supplement this Indenture or the Debentures without
notice to or consent of any Holder:
(1) to cure any ambiguity, defect or inconsistency, provided that
such amendment or supplement does not, in the opinion of the Trustee,
adversely affect the rights of any Holder in any material respect; in
formulating its opinion on such matters, the Trustee will be entitled to
rely on such evidence as it deems appropriate, including, without
limitation, solely an Opinion of Counsel;
(2) to comply with Article Five;
(3) to provide for uncertificated Debentures in addition to or in
place of certificated Debentures;
(4) to make any other change that does not adversely affect the
rights of any Debentureholder hereunder in any material respect;
(5) to maintain compliance with any requirements of the SEC in order
to effect or maintain the qualification of this Indenture under the TIA; or
(6) to make any change that would provide any additional benefit or
rights to the Holders or that does not adversely affect in any material
respect the rights of any Holder; provided that the Company has delivered
--------
to the Trustee an Opinion of Counsel and an Officers' Certificate, each
stating that such amendment or supplement complies with the provisions of
this Section 9.01.
Section 9.02. With Consent of Holders.
-----------------------
Subject to Section 6.07, the Company, when authorized by a Board
Resolution, and the Trustee, together, with the written consent of the Holder or
Holders of at least a majority in aggregate principal amount of the outstanding
Debentures, or if prior to the Exchange Date, the holders of at least a majority
of the issued and outstanding shares of Preferred Stock, may amend or supplement
this Indenture or the Debentures, without notice to any other Holders or other
holders of shares of Preferred Stock, as the case may be. Subject to Sections
6.04 and 6.07, the Holder or Holders of a majority in aggregate principal amount
of the outstanding Debentures may waive compliance by the Company with any
provision of this Indenture or the Debentures without notice to any other
Holder. No amendment, supplement or waiver, including a
54
<PAGE>
waiver pursuant to Section 6.04, shall, without the consent of each Holder of
each Debenture or if prior to the Exchange Date, each holder of shares of
Preferred Stock affected thereby:
(1) reduce the amount of Debentures whose Holders must consent to an
amendment;
(2) reduce the rate of or change or have the effect of changing the
time for payment of interest, including defaulted interest, on any
Debentures;
(3) reduce the principal of or change or have the effect of changing
the fixed maturity of any Debentures, or change the date on which any
Debentures may be subject to redemption or repurchase, or reduce the
redemption or repurchase price therefor;
(4) any Debentures payable in money other than that stated in the
Debentures;
(5) make any change in provisions of this Indenture protecting the
right of each Holder to receive payment of principal of and interest on
such Debenture on or after the due date thereof or to bring suit to enforce
such payment, or permitting Holders of a majority in principal amount of
Debentures to waive Defaults or Events of Default;
(6) amend, modify, change or waive any provision of this Section
9.02;
(7) modify Article Ten or the definitions used in Article Ten to
adversely affect the Holders of the Debentures in any material respect. It
shall not be necessary for the consent of the Holders under this Section
9.02 to approve the particular form of any proposed amendment, supplement
or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders affected thereby or if
no Holders, the holders of shares of Preferred Stock affected thereby, a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.
Section 9.03. Effect on Senior Debt.
---------------------
No amendment of this Indenture shall adversely affect the rights of
any holder of Senior Debt under Article Ten of this Indenture, without the
consent of such holder.
55
<PAGE>
Section 9.04. Compliance with TIA.
-------------------
Every amendment, waiver or supplement of this Indenture or the
Debentures shall comply with the TIA as then in effect.
Section 9.05. Revocation and Effect of Consents.
---------------------------------
Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Debenture or portion of a Debenture that evidences the same debt as
the consenting Holder's Debenture, even if notation of the consent is not made
on any Debenture. Subject to the following paragraph, any such Holder or
subsequent Holder may revoke the consent as to such Holder's Debenture or
portion of such Debenture by notice to the Trustee or the Company received
before the date on which the Trustee receives an Officers' Certificate
certifying that the Holders of the requisite principal amount of outstanding
Debentures have consented (and not theretofore revoked such consent) to the
amendment, supplement or waiver (at which time such amendment, supplement or
waiver shall become effective).
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then notwithstanding the last
sentence of the immediately preceding paragraph, those Persons who were Holders
at such record date (or their duly designated proxies), and only those Persons,
shall be entitled to revoke any consent previously given, whether or not such
Persons continue to be Holders after such record date. No such consent shall be
valid or effective for more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Holder, unless it makes a change described in any of clauses (1)
through (8) of Section 9.02, in which case, the amendment, supplement or waiver
shall bind only each Holder of a Debenture who has consented to it and every
subsequent Holder of a Debenture or portion of a Debenture that evidences the
same debt as the consenting Holder's Debenture; provided that any such waiver
shall not impair or affect the right of any Holder to receive payment of
principal of and interest on a Debenture, on or after the respective due dates
expressed in such Debenture, or to bring suit for the enforcement of any such
payment on or after such respective dates without the consent of such Holder.
Section 9.06. Notation on or Exchange of Debentures.
-------------------------------------
If an amendment, supplement or waiver changes the terms of a
Debenture, the Trustee may require the Holder of such Debenture to deliver it to
the Trustee. The Trustee may place an appropriate notation on the Debenture
about the changed terms and return it to the Holder. Alternatively, if the
Company or the Trustee so determines, the Company in exchange for the Debenture
shall issue and the Trustee shall authenticate a new Debenture that reflects the
changed terms. Any such notation or exchange shall be made at the sole cost and
expense of the Company.
56
<PAGE>
Section 9.07. Trustee To Sign Amendments, Etc.
--------------------------------
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article Nine; provided that the Trustee may, but
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel and an Officers' Certificate
each complying with Sections 11.04 and 11.05 and stating that the execution of
any amendment, supplement or waiver authorized pursuant to this Article Nine is
authorized or permitted by this Indenture. Such Opinion of Counsel shall not be
an expense of the Trustee.
ARTICLE TEN
SUBORDINATION
Section 10.01. Debentures Subordinated to Senior Debt.
--------------------------------------
The Company covenants and agrees, and each Holder of the Debentures,
by its acceptance thereof, likewise covenants and agrees, that all Debentures
shall be issued subject to the provisions of this Article Ten; and the Trustee
and each Person holding any Debenture, whether upon original issue or upon
transfer, assignment or exchange thereof, accepts and agrees that the payment of
all Obligations on the Debentures by the Company shall, to the extent and in the
manner herein set forth, be subordinated and junior in right of payment to the
prior payment in full in cash or Cash Equivalents of all Obligations on the
Senior Debt; that the subordination is for the benefit of, and shall be
enforceable directly by, the holders of Senior Debt, and that each holder of
Senior Debt whether now outstanding or hereafter created, incurred, assumed or
guaranteed shall be deemed to have acquired Senior Debt in reliance upon the
covenants and provisions contained in this Indenture and the Debentures.
Section 10.02. No Payment on Debentures in Certain Circumstances.
-------------------------------------------------
(a) If any default occurs and is continuing in the payment when due,
whether at maturity, upon redemption, by declaration or otherwise, of any
principal of, interest on, unpaid drawings for letters of credit issued in
respect of, or regularly accruing fees with respect to, any Senior Debt, no
payment of any kind or character (except in securities substantially identical
to the Debentures issued by the Company in payment of interest accrued thereon)
shall be made by, or on behalf of, the Company or any other Person on its or
their behalf with respect to any Obligations on the Debentures, or to acquire
any of the Debentures for cash or property or otherwise. In addition, if any
other event of default occurs and is continuing with respect to any Designated
Senior Debt, as such event of default is defined in the instrument creating or
evidencing such Designated Senior Debt, permitting the holders of such
Designated Senior Debt then outstanding to accelerate the maturity thereof and
if the Representative for the respective issue of Designated Senior Debt gives
notice of the event of default to the Trustee (a "Default Notice"), then, unless
and until all events of default have been cured or waived or have
57
<PAGE>
ceased to exist or the Trustee receives notice thereof from the Representative
for the respective issue of Designated Senior Debt terminating the Blockage
Period (as defined below), during the 180 days after the delivery of such
Default Notice (the "Blockage Period"), neither the Company nor any other Person
on its behalf shall (x) make any payment of any kind or character (except in
securities substantially identical to the Debentures issued by the Company in
payment of interest accrued thereon) with respect to any Obligations on the
Debentures or (y) acquire any of the Debentures for cash or property or
otherwise. Notwithstanding anything herein to the contrary, in no event will a
Blockage Period extend beyond 180 days from the date the payment on the
Debentures was due and only one such Blockage Period may be commenced within any
360 consecutive days. No event of default which existed or was continuing on the
date of the commencement of any Blockage Period with respect to the Designated
Senior Debt shall be, or be made, the basis for the commencement of a second
Blockage Period by the Representative of such Designated Senior Debt whether or
not within a period of 360 consecutive days, unless such event of default shall
have been cured or waived for a period of not less than 90 consecutive days (it
being acknowledged that any subsequent action, or any breach of any financial
covenants for a period commencing after the date of commencement of such
Blockage Period that, in either case, would give rise to an event of default
pursuant to any provisions under which an event of default previously existed or
was continuing shall constitute a new event of default for this purpose).
(b) In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee or any Holder when such payment is prohibited
by Section 10.02(a), such payment shall be held in trust for the benefit of, and
shall be paid over or delivered to, the holders of Senior Debt (pro rata to such
holders on the basis of the respective amount of Senior Debt held by such
holders) or their respective Representatives, as their respective interests may
appear. The Trustee shall be entitled to rely on information regarding amounts
then due and owing on the Senior Debt, if any, received from the holders of
Senior Debt (or their Representatives) or, if such information is not received
from such holders or their Representatives, from the Company and only amounts
included in the information provided to the Trustee shall be paid to the holders
of Senior Debt.
Nothing contained in this Article Ten shall limit the right of the
Trustee or the Holders of Debentures to take any action to accelerate the
maturity of the Debentures pursuant to Section 6.02 or to pursue any rights or
remedies hereunder; provided that all Senior Debt thereafter due or declared to
be due shall first be paid in full in cash or Cash Equivalents before the
Holders are entitled to receive any payment of any kind or character with
respect to Obligations on the Debentures.
Section 10.03. Payment Over of Proceeds upon Dissolution, Etc.
-----------------------------------------------
(a) Upon any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to creditors upon
any total or partial liquidation, dissolution, winding-up, reorganization,
assignment for the benefit of creditors or marshaling of assets of the Company
or in a bankruptcy, reorganization, insolvency, receivership or other similar
proceeding relating to the Company or its
58
<PAGE>
property, whether voluntary or involuntary, all Obligations due or to become due
upon all Senior Debt shall first be paid in full in cash or Cash Equivalents, or
such payment duly provided for to the satisfaction of the holders of Senior
Debt, before any payment or distribution of any kind or character is made on
account of any Obligations on the Debentures, or for the acquisition of any of
the Debentures for cash or property or otherwise. Upon any such dissolution,
winding-up, liquidation, reorganization, receivership or similar proceeding, any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to which the Holders of the Debentures
or the Trustee under this Indenture would be entitled, except for the provisions
hereof, shall be paid by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or distribution,
or by the Holders or by the Trustee under this Indenture if received by them,
directly to the holders of Senior Debt (pro rata to such holders on the basis of
the respective amounts of Senior Debt held by such holders) or their respective
Representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Senior Debt may have been issued, as their respective
interests may appear, for application to the payment of Senior Debt remaining
unpaid until all such Senior Debt has been paid in full in cash or Cash
Equivalents after giving effect to any concurrent payment, distribution or
provision therefor to or for the holders of Senior Debt.
(b) To the extent any payment of Senior Debt (whether by or on behalf
of the Company, as proceeds of security or enforcement of any right of setoff or
otherwise) is declared to be fraudulent or preferential, set aside or required
to be paid to any receiver, trustee in bankruptcy, liquidating trustee, agent or
other similar Person under any bankruptcy, insolvency, receivership, fraudulent
conveyance or similar law, then, if such payment is recovered by, or paid over
to, such receiver, trustee in bankruptcy, liquidating trustee, agent or other
similar Person, the Senior Debt or part thereof originally intended to be
satisfied shall be deemed to be reinstated and outstanding as if such payment
had not occurred.
(c) In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, shall be received by any Holder when such payment or
distribution is prohibited by Section 10.03(a), such payment or distribution
shall be held in trust for the benefit of, and shall be paid over or delivered
to, the holders of Senior Debt (pro rata to such holders on the basis of the
respective amount of Senior Debt held by such holders) or their respective
Representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Senior Debt may have been issued, as their respective
interests may appear, for application to the payment of Senior Debt remaining
unpaid until all such Senior Debt has been paid in full in cash or Cash
Equivalents, after giving effect to any concurrent payment, distribution or
provision therefor to or for the holders of such Senior Debt.
(d) The consolidation of the Company with, or the merger of the
Company with or into, another corporation or the liquidation or dissolution of
the Company following the conveyance or transfer of all or substantially all of
its assets, to another corporation upon the terms and conditions provided in
Article Five hereof and as
59
<PAGE>
long as permitted under the terms of the Senior Debt shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of this
Section if such other corporation shall, as a part of such consolidation,
merger, conveyance or transfer, assume the Company's obligations hereunder in
accordance with Article Five hereof.
Section 10.04. Payments May Be Paid Prior to Dissolution.
-----------------------------------------
Nothing contained in this Article Ten or elsewhere in this Indenture
shall prevent (i) the Company, except under the conditions described in Sections
10.02 and 10.03, from making payments at any time for the purpose of making
payments of principal of and interest on the Debentures, or from depositing with
the Trustee any moneys for such payments, or (ii) in the absence of actual
knowledge by the Trustee that a given payment would be prohibited by Section
10.02 or 10.03, the application by the Trustee of any moneys deposited with it
for the purpose of making such payments of principal of, and interest on, the
Debentures to the Holders entitled thereto unless at least two Business Days
prior to the date upon which such payment would otherwise become due and payable
a Trust Officer shall have actually received the written notice provided for in
the second sentence of Section 10.02(a) or in Section 10.07 (provided that,
notwithstanding the foregoing, such application shall otherwise be subject to
the provisions of the first sentence of Section 10.02(a) and Section 10.03).
The Company shall give prompt written notice to the Trustee of any dissolution,
winding-up, liquidation or reorganization of the Company.
Section 10.05. Subrogation.
-----------
Subject to the payment in full in cash or Cash Equivalents of all
Senior Debt, the Holders of the Debentures shall be subrogated to the rights of
the holders of Senior Debt to receive payments or distributions of cash,
property or securities of the Company applicable to the Senior Debt until the
Debentures shall be paid in full; and, for the purposes of such subrogation, no
such payments or distributions to the holders of the Senior Debt by or on behalf
of the Company or by or on behalf of the Holders by virtue of this Article Ten
which otherwise would have been made to the Holders shall, as between the
Company and the Holders of the Debentures, be deemed to be a payment by the
Company to or on account of the Senior Debt, it being understood that the
provisions of this Article Ten are and are intended solely for the purpose of
defining the relative rights of the Holders of the Debentures, on the one hand,
and the holders of the Senior Debt, on the other hand.
Section 10.06. Obligations of the Company Unconditional.
----------------------------------------
Nothing contained in this Article Ten or elsewhere in this Indenture
or in the Debentures is intended to or shall impair, as among the Company, its
creditors other than the holders of Senior Debt, and the Holders, the obligation
of the Company, which is absolute and unconditional, to pay to the Holders the
principal of and any interest on the Debentures as and when the same shall
become due and payable in accordance with their terms, or is intended to or
shall affect the relative rights of the Holders and creditors of the Company
other than the holders of the Senior Debt, nor shall anything herein or
60
<PAGE>
therein prevent the Holder of any Debenture or the Trustee on its behalf from
exercising all remedies otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, in respect of cash, property or
securities of the Company received upon the exercise of any such remedy.
Section 10.07. Notice to Trustee.
-----------------
The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment to or
by the Trustee in respect of the Debentures pursuant to the provisions of this
Article Ten. Regardless of anything to the contrary contained in this Article
Ten or elsewhere in this Indenture, the Trustee shall not be charged with
knowledge of the existence of any default or event of default with respect to
any Senior Debt or of any other facts which would prohibit the making of any
payment to or by the Trustee unless and until the Trustee shall have received
notice in writing from the Company, or from a holder of Senior Debt or a
Representative therefor, together with proof satisfactory to the Trustee of such
holding of Senior Debt or of the authority of such Representative, and, prior to
the receipt of any such written notice, the Trustee shall be entitled to assume
(in the absence of actual knowledge to the contrary) that no such facts exist.
In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Senior Debt to participate in any payment or distribution pursuant to this
Article Ten, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amounts of Senior Debt held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article Ten, and if such evidence is not furnished the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment.
Section 10.08. Reliance on Judicial Order or Certificate of
--------------------------------------------
Liquidating Agent.
- -----------------
Upon any payment or distribution of assets of the Company referred to
in this Article Ten, the Trustee, subject to the provisions of Article Seven
hereof, and the Holders of the Debentures shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which any
insolvency, bankruptcy, receivership, dissolution, winding-up, liquidation,
reorganization or similar case or proceeding is pending, or upon a certificate
of the receiver, trustee in bankruptcy, liquidating trustee, receiver, assignee
for the benefit of creditors, agent or other person making such payment or
distribution, delivered to the Trustee or the Holders of the Debentures, for the
purpose of ascertaining the persons entitled to participate in such payment or
distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
Ten.
61
<PAGE>
Section 10.09. Trustee's Relation to Senior Debt.
---------------------------------
The Trustee and any agent of the Company or the Trustee shall be
entitled to all the rights set forth in this Article Ten with respect to any
Senior Debt which may at any time be held by it in its individual or any other
capacity to the same extent as any other holder of Senior Debt and nothing in
this Indenture shall deprive the Trustee or any such agent of any of its rights
as such holder.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article Ten, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into this
Indenture against the Trustee. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Debt.
Whenever a distribution is to be made or a notice given to holders or
owners of Senior Debt, the distribution may be made and the notice may be given
to their Representative, if any.
Section 10.10. Subordination Rights Not Impaired by Acts or Omissions
------------------------------------------------------
of the Company or Holders of Senior Debt.
- ----------------------------------------
No right of any present or future holders of any Senior Debt to
enforce subordination as provided herein shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms of this Indenture, regardless of any
knowledge thereof which any such holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Debt may, at any time and from time to time, without the
consent of or notice to the Trustee, without incurring responsibility to the
Trustee or the Holders of the Debentures and without impairing or releasing the
subordination provided in this Article Ten or the obligations hereunder of the
Holders of the Debentures to the holders of the Senior Debt, do any one or more
of the following: (i) change the manner, place or terms of payment or extend
the time of payment of, or renew or alter, Senior Debt, or otherwise amend or
supplement in any manner Senior Debt, or any instrument evidencing the same or
any agreement under which Senior Debt is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Debt; (iii) release any Person liable in any manner for the
payment or collection of Senior Debt; and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.
Section 10.11. Securityholders Authorize Trustee To Effectuate
-----------------------------------------------
Subordination of Debentures.
- ---------------------------
Each Holder of Debentures by its acceptance of them authorizes and
expressly directs the Trustee on its behalf to take such action as may be
necessary or appropriate to effectuate, as between the holders of Senior Debt
and the Holders of
62
<PAGE>
Debentures, the subordination provided in this Article Ten, and appoints the
Trustee its attorney-in-fact for such purposes, including, in the event of any
dissolution, winding-up, liquidation or reorganization of the Company (whether
in bankruptcy, insolvency, receivership, reorganization or similar proceedings
or upon an assignment for the benefit of creditors or otherwise) tending towards
liquidation of the business and assets of the Company, the filing of a claim for
the unpaid balance of its Debentures and accrued interest in the form required
in those proceedings.
If the Trustee does not file a proper claim or proof of debt in the
form required in such proceeding prior to 30 days before the expiration of the
time to file such claim or claims, then the holders of the Senior Debt or their
Representative are or is hereby authorized to have the right to file and are or
is hereby authorized to file an appropriate claim for and on behalf of the
Holders of said Debentures. Nothing herein contained shall be deemed to
authorize the Trustee or the holders of Senior Debt or their Representative to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Debentures
or the rights of any Holder thereof, or to authorize the Trustee or the holders
of Senior Debt or their Representative to vote in respect of the claim of any
Holder in any such proceeding.
Section 10.12. This Article Ten Not To Prevent Events of Default.
-------------------------------------------------
The failure to make a payment on account of principal of or interest
on the Debentures by reason of any provision of this Article Ten will not be
construed as preventing the occurrence of an Event of Default.
Section 10.13. Trustee's Compensation Not Prejudiced.
-------------------------------------
Nothing in this Article Ten will apply to amounts due to the Trustee
pursuant to other sections in this Indenture.
ARTICLE ELEVEN
MISCELLANEOUS
Section 11.01. TIA Controls.
------------
If any provision of this Indenture limits, qualifies, or conflicts
with another provision which is required to be included in this Indenture by the
TIA, the required TIA provision shall control.
Section 11.02. Notices.
-------
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by commercial courier service, by telex, by telecopier or registered or
certified mail, postage prepaid, return receipt requested, addressed as follows:
63
<PAGE>
if to the Company:
MTL, Inc.
3108 Central Drive
Plant City, FL 33563
Attention: Chief Financial Officer
Telephone: (813) 754-4725
Telecopy: (813) 757-2305
with, in the case of any notice pursuant to Article Six, a copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
Attention: Morton A. Pierce
Telephone: (212) 259-8000
Telecopy: (212) 259-6333
if to the Trustee:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890
Facsimile No.: (212) 415-0508
Attention: Corporate Trust and Agency Services
Each of the Company and the Trustee by written notice to each other
such Person may designate additional or different addresses for notices to such
Person. Any notice or communication to the Company or the Trustee shall be
deemed to have been given or made as of the date so delivered if personally
delivered; when receipt is confirmed if delivered by commercial courier service;
when answered back, if telexed; when receipt is acknowledged, if faxed; and five
(5) calendar days after mailing if sent by registered or certified mail, postage
prepaid (except that a notice of change of address shall not be deemed to have
been given until actually received by the addressee).
Any notice or communication mailed to a Holder shall be mailed to him
by first class mail or other equivalent means at his address as it appears on
the registration books of the Registrar and shall be sufficiently given to him
if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. If a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not the addressee receives it.
64
<PAGE>
Section 11.03. Communications by Holders with Other Holders.
--------------------------------------------
Holders may communicate pursuant to TIA (S) 312(b) with other Holders
with respect to their rights under this Indenture or the Debentures. The
Company, the Trustee, the Registrar and any other Person shall have the
protection of TIA (S) 312(c).
Section 11.04. Certificate and Opinion as to Conditions Precedent.
--------------------------------------------------
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate, in form and substance satisfactory to
the Trustee, stating that, in the opinion of the signers, all conditions
precedent to be performed by the Company, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent to be performed by the Company, if any,
provided for in this Indenture relating to the proposed action have been
complied with.
Section 11.05. Statements Required in Certificate or Opinion.
---------------------------------------------
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture, other than the Officers'
Certificate required by Section 4.06, shall include:
(1) a statement that the Person making such certificate or opinion
has read such covenant or condition and the definitions relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is reasonably necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion of each such
Person, such condition or covenant has been complied with.
Section 11.06. Rules by Trustee, Paying Agent, Registrar.
-----------------------------------------
The Trustee may make reasonable rules in accordance with the Trustee's
customary practices for action by or at a meeting of Holders. The Paying Agent
or Registrar may make reasonable rules for its functions.
65
<PAGE>
Section 11.07. Legal Holidays.
--------------
A "Legal Holiday" used with respect to a particular place of payment
is a Saturday, a Sunday or a day on which banking institutions in New York, New
York or at such place of payment are not required to be open. If a payment date
is a Legal Holiday at such place, payment may be made at such place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.
Section 11.08. Governing Law.
-------------
THIS INDENTURE AND THE DEBENTURES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAWS. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS INDENTURE.
Section 11.09. No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or any of its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
Section 11.10. No Recourse Against Others.
--------------------------
A director, officer, employee, stockholder or incorporator, as such,
of the Company or of the Trustee shall not have any liability for any
obligations of the Company under the Debentures or this Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. Each Holder by accepting a Debenture waives and releases all such
liability. Such waiver and release are part of the consideration for the
issuance of the Debentures.
Section 11.11. Successors.
----------
All agreements of the Company in this Indenture and the Debentures
shall bind its successors. All agreements of the Trustee in this Indenture
shall bind its successors.
Section 11.12. Duplicate Originals.
-------------------
All parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together shall represent the
same agreement.
66
<PAGE>
Section 11.13. Severability.
------------
In case any one or more of the provisions in this Indenture or in the
Debentures shall be held invalid, illegal or unenforceable, in any respect for
any reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions shall not in any way be
affected or impaired thereby, it being intended that all of the provisions
hereof shall be enforceable to the full extent permitted by law.
67
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the date first written above.
Issuer:
MTL, INC.
By: ________________________________________
Name: Charles J. O'Brien
Title: President
Trustee:
WILMINGTON TRUST COMPANY
as Trustee
By: ________________________________________
Name:
Title:
68
<PAGE>
EXHIBIT A
CUSIP No.:
MTL, INC.
13.75% Subordinated Exchange Debentures due 2006
No. $
MTL, Inc., a Florida corporation (the "Company"), for value received,
promises to pay to ________________ or registered assigns, the principal sum of
__________, on September 15, 2006.
Interest Payment Dates: September 15, December 15, March 15, June 15
Record Dates: September 1, December 1, March 1, June 1.
Reference is made to the further provisions of this Debenture
contained herein, which will for all purposes have the same effect as if set
forth at this place.
IN WITNESS WHEREOF, the Company has caused this Debenture to be signed
manually or by facsimile by its duly authorized officers.
Dated:
MTL, INC.
By:_____________________
Name:
Title:
By:_____________________
Name:
Title:
Trustee's Certificate of Authentication
This is one of the 13.75% Subordinated Exchange Debentures due 2006 referred to
in the within-mentioned Indenture.
Wilmington Trust Company, as Trustee
By:_____________________
Authorized Signatory
A-1
<PAGE>
(REVERSE OF SECURITY)
13.75% SUBORDINATED EXCHANGE DEBENTURES DUE 2010
1. Interest. MTL, Inc., a Florida corporation (the "Company"),
--------
promises to pay interest on the principal amount of this Debenture at the rate
per annum shown above. Interest on the Debentures will accrue from the most
recent date on which interest has been paid or, if no interest has been paid,
from [ ]./*/ The Company will pay interest quarterly in arrears on each Interest
Payment Date, commencing [ ]./+/ Interest will be computed on the basis of a
360-day year of twelve 30-day months.
Notwithstanding anything herein to the contrary, on each Interest
Payment Date through and including September 15, 2003, the entire amount of the
interest payment on the Debentures may be paid, at the option of the Company, in
additional Debentures ("Secondary Debentures") (valued at 100% of the principal
amount thereof). The Company may, at its option, pay cash in lieu of issuing
any Secondary Debenture to the extent the principal amount of such Secondary
Debenture is not an integral multiple of $1,000. The Company shall notify the
Trustee of the Company's election to pay interest in Secondary Debentures not
less than 10 days prior to the Record Date for an Interest Payment Date. On
each such Interest Payment Date, the Trustee shall authenticate Secondary
Debentures for original issuance to each Holder of Debentures on the preceding
Record Date, as shown on the Debenture register, in the amount required to pay
such interest. For purposes of determining the principal amount of Secondary
Debentures to be issued in payment of interest, the Company shall be entitled to
aggregate as to each Holder the principal amount of all Debentures and Secondary
Debentures held of record by such Holder.
The Company shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by the
Debentures and on overdue installments of interest (without regard to any
applicable grace periods) to the extent lawful.
2. Method of Payment. The Company shall pay interest on the
-----------------
Debentures (except defaulted interest) to the Persons who are the registered
Holders at the close of business on the Record Date immediately preceding the
Interest Payment Date even if the Debentures are cancelled on registration of
transfer or registration of exchange after such Record Date. Holders must
surrender Debentures to a Paying Agent to collect principal payments. The
Company shall pay principal and, except to the extent the Company issues
Secondary Debentures in lieu of cash interest in accordance with paragraph 1
hereof, interest in money of the United States that at the time of payment is
legal tender for payment of public and private debts ("U.S. Legal Tender").
However, the Company may pay principal and, except to the extent the Company
issues Secondary Debentures in lieu of cash interest in accordance with
paragraph 1 hereof, interest by its
______________________
/*/ Insert date of original issuance.
/+/ Insert first Interest Payment Date following the date of original issuance.
A-2
<PAGE>
check payable in such U.S. Legal Tender. The Company may deliver any such
interest payment to the Paying Agent or to a Holder at the Holder's registered
address.
3. Paying Agent and Registrar. Initially, Wilmington Trust Company,
--------------------------
a Delaware banking corporation (the "Trustee"), will act as Paying Agent and
Registrar. The Company may change any Paying Agent, Registrar or co-Registrar
without notice to the Holders.
4. Indenture. The Company issued the Debentures under an Indenture,
---------
dated as of August 28, 1998 (the "Indenture"), between the Company and the
Trustee. This Debenture is one of a duly authorized issue of Debentures of the
Company designated as its 13.75% Subordinated Exchange Debentures due 2006 (the
"Debentures"). The Debentures are limited (except as otherwise provided in the
Indenture or this Debenture) in aggregate principal amount equal to the
liquidation preference of the outstanding shares of Preferred Stock on the
Exchange Date (including Preferred Stock issued in lieu of cash dividends on the
Preferred Stock), plus accumulated and unpaid dividends, which may be issued
under the Indenture. Capitalized terms herein are used as defined in the
Indenture unless otherwise defined herein. The terms of the Debentures include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act of 1939 (15 U.S. Code (S)(S) 77aaa-77bbbb) (the
"TIA"), as in effect on the date of the Indenture. Notwithstanding anything to
the contrary herein, the Debentures are subject to all such terms, and Holders
of Debentures are referred to the Indenture and said Act for a statement of
them. The Debentures are general unsecured obligations of the Company.
5. Subordination. The Debentures are subordinated in right of
-------------
payment, in the manner and to the extent set forth in the Indenture, to the
prior payment in full in cash or Cash Equivalents of all Senior Debt of the
Company, whether outstanding on the date of the Indenture or thereafter created,
incurred, assumed or guaranteed. Each Holder by its acceptance hereof agrees to
be bound by such provisions and authorizes and expressly directs the Trustee, on
its behalf, to take such action as may be necessary or appropriate to effectuate
the subordination provided for in the Indenture and appoints the Trustee its
attorney-in-fact for such purposes .
6. Redemption.
----------
(a) Optional Redemption. The Debentures will be redeemable, at the
Company's option, in whole or in part, at any time, on and after September 15,
2003, upon not less than 30 nor more than 60 days' notice, at the following
redemption prices (expressed as percentages of the principal amount thereof) if
redeemed during the twelve-month period commencing on September 15 of the year
set forth below, plus, in each case, accrued and unpaid interest thereon, if
any, to the date of redemption:
A-3
<PAGE>
Year Percentage
- ---------------------------------- -----------------------------------
2003............................... 106.88%
2003............................... 103.44%
2004 and thereafter................ 100.00%
(b) Optional Redemption upon Public Equity Offerings. At any time, or
from time to time, on or prior to March 1, 2001, the Company may, at its option,
use the net cash proceeds of one or more Public Equity Offerings to redeem, in
whole or in part, the Debentures at a redemption price equal to 13.75% of the
principal amount thereof plus accrued and unpaid interest thereon, if any, to
the date of redemption.
In order to effect the foregoing redemption with the proceeds of any
Public Equity Offering, the Company shall make such redemption not more than 120
days after the consummation of any such Public Equity Offering.
7. Notice of Redemption. Notice of redemption will be mailed at
--------------------
least 30 days but not more than 60 days before the Redemption Date to each
Holder of Debentures to be redeemed at such Holder's registered address.
Debentures in denominations larger than $1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for the redemption of
the Debentures called for redemption shall have been deposited with the Paying
Agent for redemption on such Redemption Date, then, unless the Company defaults
in the payment of such Redemption Price plus accrued and unpaid interest, if
any, the Debentures called for redemption will cease to bear interest from and
after such Redemption Date and the only right of the Holders of such Debentures
will be to receive payment of the Redemption Price plus accrued and unpaid
interest, if any.
8. Denominations; Transfer; Exchange. The Debentures are in
---------------------------------
registered form, without coupons, in denominations of $1,000 and integral
multiples of $1,000, except as otherwise provided in the Indenture or this
Debenture. A Holder shall register the transfer of or exchange Debentures in
accordance with the Indenture. The Registrar may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
certain transfer taxes or similar governmental charges payable in connection
therewith as permitted by the Indenture. The Registrar need not register the
transfer of or exchange of any Debentures during a period beginning 15 days
before the mailing of a redemption notice for any Debentures or portions thereof
selected for redemption.
9. Persons Deemed Owners. The registered Holder of a Debenture shall
---------------------
be treated as the owner of it for all purposes.
10. Unclaimed Money. If money for the payment of principal or
---------------
interest remains unclaimed for two years, the Trustee and the Paying Agent will
pay the money back to the Company. After that, all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
A-4
<PAGE>
11. Discharge Prior to Redemption or Maturity. If the Company at any
-----------------------------------------
time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of and interest on the Debentures to redemption
or maturity and complies with the other provisions of the Indenture relating
thereto, the Company will be discharged from certain provisions of the Indenture
and the Debentures (including certain covenants, but excluding its obligation to
pay the principal of and interest on the Debentures).
12. Amendment; Supplement; Waiver. Subject to certain exceptions, the
-----------------------------
Indenture or the Debentures may be amended or supplemented with the written
consent of the Holders of at least a majority in aggregate principal amount of
the Debentures then outstanding, and any existing Default or Event of Default or
noncompliance with any provision may be waived with the written consent of the
Holders of a majority in aggregate principal amount of the Debentures then
outstanding. Without notice to or consent of any Holder, the parties thereto may
amend or supplement the Indenture or the Debentures to, among other things, cure
any ambiguity, defect or inconsistency, provide for uncertificated Debentures in
addition to or in place of certificated Debentures, or comply with Article Five
of the Indenture or make any other change that does not adversely affect in any
material respect the rights of any Holder of a Debenture.
13. Restrictive Covenants. The Indenture imposes certain limitations
---------------------
on the ability of the Company and its Restricted Subsidiaries to, among other
things, incur additional Indebtedness, make payments in respect of its Capital
Stock or certain Indebtedness, enter into transactions with Affiliates, create
dividend or other payment restrictions affecting Subsidiaries, merge or
consolidate with any other Person, sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its assets or adopt a plan of
liquidation. Such limitations are subject to a number of important
qualifications and exceptions. The Company must annually report to the Trustee
on compliance with such limitations.
14. Successors. When a successor assumes, in accordance with the
----------
Indenture, all the obligations of its predecessor under the Debentures and the
Indenture, the predecessor will be released from those obligations.
15. Defaults and Remedies. If an Event of Default occurs and is
---------------------
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of Debentures then outstanding may declare all the Debentures to be due
and payable in the manner, at the time and with the effect provided in the
Indenture. Holders of Debentures may not enforce the Indenture or the Debentures
except as provided in the Indenture. The Trustee is not obligated to enforce the
Indenture or the Debentures unless it has received indemnity reasonably
satisfactory to it. The Indenture permits, subject to certain limitations
therein provided, Holders of a majority in aggregate principal amount of the
Debentures then outstanding to direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Holders of Debentures notice of any
continuing Default or Event of Default (except a Default in payment of principal
or interest) if it determines that withholding notice is in their interest.
A-5
<PAGE>
16. Trustee Dealings with Corporation. The Trustee under the
---------------------------------
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Debentures and may otherwise deal with the Company, its Subsidiaries
or their respective Affiliates as if it were not the Trustee.
17. No Recourse Against Others. No stockholder, director, officer,
--------------------------
employee or incorporator, as such, of the Company shall have any liability for
any obligation of the Company under the Debentures or the Indenture or for any
claim based on, in respect of or by reason of, such obligations or their
creation. Each Holder of a Debenture by accepting a Debenture waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Debentures.
18. Authentication. This Debenture shall not be valid until the
--------------
Trustee or Authenticating Agent manually signs the certificate of authentication
on this Debenture.
19. Governing Law. The laws of the State of New York shall govern
-------------
this Debenture and the Indenture, without regard to principles of conflict of
laws.
20. Abbreviations and Defined Terms. Customary abbreviations may be
-------------------------------
used in the name of a Holder of a Debenture or an assignee, such as: TEN COM (=
tenants in common), TENENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
21. CUSIP Numbers. Pursuant to a recommendation promulgated by the
-------------
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Debentures as a convenience to the Holders of
the Debentures. No representation is made as to the accuracy of such numbers as
printed on the Debentures and reliance may be placed only on the other
identification numbers printed hereon.
22. Indenture. Each Holder, by accepting a Debenture, agrees to be
---------
bound by all of the terms and provisions of the Indenture, as the same may be
amended from time to time.
The Company will furnish to any Holder of a Debenture upon written
request and without charge a copy of the Indenture which has the text of this
Debenture in larger type. Requests may be made to: MTL Inc., 3018 Central
Drive, Plant City, Florida 33563, Attn: Corporate Counsel.
A-6
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Debenture, fill in the form
below and have your signature guaranteed:
I or we assign and transfer this Debenture to:
______________________________________________________
______________________________________________________
______________________________________________________
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint ______________________________________, agent to
transfer this Debenture on the books of the Company. The agent may substitute
another to act for him.
Date:_____________________ Signed:_________________________
(Sign exactly as your name
appears on the other side of
this Debenture)
Signature Guarantee: _______________________
A-7
<PAGE>
EXHIBIT 4.7
================================================================================
CHEMICAL LEAMAN CORPORATION, AS ISSUER
AND
FIRST UNION NATIONAL BANK, AS TRUSTEE
___________________________
INDENTURE
DATED AS OF JUNE 16, 1997
___________________________
$100,000,000
10-3/8% Senior Notes due 2005, Series A
10-3/8% SENIOR NOTES DUE 2005, SERIES B
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
PARTIES......................................................................... 1
RECITALS........................................................................ 1
ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION............. 1
Section 1.01. Definitions.................................................... 1
Section 1.02. Rules of Construction.......................................... 19
Section 1.03. Form of Documents Delivered to Trustee......................... 19
Section 1.04. Acts of Holders................................................ 20
Section 1.05. Notices, etc., to the Trustee, the Company and the Guarantors.. 21
Section 1.06. Notice to Holders; Waiver...................................... 21
Section 1.07. Conflict with Trust Indenture Act.............................. 21
Section 1.08. Effect of Headings and Table of Contents....................... 22
Section 1.09. Successors and Assigns......................................... 22
Section 1.10. Separability Clause............................................ 22
Section 1.11. Benefits of Indenture.......................................... 22
Section 1.12. GOVERNING LAW.................................................. 22
Section 1.13. No Recourse Against Others..................................... 22
Section 1.14. Independence of Covenants...................................... 22
Section 1.15. Exhibits....................................................... 22
Section 1.16. Counterparts................................................... 22
Section 1.17. Duplicate Originals............................................ 22
ARTICLE TWO SECURITY FORM....................................................... 23
Section 2.01. Form and Dating................................................ 23
ARTICLE THREE THE SECURITIES.................................................... 23
Section 3.01. Title and Terms................................................ 23
Section 3.02. Registrar and Paying Agent..................................... 23
Section 3.03. Execution and Authentication................................... 24
Section 3.04. Temporary Securities........................................... 25
Section 3.05. Transfer and Exchange.......................................... 26
Section 3.06. Mutilated, Destroyed, Lost and Stolen Securities............... 27
Section 3.07. Payment of Interest; Interest Rights Preserved................. 27
Section 3.08. Persons Deemed Owners.......................................... 28
Section 3.09. Cancellation................................................... 28
Section 3.10. Computation of Interest........................................ 29
Section 3.11. Legal Holidays................................................. 29
Section 3.12. CUSIP and CINS Numbers......................................... 29
Section 3.13. Paying Agent To Hold Money in Trust............................ 29
Section 3.14. Deposits of Monies............................................. 30
Section 3.15. Book-Entry Provisions for Global Securities.................... 30
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 3.16. Special Transfer Provisions.......................................................................... 31
ARTICLE FOUR DEFEASANCE OR COVENANT DEFEASANCE........................................................................ 34
Section 4.01. Company's Option To Effect Defeasance or Covenant Defeasance......................................... 34
Section 4.02. Defeasance and Discharge............................................................................. 34
Section 4.03. Covenant Defeasance.................................................................................. 35
Section 4.04. Conditions to Defeasance or Covenant Defeasance...................................................... 35
Section 4.05. Deposited Money and U.S. Government Obligations To Be Held in Trust; Other Miscellaneous Provisions.. 37
Section 4.06. Reinstatement........................................................................................ 37
ARTICLE FIVE REMEDIES................................................................................................. 38
Section 5.01. Events of Default.................................................................................... 38
Section 5.02. Acceleration of Maturity; Rescission and Annulment................................................... 39
Section 5.03. Collection of Indebtedness and Suits for Enforcement by Trustee...................................... 40
Section 5.04. Trustee May File Proofs of Claims.................................................................... 41
Section 5.05. Trustee May Enforce Claims Without Possession of Securities.......................................... 41
Section 5.06. Application of Money Collected....................................................................... 42
Section 5.07. Limitation on Suits.................................................................................. 42
Section 5.08. Unconditional Right of Holders To Receive Principal, Premium and Interest............................ 42
Section 5.09. Restoration of Rights and Remedies................................................................... 43
Section 5.10. Rights and Remedies Cumulative....................................................................... 43
Section 5.11. Delay or Omission Not Waiver......................................................................... 43
Section 5.12. Control by Majority.................................................................................. 43
Section 5.13. Waiver of Past Defaults.............................................................................. 43
Section 5.14. Undertaking for Costs................................................................................ 44
Section 5.15. Waiver of Stay, Extension or Usury Laws.............................................................. 44
ARTICLE SIX THE TRUSTEE............................................................................................... 44
Section 6.01. Certain Duties and Responsibilities.................................................................. 44
Section 6.02. Notice of Defaults................................................................................... 45
Section 6.03. Certain Rights of Trustee............................................................................ 45
Section 6.04. Trustee Not Responsible for Recitals, Dispositions of Securities or Application of Proceeds Thereof.. 46
Section 6.05. Trustee and Agents May Hold Securities; Collections; Etc............................................. 46
Section 6.06. Money Held in Trust.................................................................................. 47
Section 6.07. Compensation and Indemnification of Trustee and Its Prior Claim...................................... 47
Section 6.08. Conflicting Interests................................................................................ 47
Section 6.09. Corporate Trustee Required; Eligibility.............................................................. 47
Section 6.10. Resignation and Removal; Appointment of Successor Trustee............................................ 48
Section 6.11. Acceptance of Appointment by Successor............................................................... 49
Section 6.12. Merger, Conversion, Amalgamation, Consolidation or Succession to Business............................ 50
ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE................................................................... 50
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Section 7.01. Preservation of Information; Company To Furnish Trustee Names and Addresses of Holders.. 50
Section 7.02. Communications of Holders............................................................... 51
Section 7.03. Reports by Trustee...................................................................... 51
ARTICLE EIGHT CONSOLIDATION, MERGER, SALE OF ASSETS, ETC................................................. 51
Section 8.01. Company May Consolidate, etc., Only on Certain Terms.................................... 51
Section 8.02. Successor Substituted................................................................... 53
ARTICLE NINE SUPPLEMENTAL INDENTURES AND WAIVERS......................................................... 53
Section 9.01. Supplemental Indentures, Agreements and Waivers Without Consent of Holders.............. 53
Section 9.02. Supplemental Indentures, Agreements and Waivers with Consent of Holders................. 54
Section 9.03. Execution of Supplemental Indentures, Agreements and Waivers............................ 56
Section 9.04. Effect of Supplemental Indentures....................................................... 56
Section 9.05. Conformity with Trust Indenture Act..................................................... 56
Section 9.06. Reference in Securities to Supplemental Indentures...................................... 56
Section 9.07. Record Date............................................................................. 56
Section 9.08. Revocation and Effect of Consents....................................................... 56
ARTICLE TEN COVENANTS.................................................................................... 57
Section 10.01. Payment of Principal, Premium and Interest............................................. 57
Section 10.02. Maintenance of Office or Agency........................................................ 57
Section 10.03. Money for Security Payments To Be Held in Trust........................................ 57
Section 10.04. Corporate Existence.................................................................... 58
Section 10.05. Payment of Taxes and Other Claims...................................................... 59
Section 10.06. Maintenance of Properties.............................................................. 59
Section 10.07. Insurance.............................................................................. 59
Section 10.08. Books and Records...................................................................... 59
Section 10.09. Provision of Financial Statements...................................................... 59
Section 10.10. Change of Control...................................................................... 60
Section 10.11. Limitation on Indebtedness............................................................. 62
Section 10.12. Statement by Officers as to Default.................................................... 64
Section 10.13. Limitation on Restricted Payments...................................................... 64
Section 10.14. Limitation on Transactions with Affiliates............................................. 67
Section 10.15. Disposition of Proceeds of Asset Sales................................................. 68
Section 10.16. Limitation on Liens.................................................................... 71
Section 10.17. Limitation on Guarantees by Restricted Subsidiaries.................................... 71
Section 10.18. Restrictions on Preferred Stock of Restricted Subsidiaries............................. 72
Section 10.19. Limitation on Dividends and Other Payment Restrictions Affecting Restricted
Subsidiaries.......................................................................... 72
Section 10.20. Limitation on Designations of Unrestricted Subsidiaries................................ 72
Section 10.21. Compliance Certificates and Opinions................................................... 74
ARTICLE ELEVEN REDEMPTION OF SECURITIES................................................................. 74
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
Section 11.01. Right of Redemption................................................ 74
Section 11.02. Applicability of Article........................................... 74
Section 11.03. Election To Redeem; Notice to Trustee.............................. 74
Section 11.04. Selection by Trustee of Securities To Be Redeemed.................. 75
Section 11.05. Notice of Redemption............................................... 75
Section 11.06. Deposit of Redemption Price........................................ 76
Section 11.07. Securities Payable on Redemption Date.............................. 76
Section 11.08. Securities Redeemed in Part........................................ 76
ARTICLE TWELVE SATISFACTION AND DISCHARGE............................................ 77
Section 12.01. Satisfaction and Discharge of Indenture.......................... 77
Section 12.02. Application of Trust Money......................................... 77
ARTICLE THIRTEEN GUARANTEE OF SECURITIES............................................. 78
Section 13.01. Unconditional Guarantee............................................ 78
Section 13.02. Execution and Delivery of Security Guarantee....................... 79
Section 13.03. Release of a Guarantor........................................... 79
Section 13.04. Waiver of Subrogation.............................................. 79
Section 13.05. Reliance on Judicial Order or Certificate of Liquidating
Agent Regarding Dissolution, etc. of Guarantors.................. 80
Section 13.06. Article Thirteen Applicable to Paying Agents....................... 80
Section 13.07. No Suspension of Remedies.......................................... 80
Section 13.08. Limitation of Subsidiary Guarantor's Liability..................... 80
Section 13.09. Contribution from Other Guarantors................................. 81
Section 13.10. Obligations Reinstated............................................. 81
Section 13.11. No Obligation To Take Action Against the Company................. 81
Section 13.12. Dealing with the Company and Others................................ 81
</TABLE>
Exhibit A-1 - Form of Series A Security
Exhibit A-2 - Form of Series B Security
Exhibit B - Form of Legend for Book-Entry Securities
Exhibit C - Form of Certificate To Be Delivered in Connection with
Transfers to Non-QIB Accredited Investors
Exhibit D - Form of Certificate To Be Delivered in Connection with
Transfers Pursuant to Regulation S
Exhibit E - Form of Security Guarantee
Note: This Table of Contents shall not, for any purpose, be deemed a part of the
Indenture.
iv
<PAGE>
Cross-Reference Table
---------------------
<TABLE>
<CAPTION>
Trust Indenture Section Act Indenture Section
- ----------------------- ---------------------
<S> <C>
ss. 310(a)(1)..................................... 6.09
(a)(2)..................................... 6.09
(a)(3)..................................... Not Applicable
(a)(4)..................................... Not Applicable
(b)........................................ 6.05, 6.08, 6.10
ss. 311(a)....................................... 6.05
(b)....................................... 6.05
(c)....................................... Not Applicable
ss. 312(a)........................................ 3.05, 7.01
(b)........................................ 7.02
(c)........................................ 7.02
ss. 313(a)........................................ 7.03
(b)........................................ 7.03
(c)........................................ 7.03
(d)........................................ 7.03
ss. 314(a)(1)..................................... 10.09
(a)(4)..................................... 10.12
(b)........................................ Not Applicable
(c)(1)..................................... 1.03, 4.04, 10.21, 12.01
(c)(2)..................................... 1.03, 4.04, 10.21, 12.01
</TABLE>
i
<PAGE>
INDENTURE, dated as of June 16, 1997, between CHEMICAL LEAMAN
CORPORATION, a Pennsylvania corporation (the "Company"), as issuer, and FIRST
UNION NATIONAL BANK, as trustee (the "Trustee").
RECITALS
The Company has duly authorized the creation of an issue of (i) 10-
3/8% Senior Notes due 2005, Series A, and (ii) 10-3/8% Senior Notes due 2005,
Series B, to be issued in exchange for the 10-3/8% Senior Notes due 2005, Series
A, pursuant to the Registration Rights Agreement (together, the "Securities",
such term to include the Initial Securities, the Private Exchange Securities, if
any, and the Unrestricted Securities, if any, treated as a single class of
securities under this Indenture), of substantially the tenor and amount
hereinafter set forth, and to provide therefor the Company has duly authorized
the execution and delivery of this Indenture.
All things necessary have been done to make the Securities, when
executed by the Company and authenticated and delivered hereunder and duly
issued by the Company, the valid obligations of the Company and to make this
Indenture a valid agreement of the Company and the Trustee in accordance with
the terms hereof.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders (as hereinafter defined) thereof, it is mutually
covenanted and agreed, for the equal and proportionate benefit of all Holders of
the Securities, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER
PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions.
-----------
"Accounts Receivable Subsidiary" means Pickering Way Funding Corp. and
any other present or future Subsidiary of the Company that is, directly or
indirectly, wholly owned by the Company (other than director qualifying shares)
and organized for the purpose of and engaged in (i) purchasing, financing, and
collecting accounts receivable obligations of customers of the Company or its
Subsidiaries, (ii) the sale or financing of such accounts receivable or
interests therein and (iii) other activities incident thereto.
"Acquired Indebtedness" means Indebtedness of a Person (i) assumed in
connection with an Asset Acquisition from such Person or (ii) existing at the
time such Person becomes a Restricted Subsidiary of any other Person (other than
any Indebtedness incurred in connection with, or in contemplation of, such Asset
Acquisition or such Person becoming such a Restricted Subsidiary).
"Act" has the meaning set forth in Section 1.04. "Affiliate" means,
with respect to any specified Person, any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such specified Person. For the purposes of this definition,
<PAGE>
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of Voting Stock, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Affiliate Transaction" has the meaning set forth in Section 10.14.
"Agent Members" has the meaning set forth in Section 3.15.
"Asset Acquisition" means (i) an Investment by the Company or any
Restricted Subsidiary in any other Person pursuant to which such Person will
become a Restricted Subsidiary or will be merged or consolidated with or into
the Company or any Restricted Subsidiary or (ii) the acquisition by the Company
or any Restricted Subsidiary of the assets of any Person which constitute
substantially all of the assets of such Person, or any division or line of
business of such Person, or which is otherwise outside of the ordinary course of
business.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease or other disposition (including, without limitation, any merger,
consolidation or sale-leaseback transaction) to any Person other than the
Company or a Restricted Subsidiary, in one or a series of related transactions
of (i) any Capital Stock of any Restricted Subsidiary; (ii) all or substantially
all of the assets of any division or line of business of the Company or any
Restricted Subsidiary; or (iii) any other properties or assets of the Company or
any Restricted Subsidiary other than in the ordinary course of business. For the
purposes of this definition, the term "Asset Sale" will not include (a) any
sale, issuance, conveyance, transfer, lease or other disposition of properties
or assets that is governed by Section 8.01; provided, however, that any
transaction consummated in compliance with Section 8.01 involving a sale,
conveyance, transfer, lease or other disposition of less than all of the
properties or assets of the Company shall be deemed to be an Asset Sale with
respect to the properties or assets of the Company that are not so sold,
conveyed, transferred, leased or otherwise disposed of in such transaction; (b)
sales of property of equipment that have become worn out, obsolete or damaged or
otherwise unsuitable for use in connection with the business of the Company or
any Restricted Subsidiary, as the case may be; (c) any sale, conveyance,
transfer, lease or other disposition of accounts receivables to an Accounts
Receivable Subsidiary in the ordinary course of business; or (d) any transaction
consummated in compliance with Section 10.13. For purposes of Section 10.15, the
term "Asset Sale" shall not include any sale, conveyance, transfer, lease or
other disposition of any property or asset, whether in one transaction or a
series of related transactions, (i) involving assets with a Fair Market Value
not in excess of $250,000 or (ii) constituting a Capitalized Lease Obligation.
"Asset Sale Offer" has the meaning set forth in Section 10.15.
"Asset Sale Offer Purchase Date" has the meaning set forth in Section
10.15.
"Average Life to Stated Maturity" means, with respect to any
Indebtedness, as at any date of determination, the quotient obtained by dividing
(i) the sum of the products of (a) the number of years from such date to the
date or dates of each successive scheduled principal payment (including, without
limitation, any sinking fund requirements) of such Indebtedness multiplied by
(b) the amount of each such principal payment by (ii) the sum of all such
principal payments.
2
<PAGE>
"Bankruptcy Law" means Title 11, United States Code or any similar
federal or state law relating to bankruptcy, insolvency, receivership, winding-
up, liquidation, reorganization or relief of debtors or the law of any other
jurisdiction relating to bankruptcy, insolvency, receivership, winding-up,
liquidation, reorganization or relief of debtors or any amendment to, succession
to or change in any such law.
"Bankruptcy Order" means any court order made in a proceeding pursuant
to or within the meaning of any Bankruptcy Law, containing an adjudication of
bankruptcy or insolvency, or providing for liquidation, receivership, winding-
up, dissolution or reorganization, or appointing a Custodian of a debtor or of
all or any substantial part of a debtor's property, or providing for the
staying, arrangement, adjustment or composition of indebtedness or other relief
of a debtor.
"Board of Directors" means the board of directors of the Company or
any Guarantor, as the case may be, or any duly authorized committee of such
board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company or any Guarantor, as the case
may be, to have been duly adopted by its respective Board of Directors and to be
in full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the City of New York,
State of New York are authorized or obligated by law, regulation or executive
order to close.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participation, rights in or other equivalents (however designated) of
such Person's capital stock, and any rights (other than debt securities
convertible into capital stock), warrants or options exchangeable for or
convertible into such capital stock.
"Capitalized Lease Obligation" means any obligation under a lease of
(or other agreement conveying the right to use) any property (whether real,
personal or mixed) that is required to be classified and accounted for as a
capital lease obligation under GAAP, and, for the purpose of this Indenture, the
amount of such obligation at any date shall be the capitalized amount thereof at
such date, determined in accordance with GAAP consistently applied.
"Cash Equivalents" means, at any time, (i) any evidence of
Indebtedness with a maturity of not more than one year issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof); (ii) certificates of deposit
or acceptances with a maturity of not more than one year of any financial
institution that is a member of the Federal Reserve System having combined
capital and surplus and undivided profits of not less than $500,000,000; (iii)
commercial paper with a maturity of not more than one year issued by a
corporation that is not an Affiliate of the Company organized under the laws of
any state of the United States or the District of Columbia and rated at least A-
1 by Standard & Poor's Corporation or at least P-1 by Moody's Investors Service,
Inc.; and (iv) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses (i) and (ii)
3
<PAGE>
above entered into with any financial institution meeting the qualifications
specified in clause (ii) above.
"Cedel" means Cedel Bank, Societe anonyme.
"Change of Control" means the occurrence of any of the following
events (whether or not approved by the Board of Directors of the Company): (i)
any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of
the Exchange Act), other than Permitted Holders, is or becomes the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that
a Person shall be deemed to have "beneficial ownership" of all securities that
such Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of 50%
of the total voting power of the then outstanding Voting Stock of the Company;
(ii) the Company consolidates with, or merges with or into, another Person
(other than a Wholly-Owned Restricted Subsidiary) or sells, assigns, conveys,
transfers, leases or otherwise disposes of all or substantially all of its
assets to any Person (other than a Wholly Owned Restricted Subsidiary), other
than any such transaction where the holders of the Voting Stock of the Company
immediately prior to such transaction own, directly or indirectly, not less than
a majority of the total voting power of the then outstanding Voting Stock of the
surviving or transferee corporation immediately after such transaction; (iii)
during any consecutive two-year period, individuals who at the beginning of such
period constituted the Board of Directors of the Company (together with any new
directors whose election by such board or whose nomination for election by the
stockholders of the Company was approved by a vote of 66 2/3% of the directors
then still in office who were either directors at the beginning of such period
or whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the Board of Directors of the Company
then in office; or (iv) any order, judgment or decree shall be entered against
the Company decreeing the dissolution or split up of the Company and such order
shall remain undischarged or unstayed for a period in excess of sixty days.
"Change of Control Offer" has the meaning set forth in Section 10.10.
"Change of Control Purchase Date" has the meaning set forth in Section
10.10.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, or if at any time after the execution of this
Indenture the Securities and Exchange Commission is not existing and performing
the applicable duties now assigned to it, then the body or bodies performing
such duties at such time.
"Company" means the person named as the "Company" in the first
paragraph of this Indenture, until a successor person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by any one of its Chairman of the Board, its
Vice-Chairman, its Chief Executive Officer, its President or a Vice President,
and by its Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer, and delivered to the Trustee.
"Consolidated Cash Flow Available for Fixed Charges" means, for any
period, (i) the sum of, without duplication, the amounts for such period, taken
as a single accounting period,
4
<PAGE>
of (a) Consolidated Net Income, (b) to the extent reducing Consolidated Net
Income, Consolidated Non-cash Charges, (c) to the extent reducing Consolidated
Net Income, Consolidated Interest Expense, and (d) to the extent reducing
Consolidated Net Income, Consolidated Income Tax Expense less (ii) other non-
cash items increasing Consolidated Net Income for such period.
"Consolidated Fixed Charge Coverage Ratio" means the ratio of the
aggregate amount of Consolidated Cash Flow Available for Fixed Charges of the
Company for the four full fiscal quarters immediately preceding the date of the
transaction (the "Transaction Date") giving rise to the need to calculate the
Consolidated Fixed Charge Coverage Ratio for which consolidated financial
information of the Company is available (such four full fiscal quarter period
being referred to herein as the "Four Quarter Period") to the aggregate amount
of Consolidated Fixed Charges of the Company for such Four Quarter Period. For
purposes of this definition, "Consolidated Cash Flow Available for Fixed
Charges" and "Consolidated Fixed Charges" will be calculated, without
duplication, after giving effect on a pro forma basis for the period of such
calculation to (i) the incurrence of any Indebtedness of the Company or any of
the Restricted Subsidiaries during the period commencing on the first day of the
Four Quarter Period to and including the Transaction Date (the "Reference
Period"), including, without limitation, the incurrence of the Indebtedness
giving rise to the need to make such calculation, as if such incurrence occurred
on the first day of the Reference Period, (ii) an adjustment to eliminate or
include, as applicable, the Consolidated Cash Flow Available for Fixed Charges
and Consolidated Fixed Charges of the Company directly attributable to assets
which are the subject of any Asset Sale or Asset Acquisition (including, without
limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of the Company or one of the Restricted Subsidiaries
(including any Person who becomes a Restricted Subsidiary as a result of the
Asset Acquisition) incurring Acquired Indebtedness) occurring during the
Reference Period, as if such Asset Sale or Asset Acquisition occurred on the
first day of the Reference Period and (iii) the retirement of Indebtedness
during the Reference Period which cannot thereafter be reborrowed occurring as
if retired on the first day of the Reference Period. In calculating
"Consolidated Fixed Charges" for purposes of determining the denominator (but
not the numerator) of this "Consolidated Fixed Charge Coverage Ratio," (1)
interest on Indebtedness determined on a fluctuating basis as of the Transaction
Date and which will continue to be so determined thereafter will be deemed to
accrue at a fixed rate per annum equal to the rate of interest on such
Indebtedness in effect on the Transaction Date; (2) if interest on any
Indebtedness actually incurred on the Transaction Date may optionally be
determined at an interest rate based upon a factor of a prime or similar rate, a
eurocurrency interbank offered rate, or other rates, then the interest rate in
effect on the Transaction Date shall be deemed to have been in effect during the
Reference Period; and (3) notwithstanding clause (1) above, interest on
Indebtedness determined on a fluctuating basis, to the extent such interest is
covered by agreements relating to Interest Rate Protection Obligations, will be
deemed to accrue at the rate per annum resulting after giving effect to the
operation of such agreements. If the Company or any Restricted Subsidiaries
directly or indirectly guarantees Indebtedness of a third Person, the above
definition will give effect to the incurrence of such guaranteed Indebtedness as
if the Company or any Restricted Subsidiary had directly incurred or otherwise
assumed such guaranteed Indebtedness. For purposes of this definition, with
respect to any calculation pursuant to which the Four Quarter Period includes a
fiscal quarter prior to March 30, 1997, "Consolidated Cash Flow Available for
Fixed Charges" and "Consolidated Fixed Charges" will be calculated, without
duplication, as if any Accounts Receivable Subsidiary was an Unrestricted
Subsidiary at all times during such Four Quarter Period.
5
<PAGE>
"Consolidated Fixed Charges" means, for any period, the sum of,
without duplication, the amounts for such period of (i) Consolidated Interest
Expense; and (ii) the aggregate amount of cash dividends and other distributions
paid or accrued during such period in respect of Redeemable Capital Stock of the
Company.
"Consolidated Income Tax Expense" means, for any period, the provision
for federal, state, local and foreign income taxes payable by the Company and
the Restricted Subsidiaries for such period as determined on a consolidated
basis in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, without
duplication, the sum of (a) the interest expense of the Company and the
Restricted Subsidiaries for such period as determined on a consolidated basis in
accordance with GAAP, including, without limitation, (i) any amortization of
debt discount attributable to such period, (ii) the net cost under Interest Rate
Protection Obligations (including any amortization of discounts), (iii) the
interest portion of any deferred payment obligation, (iv) all commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing and (v) all capitalized interest and all accrued
interest, and (b) all but the principal component of Capitalized Lease
Obligations paid, accrued and/or scheduled to be paid or accrued by the Company
and the Restricted Subsidiaries during such period and as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, for any period, the consolidated net
income (or loss) of the Company and the Restricted Subsidiaries for such period
as determined in accordance with GAAP, adjusted, to the extent included in
calculating such net income, by excluding, without duplication, (i) all
extraordinary gains or losses (net of fees and expenses relating to the
transaction giving rise thereto), (ii) income of the Company and its Restricted
Subsidiaries derived from or in respect of Investments in Unrestricted
Subsidiaries, except to the extent that cash dividends or distributions are
actually received by the Company or a Restricted Subsidiary, (iii) the portion
of net income (or loss) of the Company and the Restricted Subsidiaries allocable
to minority interests in unconsolidated Persons, except to the extent that cash
dividends or distributions are actually received by the Company or one of the
Restricted Subsidiaries, (iv) net income (or loss) of any Person combined with
the Company or one of the Restricted Subsidiaries in a "pooling of interests"
basis attributable to any period prior to the date of combination, (v) gains or
losses in respect of any Asset Sales by the Company or one of the Restricted
Subsidiaries (net of fees and expenses relating to the transaction giving rise
thereto), and (vi) the net income of any Restricted Subsidiary to the extent
that the declaration of dividends or similar distributions by that Restricted
Subsidiary of that income is not at the time permitted, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulations applicable to that
Restricted Subsidiary or its stockholders.
"Consolidated Net Worth" with respect to any Person means the equity
of the holders of Capital Stock of such Person and its Restricted Subsidiaries
(excluding any Redeemable Capital Stock), as reflected in a balance sheet of
such Person determined on a consolidated basis and in accordance with GAAP.
"Consolidated Non-cash Charges" means, for any period, the aggregate
depreciation, amortization and other non-cash expenses of the Company and the
Restricted Subsidiaries reducing Consolidated Net Income for such period (other
than any non-cash item requiring an accrual or
6
<PAGE>
reserve for cash disbursements in any future period), determined on a
consolidated basis in accordance with GAAP.
"consolidation" means, with respect to any Person, the consolidation
of the accounts of its Restricted Subsidiaries with those of such Person, all in
accordance with GAAP; provided, however, that "consolidation" will not include
consolidation of the accounts of any Unrestricted Subsidiary with the accounts
of such Person. The term "consolidated" has a correlative meaning to the
foregoing.
"Consulting Agreement" means the Consultant Agreement between the
Company and George McFadden dated as of January 1, 1995, as amended and in
effect from time to time.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is located
at 40 Broad Street, Suite 550, Fifth Floor, New York, New York 10004.
"covenant defeasance" has the meaning set forth in Section 4.03.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect the
Company against fluctuations in currency values.
"Custodian" means any receiver, interim receiver, receiver and
manager, receiver-manager, trustee, assignee, liquidator, sequestrator or
similar official under any Bankruptcy Law or any other law respecting secured
creditors and the enforcement of their security or any other person with like
powers whether appointed judicially or out of court and whether pursuant to an
interim or final appointment.
"Default" means any event that is, or after notice or passage of time
or both would be, an Event of Default.
"Defaulted Interest" has the meaning set forth in Section 3.07.
"defeasance" has the meaning set forth in Section 4.02.
"Defeased Securities" has the meaning set forth in Section 4.01.
"Depository" means The Depository Trust Company, its nominees and
successors.
"Designation" has the meaning set forth in Section 10.20.
"Designation Amount" has the meaning set forth in Section 10.20.
"Domestic Subsidiary" means a Restricted Subsidiary organized under
the laws of the United States, any State or territory thereof or the District of
Columbia.
7
<PAGE>
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
Office, as operator of the Euroclear System.
"Event of Default" has the meaning set forth in Section 5.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the Commission thereunder.
"Exchange Offer" has the meaning specified in the Registration Rights
Agreement.
"Exchange Securities" means the 10-3/8% Senior Notes due 2005, Series
B, to be issued in exchange for the Initial Securities pursuant to the
Registration Rights Agreement.
"Fair Market Value" means, with respect to any asset, the price which
could be negotiated in an arm's-length free market transaction, for cash,
between a willing seller and a willing buyer, neither of which is under pressure
or compulsion to complete the transaction. Fair Market Value shall be
determined by the Board of Directors of the Company acting in good faith
evidenced by a Board Resolution delivered to the Trustee.
"Four Quarter Period" has the meaning set forth in the definition of
"Consolidated Fixed Charge Coverage Ratio."
"GAAP" means, at any date of determination, generally accepted
accounting principles in effect in the United States which are applicable at the
date of determination and which are consistently applied for all applicable
periods.
"Global Securities" means one or more Regulation S Global Securities
and 144A Global Securities.
"guarantee" means, as applied to any obligation, (i) a guarantee
(other than by endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner, of any part or
all of such obligation and (ii) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit. A guarantee shall include,
without limitation, any agreement to maintain or preserve any other Person's
financial condition or to cause any other Person to achieve certain levels of
operating results.
"Guarantor" means each Domestic Subsidiary, formed, created or
acquired before or after the Issue Date, required to become a Guarantor after
the Issue Date pursuant to Section 10.17.
"Holder" or "Securityholder" means a Person in whose name a Security
is registered in the Security Register.
"incur" has the meaning set forth in Section 10.11. "Incurrence,"
"incurred" and "incurring" shall have the meanings correlative to the foregoing.
8
<PAGE>
"Indebtedness" means, with respect to any Person, without duplication,
(i) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services, excluding any trade payable and other
accrued current liabilities incurred in the ordinary course of business, but
including, without limitation, all obligations, contingent or otherwise, of such
Person in connection with any letters of credit, bankers acceptance or other
similar credit transaction and in connection with any agreement to purchase,
redeem, exchange, convert or otherwise acquire for value any Capital Stock of
such Person, or any warrants, rights or options to acquire such Capital Stock,
now or hereafter outstanding, (ii) all obligations of such Person evidenced by
bonds, notes, debentures or other similar instruments, (iii) all indebtedness
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even if the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), but excluding trade
accounts payable arising in the ordinary course of business, (iv) all
Capitalized Lease Obligations of such Person, (v) all Indebtedness referred to
in the preceding clauses of other Persons and all dividends of other Persons,
the payment of which is secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien upon
property (including, without limitation, accounts and contract rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness (the amount of such obligation being deemed to be
the lesser of the value of such property or asset or the amount of the
obligation so secured), (vi) all guarantees of Indebtedness by such Person,
(vii) except for purposes of Section 10.13, all Redeemable Capital Stock valued
at the greater of its voluntary or involuntary maximum fixed repurchase price
plus accrued and unpaid dividends, (viii) all obligations under or in respect of
Currency Agreements and Interest Rate Protection Obligations of such Person, and
(ix) any amendment, supplement, modification, deferral, renewal, extension or
refunding of any liability of the types referred to in clauses (i) through
(viii) above. For purposes hereof, the "maximum fixed repurchase price" of any
Redeemable Capital Stock which does not have a fixed repurchase price will be
calculated in accordance with the terms of such Redeemable Capital Stock as if
such Redeemable Capital Stock were purchased on any date on which Indebtedness
will be required to be determined pursuant to this Indenture, and if such price
is based upon, or measured by, the Fair Market Value of such Redeemable Capital
Stock, such Fair Market Value is to be determined in good faith by the Board of
Directors of the issuer of such Redeemable Capital Stock. Indebtedness (a) shall
never be calculated taking into account any cash and cash equivalents held by
such Person; (b) shall not include obligations of any Person (x) arising from
the honoring by a bank or other financial institution of a check, draft or
similar instrument inadvertently drawn against insufficient funds in the
ordinary course of business, provided that such obligations are extinguished
within two Business Days of their incurrence or (y) resulting from the
endorsement of negotiable instruments for collection in the ordinary course of
business and consistent with past business practices; and (c) which provides
that an amount less than the principal amount thereof shall be due upon any
declaration of acceleration thereof shall be deemed to be incurred or
outstanding in an amount equal to the accreted value thereof at the date of
determination.
"Indenture" means this instrument as originally executed (including
all exhibits and schedules hereto) and as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof.
9
<PAGE>
"Indenture Obligations" means the obligations of the Company and any
other obligor under this Indenture or under the Securities, to pay principal of,
premium, if any, and interest on the Securities when due and payable, whether at
maturity, by acceleration, call for redemption or repurchase or otherwise, and
all other amounts due or to become due under or in connection with this
Indenture, the Securities or the Security Guarantees and the performance of all
other obligations to the Trustee (including, but not limited to, payment of all
amounts due the Trustee under Section 6.07 hereof) and the Holders of the
Securities under this Indenture, the Securities and the Security Guarantees,
according to the terms thereof.
"Independent Financial Advisor" means a nationally recognized
accounting, appraisal or investment banking firm (i) which does not, and whose
directors, officers and employees or Affiliates do not have, a direct or
indirect financial interest in the Company and (ii) which, in the judgment of
the Board of Directors of the Company, is otherwise independent and qualified to
perform the task for which it is to be engaged.
"Initial Purchasers" means Merrill Lynch and Schroder Wertheim & Co.
Incorporated.
"Initial Securities" means the 10-3/8% Senior Notes due 2005, Series
A, of the Company.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"interest," when used with respect to any Security, means the amount
of all interest accruing on such Security, including all additional interest
payable on the Securities pursuant to the Registration Rights Agreement and all
interest accruing subsequent to the occurrence of any events specified in
Sections 5.01(h), (i) and (j) or which would have accrued but for any such
event, whether or not such claims are allowable under applicable law.
"Interest Payment Date" means, when used with respect to any Security,
the Stated Maturity of an installment of interest on such Security, as set forth
in such Security.
"Interest Rate Protection Obligations" means the obligations of any
Person pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such Person
calculated by applying a fixed or a floating rate of interest on the same
notional amount or any other arrangement involving payments by or to such Person
based upon fluctuations in interest rates.
"Investment" means, with respect to any Person, any direct or indirect
advance, loan or other extension of credit (including by means of a guarantee)
or capital contribution to (by means of any transfer of cash or other property
to others or any payment for property or services for the account or use of
others or otherwise), or any purchase or acquisition by such Person of any
Capital Stock, bonds, notes, debentures or other securities or evidences of
Indebtedness issued by any other Person. Investments shall exclude extensions
of trade credit on commercially reasonable
10
<PAGE>
terms in accordance with normal trade practices. In addition to the foregoing,
any Currency Agreement, Interest Rate Protection Obligation or similar agreement
shall constitute an Investment.
"Issue Date" means June 16, 1997.
"Lien" means any mortgage, charge, pledge, lien (statutory or other),
privilege, security interest, hypothecation, cessation and transfer, lease of
real property, assignment for security, claim, deposit arrangement, or
preference or priority or other encumbrance upon or with respect to any property
of any kind, whether real, personal or mixed, movable or immovable, now owned or
hereafter acquired. A Person shall be deemed to own subject to a Lien any
property which it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement.
"Material Subsidiary" means each Restricted Subsidiary of the Company
that is a "significant subsidiary" as defined in Rule 1-02 of Regulation S-X
under the Securities Act and the Exchange Act (as such regulation is in effect
on the Issue Date).
"Maturity Date" means, with respect to any Security, the date on which
any principal of such Security becomes due and payable as therein or herein
provided, whether at the Stated Maturity with respect to such principal or by
declaration of acceleration, call for redemption or purchase or otherwise.
"Merrill Lynch" means Merrill Lynch, Pierce, Fenner & Smith
Incorporated.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds thereof in the form of cash or Cash Equivalents including payments in
respect of deferred payment obligations when received in the form of cash or
Cash Equivalents (except to the extent that such obligations are financed or
sold with recourse to the Company or any Restricted Subsidiary) net of (i)
brokerage commissions and other reasonable fees and expenses (including fees and
expenses of legal counsel and investment bankers) related to such Asset Sale,
(ii) provisions for all taxes payable as a result of such Asset Sale, (iii)
amounts required to be paid to any Person (other than the Company or any
Restricted Subsidiary) owning a beneficial interest in or having a Lien on the
assets subject to the Asset Sale and (iv) appropriate amounts to be provided by
the Company or any Restricted Subsidiary, as the case may be, as a reserve
required in accordance with GAAP consistently applied against any liabilities
associated with such Asset Sale and retained by the Company or any Restricted
Subsidiary, as the case may be, after such Asset Sale, including, without
limitation, pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale (provided that the amount of any
such reserves shall be deemed to constitute Net Cash Proceeds at the time such
reserves shall have been released or are not otherwise required to be retained
as a reserve).
"New Revolving Credit Facility" means the Credit Agreement dated as of
June 16, 1997 among the Company, CoreStates Bank, N.A., as Administrative Agent
(or any successor administrative agent), and the other financial institutions
signatory thereto from time to time, as in effect on the Issue Date, and as such
agreement may be amended, renewed, extended, refinanced, substituted or replaced
in whole, supplemented or otherwise modified from time to time, and
11
<PAGE>
includes (a) related Notes, guarantees and other agreements executed in
connection therewith and (b) any agreement (i) extending the maturity of all or
any portion of the Indebtedness thereunder, (ii) adding guarantors thereunder
and (iii) increasing the amount to be borrowed thereunder; provided, however,
that in the case of clauses (ii) and (iii), any such agreement is not prohibited
by the Indenture.
"Non-U.S. Person" has the meaning assigned to such term in Regulation
S.
"Offering Memorandum" means the Offering Memorandum dated June 10,
1997 pursuant to which the Securities were offered, and any supplement thereto.
"Officer" means, with respect to the Company or any Guarantor, the
Chairman of the Board, a Vice Chairman, the President, a Vice President, the
Secretary or the Treasurer.
"Officers' Certificate" means a certificate complying with the
requirements of Section 10.21 signed by the Chairman of the Board, a Vice
Chairman, the President or a Vice President, and by the Secretary, an Assistant
Secretary, the Treasurer or an Assistant Treasurer, of the Company or any
Guarantor, as the case may be, and delivered to the Trustee.
"144A Global Security" means a permanent global security in registered
form representing the aggregate principal amount of Securities sold in reliance
on Rule 144A under the Securities Act.
"Opinion of Counsel" means a written opinion of counsel complying with
the requirements of Section 10.21 who may be counsel for the Company, a
Guarantor, or the Trustee, and who shall not be unacceptable to the Trustee.
"Other Indebtedness" has the meaning set forth in Section 10.17.
"Other Senior Debt Pro Rata Share" means the amount of the Net Cash
Proceeds obtained by multiplying the amount of such Net Cash Proceeds by a
fraction, (i) the numerator of which is the lesser of the aggregate principal
face amount or accreted value of all Indebtedness (other than (x) the Securities
and (y) Subordinated Indebtedness) of the Company and any Guarantor outstanding
at the time of the applicable Asset Sale with respect to which the Company or a
Guarantor, as the case may be, is required to use Net Cash Proceeds to repay or
make an offer to purchase and repay and (ii) the denominator of which is the sum
of (a) the aggregate principal amount of all Securities outstanding at the time
of the applicable Asset Sale and (b) the lesser of the aggregate principal face
amount or accreted value of all other Indebtedness (other than Subordinated
Indebtedness) of the Company or a Guarantor outstanding at the time of the
applicable Asset Sale with respect to which the Company or a Guarantor, as the
case may be, is required to use the Net Cash Proceeds to repay or to offer to
purchase and repay.
"Outstanding" means, as of the date of determination, all Securities
theretofore authenticated and delivered under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or delivered
to the Trustee for cancellation;
12
<PAGE>
(ii) Securities, or portions thereof, for whose payment or
redemption money in the necessary amount has been theretofore
deposited with the Trustee or any Paying Agent (other than the Company
or any Guarantor or any Affiliate thereof) in trust or set aside and
segregated in trust by the Company or any Guarantor or any Affiliate
thereof (if the Company or such Guarantor or Affiliate shall act as
Paying Agent) for the Holders of such Securities; provided, however,
that if such Securities are to be redeemed, notice of such redemption
has been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made;
(iii) Securities with respect to which the Company has
effected defeasance or covenant defeasance as provided in Article
Four, to the extent provided in Sections 4.02 and 4.03; and
(iv) Securities in exchange for or in lieu of which other
Securities have been authenticated and delivered pursuant to this
Indenture and in respect of which there shall not have been presented
to the Trustee proof satisfactory to it that such Securities are held
by a bona fide purchaser in whose hands the Securities are valid
obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company, any Guarantor or any other obligor upon the Securities or any
Affiliate of the Company, any Guarantor or such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities that a
Responsible Officer of the Trustee knows to be so owned shall be so disregarded.
The Company shall notify the Trustee, in writing, when it repurchases or
otherwise acquires Securities, of the aggregate principal amount of such
Securities so repurchased or otherwise acquired. Securities so owned which have
been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Company, any
Guarantor or any other obligor upon the Securities or any Affiliate of the
Company, any Guarantor or such other obligor. If the Paying Agent holds, in its
capacity as such, on any Maturity Date or on any optional redemption date money
sufficient to pay all accrued interest and principal with respect to such
Securities payable on that date and is not prohibited from paying such money to
the Holders thereof pursuant to the terms of this Indenture, then on and after
that date such Securities shall cease to be Outstanding and interest on them
shall cease to accrue. Securities may also cease to be outstanding to the
extent expressly provided in Article Four.
"Outstanding Preferred Stock" means all shares of Preferred Stock of
the Company issued and outstanding as of the Issue Date.
"Paying Agent or Agent" has the meaning set forth in Section 3.02.
"Permitted Holders" means, at any particular date, (i) each of (A)
David R. Hamilton, (B) George McFadden and (C) John McFadden; (ii) the spouse,
ancestors, siblings,
13
<PAGE>
descendants (including children or grandchildren by adoption) of (A) any of the
Persons described in clause (i) or (B) any spouse, ancestor, sibling or
descendent (including children or grandchildren by adoption) of any of the
Persons described in clause (i); (iii) in the event of the incompetence or death
of any of the Persons described in clauses (i) and (ii), such Person's estate,
executor, administrator, committee or other personal representative, in each
case who shall beneficially own or have the right to acquire, directly or
indirectly, Capital Stock of the Company; (iv) any trusts created for the
benefit of the Persons described in clause (i), (ii) or (iii) or any trust for
the benefit of any such trust.
"Permitted Indebtedness" has the meaning set forth in Section 10.11.
"Permitted Investments" means (a) Cash Equivalents; (b) Investments in
prepaid expenses, negotiable instruments held for collection and lease, utility
and workers' compensation, performance and other similar deposits; (c) loans and
advances to employees made in the ordinary course of business not to exceed
$250,000 in the aggregate at any one time outstanding; (d) loans and advances to
David R. Hamilton made after the Issue Date not to exceed $350,000 in the
aggregate at any one time outstanding; (e) Interest Rate Protection Obligations
and Currency Agreements permitted under clause (vii) or (viii) of the second
paragraph of Section 10.11; (f) Investments represented by accounts receivable
created or acquired in the ordinary course of business; (g) Investments in the
form of the sale (on a "true-sale" non-recourse basis) of receivables
transferred from the Company or any Restricted Subsidiary to an Accounts
Receivable Subsidiary as a capital contribution or in exchange for Indebtedness
of such Accounts Receivable Subsidiary or cash in the ordinary course of
business; (h) Investments existing on the Issue Date and any renewal or
replacement thereof on terms and conditions no less favorable in any respect
than that existing on the Issue Date; (i) any Investment to the extent that the
consideration therefor is Capital Stock (other than Redeemable Capital Stock) of
the Company; and (j) bonds, Securities, debentures or other securities received
in connection with an Asset Sale permitted under Section 10.15, not to exceed
15% of the total consideration in such Asset Sale.
"Permitted Liens" means (a) Liens on property of (or Capital Stock of)
a Person existing at the time such Person (i) is merged into or consolidated
with the Company or any Restricted Subsidiary or (ii) becomes a Restricted
Subsidiary; provided, however, that such Liens were in existence prior to the
contemplation of such merger, consolidation or acquisition and do not attach to
any property or assets of the Company or any Restricted Subsidiary other than
the property or assets subject to the Liens prior to such merger, consolidation
or acquisition; (b) Liens imposed by law such as landlords', carriers',
warehousemen's and mechanics' Liens and other similar Liens arising in the
ordinary course of business which secure payment of obligations not more than 60
days past due or which are being contested in good faith and by appropriate
proceedings; (c) Liens existing on the Issue Date; (d) Liens securing only the
Securities; (e) Liens in favor of the Company or any Restricted Subsidiary; (f)
Liens for taxes, assessments or governmental charges or claims that are not yet
delinquent for more than 90 days or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded; provided,
however, that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor; (g) easements, reservation
of rights of way, restrictions and other similar easements, licenses,
restrictions on the use of properties, or imperfections of title that in the
aggregate are not material in amount and do not in any case materially detract
from the properties subject thereto or interfere with the ordinary conduct of
the
14
<PAGE>
business of the Company and the Restricted Subsidiaries; (h) Liens resulting
from the deposit of cash or notes in connection with contracts, tenders or
expropriation proceedings, or to secure workers' compensation, surety or appeal
bonds, costs of litigation when required by law, public and statutory
obligations, obligations under franchise arrangements entered into in the
ordinary course of business and other obligations of a similar nature arising in
the ordinary course of business; (i) Liens on property of the Company securing
the New Revolving Credit Facility; (j) Liens securing Indebtedness consisting of
Capitalized Lease Obligations, Purchase Money Indebtedness (other than
Indebtedness incurred in connection with an Asset Acquisition), mortgage
financings, industrial revenue bonds or other monetary obligations, in each case
incurred solely for the purpose of financing all or any part of the purchase
price or cost of construction or installation of assets used in the business of
the Company or the Restricted Subsidiaries, or repairs, additions or
improvements to such assets; provided, however, that (I) such Liens secure
Indebtedness in an amount not in excess of the original purchase price or the
original cost of any such assets or repair, addition or improvement thereto
(plus an amount equal to the reasonable fees and expenses in connection with the
incurrence of such Indebtedness), (II) such Liens do not extend to any other
assets of the Company or the Restricted Subsidiaries (and, in the case of
repairs, additions or improvements to any such assets, such Lien extends only to
the assets (and improvements thereto or thereon) repaired, added to or
improved), (III) the incurrence of such Indebtedness is permitted under Section
10.11 and (IV) such Liens attach prior to 90 days after such purchase,
construction, installation, repair, addition or improvement; (k) Liens to secure
any Refinancings (or successive Refinancings), in whole or in part, of any
Indebtedness secured by Liens referred to in the clauses above so long as such
Lien does not extend to any other property (other than improvements thereto);
(l) Liens securing letters of credit entered into in the ordinary course of
business and consistent with past business practice; (m) Liens on and pledges of
the Capital Stock of any Unrestricted Subsidiary securing any Indebtedness of
such Unrestricted Subsidiary; (n) leases or subleases granted to others that do
not materially interfere with the ordinary course of business of the Company and
the Restricted Subsidiaries, taken as a whole; (o) any interest or title of a
lessor in the property subject to any lease or located on the real property
subject to any lease; (p) Liens arising from the rendering of a final judgment
or order against the Company or any Restricted Subsidiary that does not give
rise to an Event of Default; and (q) Liens on property existing at the time such
property is acquired by the Company or any Restricted Subsidiary so long as such
acquisition (including the assumption of any Indebtedness in connection
therewith) does not violate any of the terms of the Indenture and such Liens
were in existence prior to the contemplation of such acquisition and do not
attach to any other property of the Company or such Restricted Subsidiary.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Physical Securities" has the meaning set forth in Section 3.03.
"Preferred Stock" means, with respect to any Person, Capital Stock of
any class or classes (however designated) of such Person which is preferred as
to the payment of dividends or distributions, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
Person, over Capital Stock of any other class of such Person.
15
<PAGE>
"Private Exchange Securities" has the meaning set forth in the
Registration Rights Agreement.
"Private Placement Legend" shall mean the legend initially set forth
in the Securities in the form set forth on Exhibit A-1.
"Purchase Money Indebtedness" means Indebtedness of the Company or any
Restricted Subsidiary incurred for the purpose of financing all or any part of
the purchase price or the cost of construction or improvement of any property,
provided that the aggregate principal amount of such Indebtedness does not
exceed the lesser of the Fair Market Value of such property or such purchase
price or cost.
"Qualified Institutional Buyer" or "QIB" has the meaning specified in
Rule 144A under the Securities Act.
"Redeemable Capital Stock" means any class or series of Capital Stock
to the extent that, either by its terms, by the terms of any security into which
it is convertible or exchangeable, or by contract or otherwise, is or upon the
happening of an event or passage of time would be, required to be redeemed prior
to the final Stated Maturity of the Securities or is redeemable at the option of
the holder thereof at any time prior to such Stated Maturity, or is convertible
into or exchangeable for debt securities at any time prior to such Stated
Maturity.
"Redemption Date" means, with respect to any particular Security to be
redeemed, the date fixed for such redemption pursuant to this Indenture and the
terms of the Securities.
"Redemption Price" means, with respect to any particular Security to
be redeemed, the price at which such Security is to be redeemed pursuant to this
Indenture and the terms of the Securities.
"Reference Period" has the meaning set forth in the definition of
"Consolidated Fixed Charge Coverage Ratio."
"Refinance" means, with respect to any Indebtedness, any refinancing,
redemption, retirement, renewal, replacement, extension or refunding of such
Indebtedness.
"Registrable Securities" has the meaning set forth in the Registration
Rights Agreement.
"Registrar" has the meaning set forth in Section 3.02.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of June 16, 1997 by and between the Company and the Initial
Purchasers, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof.
"Regular Record Date" means the Regular Record Date specified in the
Securities.
"Regulation S" means Regulation S under the Securities Act.
16
<PAGE>
"Regulation S Global Security" means a permanent global Security in
registered form representing the aggregate principal amount of Securities sold
in reliance on Regulation S under the Securities Act.
"Required Filing Dates" has the meaning set forth in Section 10.09.
"Responsible Officer" means, with respect to the Trustee, the chairman
or vice chairman of the board of directors, the chairman or vice chairman of the
executive committee of the board of directors, the president, any vice
president, the secretary, any assistant secretary, the treasurer, any assistant
treasurer, the cashier, any assistant cashier, any trust officer or assistant
trust officer, the controller and any assistant controller or any other officer
of the Trustee customarily performing functions similar to those performed by
any of the above designated officers and also means, with respect to a
particular corporate trust matter, any other officer of the Trustee to whom such
corporate trust matter is then referred because of his or her knowledge of and
familiarity with the particular subject.
"Restricted Payment" has the meaning set forth in Section 10.13.
"Restricted Period" has the meaning set forth in Section 3.16.
"Restricted Security" means a Security that constitutes a "restricted
security" within the meaning of Rule 144(a)(3) under the Securities Act;
provided, however, that the Trustee shall be entitled to request and
conclusively rely on an Opinion of Counsel with respect to whether any Security
constitutes a Restricted Security.
"Restricted Subsidiary" means any Subsidiary of the Company (other
than an Accounts Receivable Subsidiary) that has not been designated by the
Board of Directors of the Company, by a Board Resolution delivered to the
Trustee, as an Unrestricted Subsidiary pursuant to and in compliance with
Section 10.20. Any such designation may be revoked by a Board Resolution of the
Company delivered to the Trustee, subject to the provisions of Section 10.20.
"Revocation" has the meaning set forth in Section 10.20.
"Rule 144A" means Rule 144A under the Securities Act.
"Securities" has the meaning set forth in the recitals of this
Indenture.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated by the Commission thereunder.
"Security Guarantee" means the guarantee by each of the Guarantors of
the Securities and the Company's obligations under this Indenture.
"Security Register" has the meaning set forth in Section 3.05.
"Service Agreement" means the Service Agreement dated as of December
11, 1995 by and between Chemical Leaman Tank Lines, Inc. and Acumen Consulting
Group, Inc., as amended and in effect from time to time.
17
<PAGE>
"Special Record Date" means, with respect to the payment of any
Defaulted Interest, a date fixed by the Trustee pursuant to Section 3.07 hereof.
"Stated Maturity" means, with respect to any Security or any
installment of interest thereon, the dates specified in such Security as the
fixed date on which the principal of such Security or such installment of
interest is due and payable, and when used with respect to any other
Indebtedness, means the date specified in the instrument governing such
Indebtedness as the fixed date on which the principal of such Indebtedness or
any installment of interest is due and payable.
"Subsidiary" means, with respect to any Person, (a) any corporation of
which the outstanding shares of Voting Capital Stock having at least a majority
of the votes entitled to be cast in the election of directors shall at the time
be owned, directly or indirectly, by such Person, or (b) any other Person of
which at least a majority of the shares of Voting Capital Stock are at the time,
directly or indirectly, owned by such first named Person.
"Subordinated Indebtedness" means, with respect to the Company,
Indebtedness of the Company which is expressly subordinated in right of payment
to the Securities or, with respect to any Guarantor, Indebtedness of such
Guarantor which is expressly subordinated in right of payment to the Security
Guarantee of such Guarantor.
"Surviving Person" means, with respect to any Person involved in any
consolidation or merger, or any sale, assignment, conveyance, transfer, lease or
other disposition of all or substantially all of its properties and assets as an
entirety, the Person formed by or surviving such merger or consolidation or the
Person to which such sale, assignment, conveyance, transfer or lease is made.
"Transaction Date" has the meaning set forth in the definition of
"Consolidated Fixed Charge Coverage Ratio."
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939,
as amended.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture, until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Unrestricted Securities" means one or more Securities that do not and
are not required to bear the Private Placement Legend in the form set forth in
Exhibit A-2, including, without limitation, the Exchange Securities.
"Unrestricted Subsidiary" means each Accounts Receivable Subsidiary
and each other Subsidiary of the Company (other than a Guarantor) designated as
such pursuant to and in compliance with Section 10.20. Any such Designation may
be revoked by a Board Resolution of the Company delivered to the Trustee,
subject to the provisions of Section 10.20.
"Unutilized Net Available Proceeds" has the meaning set forth in
Section 10.15.
"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (ii)
18
<PAGE>
obligations of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the timely payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America, which, in either case, are not callable or redeemable at the
option of the issuer thereof at any time prior to the Stated Maturity of the
Securities, and shall also include a depository receipt issued by a bank (as
defined in Section 3(a)(2) of the Securities Act) as custodian with respect to
any such U.S. Government Obligation or a specific payment of principal of or
interest on any such U.S. Government Obligation held by such custodian for the
account of the holder of such depository receipt, provided, however, that
(except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the U.S. Government
Obligation or the specific payment of principal of or interest on the U.S.
Government Obligation evidenced by such depository receipt.
"Voting Stock" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the Board of Directors, managers
or trustees of any Person (irrespective of whether or not, at the time, stock of
any other class or classes shall have, or might have, voting power by reason of
the happening of any contingency).
"Wholly-Owned Restricted Subsidiary" means any Restricted Subsidiary
of which 100% of the outstanding Capital Stock is owned by the Company and/or
another Wholly-Owned Restricted Subsidiary. For purposes of this definition,
any directors' qualifying shares shall be disregarded in determining the
ownership of a Restricted Subsidiary.
Section 1.02. Rules of Construction. For all purposes of this
---------------------
Indenture, except as otherwise expressly provided or unless the context
otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(d) the words "herein" "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision;
(e) all references to "$" or "dollars" refer to the lawful currency
of the United States of America; and
(f) the words "include," "included" and "including" as used herein
are deemed in each case to be followed by the phrase "without limitation."
Section 1.03. Form of Documents Delivered to Trustee. In any case
--------------------------------------
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not
19
<PAGE>
necessary that all such matters be certified by, or covered by the opinion of,
only one such Person, or that they be so certified or covered by only one
document, but one such Person may certify or give an opinion with respect to
some matters and one or more other Persons as to other matters, and any such
Person may certify or give an opinion as to such matters in one or several
documents.
Any certificate or opinion of an officer of the Company or any
Guarantor may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless such officer
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate or opinion
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Company or any
Guarantor stating that the information with respect to such factual matters is
in the possession of the Company or any Guarantor, unless such counsel knows, or
in the exercise of reasonable care should know, that the certificate or opinion
or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated, with
proper identification of each matter covered therein, and form one instrument.
Section 1.04. Acts of Holders
---------------
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent
duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as
the "Act" of the Holders signing such instrument or instruments. Proof of
execution (as provided below in subsection (b) of this Section 1.04) of any
such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to Section 6.01
hereof) conclusive in favor of the Trustee and the Company, if made in the
manner provided in this Section 1.04.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any reasonable manner which the
Trustee deems sufficient.
(c) The ownership of Securities shall be proved by the Security
Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Security shall bind every
future Holder of the same Security or the Holder of every Security issued
upon the transfer thereof or in exchange therefor or in lieu thereof to the
same extent as the original Holder, in respect of anything done, suffered
or omitted to be done by the Trustee, any Paying Agent or the Company or
any Guarantor in reliance thereon, whether or not notation of such action
is made upon such Security.
20
<PAGE>
Section 1.05. Notices, etc., to the Trustee, the Company and the
--------------------------------------------------
Guarantors. Any request, demand, authorization, direction, notice, consent,
- ----------
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with:
(a) the Trustee by any Holder or by the Company or any Guarantor
shall be sufficient for every purpose hereunder if made, given, furnished
or filed, in writing, to or with the Trustee at 40 Broad Street, Suite 550,
Fifth Floor, New York, New York 10004, with a copy to 123 South Broad
Street, PA 1249, Philadelphia, Pennsylvania 19109 or at any other address
previously furnished in writing to the Holders, the Company and the
Guarantors by the Trustee; or
(b) the Company or a Guarantor by the Trustee or by any Holder
shall be sufficient for every purpose (except as otherwise expressly
provided herein) hereunder if in writing and mailed, first-class postage
prepaid, to the Company or such Guarantor addressed to it at Chemical
Leaman Corporation, 102 Pickering Way, Exton, Pennsylvania 17341,
Attention: Chief Financial Officer, or at any other address previously
furnished in writing to the Trustee by the Company.
Section 1.06. Notice to Holders; Waiver. Where this Indenture
-------------------------
provides for notice to Holders of any event, such notice shall be sufficiently
given (unless otherwise expressly provided herein) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at the
address of such Holder as it appears in the Security Register, not later than
the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Holders is given by mail,
neither the failure to mail such notice, nor any defect in any notice so mailed,
to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. Any notice when mailed to a Holder in the aforesaid
manner shall be conclusively deemed to have been received by such Holder whether
or not actually received by such Holder. Where this Indenture provides for
notice in any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause, it shall be impracticable to mail notice of any event
as required by any provision of this Indenture, then any method of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Section 1.07. Conflict with Trust Indenture Act. If any provision
---------------------------------
hereof limits, qualifies or conflicts with any provision of the Trust Indenture
Act or another provision which is required or deemed to be included in this
Indenture by any of the provisions of the Trust Indenture Act, such provision or
requirement of the Trust Indenture Act shall control.
If any provision of this Indenture modifies or excludes any provision
of the Trust Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so modified or excluded,
as the case may be.
21
<PAGE>
Section 1.08. Effect of Headings and Table of Contents. The Article
----------------------------------------
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
Section 1.09. Successors and Assigns. All covenants and agreements in
----------------------
this Indenture by the Company and the Guarantors, shall bind their respective
successors and assigns, whether so expressed or not.
Section 1.10. Separability Clause. In case any provision in this
-------------------
Indenture or in the Securities or any Security Guarantee issued pursuant hereto
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 1.11. Benefits of Indenture. Nothing in this Indenture or in
---------------------
the Securities or in any Security Guarantee issued pursuant hereto, express or
implied, shall give to any Person (other than the parties hereto and their
successors hereunder, any Paying Agent and the Holders) any benefit or any legal
or equitable right, remedy or claim under this Indenture.
Section 1.12. GOVERNING LAW. THIS INDENTURE, THE SECURITIES AND ANY
-------------
SECURITY GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS
OF LAW.
Section 1.13. No Recourse Against Others. A director, officer,
--------------------------
employee or stockholder, as such, of the Company or of a Guarantor shall not
have any liability for any obligations of the Company or a Guarantor under the
Securities, the Security Guarantee or this Indenture or for any claim based on,
in respect of or by reason of such obligations or their creation.
Section 1.14. Independence of Covenants. All covenants and agreements
-------------------------
in this Indenture shall be given independent effect so that if a particular
action or condition is not permitted by any of such covenants, the fact that it
would be permitted by an exception to, or be otherwise within the limitations
of, another covenant shall not avoid the occurrence of a Default if such action
is taken or condition exists.
Section 1.15. Exhibits. All exhibits attached hereto are by this
--------
reference made a part hereof with the same effect as if herein set forth in
full.
Section 1.16. Counterparts. This Indenture may be executed in any
------------
number of counterparts and by telecopier, each of which shall be an original;
but such counterparts shall together constitute but one and the same instrument.
Section 1.17. Duplicate Originals. The parties may sign any number of
-------------------
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
22
<PAGE>
ARTICLE TWO
SECURITY FORM
Section 2.01. Form and Dating. The Initial Securities and the
---------------
Exchange Securities and the Trustee's certificate of authentication with respect
thereto shall be in substantially the forms set forth, or referenced, in Exhibit
A-1 and Exhibit A-2, respectively, annexed hereto, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with any applicable law or with the rules of the Depository,
any clearing agency or any securities exchange or as may, consistently herewith,
be determined by the officers executing such Securities, as evidenced by their
execution thereof. The definitive Securities shall be printed, typewritten,
lithographed or engraved or produced by any combination of these methods or may
be produced in any other manner permitted by the rules of any securities
exchange on which the Securities may be listed, all as determined by the
Officers executing such Securities, as evidenced by their execution of such
Securities. Each Security shall be dated the date of its issuance and shall show
the date of its authentication. The terms and provisions contained in the
Securities shall constitute, and are expressly made, a part of this Indenture.
ARTICLE THREE
THE SECURITIES
Section 3.01. Title and Terms. The aggregate principal amount of
---------------
Securities which may be authenticated and delivered under this Indenture is
limited to $100,000,000 in aggregate principal amount of Securities, except for
Securities authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Securities pursuant to Sections 3.03, 3.04,
3.05, 3.06, 9.06, 10.10, 10.15 or 11.08.
The final Stated Maturity of the Securities shall be June 15, 2005,
and the Securities shall bear interest at the rate of 10-3/8% per annum from the
Issue Date or from the most recent Interest Payment Date to which interest has
been paid, as the case may be, payable semi-annually thereafter on June 15 and
December 15, in each year, commencing on December 15, 1997, to the Holders of
record at the close of business on the June 1 and December 1, respectively,
immediately preceding such Interest Payment Dates, until the principal thereof
is paid or duly provided for. Interest on any overdue principal, interest (to
the extent lawful) or premium, if any, shall be payable on demand. The
Securities shall be redeemable at the option of the Company as provided in
Article Eleven and paragraphs 2 and 3 on the reverse of the Securities.
At the election of the Company, the entire Indebtedness on the
Securities or certain of the Company's obligations and covenants and certain
Events of Default thereunder may be defeased as provided in Article Four.
Section 3.02. Registrar and Paying Agent. The Company shall maintain
--------------------------
an office or agency (which shall be located in the Borough of Manhattan in The
City of New York, State of New York) where Securities may be presented for
registration of transfer or for exchange (the
23
<PAGE>
"Registrar"), an office or agency (which shall be located in the Borough of
Manhattan in The City of New York, State of New York) where Securities may be
presented for payment (the "Paying Agent" or "Agent") and an office or agency
where notices and demands to or upon the Company in respect of the Securities,
the Security Guarantees and this Indenture may be served. The Registrar shall
keep a register of the Securities and of their transfer and exchange. The
Company may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" or "Agent" includes any additional paying agent.
The Company may act as its own Paying Agent, except for the purposes of payments
on account of principal on the Securities pursuant to Sections 10.10 and 10.15.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which shall incorporate the provisions of
the Trust Indenture Act. The agreement shall implement the provisions of this
Indenture that relate to such Agent. The Company shall notify the Trustee of
the name and address of any such Agent. If the Company fails to maintain a
Registrar or Paying Agent, or fails to give the foregoing notice, the Trustee
shall act as such and shall be entitled to appropriate compensation in
accordance with Section 6.07. The Company initially appoints the Trustee as the
Registrar and Paying Agent and agent for service of notices and demands in
connection with the Securities.
Section 3.03. Execution and Authentication. The Initial Securities
----------------------------
and the Trustee's certificate of authentication shall be substantially in the
form of Exhibit A-1 hereto. The Exchange Securities and the Trustee's
certificate of authentication shall be substantially in the form of Exhibit A-2
hereto. The Securities may have notations, legends or endorsements required by
law, stock exchange rule or usage. The Company shall approve the form of the
Securities and any notation, legend or endorsement thereon. Each Security shall
be dated the date of issuance and shall show the date of its authentication.
The terms and provisions contained in the Securities annexed hereto as
Exhibits A-1 and A-2 shall constitute, and are hereby expressly made, a part of
this Indenture and, to the extent applicable, the Company, the Guarantors and
the Trustee, by their execution and delivery of this Indenture, expressly agree
to such terms and provisions and to be bound thereby.
Securities offered and sold in reliance on Rule 144A and Securities
offered and sold in reliance on Regulation S shall be issued initially in the
form of one or more Global Securities, substantially in the form set forth in
Exhibit A-1, deposited with the Trustee, as custodian for the Depository, duly
executed by the Company and authenticated by the Trustee as hereinafter provided
and shall bear the legend set forth in Exhibit B. The aggregate principal amount
of the Global Securities may from time to time be increased or decreased by
adjustments made on the records of the Trustee, as custodian for the Depository,
as hereinafter provided.
Securities offered and sold to institutional "accredited investors"
(as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) shall,
and Securities issued in exchange for interests in a Global Security pursuant to
Section 3.16 may, be issued in the form of permanent certificated Securities in
registered form in substantially the form set forth in Exhibit A-1 hereto (the
"Physical Securities").
24
<PAGE>
All Securities offered and sold in reliance on Regulation S shall
remain in the form of a Global Security until the consummation of the Exchange
Offer pursuant to the Registration Rights Agreement; provided, however, that all
of the time periods specified in the Registration Rights Agreement to be
complied with by the Company have been so complied with.
Two Officers, or an Officer and an Assistant Secretary, shall sign, or
one Officer shall sign, and one Officer or an Assistant Secretary (each of whom
shall, in each case, have been duly authorized by all requisite corporate
actions) shall attest to, the Securities for the Company, by manual or facsimile
signature.
If an Officer or Assistant Secretary whose signature is on a Security
was an Officer or Assistant Secretary, as the case may be, at the time of such
execution but no longer holds that office or position at the time the Trustee
authenticates the Security, the Security shall nevertheless be valid.
The Trustee shall authenticate (i) Initial Securities for original
issue in an aggregate principal amount not to exceed $100,000,000, (ii) Private
Exchange Securities from time to time only in exchange for a like principal
amount of Initial Securities and (iii) Unrestricted Securities from time to time
only in exchange for (A) a like principal amount of Initial Securities or (B) a
like principal amount of Private Exchange Securities, in each case upon a
written order of the Company in the form of an Officers' Certificate of the
Company. Each such written order shall specify the amount of Securities to be
authenticated and the date on which the Securities are to be authenticated,
whether the Securities are to be Initial Securities, Private Exchange Securities
or Unrestricted Securities and whether (subject to this Section 3.03) the
Securities are to be issued as Physical Securities or Global Securities and such
other information as the Trustee may reasonably request. The aggregate
principal amount of Securities outstanding at any time may not exceed
$100,000,000, except as provided in Section 3.06.
Notwithstanding the foregoing, all Securities issued under this
Indenture shall vote and consent together on all matters (as to which any of
such Securities may vote or consent) as one class and no series of Securities
will have the right to vote or consent as a separate class on any matter.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Company to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company and Affiliates of the Company.
The Securities shall be issuable in fully registered form only,
without coupons, in denominations of $1,000 and any integral multiple thereof.
Section 3.04. Temporary Securities. Until definitive Securities are
--------------------
prepared and ready for delivery, the Company may execute and upon a Company
Order the Trustee shall authenticate and deliver temporary Securities. Temporary
Securities shall be substantially in the form of definitive Securities, in any
authorized denominations, but may have variations that the
25
<PAGE>
Company reasonably considers appropriate for temporary Securities as
conclusively evidenced by the Company's execution of such temporary Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay but in no event later than
the date that the Exchange Offer is consummated. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at the office
or agency of the Company designated for such purpose pursuant to Section 10.02,
without charge to the Holder. Upon surrender for cancellation of any one or
more temporary Securities, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of like tenor and of authorized denominations. Until so
exchanged the temporary Securities shall in all respects be entitled to the same
benefits under this Indenture as definitive Securities.
Section 3.05. Transfer and Exchange. The Company shall cause to be
---------------------
kept at the Corporate Trust Office of the Trustee a register (the register
maintained in such office and in any other office or agency designated pursuant
to Section 10.02 being sometimes referred to herein as the "Security Register")
in which, subject to such reasonable regulations as the Registrar may prescribe,
the Company shall provide for the registration of Securities and of transfers
and exchanges of Securities. The Trustee is hereby initially appointed Registrar
for the purpose of registering Securities and transfers of Securities as herein
provided.
Subject to Sections 3.15 and 3.16, when Securities are presented to
the Registrar or a co-Registrar with a request from the Holder of such
Securities to register the transfer or exchange for an equal principal amount of
Securities of other authorized denominations, the Registrar shall register the
transfer or make the exchange as requested; provided, however, that every
Security presented or surrendered for registration of transfer or exchange shall
be duly endorsed or be accompanied by a written instrument of transfer or
exchange in form satisfactory to the Company and the Registrar, duly executed by
the Holder thereof or his attorney duly authorized in writing. Whenever any
Securities are so presented for exchange, the Company shall execute, and the
Trustee shall authenticate and deliver, the Securities which the Holder making
the exchange is entitled to receive. No service charge shall be made to the
Securityholder for any registration of transfer or exchange. The Company may
require from the Securityholder payment of a sum sufficient to cover any
transfer taxes or other governmental charge that may be imposed in relation to a
transfer or exchange, but this provision shall not apply to any exchange
pursuant to Sections 9.06, 10.10, 10.15 or 11.08 hereof (in which events the
Company will be responsible for the payment of all such taxes which arise solely
as a result of the transfer or exchange and do not depend on the tax status of
the Holder). The Trustee shall not be required to exchange or register the
transfer of any Security for a period of 15 days immediately preceding the first
mailing of notice of redemption of Securities to be redeemed or of any Security
selected, called or being called for redemption except, in the case of any
Security where public notice has been given that such Security is to be redeemed
in part, the portion thereof not to be redeemed.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
Indebtedness, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
26
<PAGE>
Any Holder of a beneficial interest in a Global Security shall, by
acceptance of such Global Security, agree that transfers of beneficial interests
in such Global Securities may be effected only through a book-entry system
maintained by the Holder of such Global Security (or its agent), and that
ownership of a beneficial interest in the Security shall be required to be
reflected in a book-entry system.
Section 3.06. Mutilated, Destroyed, Lost and Stolen Securities. If a
------------------------------------------------
mutilated Security is surrendered to the Trustee or if the Holder of a Security
claims that the Security has been lost, destroyed or wrongfully taken, the
Company shall execute and upon a Company Order, the Trustee shall authenticate
and deliver a replacement Security of like tenor and principal amount, bearing a
number not contemporaneously outstanding, if the Holder of such Security
furnishes to the Company and to the Trustee, in the case of such loss,
destruction or theft, evidence reasonably acceptable to them of the ownership
and the destruction, loss or theft of such Security and, in the case of such
loss, destruction or theft, an indemnity bond shall be posted by such Holder,
sufficient in the judgment of the Company or the Trustee, as the case may be, to
protect the Company, the Trustee or any Agent from any loss that any of them may
suffer if such Security is replaced. The Company may charge such Holder for the
Company's expenses in replacing such Security (including (i) expenses of the
Trustee charged to the Company and (ii) any tax or other governmental charge
that may be imposed) and the Trustee may charge the Company for the Trustee's
expenses in replacing such Security.
Every replacement Security issued pursuant to this Section 3.06 in
lieu of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all benefits of this Indenture equally and proportionately with any
and all other Securities duly issued hereunder.
Section 3.07. Payment of Interest; Interest Rights Preserved.
----------------------------------------------
Interest on any Security which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name such Security is registered at the close of business on the Regular Record
Date for such interest.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date and interest on such
defaulted interest at the then applicable interest rate borne by the Securities,
to the extent lawful (such defaulted interest and interest thereon herein
collectively called "Defaulted Interest") shall forthwith cease to be payable to
the Holder on the Regular Record Date; and such Defaulted Interest may be paid
by the Company, at its election in each case, as provided in subsection (a) or
(b) below:
(a) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities are registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company shall
notify the Trustee in writing of the amount of Defaulted Interest proposed
to be paid on each Security and the date of the proposed payment, and at
the same time the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit prior to the
27
<PAGE>
date of the proposed payment, such money when deposited to be held in trust
for the benefit of the Persons entitled to such Defaulted Interest as
provided in this subsection (a). Thereupon the Trustee shall fix a Special
Record Date for the payment of such Defaulted Interest which shall be not
more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly notify
the Company in writing of such Special Record Date. In the name and at the
expense of the Company, the Trustee shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor to
be mailed, first-class postage prepaid, to each Holder at its address as it
appears in the Security Register, not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been so mailed, such
Defaulted Interest shall be paid to the Persons in whose names the
Securities are registered on such Special Record Date and shall no longer
be payable pursuant to the following subsection (b).
(b) The Company may elect to make payment of any Defaulted Interest
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after written notice given
by the Company to the Trustee of the proposed payment pursuant to this
subsection (b), such payment shall be deemed practicable by the Trustee.
The Trustee shall be entitled to rely on an Opinion of Counsel regarding
the legality of any proposed payment pursuant to this subsection (b).
Subject to the foregoing provisions of this Section 3.07, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.
Section 3.08. Persons Deemed Owners. Prior to and at the time of due
---------------------
presentment for registration of transfer, the Company, the Trustee and any agent
of the Company or the Trustee may treat the person in whose name any Security is
registered in the Security Register as the owner of such Security for the
purpose of receiving payment of principal of, premium, if any, and (subject to
Section 3.07) interest on such Security and for all other purposes whatsoever,
whether or not such Security shall be overdue, and neither the Company, the
Trustee nor any agent of the Company or the Trustee shall be affected by notice
to the contrary.
Section 3.09. Cancellation. All Securities surrendered for payment,
------------
redemption, registration of transfer or exchange shall be delivered to the
Trustee and, if not already canceled, shall be promptly canceled by it. The
Company and any Guarantor may at any time deliver to the Trustee for
cancellation any Securities previously authenticated and delivered hereunder
which the Company or such Guarantor may have acquired in any manner whatsoever,
and all Securities so delivered shall be promptly canceled by the Trustee. The
Registrar and the Paying Agent shall forward to the Trustee any Securities
surrendered to them for registration of transfer or exchange, redemption or
payment. The Trustee and no one else shall cancel all Securities surrendered for
registration of transfer, exchange, payment, replacement or cancellation. No
Securities shall be authenticated in lieu of or in exchange for any Securities
canceled as provided in this Section 3.09, except as expressly permitted by this
Indenture. All canceled Securities held by the Trustee shall
28
<PAGE>
be destroyed and certification of their destruction delivered to the Company
unless by a Company Order the Company shall direct that the canceled Securities
be returned to it. The Trustee shall provide the Company a list of all
Securities that have been canceled from time to time as requested by the
Company.
Section 3.10. Computation of Interest. Interest on the Securities
-----------------------
shall be computed on the basis of a 360-day year of twelve 30-day months and, in
the case of a partial month, the actual number of days elapsed.
Section 3.11. Legal Holidays. In any case where any Interest Payment
--------------
Date, Redemption Date, Change of Control Purchase Date, Asset Sale Purchase
Date, date established for the payment of Defaulted Interest or Stated Maturity
of any Security shall not be a Business Day, then (notwithstanding any other
provision of this Indenture or of the Securities) payment of principal, premium,
if any, or interest need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the
Interest Payment Date, Redemption Date, Change of Control Purchase Date, Asset
Sale Purchase Date, date established for the payment of Defaulted Interest or at
the Stated Maturity, as the case may be. In such event, no interest shall accrue
with respect to such payment for the period from and after such Interest Payment
Date, Redemption Date, Change of Control Purchase Date, Asset Sale Purchase
Date, date established for the payment of Defaulted Interest or Stated Maturity,
as the case may be, to the next succeeding Business Day and, with respect to any
Interest Payment Date, interest for the period from and after such Interest
Payment Date shall accrue with respect to the next succeeding Interest Payment
Date.
Section 3.12. CUSIP and CINS Numbers. The Company in issuing the
----------------------
Securities may use "CUSIP" and "CINS" numbers (if then generally in use), and if
the Company does so, the Trustee shall use the CUSIP or CINS numbers, as the
case may be, in notices of redemption or exchange as a convenience to Holders;
provided, however, that any such notice shall state that no representation is
made as to the correctness or accuracy of the CUSIP or CINS number, as the case
may be, printed in the notice or on the Securities, and that reliance may be
placed only on the other identification numbers printed on the Securities. The
Company shall promptly notify the Trustee in writing of any change in the CUSIP
or CINS number of any type of Securities.
Section 3.13. Paying Agent To Hold Money in Trust. Each Paying Agent
-----------------------------------
shall hold in trust for the benefit of the Securityholders or the Trustee all
money held by the Paying Agent for the payment of principal of, premium, if any,
or interest on the Securities, and shall notify the Trustee of any default by
the Company in making any such payment. Money held in trust by the Paying Agent
need not be segregated, except as required by law and except if the Company, any
Guarantor or any of their respective Affiliates is acting as Paying Agent, and
in no event shall the Paying Agent be liable for any interest on any money
received by it hereunder. The Company at any time may require the Paying Agent
to pay all money held by it to the Trustee and account for any funds disbursed
and the Trustee may at any time during the continuance of any Event of Default,
upon a Company Order to the Paying Agent, require such Paying Agent to pay
forthwith all money so held by it to the Trustee and to account for any funds
disbursed. Upon making such payment, the Paying Agent shall have no further
liability for the money delivered to the Trustee.
29
<PAGE>
Section 3.14. Deposits of Monies. Prior to 12:00 p.m. noon New York
------------------
City time on each Interest Payment Date, Redemption Date, Stated Maturity,
Change of Control Purchase Date and Asset Sale Offer Purchase Date, the Company
shall deposit with the Paying Agent in immediately available funds money
sufficient to make cash payments, if any, due on such Interest Payment Date,
Redemption Date, Stated Maturity, Change of Control Purchase Date and Asset Sale
Offer Purchase Date, as the case may be, in a timely manner which permits the
Paying Agent to remit payment to the Holders on such Interest Payment Date,
Redemption Date, Stated Maturity, Change of Control Purchase Date and Asset Sale
Offer Purchase Date, as the case may be.
Section 3.15. Book-Entry Provisions for Global Securities.
-------------------------------------------
(a) The Global Securities initially shall (i) be registered in the
name of the Depository or the nominee of such Depository, (ii) be delivered
to the Trustee as custodian for such Depository and (iii) bear legends as
set forth in Exhibit B hereto.
Members of, or participants in, the Depository ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security
held on their behalf by the Depository, or the Trustee as its custodian, or
under the Global Security, and the Depository may be treated by the
Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of the Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company,
the Trustee or any agent of the Company or the Trustee from giving effect
to any written certification, proxy or other authorization furnished by the
Depository or impair, as between the Depository and its Agent Members, the
operation of customary practices governing the exercise of the rights of a
Holder of any Security.
(b) Transfers of Global Securities shall be limited to transfers in
whole, but not in part, to the Depository, its successors or their
respective nominees. Interests of beneficial owners in the Global
Securities may be transferred or exchanged for Physical Securities in
accordance with the rules and procedures of the Depository and the
provisions of Sections 3.03 and 3.16. In addition, Physical Securities
shall be transferred to all beneficial owners in exchange for their
beneficial interests in Global Securities if (i) the Depository notifies
the Company that it is unwilling or unable to continue as Depository for
any Global Security, or that it will cease to be a "Clearing Agency" under
the Exchange Act, and in either case a successor Depository is not
appointed by the Company within 90 days of such notice or (ii) an Event of
Default has occurred and is continuing and the Registrar has received a
written request from the Depository to issue Physical Securities.
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in any Global Security to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Securities are
to be issued) reflect on its books and records the date and a decrease in
the principal amount of such Global Security in an amount equal to the
principal amount of the beneficial interest in such Global Security to be
transferred, and the Company shall execute, and the Trustee shall
authenticate and deliver, one or more Physical Securities of like tenor and
principal amount of authorized denominations.
30
<PAGE>
(d) In connection with the transfer of Global Securities as an
entirety to beneficial owners pursuant to paragraph (b), the Global
Securities shall be deemed to be surrendered to the Trustee for
cancellation, and the Company shall execute, and the Trustee shall
authenticate and deliver, to each beneficial owner identified by the
Depository in exchange for its beneficial interest in the Global
Securities, an equal aggregate principal amount of Physical Securities of
like tenor of authorized denominations.
(e) Any Physical Security constituting a Restricted Security
delivered in exchange for an interest in a Global Security pursuant to
subparagraph (b), (c) or (d) of this Section 3.15 shall, except as
otherwise provided by Section 3.16, bear the Private Placement Legend.
(f) The Holder of any Global Security may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Securities.
Section 3.16. Special Transfer Provisions.
---------------------------
(a) Transfers to Non-QIB Institutional Accredited Investors. The
-------------------------------------------------------
following additional provisions shall apply with respect to the
registration of any proposed transfer of an Initial Security to any
Institutional Accredited Investor which is not a QIB:
(i) the Registrar shall register the transfer of any Initial
Security, whether or not such Security bears the Private Placement
Legend, if (x) the requested transfer is after the second anniversary
of the Issue Date; provided, however, that neither the Company nor any
Affiliate of the Company has held any beneficial interest in such
Security, or portion thereof, at any time on or prior to the second
anniversary of the Issue Date and such transfer can otherwise be
lawfully made under the Securities Act without registering such
Initial Securities thereunder or (y) the proposed transferee has
delivered to the Registrar a certificate substantially in the form of
Exhibit C hereto and any legal opinions and certifications required
thereby; and
(ii) if the proposed transferor is an Agent Member seeking to
transfer an interest in a Global Security, upon receipt by the
Registrar of (x) written instructions given in accordance with the
Depository's and the Registrar's procedures and (y) the appropriate
certificate, if any, required by clause (y) of paragraph (i) above,
together with any required legal opinions and certifications, the
Registrar shall register the transfer and reflect on its books and
records the date and a decrease in the principal amount of the Global
Security from which such interests are to be transferred in an amount
equal to the principal amount of the Securities to be transferred and
the Company shall execute, and the Trustee shall authenticate,
Physical Securities in a principal amount equal to the principal
amount of the Global Security to be transferred.
31
<PAGE>
(b) Transfers to Non-U.S. Persons. The following additional
-----------------------------
provisions shall apply with respect to the registration of any proposed
transfer of an Initial Security to any Non-U.S. Person:
(i) the Registrar shall register the transfer of any Initial
Security, whether or not such Security bears the Private Placement
Legend, if (x) the requested transfer is after the second anniversary
of the Issue Date; provided, however, that neither the Company nor any
Affiliate of the Company has held any beneficial interest in such
Security, or portion thereof, at any time on or prior to the second
anniversary of the Issue Date and such transfer can otherwise be
lawfully made under the Securities Act without registering such
Initial Securities thereunder or (y) the proposed transferor has
delivered to the Registrar a certificate substantially in the form of
Exhibit D hereto;
(ii) if the proposed transferee is an Agent Member and the
Securities to be transferred consist of Physical Securities which
after transfer are to be evidenced by an interest in the Regulation S
Global Security, upon receipt by the Registrar of (x) written
instructions given in accordance with the Depository's and the
Registrar's procedures and (y) the appropriate certificate, if any,
required by clause (y) of paragraph (i) above, together with any
required legal opinions and certifications, the Registrar shall
register the transfer and reflect on its books and records the date
and an increase in the principal amount of the Regulation S Global
Security in an amount equal to the principal amount of Physical
Securities to be transferred, and the Trustee shall cancel the
Physical Securities so transferred;
(iii) if the proposed transferor is an Agent Member seeking to
transfer an interest in a Global Security, upon receipt by the
Registrar of (x) written instructions given in accordance with the
Depository's and the Registrar's procedures and (y) the appropriate
certificate, if any, required by clause (y) of paragraph (i) above,
together with any required legal opinions and certifications, the
Registrar shall register the transfer and reflect on its books and
records the date and (A) a decrease in the principal amount of the
Global Security from which such interests are to be transferred in an
amount equal to the principal amount of the Securities to be
transferred and (B) an increase in the principal amount of the
Regulation S Global Security in an amount equal to the principal
amount of the Global Security to be transferred; and
(iv) Until the 41st day after the Issue Date (the "Restricted
Period"), an owner of a beneficial interest in the Regulation S Global
Security may not transfer such interest to a transferee that is a U.S.
person or for the account or benefit of a U.S. person within the
meaning of Rule 902(o) of the Securities Act. During the Restricted
Period, all beneficial interests in the Regulation S Global Security
shall be transferred only through Cedel or Euroclear, either directly
if the transferor and transferee are participants in such systems, or
indirectly through organizations that are participants therein.
32
<PAGE>
(c) Transfers to QIBs. The following provisions shall apply with
-----------------
respect to the registration of any proposed transfer of an Initial Security
to a QIB (excluding Non-U.S. Persons):
(i) the Registrar shall register the transfer of any Initial
Security, whether or not such Security bears the Private Placement
Legend, if (x) the requested transfer is after the second anniversary
of the Issue Date; provided, however, that neither the Company nor any
Affiliate of the Company has held any beneficial interest in such
Security, or portion thereof, at any time on or prior to the second
anniversary of the Issue Date and such transfer can otherwise be
lawfully made under the Securities Act without registering such
Initial Security thereunder or (y) such transfer is being made by a
proposed transferor who has checked the box provided for on the form
of Security stating, or has otherwise advised the Company and the
Registrar in writing, that the sale has been made in compliance with
the provisions of Rule 144A to a transferee who has signed the
certification provided for on the form of Security stating, or has
otherwise advised the Company and the Registrar in writing, that it is
purchasing the Security for its own account or an account with respect
to which it exercises sole investment discretion and that it and any
such account is a QIB within the meaning of Rule 144A, and is aware
that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the
Company as it has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the
transferor is relying upon its foregoing representations in order to
claim the exemption from registration provided by Rule 144A;
(ii) if the proposed transferee is an Agent Member and the
Securities to be transferred consist of Physical Securities which
after transfer are to be evidenced by an interest in the 144A Global
Security, upon receipt by the Registrar of written instructions given
in accordance with the Depository's and the Registrar's procedures,
the Registrar shall register the transfer and reflect on its book and
records the date and an increase in the principal amount of the 144A
Global Security in an amount equal to the principal amount of Physical
Securities to be transferred, and the Trustee shall cancel the
Physical Security so transferred; and
(iii) if the proposed transferor is an Agent Member seeking to
transfer an interest in a Global Security, upon receipt by the
Registrar of written instructions given in accordance with the
Depository's and the Registrar's procedures, the Registrar shall
register the transfer and reflect on its books and records the date
and (A) a decrease in the principal amount of the Global Security from
which interests are to be transferred in an amount equal to the
principal amount of the Securities to be transferred and (B) an
increase in the principal amount of the 144A Global Security in an
amount equal to the principal amount of the Global Security to be
transferred.
(d) Private Placement Legend. Upon the registration of transfer,
------------------------
exchange or replacement of Securities not bearing the Private Placement
Legend, the Registrar shall deliver Securities that do not bear the Private
Placement Legend. Upon the registration of
33
<PAGE>
transfer, exchange or replacement of Securities bearing the Private
Placement Legend, the Registrar shall deliver only Securities that bear the
Private Placement Legend unless (i) the circumstances contemplated by
paragraph (a)(i)(x) of this Section 3.16 exist, (ii) there is delivered to
the Registrar an Opinion of Counsel reasonably satisfactory to the Company
and the Trustee to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance with
the provisions of the Securities Act or (iii) such Security has been sold
pursuant to an effective registration statement under the Securities Act.
(e) Other Transfers. If a Holder proposes to transfer a Security
---------------
constituting a Restricted Security pursuant to any exemption from the
registration requirements of the Securities Act other than as provided for
by Section 3.16(a), (b) and (c), the Registrar shall only register such
transfer or exchange if such transferor delivers an Opinion of Counsel
satisfactory to the Company and the Registrar that such transfer is in
compliance with the Securities Act and the terms of this Indenture.
(f) General. By its acceptance of any Security bearing the Private
-------
Placement Legend, each Holder of such a Security acknowledges the
restrictions on transfer of such Security set forth in this Indenture and
in the Private Placement Legend and agrees that it will transfer such
Security only as provided in this Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 3.15 or this Section 3.16.
The Company shall have the right to inspect and make copies of all
such letters, notices or other written communications at any reasonable time
upon the giving of reasonable prior written notice to the Registrar.
ARTICLE FOUR
DEFEASANCE OR COVENANT DEFEASANCE
Section 4.01. Company's Option To Effect Defeasance or Covenant
-------------------------------------------------
Defeasance. The Company may, at its option by Board Resolution, at any time,
- ----------
with respect to the Securities, elect to have either Section 4.02 or Section
4.03 be applied to all of the Outstanding Securities (the "Defeased
Securities"), upon compliance with the conditions set forth below in this
Article Four.
Section 4.02. Defeasance and Discharge. Upon the Company's exercise
------------------------
under Section 4.01 of the option applicable to this Section 4.02, the Company
and each Guarantor shall be deemed to have been discharged from their
obligations with respect to the Defeased Securities and the related Security
Guarantees on the date the conditions set forth below are satisfied
(hereinafter, "defeasance"). For this purpose, such defeasance means that the
Company shall be deemed to have paid and discharged the entire indebtedness
represented by the Defeased Securities, which shall thereafter be deemed to be
"Outstanding" only for the purposes of Section 4.05 and the other Sections of
this Indenture referred to in clauses (a) and (b) below, and to have satisfied
all its other obligations under such Securities and this Indenture insofar as
such Securities are concerned (and the Trustee, at the expense of the Company,
and, upon Company Request, shall execute proper
34
<PAGE>
instruments acknowledging the same), except for the following, which shall
survive until otherwise terminated or discharged hereunder:
(a) the rights of Holders of Defeased Securities to receive, solely
from the trust fund described in Section 4.04 and as more fully set forth
in such Section 4.04, payments in respect of the principal of, premium, if
any, and interest on such Defeased Securities when such payments are due,
(b) the Company's obligations with respect to such Defeased
Securities under Sections 3.04, 3.05, 3.06, 10.02 and 10.03,
(c) the rights, powers, trusts, duties and immunities of the Trustee
hereunder, including, without limitation, the Trustee's rights under
Section 6.07, and
(d) this Article Four. Subject to compliance with this Article Four,
the Company may exercise its option under this Section 4.02 notwithstanding
the prior exercise of its option under Section 4.03 with respect to the
Securities.
Section 4.03. Covenant Defeasance. Upon the Company's exercise under
-------------------
Section 4.01 of the option applicable to this Section 4.03, the Company and each
Guarantor shall be released from their obligations under any covenant or
provision contained in Sections 10.06 through 10.21 and the provisions of
Articles Eight shall not apply, with respect to the Defeased Securities, on and
after the date the conditions set forth below are satisfied (hereinafter,
"covenant defeasance"), and the Defeased Securities shall thereafter be deemed
not to be "Outstanding" for the purposes of any direction, waiver, consent or
declaration or Act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "Outstanding"
for all other purposes hereunder. For this purpose, such covenant defeasance
means that, with respect to the Defeased Securities, the Company and each
Guarantor may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in Sections 10.06 through 10.21 or
Article Eight, whether directly or indirectly, by reason of any reference
elsewhere herein to any such Section or Article or by reason of any reference in
any such Section or Article to any other provision herein or in any other
document and such omission to comply shall not constitute a Default or an Event
of Default under Section 5.01(c) or (d), but, except as specified above, the
remainder of this Indenture and such Defeased Securities shall be unaffected
thereby.
Section 4.04. Conditions to Defeasance or Covenant Defeasance. The
-----------------------------------------------
following shall be the conditions to application of either Section 4.02 or
Section 4.03 to the Defeased Securities:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements of
Section 6.09 who shall agree to comply with the provisions of this Article Four
applicable to it) as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated solely
to, the benefit of the Holders of such Securities, (a) cash in an amount, or (b)
U.S. Government Obligations which through the scheduled payment of principal,
premium, if any, and interest in respect thereof in accordance with their terms
will provide, not later than one day before the due date of any payment, money
in an amount, or (c) a combination thereof, in any such case,
35
<PAGE>
sufficient, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay and discharge, and which shall be applied by the Trustee (or
other qualifying trustee) to pay and discharge, the principal of, premium, if
any, and interest on the Defeased Securities at the Stated Maturity of such
principal or installment of principal, premium, if any, or interest; provided,
however, that the Trustee shall have been irrevocably instructed to apply such
cash or the proceeds of such U.S. Government Obligations to said payments with
respect to the Securities;
(2) No Default shall have occurred and be continuing on the date
of such deposit or, insofar as Sections 5.01(h), (i) or (j) are concerned, at
any time during the period ending on the ninety-first day after the date of such
deposit (it being understood that this condition shall not be deemed satisfied
until the expiration of such period);
(3) Neither the Company nor any Subsidiary of the Company is an
"insolvent person" within the meaning of any applicable Bankruptcy Law on the
date of such deposit or at any time during the period ending on the ninety-first
day after the date of such deposit (it being understood that this condition
shall not be deemed satisfied until the expiration of such period);
(4) Such defeasance or covenant defeasance shall not cause the
Trustee for the Securities to have a conflicting interest in violation of
Section 6.08 and for purposes of the Trust Indenture Act with respect to any
securities of the Company or any Guarantor;
(5) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture or any
other material agreement or instrument to which the Company or any Guarantor is
a party or by which it is bound;
(6) In the case of an election under Section 4.02, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that (x) the
Company has received from, or there has been published by, the Internal Revenue
Service a ruling or (y) since the date hereof, there has been a change in the
applicable Federal income tax law, in either case to the effect that, and based
thereon such opinion shall confirm that, the Holders of the Outstanding
Securities will not recognize income, gain or loss for Federal income tax
purposes as a result of such defeasance and will be subject to Federal income
tax on the same amounts, in the same manner and at the same times as would have
been the case if such defeasance had not occurred;
(7) In the case of an election under Section 4.03, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of the Outstanding Securities will not recognize income, gain or loss
for Federal income tax purposes as a result of such covenant defeasance and will
be subject to Federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such covenant defeasance had not
occurred;
(8) The Company shall have delivered to the Trustee, an Opinion
of Counsel to the effect that, immediately following the ninety-first day after
the deposit, the trust funds established pursuant to this Article Four will not
be subject to the effect of any applicable
36
<PAGE>
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally under any applicable U.S. Federal or state law;
(9) The Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit made by the Company pursuant to its
election under Section 4.02 or 4.03 was not made by the Company with the intent
of preferring the Holders or any Guarantor over the other creditors of the
Company or with the intent of defeating, hindering, delaying or defrauding
creditors of the Company or others; and
(10) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that (i) all conditions
precedent (other than conditions requiring the passage of time) provided for
relating to either the defeasance under Section 4.02 or the covenant defeasance
under Section 4.03 (as the case may be) have been complied with as contemplated
by this Section 4.04 and (ii) if any other Indebtedness of the Company or any
Guarantor shall then be outstanding or committed, such defeasance or covenant
defeasance will not violate the provisions of the agreements or instruments
evidencing such Indebtedness. Opinions of Counsel required to be delivered
under this Section 4.04 may have such qualifications as are customary for
opinions of the type required.
Section 4.05. Deposited Money and U.S. Government Obligations To Be
-----------------------------------------------------
Held in Trust; Other Miscellaneous Provisions. Subject to the proviso of the
- ---------------------------------------------
last paragraph of Section 10.03, all money and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee (or other qualifying
trustee, collectively for purposes of this Section 4.05, the "Trustee") pursuant
to Section 4.04 in respect of the Defeased Securities shall be held in trust and
applied by the Trustee, in accordance with the provisions of such Securities and
this Indenture, to the payment, either directly or through any Paying Agent
(other than the Company or any Guarantor) as the Trustee may determine, to the
Holders of such Securities of all sums due and to become due thereon in respect
of principal, premium, if any, and interest, but such money need not be
segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee and hold it harmless
against any tax, fee or other charge imposed on or assessed against the U.S.
Government Obligations deposited pursuant to Section 4.04 or the principal,
premium, if any, and interest received in respect thereof other than any such
tax, fee or other charge which by law is for the account of the Holders of the
Defeased Securities.
Anything in this Article Four to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 4.04 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent defeasance or covenant
defeasance.
Section 4.06. Reinstatement. If the Trustee or Paying Agent is unable
-------------
to apply any money or U.S. Government Obligations in accordance with Section
4.02 or 4.03, as the case may be, by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the obligations of the Company and of
37
<PAGE>
any Guarantor under this Indenture, the Securities and any Security Guarantees
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 4.02 or 4.03, as the case may be, until such time as the Trustee or
Paying Agent is permitted to apply all such money and U.S. Government
Obligations in accordance with Section 4.02 or 4.03, as the case may be;
provided, however, that if the Company makes any payment of principal, premium,
if any, or interest on any Security following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Securities to receive such payment from the money and U.S. Government
Obligations held by the Trustee or Paying Agent.
ARTICLE FIVE
REMEDIES
Section 5.01. Events of Default. "Event of Default," wherever used
-----------------
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) default in the payment of the principal of or premium, if any,
when due and payable, on any of the Securities (at its Stated Maturity,
upon optional redemption, required purchase, scheduled principal payment or
otherwise); or
(b) default in the payment of an installment of interest on any of
the Securities, when due and payable, continued for 30 days or more; or
(c) the Company or any Guarantor fails to comply with any of its
obligations described under Article Eight or Section 10.10 or 10.15; or
(d) the Company or any Guarantor fails to perform or observe any
other term, covenant or agreement contained in the Securities, the Security
Guarantees or this Indenture (other than a default specified in (a), (b) or
(c) above) for a period of 30 days after written notice of such failure
requiring the Company to remedy the same shall have been given (x) to the
Company by the Trustee or (y) to the Company and the Trustee by the Holders
of at least 25% in aggregate principal amount of the Securities then
Outstanding; or
(e) default or defaults under one or more agreements, indentures or
instruments under which the Company or any Restricted Subsidiary then has
outstanding Indebtedness in excess of $5.0 million individually or in the
aggregate and either (i) such Indebtedness is already due and payable in
full or (ii) such default or defaults results in the acceleration of the
maturity of such Indebtedness; or
(f) any Security Guarantee ceases to be in full force and effect or
is declared null and void or any Guarantor denies that it has any further
liability under any Security Guarantee, or gives notice to such effect
(other than by reason of the termination of this Indenture or the release
of any such Security Guarantee in accordance with Section 13.03); or
38
<PAGE>
(g) one or more judgments, orders or decrees of any court or
regulatory or administrative agency for the payment of money in excess of
$5.0 million either individually or in the aggregate shall have been
rendered against the Company or any Restricted Subsidiary or any of their
respective properties and shall not have been discharged and either (a) any
creditor shall have commenced an enforcement proceeding upon such judgment,
order or decree or (b) there shall have been a period of 60 consecutive
days during which a stay of enforcement of such judgment, order or decree,
by reason of a pending appeal or otherwise, shall not be in effect; or
(h) the Company or any Material Subsidiary of the Company pursuant
to or under or within the meaning of any Bankruptcy Law:
(i) commences a voluntary case or proceeding;
(ii) consents to the making of a Bankruptcy Order in an
involuntary case or proceeding or the commencement of any case against
it;
(iii) consents to the appointment of a Custodian of it or for
any substantial part of its property;
(iv) makes a general assignment for the benefit of its
creditors;
(v) files an answer or consent seeking reorganization or
relief;
(vi) shall admit in writing its inability to pay its debts
generally; or
(vii) consents to the filing of a petition in bankruptcy; or (i)
a court of competent jurisdiction in any involuntary case or
proceeding enters a Bankruptcy Order against the Company or any
Material Subsidiary, and such Bankruptcy Order remains unstayed and in
effect for 60 consecutive days; or (j) a Custodian shall be appointed
out of court with respect to the Company or any Material Subsidiary or
with respect to all or any substantial part of the assets or
properties of the Company or any Material Subsidiary; or (k) any
holder of at least $10.0 million in aggregate principal amount of
Indebtedness of the Company or any Restricted Subsidiary shall
commence judicial proceedings to foreclose upon assets of the Company
or any of the Restricted Subsidiaries having an aggregate Fair Market
Value, individually or in the aggregate, in excess of $10.0 million or
shall have exercised any right under applicable law or applicable
security documents to take ownership of any such assets in lieu of
foreclosure.
Section 5.02. Acceleration of Maturity; Rescission and Annulment. If
--------------------------------------------------
(x) an Event of Default (other than an Event of Default specified in Section
5.01(h), (i) or (j) with respect to the Company) occurs and is continuing, then
and in every such case the Trustee or the Holders of at least 25% in aggregate
principal amount of the Securities then Outstanding may, and the Trustee upon
the request of the Holders of not less than 25% in aggregate principal amount of
the Securities then Outstanding shall, declare the principal of, premium, if
any, and accrued and unpaid interest on all Outstanding Securities to and
including the date such Securities are paid to become due and payable
immediately by a notice in writing to the Company (and to the Trustee, if given
by the
39
<PAGE>
Holders) and upon any such declaration such principal, premium, if any, and
interest, shall become immediately due and payable. If an Event of Default
specified in Section 5.01(h), (i) or (j) with respect to the Company occurs and
is continuing, then the principal of, premium, if any, and accrued and unpaid
interest on all the Securities then Outstanding shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder of Securities. At any time after a declaration of
acceleration has been made and before a judgment or decree for payment of the
money due has been obtained by the Trustee as hereinafter provided in this
Article Five, the Holders of a majority in aggregate principal amount of the
Securities then Outstanding, by written notice to the Company and the Trustee,
may rescind and annul such declaration of acceleration and its consequences if:
(a) the Company has paid or deposited with the Trustee a sum
sufficient to pay (i) all amounts due the Trustee under Section 6.07,
including the reasonable compensation, fees, expenses, disbursements and
advances of the Trustee, its agents and counsel, (ii) all overdue interest
on all Securities, (iii) the principal of and premium, if any, on any
Securities which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate then borne by the Securities,
and (iv) to the extent that payment of such interest is lawful, interest
upon overdue interest at the rate then borne by the Securities; and
(b) all Events of Default, other than the non-payment of principal
of, premium, if any, and any accrued and unpaid interest on the Securities
that have become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 5.13.
No such rescission shall affect any subsequent Default or impair any
right consequent thereon.
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
-------------------------------------------------------
Trustee. The Company and each Guarantor covenant that if an Event of Default
- -------
specified in Section 5.01(a) or 5.01(b) shall have occurred and be continuing,
the Company and each Guarantor shall, jointly and severally, upon demand of the
Trustee, pay to the Trustee, for the benefit of the Holders of such Securities,
the whole amount then due and payable on such Securities for principal, premium,
if any, and interest, with interest upon the overdue principal, premium, if any,
and, to the extent that payment of such interest shall be legally enforceable,
upon overdue installments of interest, at the rate then borne by the Securities;
and, in addition thereto, such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
If the Company and each Guarantor fail to pay such amounts forthwith
upon such demand, the Trustee, in its own name and as trustee of an express
trust, may, but is not obligated under this paragraph to, institute a judicial
proceeding for the collection of the sums so due and unpaid and may, but is not
obligated under this paragraph to, prosecute such proceeding to judgment or
final decree, and may, but is not obligated under this paragraph to, enforce the
same against the Company, any Guarantor or any other obligor upon the Securities
and collect the moneys adjudged or decreed to be payable in the manner provided
by law out of the property of the Company or any Guarantor or any other obligor
upon the Securities, wherever situated.
40
<PAGE>
If an Event of Default occurs and is continuing, the Trustee may in
its discretion, but is not obligated under this paragraph to, (i) proceed to
protect and enforce its rights and the rights of the Holders under this
Indenture or any Security Guarantee by such appropriate private or judicial
proceedings as the Trustee shall deem most effectual to protect and enforce such
rights, whether for the specific enforcement of any covenant or agreement
contained in this Indenture or in aid of the exercise of any power granted
herein, including, without limitation, seeking recourse against any Guarantor or
(ii) proceed to protect and enforce any other proper remedy, including, without
limitation, seeking recourse against any Guarantor. No recovery of any such
judgment upon any property of the Company or any Guarantor shall affect or
impair any rights, powers or remedies of the Trustee or the Holders.
Section 5.04. Trustee May File Proofs of Claims. In case of the
---------------------------------
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon the Securities,
including each Guarantor or the property of the Company or of such other obligor
or their creditors, the Trustee (irrespective of whether the principal of the
Securities shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Trustee shall have made any demand
on the Company for the payment of overdue principal or interest) shall be
entitled and empowered, by intervention in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of principal,
premium, if any, and interest owing and unpaid in respect of the Securities
and to file such other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for the
reasonable compensation, fees, expenses, disbursements and advances of the
Trustee, its agents and counsel) and of the Holders allowed in such
judicial proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any Custodian, in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 6.07 hereof.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
Section 5.05. Trustee May Enforce Claims Without Possession of
------------------------------------------------
Securities. All rights of action and claims under this Indenture, the Securities
- ----------
or any Security Guarantee may be prosecuted and enforced by the Trustee without
the possession of any of the Securities or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name and as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, fees, expenses,
41
<PAGE>
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
Section 5.06. Application of Money Collected. Any money collected by
------------------------------
the Trustee pursuant to this Article Five shall be applied in the following
order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal, premium, if any, or
interest, upon presentation of the Securities and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
First: to the Trustee for amounts due under Section 6.07;
Second: to Holders for interest accrued on the Securities, ratably,
without preference or priority of any kind, according to the amounts
due and payable on the Securities for interest;
Third: to Holders for principal and premium, if any, owing under the
Securities, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Securities for
principal and premium, if any; and
Fourth: the balance, if any, to the Company.
The Trustee, upon prior written notice to the Company, may fix a
record date and payment date for any payment to Securityholders pursuant to this
Section 5.06.
Section 5.07. Limitation on Suits. No Holder of any Securities shall
-------------------
have any right to institute any proceeding, judicial or otherwise, with respect
to this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless (a) such Holder has previously given written
notice to the Trustee of a continuing Event of Default; (b) the Holders of not
less than 25% in principal amount of the Outstanding Securities shall have made
written request to the Trustee to institute proceedings in respect of such Event
of Default in its own name as Trustee hereunder; (c) such Holder or Holders have
offered to the Trustee reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request; (d) the Trustee for
15 days after its receipt of such notice, request and offer of indemnity has
failed to institute any such proceeding; and (e) no direction inconsistent with
such written request has been given to the Trustee during such 15-day period by
the Holders of a majority in aggregate principal amount of the Outstanding
Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture, any Security or any Security Guarantee to affect, disturb or
prejudice the rights of any other Holders, or to obtain or to seek to obtain
priority or preference over any other Holders or to enforce any right under this
Indenture, any Security or any Security Guarantee, except in the manner provided
in this Indenture and for the equal and ratable benefit of all the Holders.
Section 5.08. Unconditional Right of Holders To Receive Principal,
----------------------------------------------------
Premium and Interest. Notwithstanding any other provision in this Indenture,
- --------------------
each Holder of a Security shall have the right, which is absolute and
unconditional, to receive cash payment of the principal of, premium, if any, and
(subject to Section 3.07 hereof) interest on such Security on the respective
42
<PAGE>
Stated Maturities expressed in such Security (or, in the case of redemption, a
Change of Control Offer or Asset Sale Offer, on the Redemption Date, Change of
Control Purchase Date or Asset Sale Offer Purchase Date, respectively) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
Section 5.09. Restoration of Rights and Remedies. If the Trustee or
----------------------------------
any Holder has instituted any proceeding to enforce any right or remedy under
this Indenture, any Security or any Security Guarantee and such proceeding has
been discontinued or abandoned for any reason, or has been determined adversely
to the Trustee or to such Holder, then and in every such case the Company, each
of the Guarantors, the Trustee and the Holders shall, subject to any
determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
Section 5.10. Rights and Remedies Cumulative. No right or remedy
------------------------------
herein conferred upon or reserved to the Trustee or to the Holders is intended
to be exclusive of any other right or remedy, and every right and remedy shall,
to the extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 5.11. Delay or Omission Not Waiver. No delay or omission of
----------------------------
the Trustee or of any Holder of any Security to exercise any right or remedy
accruing upon any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article Five or by law to the Trustee or to
the Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
Section 5.12. Control by Majority. The Holders of a majority in
-------------------
aggregate principal amount of the Outstanding Securities shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee, provided, however, that:
(a) such direction shall not be in conflict with any rule of law or
with this Indenture, any Security or any Security Guarantee or expose the
Trustee to personal liability; and
(b) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
Section 5.13. Waiver of Past Defaults. The Holders of not less than a
-----------------------
majority in aggregate principal amount of the Outstanding Securities may on
behalf of the Holders of all the Securities waive any past Default hereunder and
its consequences, except a Default (a) in the payment of the principal of,
premium, if any, or interest on any Security or (b) in respect of a covenant or
provision hereof which under Article Nine cannot be modified or amended without
the consent of the Holder of each Outstanding Security affected thereby.
43
<PAGE>
Upon any such waiver, such Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereon.
Section 5.14. Undertaking for Costs. All parties to this Indenture
---------------------
agree, and each Holder of any Security by his acceptance thereof shall be deemed
to have agreed, that any court may in its discretion require, in any suit for
the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken, suffered or omitted by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay the costs
of such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section 5.14 shall not apply to
any suit instituted by the Trustee, to any suit instituted by any Holder, or
group of Holders, holding in the aggregate more than 10% in principal amount of
the Outstanding Securities, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of, premium, if any, or interest on
any Security on or after the respective Stated Maturities expressed in such
Security (or, in the case of redemption, a Change of Control Offer or Asset Sale
Offer, on or after the Redemption Date, Change of Control Purchase Date or Asset
Sale Offer Purchase Date, respectively).
Section 5.15. Waiver of Stay, Extension or Usury Laws. Each of the
---------------------------------------
Company and the Guarantors covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law or any
usury or other law wherever enacted, now or at any time hereafter in force,
which would prohibit or forgive the Company or any Guarantor from paying all or
any portion of the principal of, premium, if any, or interest on the Securities
contemplated herein or in the Securities or which may affect the covenants or
the performance of this Indenture; and each of the Company and the Guarantors
(to the extent that it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
ARTICLE SIX
THE TRUSTEE
Section 6.01. Certain Duties and Responsibilities
-----------------------------------
(a) Except during the continuance of an Event of Default, (1) the
Trustee undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and (2)
in the absence of bad faith on its part, the Trustee may conclusively rely,
as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee
and conforming to the requirements of this Indenture; but in the case of
any such certificates or opinions which by the provisions hereof are
specifically required to be furnished to the Trustee, the Trustee shall be
under a
44
<PAGE>
duty to examine the same to determine whether or not they conform to the
requirements of this Indenture.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as
a prudent person would exercise or use under the circumstances in the
conduct of such person's own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that no provision of
this Indenture shall require the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured
to it.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of
this Section 6.01.
Section 6.02. Notice of Defaults. Within 90 days after the
-------------------
occurrence of any Default, the Trustee shall transmit by mail to all Holders, as
their names and addresses appear in the Security Register, notice of such
Default hereunder known to the Trustee, unless such Default shall have been
cured or waived; provided, however, that, except in the case of a Default in the
payment of the principal of, premium, if any, or interest on any Security, the
Trustee shall be protected in withholding such notice if and so long as a trust
committee of Responsible Officers of the Trustee in good faith determines that
the withholding of such notice is in the interest of the Holders.
Section 6.03. Certain Rights of Trustee. Subject to Section 6.01
--------------------------
hereof and the provisions of Section 315 of the Trust Indenture Act:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors of the Company or any Guarantor may be
sufficiently evidenced by a Board Resolution thereof;
(c) the Trustee may consult with counsel and any written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon in accordance
with such advice or Opinion of Counsel;
45
<PAGE>
(d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by the Trustee in
compliance with such request or direction;
(e) the Trustee shall not be liable for any action taken or omitted
by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture other than
any liabilities arising out of its own negligence;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
approval, appraisal, bond, debenture, note, coupon, security, other
evidence of indebtedness or other paper or document unless requested in
writing so to do by the Holders of not less than a majority in aggregate
principal amount of the Securities then Outstanding; provided, however,
that, if the payment within a reasonable time to the Trustee of the costs,
expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to
the Trustee by the security afforded to it by the terms of this Indenture,
the Trustee may require reasonable indemnity against such expenses or
liabilities as a condition to proceeding; the reasonable expenses of every
such investigation shall be paid by the Company or, if paid by the Trustee
or any predecessor Trustee, shall be repaid by the Company upon demand;
provided, further, however, the Trustee in its discretion may make such
further inquiry or investigation into such facts or matters as it may deem
fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney; and
(g) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
Section 6.04. Trustee Not Responsible for Recitals, Dispositions of
-----------------------------------------------------
Securities or Application of Proceeds Thereof. The recitals contained herein and
- ----------------------------------------------
in the Securities, except the Trustee's certificates of authentication, shall be
taken as the statements of the Company and the Guarantors, and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Securities or of any Security Guarantee except that the Trustee represents that
it is duly authorized to execute and deliver this Indenture, authenticate the
Securities and perform its obligations hereunder and that the statements made by
it in a Statement of Eligibility and Qualification on Form T-1, if any, to be
supplied to the Company are true and accurate subject to the qualifications set
forth therein. The Trustee shall not be accountable for the use or application
by the Company of Securities or the proceeds thereof.
Section 6.05. Trustee and Agents May Hold Securities; Collections;
----------------------------------------------------
Etc. The Trustee, any Paying Agent, Registrar or any other agent of the Company,
- ----
in its individual or any
46
<PAGE>
other capacity, may become the owner or pledgee of Securities, with the same
rights it would have if it were not the Trustee, Paying Agent, Registrar or such
other agent and, subject to Section 6.08 hereof and Sections 310 and 311 of the
Trust Indenture Act, may otherwise deal with the Company and receive, collect,
hold and retain collections from the Company with the same rights it would have
if it were not the Trustee, Paying Agent, Registrar or such other agent.
Section 6.06. Money Held in Trust. All moneys received by the
--------------------
Trustee shall, until used or applied as herein provided, be held in trust for
the purposes for which they were received, but need not be segregated from other
funds except to the extent required herein or by law. The Trustee shall not be
under any liability for interest on any moneys received by it hereunder.
Section 6.07. Compensation and Indemnification of Trustee and Its
---------------------------------------------------
Prior Claim. The Company and each Guarantor covenant and agree:
- -----------
(a) to pay to the Trustee from time to time, and the Trustee shall
be entitled to, reasonable compensation for all services rendered by it
hereunder (which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(b) to reimburse the Trustee and each predecessor Trustee upon its
request for all reasonable expenses, fees, disbursements and advances
incurred or made by or on behalf of it in accordance with any of the
provisions of this Indenture (including the reasonable compensation, fees,
and the expenses and disbursements of its counsel and of all agents and
other persons not regularly in its employ), except any such expense,
disbursement or advance as may arise from its negligence or bad faith; and
(c) to indemnify the Trustee and each predecessor Trustee for, and
to hold it harmless against, any loss, liability or expense incurred
without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of this Indenture or the
trusts hereunder and its duties hereunder, including enforcement of this
The obligations of the Company and each Guarantor under this Section 6.07
to compensate and indemnify the Trustee and each predecessor Trustee and to
pay or reimburse the Trustee and each predecessor Trustee for expenses,
fees, disbursements and advances shall constitute an additional obligation
hereunder and shall survive the satisfaction and discharge of this
Indenture. To secure the obligations of the Company and of each Guarantor
to the Trustee under this Section 6.07, the Trustee shall have a prior Lien
upon all property and funds held or collected by the Trustee as such,
except funds and property paid by the Company or any Guarantor and held in
trust for the benefit of the Holders of particular Securities or for the
purchase price or redemption price of any Securities to be purchased
pursuant to Section 10.10 or 10.15 or to be redeemed pursuant to Article
Eleven.
Section 6.08. Conflicting Interests. The Trustee shall be subject to
----------------------
and comply with the provisions of Section 310(b) of the Trust Indenture Act.
Section 6.09. Corporate Trustee Required; Eligibility. There shall
----------------------------------------
at all times be a Trustee hereunder which shall be eligible to act as Trustee
under Trust Indenture Act Sections
47
<PAGE>
310(a)(1) and (2) and which shall have a combined capital and surplus of at
least $100,000,000, and have a Corporate Trust Office in the Borough of
Manhattan in The City of New York, State of New York. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of any Federal, state, territorial or District of Columbia
supervising or examining authority, then for the purposes of this Section 6.09,
the combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 6.09, the Trustee shall resign
immediately in the manner and with the effect hereinafter specified in this
Article Six.
Section 6.10. Resignation and Removal; Appointment of Successor
-------------------------------------------------
Trustee
- -------
(a) No resignation or removal of the Trustee and no appointment of
a successor Trustee pursuant to this Article Six shall become effective
until the acceptance of appointment by the successor Trustee under Section
6.11.
(b) The Trustee, or any trustee or trustees hereinafter appointed,
may at any time resign by giving written notice thereof to the Company at
least 20 Business Days prior to the date of such proposed resignation.
Upon receiving such notice of resignation, the Company shall promptly
appoint a successor Trustee by written instrument executed by authority of
the Board of Directors of the Company, a copy of which shall be delivered
to the resigning Trustee and a copy to the successor Trustee. If an
instrument of acceptance by a successor Trustee shall not have been
delivered to the Trustee within 20 Business Days after the giving of such
notice of resignation, the resigning Trustee may, or any Holder who has
been a bona fide Holder of a Security for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee. Such
court may thereupon, after such notice, if any, as it may deem proper,
appoint a successor Trustee.
(c) The Trustee may be removed at any time by an Act of the Holders
of a majority in principal amount of the Outstanding Securities, delivered
to the Trustee and to the Company.
(d) If at any time: (1) the Trustee shall fail to comply with the
provisions of Section 310(b) of the Trust Indenture Act in accordance with
Section 6.08 hereof after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Security for at least six
months, or (2) the Trustee shall cease to be eligible under Section 6.09
hereof and shall fail to resign after written request therefor by the
Company or by any Holder who has been a bona fide Holder of a Security for
at least six months, or (3) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or
of its property shall be appointed or any public officer shall take charge
or control of the Trustee or of its property or affairs for the purpose or
rehabilitation, conservation or liquidation, then, in any case, (i) the
Company by a Board Resolution may remove the Trustee, or (ii) the Holder of
any Security who has been a bona fide Holder of a Security for at least six
months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Trustee
and the
48
<PAGE>
appointment of a successor Trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, remove the Trustee and
appoint a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause,
the Company, by a Board Resolution of its Board of Directors, shall
promptly appoint a successor Trustee. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee shall be appointed by Act of the Holders of a majority in
principal amount of the Outstanding Securities delivered to the Company and
the retiring Trustee, the successor Trustee so appointed shall, forthwith
upon its acceptance of such appointment, become the successor Trustee and
supersede the successor Trustee appointed by the Company. If no successor
Trustee shall have been so appointed by the Company or the Holders of the
Securities and accepted appointment in the manner hereinafter provided, the
Holder of any Security who has been a bona fide Holder for at least six
months may on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor
Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee by
mailing written notice of such event by first-class mail, postage prepaid,
to the Holders of Securities as their names and addresses appear in the
Security Register. Each notice shall include the name of the successor
Trustee and the address of its Corporate Trust Office.
Section 6.11. Acceptance of Appointment by Successor. Every
---------------------------------------
successor Trustee appointed hereunder shall execute, acknowledge and deliver to
the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee as if originally named as Trustee hereunder; but,
nevertheless, on the written request of the Company or the successor Trustee,
upon payment of amounts due it pursuant to Section 6.07, such retiring Trustee
shall duly assign, transfer and deliver to the successor Trustee all moneys and
property at the time held by it hereunder and shall execute and deliver an
instrument transferring to such successor Trustee all the rights, powers, duties
and obligations of the retiring Trustee. Upon request of any such successor
Trustee, the Company shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such rights
and powers. Any Trustee ceasing to act shall, nevertheless, retain a prior claim
upon all property or funds held or collected by such Trustee to secure any
amounts then due it pursuant to the provisions of Section 6.07.
No successor Trustee with respect to the Securities shall accept
appointment as provided in this Section 6.11 unless at the time of such
acceptance such successor Trustee shall be eligible to act as Trustee under this
Article Six.
Upon acceptance of appointment by any successor Trustee as provided in
this Section 6.11, the successor shall give notice thereof to the Holders of the
Securities, by mailing such notice to such Holders at their addresses as they
shall appear on the Security Register. If the acceptance of appointment is
substantially contemporaneous with the resignation, then the notice
49
<PAGE>
called for by the preceding sentence may be combined with the notice called for
by Section 6.10. If the Company fails to give such notice within 10 days after
acceptance of appointment by the successor Trustee, the successor Trustee shall
cause such notice to be given at the expense of the Company.
Section 6.12. Merger, Conversion, Amalgamation, Consolidation or
--------------------------------------------------
Succession to Business. Any corporation into which the Trustee may be merged or
- -----------------------
converted or with which it may be consolidated or amalgamated, or any
corporation resulting from any merger, conversion, amalgamation or consolidation
to which the Trustee shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder without the execution or filing of any paper
or any further act on the part of any of the parties hereto, provided such
corporation shall be eligible under this Article Six to serve as Trustee
hereunder.
In case at the time such successor to the Trustee under this Section
6.12 shall have succeeded to the trusts created by this Indenture any of the
Securities shall have been authenticated but not delivered, any such successor
to the Trustee may adopt the certificate of authentication of any predecessor
Trustee and deliver such Securities so authenticated; and, in case at that time
any of the Securities shall not have been authenticated, any successor to the
Trustee under this Section 6.12 may authenticate such Securities either in the
name of any predecessor hereunder or in the name of the successor Trustee; and
in all such cases such certificate shall have the full force which it is
anywhere in the Securities or in this Indenture provided that the certificate of
the Trustee shall have been authenticated.
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 7.01. Preservation of Information; Company To Furnish
-----------------------------------------------
Trustee Names and Addresses of Holders
- --------------------------------------
(a) The Trustee shall preserve the names and addresses of the
Securityholders and otherwise comply with TIA Section 312(a). If the
Trustee is not the Registrar, the Company shall furnish or cause the
Registrar to furnish to the Trustee before each Interest Payment Date, and
at such other times as the Trustee may request in writing, a list in such
form and as of such date as the Trustee may reasonably require of the names
and addresses of the Securityholders. Neither the Company nor the Trustee
shall be under any responsibility with regard to the accuracy of such list.
(b) The Company will furnish or cause to be furnished to the
Trustee (i) semi-annually, not more than 15 days after each Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of such Regular Record Date; and (ii)
at such other times as the Trustee may reasonably request in writing,
within 30 days after receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished;
50
<PAGE>
provided, however, that if and so long as the Trustee shall be the
Registrar, no such list need be furnished pursuant to this Subsection
7.01(b).
Section 7.02. Communications of Holders. Holders may communicate
-------------------------
with other Holders with respect to their rights under this Indenture or under
the Securities pursuant to Section 312(b) of the Trust Indenture Act. The
Company and the Trustee and any and all other persons benefited by this
Indenture shall have the protection afforded by Section 312(c) of the Trust
Indenture Act.
Section 7.03. Reports by Trustee. Within 60 day after May 15 of each
-------------------
year commencing with the first May 15 following the date of this Indenture, the
Trustee shall mail to all Holders, as their names and addresses appear in the
Security Register, a brief report dated as of such May 15, in accordance with,
and to the extent required under Section 313 of the Trust Indenture Act. At the
time of its mailing to Holders, a copy of each such report shall be filed by the
Trustee with the Company, the Commission and with each stock exchange on which
the Securities are listed. The Company shall notify the Trustee when the
Securities are listed on any stock exchange.
ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE OF ASSETS, ETC.
Section 8.01. Company May Consolidate, etc., Only on Certain Terms.
-----------------------------------------------------
(a) The Company shall not, in any transaction or series of related
transactions, merge or consolidate with or into, or sell, assign, convey,
transfer, lease or otherwise dispose of all or substantially all of its
properties and assets as an entirety to, any Person or Persons, and the
Company shall not permit any of the Restricted Subsidiaries to enter into
any such transaction or series of related transactions if such transaction
or series of related transactions, in the aggregate, would result in a
sale, assignment, conveyance, transfer, lease or other disposition of all
or substantially all of the properties and assets of the Company and the
Restricted Subsidiaries (determined on a consolidated basis for the Company
and the Restricted Subsidiary), to any Person or Persons, unless at the
time and after giving effect thereto:
(i) either (A)(1) if the transaction or transactions is a
merger or consolidation involving the Company, the Company shall be
the Surviving Person of such merger or consolidation or (2) if the
transaction or transactions is a merger or consolidation involving a
Restricted Subsidiary, such Restricted Subsidiary shall be the
Surviving Person of such merger or consolidation, or (B)(1) the
Surviving Person shall be a corporation organized and existing under
the laws of the United States of America, any State thereof or the
District of Columbia and (2)(x) in the case of a transaction involving
the Company, the Surviving Person shall expressly assume by a
supplemental indenture executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company under
the Securities and this Indenture and the Registration Rights
Agreement, and in each case, this Indenture and the Registration
Rights Agreement shall remain in full force and
51
<PAGE>
effect, or (y) in the case of a transaction involving a Restricted
Subsidiary that is a Guarantor, the Surviving Person shall expressly
assume by a supplemental indenture executed and delivered to the
Trustee, in form satisfactory to the Trustee, all the obligations of
such Restricted Subsidiary under its Security Guarantee and this
Indenture and the Registration Rights Agreement, and in each case,
this Indenture and the Registration Rights Agreement shall remain in
full force and effect;
(ii) immediately after giving effect to such transaction or
series of related transactions on a pro forma basis, no Default shall
have occurred and be continuing;
(iii) the Company, or the Surviving Person, as the case may
be, immediately after giving effect to such transaction or series of
related transactions on a pro forma basis (including, without
limitation, any Indebtedness incurred or anticipated to be incurred in
connection with or in respect of such transaction or series of
transactions), could incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) under Section 10.11; and (iv) immediately
after giving effect to such transaction or series of related
transactions on a pro forma basis, the Company, or the Surviving
Person, as the case may be, shall have a Consolidated Net Worth not
less than the Consolidated Net Worth of the Company immediately prior
to such transaction or series of related transactions.
(b) No Guarantor (other than a Guarantor whose Security Guarantee
is to be released in accordance with Section 13.03) shall, in any
transaction or series of related transactions, consolidate with or merge
with or into another Person, whether or not such Person is affiliated with
such Guarantor and whether or not such Guarantor is the Surviving Person,
unless:
(i) the Surviving Person (if other than such Guarantor) is a
corporation organized and validly existing under the laws of the
United States, any State thereof or the District of Columbia;
(ii) the Surviving Person (if other than such Guarantor)
expressly assumes by a supplemental indenture all the obligations of
such Guarantor under its Security Guarantee and the performance and
observance of every covenant of this Indenture and the Registration
Rights Agreement to be performed or observed by such Guarantor;
(iii) immediately after giving effect to such transaction or
series of related transactions on a pro forma basis, no Default shall
have occurred and be continuing; and
(iv) immediately after giving effect to such transaction or
series of related transactions on a pro forma basis, such Guarantor,
or the Surviving Person, as the case may be, shall have a Consolidated
Net Worth not less than the Consolidated Net Worth of such Guarantor
immediately prior to such transaction or series of related
transactions.
52
<PAGE>
(c) In connection with any consolidation, merger, transfer, lease
or other disposition contemplated hereby, the Company shall deliver, or
cause to be delivered, to the Trustee, in form and substance reasonably
satisfactory to the Trustee, an Officers' Certificate and an Opinion of
counsel, each stating that such consolidation, merger, transfer, lease or
other disposition and the supplemental indenture in respect thereof comply
with the requirements of this Indenture. In addition, each Guarantor, in
the case of a transaction described in paragraph (a) of this Section 8.01,
unless it is the other party to the transaction or unless its Security
Guarantee will be released and discharged in accordance with its terms as a
result of the transaction, will be required to confirm, by supplemental
indenture, that its Security Guarantee will continue to apply to the
obligations of the Company or the Surviving Person under the Indenture.
Section 8.02. Successor Substituted. Upon any consolidation or
----------------------
merger of the Company or any Guarantor or any transfer of all or substantially
all of the assets of the Company in accordance with Section 8.01, in which the
Company or a Guarantor is not the Surviving Person, the Surviving Person shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture and the Securities and the Registration Rights
Agreement or such Guarantor under this Indenture, the Security Guarantee of such
Guarantor and the Registration Rights Agreement, as the case may be, with the
same effect as if such successor corporation had been named as the Company or
Guarantor, as the case may be, herein and therein; and thereafter, except in the
case of (a) a lease or (b) any sale, assignment, conveyance, transfer, lease or
other disposition to a Restricted Subsidiary of the Company or such Guarantor,
the Company shall be discharged from all obligations and covenants under this
Indenture and the Securities and such Guarantor shall be discharged from all
obligations and covenants under this Indenture and the Security Guarantee of
such Guarantor, as the case may be.
For all purposes of this Indenture and the Securities (including the
provisions of this Article Eight and the covenants described in Sections 10.11,
10.13 and 10.16), Subsidiaries of any Surviving Person shall, upon such
transaction or series of related transactions, become Restricted Subsidiaries
unless and until designated as Unrestricted Subsidiaries pursuant to and in
accordance with Section 10.20, and all Indebtedness, and all Liens on property
or assets, of the Company and the Restricted Subsidiaries in existence
immediately prior to such transaction or series of related transactions will be
deemed to have been incurred upon such transaction or series of related
transactions.
ARTICLE NINE
SUPPLEMENTAL INDENTURES AND WAIVERS
Section 9.01. Supplemental Indentures, Agreements and Waivers Without
-------------------------------------------------------
Consent of Holders. Without the consent of any Holders, the Company and the
- -------------------
Guarantors, when authorized by a Board Resolution of the Board of Directors of
the Company and each Guarantor, and the Trustee, at any time and from time to
time, may amend, waive, modify or supplement this Indenture or the Securities or
the Security Guarantees for any of the following purposes:
53
<PAGE>
(a) to evidence the succession of another person to the Company or
a Guarantor, and the assumption by any such successor of the covenants of
the Company or such Guarantor herein and in the Securities and/or in any
Security Guarantee, as the case may be;
(b) to add to the covenants of the Company or any Guarantor for the
benefit of the Holders, or to surrender any right or power conferred upon
the Company or any Guarantor, as applicable, herein, in the Securities or
in any Security Guarantee, as the case may be;
(c) to cure any ambiguity, to correct or supplement any provision
herein, in the Securities or in any Security Guarantee which may be
defective or inconsistent with any other provision herein or to make any
other provisions with respect to matters or questions arising under this
Indenture, the Securities or any Security Guarantee; provided, however,
that, in each case, such provisions shall not materially adversely affect
the legal rights of the Holders;
(d) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust
Indenture Act, as contemplated by Section 9.05 hereof or otherwise;
(e) to add a Guarantor pursuant to the requirements of Section
10.17 hereof or otherwise;
(f) to evidence and provide the acceptance of the appointment of a
successor Trustee hereunder;
(g) to mortgage, pledge, hypothecate or grant a security interest
in any property or assets in favor of the Trustee for the benefit of the
Holders as security for the payment and performance of the Indenture
Obligations; or
(h) to make any other change that does not materially adversely
affect the legal rights of any Holder;
provided, however, that the Company has delivered to the Trustee an Opinion
of Counsel stating that such change, agreement or waiver does not
materially adversely affect the legal rights of any Holder.
Section 9.02. Supplemental Indentures, Agreements and Waivers with
----------------------------------------------------
Consent of Holders. With the written consent of the Holders of not less than a
- -------------------
majority in aggregate principal amount of the Outstanding Securities delivered
to the Company, each Guarantor and the Trustee, the Company and each Guarantor
when authorized by a Board Resolution, together with the Trustee, may amend,
waive, modify or supplement any other provision of this Indenture or the
Securities or the Security Guarantees; provided, however, that no such
amendment, waiver, modification or supplement may, without the written consent
of the Holder of each Outstanding Security affected thereby:
(i) change the maturity of the principal of or any installment
of interest on any such Security or alter the optional redemption or
repurchase provisions of any such Security or this Indenture in a
manner adverse to the Holders of the Securities;
54
<PAGE>
(ii) reduce the principal amount of (or the premium) of any
such Security;
(iii) reduce the rate of or extend the time for payment of
interest on any such Security;
(iv) change the place or currency of payment of principal of
(or premium) or interest on any such Security;
(v) modify any provisions of this Indenture relating to the
waiver of past defaults (other than to add sections to this Indenture
or the Securities subject thereto) or the right of the Holders of
Securities to institute suit for the enforcement of any payment on or
with respect to any such Security or any Security Guarantee or the
modification and amendment provisions of this Indenture and the
Securities (other than to add sections to this Indenture or the
Securities which may not be amended, supplemented or waived without
the consent of each Holder therein affected);
(vi) reduce the percentage of the principal amount of
Outstanding Securities necessary for amendment to or waiver of
compliance with any provision of this Indenture or the Securities or
for waiver of any Default in respect thereof;
(vii) waive a default in the payment of principal of, premium,
if any, or interest on, or redemption payment with respect to, the
Securities (except a rescission of acceleration of the Securities by
the holders thereof as provided in this Indenture and a waiver of the
payment default that resulted from such acceleration);
(viii) modify the ranking or priority of any Security or the
Security Guarantee of any Guarantor;
(ix) modify the provisions of any covenant (or the related
definitions) in this Indenture requiring the Company to make and
consummate a Change of Control Offer upon a Change of Control or an
Asset Sale Offer in respect of an Asset Sale or modify any of the
provisions or definitions with respect thereto in a manner materially
adverse to the Holders of Securities affected thereby otherwise than
in accordance with this Indenture; or
(x) release any Guarantor from any of its obligations under
its Security Guarantee or this Indenture otherwise than in accordance
with this Indenture.
Upon the written request of the Company and each Guarantor accompanied
by a copy of a Board Resolution of the Board of Directors of each of them
authorizing the execution of any such supplemental indenture or other agreement,
instrument or waiver, and upon the filing with the Trustee of evidence of the
consent of Holders as aforesaid, the Trustee shall join with the Company and
each Guarantor in the execution of such supplemental indenture or other
agreement, instrument or waiver.
It shall not be necessary for any Act of Holders under this Section
9.02 to approve the particular form of any proposed supplemental indenture or
other agreement, instrument or waiver, but it shall be sufficient if such Act
shall approve the substance thereof.
55
<PAGE>
Section 9.03. Execution of Supplemental Indentures, Agreements and
----------------------------------------------------
Waivers. In executing, or accepting the additional trusts created by, any
- -------
supplemental indenture, agreement, instrument or waiver permitted by this
Article Nine or the modifications thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and (subject to Section
6.01 hereof) shall be fully protected in relying upon, an Opinion of Counsel and
an Officers' Certificate from each obligor under the Securities entering into
such supplemental indenture, agreement, instrument or waiver, each stating that
the execution of such supplemental indenture, agreement, instrument or waiver
(a) is authorized or permitted by this Indenture and (b) does not violate the
provisions of any agreement or instrument evidencing any other Indebtedness of
the Company, any Guarantor or any other Subsidiary of the Company. The Trustee
may, but shall not be obligated to, enter into any such supplemental indenture,
agreement, instrument or waiver which affects the Trustee's own rights, duties
or immunities under this Indenture, the Securities, any Security Guarantee or
otherwise.
Section 9.04. Effect of Supplemental Indentures. Upon the execution
----------------------------------
of any supplemental indenture under this Article Nine, this Indenture, the
Securities, if applicable, and/or the applicable Security Guarantee shall be
modified in accordance therewith, and such supplemental indenture shall form a
part of this Indenture, the Securities, if applicable, and/or the applicable
Security Guarantee, as the case may be, for all purposes; and every Holder of
Securities theretofore or thereafter authenticated and delivered hereunder shall
be bound thereby.
Section 9.05. Conformity with Trust Indenture Act. Every
------------------------------------
supplemental indenture executed pursuant to this Article Nine shall conform to
the requirements of the Trust Indenture Act as then in effect.
Section 9.06. Reference in Securities to Supplemental Indentures.
---------------------------------------------------
Securities authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article Nine may, and shall if required by the
Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Board of Directors of the Company, to any such supplemental indenture may be
prepared and executed by the Company and each Guarantor and authenticated and
delivered by the Trustee upon a Company Order in exchange for Outstanding
Securities.
Section 9.07. Record Date. The Company may, but shall not be
------------
obligated to, fix, a record date for the purpose of determining the Holders
entitled to consent to any supplemental indenture, agreement or instrument or
any waiver, and shall promptly notify the Trustee of any such record date. If a
record date is fixed, those Persons who were Holders at such record date (or
their duly designated proxies), and only those Persons, shall be entitled to
consent to such supplemental indenture, agreement or instrument or waiver or to
revoke any consent previously given, whether or not such Persons continue to be
Holders after such record date.
Section 9.08. Revocation and Effect of Consents. Until an amendment
----------------------------------
or waiver becomes effective, a consent to it by a Holder of a Security is a
continuing consent by the Holder and every subsequent Holder of a Security or
portion of a Security that evidences the same debt as the consenting Holder's
Security, even if a notation of the consent is not made on any Security.
However, any such Holder, or subsequent Holder, may revoke the consent as to his
Security or
56
<PAGE>
portion of a Security if the Trustee receives the notice of revocation before
the date the amendment or waiver becomes effective. An amendment or waiver shall
become effective in accordance with its terms and thereafter bind every Holder.
ARTICLE TEN
COVENANTS
Section 10.01. Payment of Principal, Premium and Interest. The
-------------------------------------------
Company shall duly and punctually pay the principal of, premium, if any, and
interest on the Securities in accordance with the terms of the Securities, this
Indenture and the Registration Rights Agreement.
Section 10.02. Maintenance of Office or Agency. The Company shall
--------------------------------
maintain in the Borough of Manhattan in The City of New York, State of New York,
an office or agency where Securities may be presented or surrendered for
payment, where Securities may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. The office of the Trustee at its
Corporate Trust Office shall be such office or agency of the Company, unless the
Company shall designate and maintain some other office or agency for one or more
of such purposes. The Company shall give prompt written notice to the Trustee of
any change in the location of any such office or agency. If at any time the
Company shall fail to maintain any such required office or agency or shall fail
to furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee, and the Company hereby appoints the Trustee as its agent to receive all
such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies (in or outside of The City of New York, State of New York)
where the Securities may be presented or surrendered for any or all such
purposes, and may from time to time rescind such designation; provided, however,
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in The City of New York, State
of New York for such purposes. The Company shall give prompt written notice to
the Trustee of any such designation or rescission and any change in the location
of any such other office or agency.
Section 10.03. Money for Security Payments To Be Held in Trust. If
-----------------------------------------------
the Company, any Guarantor or any of their respective Affiliates shall at any
time act as Paying Agent, it shall, and shall cause such Guarantor or Affiliate
to, if applicable, on or before each due date of the principal of, premium, if
any, or interest on any of the Securities, segregate and hold in trust for the
benefit of the Holders entitled thereto a sum sufficient to pay the principal,
premium, if any, or interest so becoming due until such sums shall be paid to
such persons or otherwise disposed of as herein provided, and will promptly
notify the Trustee of its action or failure so to act. If the Company is not
acting as Paying Agent, the Company shall, on or before each due date of the
principal of, premium, if any, or interest on, any Securities, deposit with a
Paying Agent a sum in same day funds sufficient to pay the principal, premium,
if any, or interest so becoming due, such sum to be held in trust for the
benefit of the Holders entitled to such principal, premium or interest, and
(unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of such action or any failure so to act. If the Company is not acting as
Paying Agent, the Company
57
<PAGE>
shall cause each Paying Agent other than the Trustee to execute and deliver to
the Trustee an instrument in which such Paying Agent will agree with the
Trustee, subject to the provisions of this Section 10.03, that such Paying Agent
will:
(a) hold all sums held by it for the payment of the principal of,
premium, if any, or interest on Securities in trust for the benefit of the
Holders entitled thereto until such sums shall be paid to such Holders or
otherwise disposed of as herein provided;
(b) give the Trustee notice of any Default by the Company or any
Guarantor (or any other obligor upon the Securities) in the making of any
payment of principal of, premium, if any, or interest on the Securities;
(c) at any time during the continuance of any such Default, upon
the written request of the Trustee, forthwith pay to the Trustee all sums
so held in trust by such Paying Agent; and
(d) acknowledge, accept and agree to comply in all aspects with the
provisions of this Indenture relating to the duties, rights and liabilities
of such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent will be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on any Security and remaining unclaimed for two years after such
principal, premium, if any, or interest has become due and payable shall be paid
to the Company upon receipt of a Company Request therefor, or (if then held by
the Company) will be discharged from such trust; and the Holder of such Security
will thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, will thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, at the option of the Company
in the New York Times or the Wall Street Journal (national edition), notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining shall be repaid to the Company.
Section 10.04. Corporate Existence. Subject to Article Eight, the
--------------------
Company shall do or cause to be done all things necessary to preserve and keep
in full force and effect the corporate existence, rights (charter and
statutory), licenses and franchises of the Company and each of the Restricted
Subsidiaries; provided, however, that the Company shall not be required to
preserve any such right, license or franchise if the Board of Directors of the
Company shall determine that the preservation thereof is no longer desirable in
the conduct of the business of the
58
<PAGE>
Company and the Restricted Subsidiaries as a whole and that the loss thereof is
not adverse in any material respect to the Holders; provided, further, however,
that the foregoing shall not prohibit a sale, transfer or conveyance of a
Restricted Subsidiary of the Company or any of its assets in compliance with the
terms of this Indenture.
Section 10.05. Payment of Taxes and Other Claims. The Company shall
---------------------------------
pay or discharge or cause to be paid or discharged, before the same shall become
delinquent, (a) all material taxes, assessments and governmental charges levied
or imposed (i) upon the Company or any of the Restricted Subsidiaries or (ii)
upon the income, profits or property of the Company or any of the Restricted
Subsidiaries and (b) all lawful claims for labor, materials and supplies, which,
if unpaid, could reasonably be expected to become a Lien upon the property of
the Company or any of the Restricted Subsidiaries; provided, however, that the
Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings properly
instituted and diligently conducted and for which appropriate provision has been
made.
Section 10.06. Maintenance of Properties. The Company shall cause all
-------------------------
material properties owned or leased by the Company or any of the Restricted
Subsidiaries or used or held for use in the conduct of their respective
businesses to be maintained and kept in good condition, repair and working order
and supplied with all necessary equipment and shall cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times; provided, however, that nothing in this Section 10.06 shall
prevent the Company from discontinuing the maintenance of any of such properties
if such discontinuance is, in the judgment of the Company (as evidenced by a
Board Resolution of the Board of Directors of the Company), desirable in the
conduct of its business or the business of any of the Restricted Subsidiaries
and is not disadvantageous in any material respect to the Holders.
Section 10.07. Insurance. The Company shall maintain, and shall cause
---------
the Restricted Subsidiaries to maintain, insurance with responsible carriers
against such risks and in such amounts, and with such deductibles, retentions,
self-insured amounts and co-insurance provisions, as are customarily carried by
similar businesses of similar size, including property and casualty loss, and
workers' compensation insurance.
Section 10.08. Books and Records. The Company shall keep proper books
-----------------
of record and account, in which full and correct entries shall be made of all
financial transactions and the assets and business of the Company and each
Restricted Subsidiary of the Company in compliance with GAAP.
Section 10.09. Provision of Financial Statements. For so long as the
---------------------------------
Securities are outstanding, whether or not the Company or any Guarantor is
subject to Section 13(a) or 15(d) of the Exchange Act, or any successor
provision thereto, the Company and the Guarantors shall file with the Commission
(if permitted by Commission practice and applicable law and regulations) the
annual reports, quarterly reports and other documents which the Company or the
Guarantors would have been required to file with the Commission pursuant to such
Section 13(a) or 15(d) or any successor provision thereto if the Company or the
Guarantors were so subject, such documents to
59
<PAGE>
be filed with the Commission on or prior to the respective dates (the "Required
Filing Dates") by which the Company or the Guarantors would have been required
so to file such documents if the Company or the Guarantors were so subject. The
Company and the Guarantors shall also in any event (a) within 15 days after each
Required Filing Date (whether or not permitted or required to be filed with the
Commission) (i) transmit (or cause to be transmitted) by mail to all Holders of
Securities, as their names and addresses appear in the Security Register,
without cost to such Holders, and (ii) file with the Trustee, copies of the
annual reports, quarterly reports and other documents which the Company or the
Guarantors are required to file with the Commission pursuant to the preceding
sentence, or, if such filing is not so permitted, information and data of a
similar nature, and (b) if, notwithstanding the preceding sentence, filing such
documents by the Company and the Guarantors with the Commission is not permitted
by Commission practice or applicable law or regulations, promptly upon written
request supply copies of such documents to any Holder of Securities. In
addition, for so long as any Securities remain outstanding, the Company and the
Guarantors shall furnish to the Holders of Securities and to securities analysts
and prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act, and, to any
beneficial holder of Securities, if not obtainable from the Commission,
information of the type that would be filed with the Commission pursuant to the
foregoing provisions, upon the request of any such holder.
Section 10.10. Change of Control. Following the occurrence of a
-----------------
Change of Control (the date of such occurrence, the "Change of Control Date"),
the Company shall notify the Holders of Securities in writing of such occurrence
and shall make an offer to purchase (the "Change of Control Offer"), within 20
days after the Change of Control Date, all Securities then Outstanding at a
purchase price in cash equal to 101% of the principal amount thereof, plus
accrued and unpaid interest thereon, if any, to the date fixed for purchase of
Securities validly tendered and not withdrawn, which date shall not be earlier
than the 20th Business Day following the mailing of the Change of Control Offer
or later than the last day such Change of Control Offer is required to remain
open by applicable law (the "Change of Control Purchase Date"). Failure to mail
the notice of a Change of Control Offer on the date specified below or to have
satisfied the foregoing condition precedent by the date that such notice is
required to be mailed will constitute a covenant Default under Section 5.01(c).
Notice of a Change of Control Offer shall be mailed by the Company not
more than 20 days after the Change of Control Date to the Holders of Securities
at their last registered addresses with a copy to the Trustee and the Paying
Agent. The Change of Control Offer shall remain open from the time of mailing
for at least 20 Business Days or such longer period as may be required by
applicable law. The notice, which shall govern the terms of the Change of
Control Offer, shall include such disclosures as are required by law and shall
state:
(a) that the Change of Control Offer is being made pursuant to this
Section 10.10 and that all Securities tendered into the Change of Control
Offer will be accepted for payment; and that the Change of Control Offer
shall remain open for a period of 20 Business Days or such longer period as
may be required by applicable law.
(b) the purchase price (including the amount of accrued interest,
if any) for each Security, the Change of Control Purchase Date and the date
on which the Change of Control Offer expires;
60
<PAGE>
(c) that any Security not tendered for payment shall continue to
accrue interest in accordance with the terms thereof;
(d) that, unless the Company shall default in the payment of the
purchase price, any Security accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of Control
Purchase Date;
(e) that Holders electing to have Securities purchased pursuant to
a Change of Control Offer shall be required to surrender their Securities
to the Paying Agent at the address specified in the notice prior to 5:00
p.m., New York City time, on the Change of Control Purchase Date and must
complete any form letter of transmittal proposed by the Company and
acceptable to the Trustee and the Paying Agent;
(f) that Holders of Securities shall be entitled to withdraw their
election if the Paying Agent receives, not later than 5:00 p.m., New York
City time, on the Change of Control Purchase Date, a facsimile transmission
or letter setting forth the name of the Holders, the principal amount of
Securities the Holders delivered for purchase, the Security certificate
number (if any) and a statement that such Holder is withdrawing his
election to have such Securities purchased;
(g) that Holders whose Securities are purchased only in part shall
be issued Securities of like tenor equal in principal amount to the
unpurchased portion of the Securities surrendered;
(h) the instructions that Holders must follow in order to tender
their Securities; and
(i) information concerning the business of the Company, the most
recent annual and quarterly reports of the Company filed with the
Commission pursuant to the Exchange Act (or, if the Company is not
permitted to file any such reports with the Commission, the comparable
reports prepared pursuant to Section 10.09), a description of material
developments in the Company's business, information with respect to pro
forma historical financial position and results of operations after giving
effect to such Change of Control and such other information concerning the
circumstances and relevant facts regarding such Change of Control and
Change of Control Offer as would, in the good faith judgment of the
Company, be material to a Holder of Securities in connection with the
decision of such Holder as to whether or not it should tender Securities
pursuant to the Change of Control Offer.
On the Change of Control Purchase Date, the Company shall (i) accept
for payment Securities or portions thereof tendered pursuant to the Change of
Control Offer, (ii) deposit with the Paying Agent money, in immediately
available funds, sufficient to pay the purchase price of all Securities or
portions thereof so tendered and accepted and (iii) deliver to the Trustee the
Securities so accepted together with an Officers' Certificate setting forth the
Securities or portions thereof tendered to and accepted for payment by the
Company. The Paying Agent shall promptly mail or deliver to the Holders of
Securities so accepted payment in an amount equal to the purchase price, and the
Trustee shall promptly authenticate and mail or deliver to such Holders a new
Security of like tenor equal in principal amount to any unpurchased portion of
the Security surrendered. Any
61
<PAGE>
Securities not so accepted shall be promptly mailed or delivered by the Company
to the Holder thereof. The Company shall publicly announce the results of the
Change of Control Offer not later than the first Business Day following the
Change of Control Purchase Date. The Company shall comply, to the extent
applicable, with the requirements of Section 14(e) of the Exchange Act, and any
other applicable securities laws or regulations and any applicable requirements
of any securities exchange on which the Securities are listed in connection with
the repurchase of Securities pursuant to a Change of Control Offer, and any
violations of this Section 10.10 occurring as a result of such compliance shall
not be deemed a Default.
Section 10.11. Limitation on Indebtedness. The Company shall not, and
--------------------------
shall not cause or permit any of the Restricted Subsidiaries to, directly or
indirectly, create, incur, assume, issue, guarantee or in any manner become
liable for or with respect to, contingently or otherwise (in each case, to
"incur"), the payment of any Indebtedness (including any Acquired Indebtedness);
provided, however, that (i) the Company may incur Indebtedness (including
Acquired Indebtedness) and (ii) a Restricted Subsidiary may incur Acquired
Indebtedness, if, in either case, immediately after giving pro forma effect
thereto, the Consolidated Fixed Charge Coverage Ratio of the Company is at least
equal to (i) if the date of such incurrence is on or prior to December 31, 2000,
2.00:1.0, and (ii) if the date of such incurrence is after December 31, 2000,
2.25:1.0.
Notwithstanding the foregoing, the Company and, to the extent
specifically set forth below, the Restricted Subsidiaries may incur each and all
of the following (collectively, "Permitted Indebtedness"):
(i) Indebtedness of the Company under the New Revolving Credit
Facility in an aggregate principal amount at any time outstanding not
to exceed $20.0 million (it being understood that additional
Indebtedness may be incurred under the New Revolving Credit Facility
pursuant to the other provisions of this Section 10.11);
(ii) Indebtedness of the Company or any Guarantor under the
Indenture and the Securities;
(iii) Indebtedness of the Company or any Restricted Subsidiary
not otherwise referred to in this paragraph that is outstanding on the
Issue Date, except Indebtedness to be repaid as described under "Use
of Proceeds" in the Offering Memorandum;
(iv) Indebtedness of the Company or any Restricted Subsidiary
in respect of performance bonds, bankers' acceptances, letters of
credit of the Company or any Restricted Subsidiary and surety bonds
provided by the Company or any Restricted Subsidiary in the ordinary
course of business, not to exceed $10.0 million in the aggregate at
any time outstanding;
(v) Indebtedness of any Restricted Subsidiary owed to and held
by the Company or any Restricted Subsidiary, and Indebtedness of the
Company owed to and held by any Restricted Subsidiary which is
unsecured and subordinated in right of payment to the payment and
performance of the Company's obligations under this Indenture and the
Securities; provided, however, that an incurrence of Indebtedness
62
<PAGE>
that is not permitted by this clause (v) shall be deemed to have
occurred upon (a) any sale or other disposition of any Indebtedness of
the Company or any Restricted Subsidiary referred to in this clause
(v) to a Person (other than the Company or any Restricted Subsidiary),
(b) any sale or other disposition of Capital Stock of any Restricted
Subsidiary which holds Indebtedness of the Company or another
Restricted Subsidiary such that such Restricted Subsidiary ceases to
be a Restricted Subsidiary and (c) the designation of a Restricted
Subsidiary which holds Indebtedness of the Company or any other
Restricted Subsidiary as an Unrestricted Subsidiary;
(vi) any guarantee of Indebtedness by a Restricted Subsidiary
incurred in compliance with Section 10.17;
(vii) Interest Rate Protection Obligations of the Company or
any Restricted Subsidiary covering Indebtedness of the Company or such
Restricted Subsidiary (which Indebtedness (a) bears interest at
fluctuating interest rates and (b) is otherwise permitted to be
incurred under this Section 10.11) to the extent the notional
principal amount of such Interest Rate Protection Obligations does not
exceed the principal amount of the Indebtedness to which such Interest
Rate Protection Obligations relate;
(viii) Indebtedness of the Company or any Restricted Subsidiary
under Currency Agreements relating to (a) Indebtedness of the Company
or such Restricted Subsidiary and/or (b) obligations to purchase or
sell assets or properties, in each case, incurred in the ordinary
course of business of the Company; provided, however, that such
Currency Agreements do not increase the Indebtedness or other
obligations of the Company outstanding other than as a result of
fluctuations in foreign currency exchange rates or by reason of fees,
indemnities and compensation payable thereunder;
(ix) Purchase Money Indebtedness and Capitalized Lease
Obligations of the Company or any Restricted Subsidiary not to exceed
$10.0 million in the aggregate outstanding at any time;
(x) (a) Indebtedness of the Company or any Guarantor to the
extent the proceeds thereof are used to Refinance Indebtedness of the
Company or any Guarantor or any Restricted Subsidiary and (b)
Indebtedness of any Restricted Subsidiary that is not a Guarantor to
the extent the proceeds thereof are used to Refinance Indebtedness of
any Restricted Subsidiary that is not a Guarantor, in each case
incurred under the first paragraph of this Section 10.11 or
Indebtedness referred to under clause (iii) (other than the
Indebtedness to be repaid as described under "Use of Proceeds" in the
Offering Memorandum) of this paragraph; provided, however, that, in
the case of either clause (a) or (b), (1) the principal amount of
Indebtedness incurred pursuant to this clause (x) (or, if such
Indebtedness provides for an amount less than the principal amount
thereof to be due and payable upon a declaration of acceleration of
the maturity thereof, the original issue price of such
Indebtedness) shall not exceed the sum of the principal amount of
Indebtedness so
63
<PAGE>
refinanced (or, if such Indebtedness provides for an amount less than
the principal amount thereof to be due and payable upon a declaration
of acceleration of the maturity thereof, the original issue price of
such Indebtedness, plus any accreted value attributable thereto since
the original issuance of such Indebtedness), plus the amount of any
premium required to be paid in connection with such Refinancing
pursuant to the terms of such Indebtedness or the amount of any
premium reasonably determined by the Company or a Restricted
Subsidiary, as applicable, as necessary to accomplish such Refinancing
by means of a tender offer or privately negotiated purchase, plus the
amount of expenses in connection therewith; and (2) Indebtedness
incurred pursuant to this clause (x) shall not reduce the Average Life
to Stated Maturity of the Indebtedness so refinanced; and
(xi) in addition to the items referred to in clauses (i)
through (x) above, additional Indebtedness of the Company or any
Restricted Subsidiary not to exceed an aggregate principal amount at
any time outstanding of $10.0 million.
For purposes of determining compliance with this Section 10.11, in the
event that an item of Indebtedness meets the criteria of more than one of the
types of Indebtedness permitted by this Section 10.11, the Company in its sole
discretion shall classify such item of Indebtedness and only be required to
include the amount of such Indebtedness as one of such types.
Section 10.12. Statement by Officers as to Default. The Company shall
-----------------------------------
deliver to the Trustee, within 45 days after the end of the first three fiscal
quarters of the Company ending after the date hereof and 90 days after the end
of each fiscal year of the Company ending after the date hereof, a written
statement signed by the chairman or a chief executive officer, the principal
financial officer or principal accounting officer of the Company, stating (i)
that a review of the activities of the Company during the preceding fiscal
quarter or year, as applicable, has been made under the supervision of the
signing officers with a view to determining whether the Company has kept,
observed, performed and fulfilled its obligations under this Indenture, and (ii)
that, to the knowledge of each officer signing such certificate, the Company has
kept, observed, performed and fulfilled each and every covenant and condition
contained in this Indenture and is not in default in the performance or
observance of any of the terms, provisions, conditions and covenants hereof (or,
if a Default shall have occurred, describing all such Defaults of which such
officers may have knowledge, their status and what action the Company is taking
or proposes to take with respect thereto). When any Default has occurred and is
continuing, or if the Trustee or any Holder or the trustee for or the holder of
any other evidence of Indebtedness of the Company or any Restricted Subsidiary
gives any notice or takes any other action with respect to a claimed default,
the Company shall promptly notify the Trustee of such Default, notice or action
and shall deliver to the Trustee by registered or certified mail or by telegram,
or facsimile transmission followed by hard copy by registered or certified mail
an Officers' Certificate specifying such event, notice or other action within
five Business Days after the Company becomes aware of such occurrence and what
action the Company is taking or proposes to take with respect thereto.
Section 10.13. Limitation on Restricted Payments. The Company shall
---------------------------------
not, and shall not cause or permit any of the Restricted Subsidiaries to,
directly or indirectly:
64
<PAGE>
(i) declare or pay any dividend or make any other distribution
or payment on or in respect of Capital Stock of the Company or any
Restricted Subsidiary or any payment made to the direct or indirect
holders (in their capacities as such) of Capital Stock of the Company
or any Restricted Subsidiary (other than dividends or distributions
made to the Company or a Restricted Subsidiary and dividends and
distributions payable solely in Capital Stock of the Company (other
than Redeemable Capital Stock) or in rights to purchase Capital Stock
of the Company (other than Redeemable Capital Stock)); or
(ii) purchase, redeem, defease or otherwise acquire or retire
for value any Capital Stock of the Company or any Restricted
Subsidiary (other than any such Capital Stock owned by the Company or
a Restricted Subsidiary); or
(iii) make any principal payment on, or purchase, defease,
repurchase, redeem or otherwise acquire or retire for value, prior to
any scheduled maturity, scheduled repayment, scheduled sinking fund
payment or other Stated Maturity, any Subordinated Indebtedness (other
than any Subordinated Indebtedness owed to and held by the Company or
a Restricted Subsidiary); or make any Investment (other than a
Permitted Investment) in any Person (other than in the Company, any
Restricted Subsidiary or a Person that becomes a Restricted
Subsidiary, or is merged with or into or consolidated with the Company
or a Restricted Subsidiary (provided the Company or a Restricted
Subsidiary is the survivor), as a result of or in connection with such
Investment) (each such payment or Investment (other than an exception
thereto) described in the preceding clauses (i), (ii), (iii) and (iv)
is referred to as a "Restricted Payment"), unless, at the time of and
after giving effect to the proposed Restricted Payment (the amount of
any such Restricted Payment, if other than in cash, shall be the Fair
Market Value of the asset(s) proposed to be transferred by the Company
or such Restricted Subsidiary, as the case may be, pursuant to such
Restricted Payment): (A) no Default shall have occurred and be
continuing; (B) the Company could incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) under Section 10.11;
and (C) the aggregate amount of all Restricted Payments declared or
made from and after the Issue Date would not exceed the sum of (1) 50%
of cumulative Consolidated Net Income of the Company during the period
(treated as one accounting period) beginning on the Issue Date and
ending on the last day of the fiscal quarter of the Company
immediately preceding the date of such proposed Restricted Payment for
which consolidated financial information of the Company is available
(or, if such cumulative Consolidated Net Income of the Company for
such period shall be a deficit, minus 100% of such deficit), plus (2)
the aggregate net cash proceeds received by the Company either (x) as
capital contributions in the form of common equity to the Company
after the Issue Date or (y) from the issuance or sale of Capital Stock
(excluding Redeemable Capital Stock but including Capital Stock issued
upon the conversion of convertible Indebtedness, in exchange for
outstanding Indebtedness or from the exercise of options, warrants or
rights to purchase Capital Stock (other than Redeemable Capital
Stock)) of the Company to any Person (other than to a Restricted
Subsidiary of the Company) after the Issue Date (excluding the net
cash proceeds from any issuance and sale of Capital Stock financed,
directly or indirectly, using funds borrowed from the
65
<PAGE>
Company or any Restricted Subsidiary until and to the extent such
borrowing is repaid), plus (3) in the case of the disposition or
repayment of any Investment constituting a Restricted Payment made
after the Issue Date, an amount (to the extent not included in
Consolidated Net Income and to the extent such disposition or
repayment does not reduce the amount of Investments outstanding under
clause (viii) of the second succeeding paragraph hereunder) equal to
the lesser of the return of capital with respect to such Investment
and the initial amount of such Investment which was treated as a
Restricted Payment, in either case, less the cost of the disposition
of such Investment and net of taxes, plus (4) so long as the
Designation thereof was treated as a Restricted Payment made after the
Issue Date, with respect to any Unrestricted Subsidiary that has been
redesignated as a Restricted Subsidiary after the Issue Date in
accordance with Section 10.20, the Fair Market Value of the Company's
interest in such Subsidiary calculated in accordance with GAAP,
provided that such amount shall not in any case exceed the Designation
Amount with respect to such Restricted Subsidiary upon its
Designation, minus (5) the Designation Amount (measured as of the date
of Designation) with respect to any Subsidiary of the Company which
has been designated as an Unrestricted Subsidiary after the Issue Date
in accordance with Section 10.20.
For purposes of the preceding clause (C)(2), upon the issuance of
Capital Stock either from the conversion of convertible Indebtedness or
exchange for outstanding Indebtedness or upon the exercise of options,
warrants or rights, the amount counted as net cash proceeds received will
be the cash amount received by the Company at the original issuance of the
Indebtedness that is so converted or exchanged or from the issuance of
options, warrants or rights, as the case may be, plus the incremental
amount of cash received by the Company, if any, upon the conversion,
exchange or exercise thereof. None of the foregoing provisions of this
Section 10.13 will prohibit (i) the payment of any dividend within 60 days
after the date of its declaration, if at the date of declaration such
payment would be permitted by the provisions of the Indenture; (ii) so long
as no Default shall have occurred and be continuing or would arise
therefrom, the redemption, repurchase or other acquisition or retirement of
any shares of any class of Capital Stock of the Company in exchange for, or
out of the net cash proceeds of, a substantially concurrent issue and sale
of other shares of Capital Stock (other than Redeemable Capital Stock) of
the Company to any Person (other than to a Restricted Subsidiary);
provided, however, that any such net proceeds and the value of any Capital
Stock issued in exchange for such retired Capital Stock are excluded from
clause (C)(2) of the second preceding paragraph; (iii) so long as no
Default shall have occurred and be continuing or would arise therefrom, any
redemption, repurchase or other acquisition or retirement of Subordinated
Indebtedness made by exchange for, or out of the net cash proceeds of, a
substantially concurrent issue and sale of (A) Capital Stock (other than
Redeemable Capital Stock) of the Company to any Person (other than to a
Restricted Subsidiary); provided, however, that any such net cash proceeds
and the value of any Capital Stock issued in exchange for Subordinated
Indebtedness are excluded from clause (C)(2) of the second preceding
paragraph; or (B) Indebtedness of the Company or any Guarantor so long as
such Indebtedness (1) is subordinated to the Securities and the Security
Guarantees of such Guarantor, as the case may be, at least to the same
extent as the Subordinated Indebtedness so purchased, exchanged, redeemed,
repurchased, acquired or retired, (2) has no Stated Maturity earlier
66
<PAGE>
than the Stated Maturity for the final scheduled principal payment of the
Securities and (3) shall not reduce the Average Life to Stated Maturity of
the Subordinated Indebtedness so redeemed, repurchased, acquired or
retired; (iv) Investments constituting Restricted Payments made as a result
of the receipt of non-cash consideration from any Asset Sale made pursuant
to and in compliance with Section 10.15; (v) the purchase, redemption or
other acquisition, cancellation or retirement for value of Capital Stock,
or options, warrants, equity appreciation rights or other rights to
purchase or acquire Capital Stock, of the Company or any Restricted
Subsidiary, or similar securities, held by officers or employees or former
officers or employees of the Company or any Restricted Subsidiary (or their
estates or beneficiaries under their estates), upon death, disability,
retirement or termination of employment, not to exceed $1.0 million in any
consecutive 12-month period; (vi) the payment of dividends on the
Outstanding Preferred Stock as required pursuant to the terms of the
Company's Articles of Incorporation as in effect on the Issue Date; (vii)
the redemption of shares of the Company's Series A Preferred Stock, no par
value per share, outstanding on the Issue Date required by the holder
thereof after August 1, 2002 pursuant to the terms of the Company's Article
of Incorporation as in effect on the Issue Date; or (viii) Investments not
to exceed $5.0 million in the aggregate outstanding at any time. In
computing the amount of Restricted Payments previously made for purposes of
clause (C) of the second preceding paragraph, Restricted Payments under the
immediately preceding clauses (i), (iv), (v), (vi), (vii) and (viii) shall
be included.
Section 10.14. Limitation on Transactions with Affiliates. The
------------------------------------------
Company shall not, and shall not cause or permit any of the Restricted
Subsidiaries to, directly or indirectly, conduct any business or enter into or
suffer to exist any transaction or series of related transactions with, or for
the benefit of, any of their respective Affiliates or any beneficial holder of
10% or more of any class of Capital Stock of the Company or any officer,
director or employee of the Company or any Restricted Subsidiary (each, an
"Affiliate Transaction"), unless (i) such Affiliate Transaction is on terms that
are no less favorable to the Company or the Restricted Subsidiary, as the case
may be, than those which could have been obtained in a comparable transaction at
such time from Persons who do not have such a relationship, (ii) with respect to
any Affiliate Transaction or series of Affiliate Transactions involving
aggregate payments or value equal to or greater than $1.0 million, the Company
shall have delivered an Officers' Certificate to the Trustee certifying that
such Affiliate Transaction or series of Affiliate Transactions has been approved
by a majority of the Board of Directors of the Company, including a majority of
the disinterested directors of the Board of Directors of the Company, and (iii)
with respect to any Affiliate Transaction or series of Affiliate Transactions
involving aggregate payments or value equal to or greater than $5.0 million, the
Company shall have obtained a written opinion from an Independent Financial
Advisor stating that the terms of such Affiliate Transaction or series of
Affiliate Transactions are fair, from a financial point of view, to the Company
or the Restricted Subsidiary involved, as the case may be.
Notwithstanding the foregoing, the restrictions set forth in this
Section 10.14 shall not apply to (i) transactions with or among the Company and
the Restricted Subsidiaries; (ii) customary directors' fees, indemnification and
similar arrangements, consulting fees, employee salaries, bonuses or employment
agreements, compensation or employee benefit arrangements and incentive
arrangements with any officer, director or employee of the Company or any
Restricted Subsidiary entered into in the ordinary course of business (including
customary benefits thereunder) and payments under any indemnification
arrangements permitted by applicable law;
67
<PAGE>
(iii) the issue and sale by the Company to its stockholders of Capital Stock
(other than Redeemable Capital Stock); (iv) any dividends made in compliance
with Section 10.13; (v) loans and advances to officers, directors and employees
of the Company or any Restricted Subsidiary for travel, entertainment, moving
and other relocation expenses, in each case made in the ordinary course of
business; (vi) the incurrence of intercompany Indebtedness permitted pursuant to
clause (v) of the second paragraph of Section 10.11; (vii) Affiliate
Transactions consummated prior to the Issue Date and any renewal or replacement
thereof on terms and conditions no less favorable in any respect than that
existing on the Issue Date; (viii) payments to George McFadden pursuant to the
Consulting Agreement (as in effect on the Issue Date) not to exceed $1.25
million in any fiscal year (exclusive of reimbursement of expenses); (ix) loans
and advances to David R. Hamilton made after the Issue Date not to exceed
$350,000 in the aggregate at any one time outstanding; and (x) payments to
Acumen Consulting Group, Inc. as required by and pursuant to the terms of the
Service Agreement (as in effect on the Issue Date).
Section 10.15. Disposition of Proceeds of Asset Sales. The Company
shall not, and shall not cause or permit any Restricted Subsidiary to, directly
or indirectly, make any Asset Sale, unless (i) the Company or such Restricted
Subsidiary, as the case may be, receives consideration at the time of such Asset
Sale at least equal to the Fair Market Value of the assets sold or otherwise
disposed of and (ii) at least 85% of such consideration consists of (A) cash or
Cash Equivalents, (B) properties and capital assets to be used in the same line
of business being conducted by the Company or any Restricted Subsidiary on the
Issue Date or (C) Capital Stock in any Person which thereby becomes a Restricted
Subsidiary whose assets consist primarily of properties and capital assets used
in the same line of business being conducted by the Company or any Restricted
Subsidiary on the Issue Date. The amount of any (i) Indebtedness (other than any
Subordinated Indebtedness) of the Company or any Restricted Subsidiary that is
actually assumed by the transferee in such Asset Sale and from which the Company
and the Restricted Subsidiaries are fully released shall be deemed to be cash
for purposes of determining the percentage of cash consideration received by the
Company or the Restricted Subsidiaries and (ii) notes or other similar
obligations received by the Company or the Restricted Subsidiaries from such
transferee that are converted, sold or exchanged within thirty days of the
related Asset Sale by the Company or the Restricted Subsidiaries into cash shall
be deemed to be cash, in an amount equal to the net cash proceeds realized upon
such conversion, sale or exchange for purposes of determining the percentage of
cash consideration received by the Company or the Restricted Subsidiaries. The
Company or such Restricted Subsidiary, as the case may be, may (i) apply the Net
Cash Proceeds of any Asset Sale within 365 days of receipt thereof to (x) repay
Indebtedness of the Company or any Restricted Subsidiary which is secured by a
Lien on the assets or property of the Company or a Restricted Subsidiary which
was the subject of such Asset Sale and permanently reduce any related commitment
or (y) repay any Indebtedness (other than Subordinated Indebtedness and other
than any Indebtedness owed to the Company or any Restricted Subsidiary) of the
Company or any Guarantor in an amount not to exceed the Other Senior Debt Pro
Rata Share and permanently reduce any related commitment, or (ii) commit in
writing to acquire, construct or improve properties and capital assets to be
used in the same line of business as being conducted by the Company or any
Restricted Subsidiary on the Issue Date and so apply such Net Cash Proceeds
within 365 days after the receipt thereof. To the extent all or part of the Net
Cash Proceeds of any Asset Sale are not applied, or the Company determines not
to so apply such Net Cash Proceeds, within 365 days of such Asset Sale as
described in clause (i) or (ii) of the immediately preceding paragraph (such Net
Cash Proceeds, the "Unutilized Net Cash Proceeds"), the Company shall,
68
<PAGE>
within 20 days after such 365th day or at any earlier time after such Asset
Sale, make an offer to purchase (the "Asset Sale Offer") all Outstanding
Securities up to a maximum principal amount (expressed as a multiple of $1,000)
of Securities equal to such Unutilized Net Cash Proceeds, at a purchase price in
cash equal to 100% of the principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the date fixed for purchase of Securities validly
tendered and not withdrawn, which date shall not be earlier than the 20th
Business Day following the mailing of the Asset Sale Offer or later than the
last day such Asset Sale Offer is required to remain open by applicable law (the
"Asset Sale Offer Purchase Date"); provided, however, that the Asset Sale Offer
may be deferred until there are aggregate Unutilized Net Cash Proceeds equal to
or in excess of $10.0 million, at which time the entire amount of such
Unutilized Net Cash Proceeds, and not just the amount in excess of $10.0
million, shall be applied as required pursuant to this paragraph.
With respect to any Asset Sale Offer effected pursuant to this Section
10.15, among the Securities, to the extent the aggregate principal amount of
Securities tendered pursuant to such Asset Sale Offer exceeds the Unutilized Net
Cash Proceeds to be applied to the repurchase thereof, such Securities shall be
purchased pro rata based on the aggregate principal amount of such Securities
tendered by each Holder. To the extent the Unutilized Net Cash Proceeds exceed
the aggregate amount of Securities tendered by the Holders of the Securities
pursuant to such Asset Sale Offer, the Company may retain and utilize any
portion of the Unutilized Net Cash Proceeds not applied to repurchase the
Securities for any purpose consistent with the other terms of this Indenture.
Notice of an Asset Sale Offer shall be mailed by the Company not more than 20
days after the obligation to make such Asset Sale Offer arises to the Holders of
Securities at their last registered addresses with a copy to the Trustee and the
Paying Agent. The Asset Sale Offer shall remain open from the time of mailing
for at least 20 Business Days or such longer period as may be required by
applicable law. The notice, which shall govern the terms of the Asset Sale
Offer, shall include such disclosures as are required by law and shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section
10.15 and that all Securities tendered into the Asset Sale Offer shall be
accepted for payment; provided, however, that if the aggregate principal
amount of Securities tendered in the Asset Sale Offer exceeds the
Unutilized Net Cash Proceeds, the Company shall select the Securities to be
purchased on a pro rata basis based upon the aggregate principal amount of
such Securities tendered by each Holder; and that the Asset Sale Offer
shall remain open for a period of 20 Business Days or such longer period as
may be required by applicable law;
(b) the purchase price (including the amount of accrued interest, if
any) for each Security, the Asset Sale Offer Purchase Date and the date on
which the Asset Sale Offer expires;
(c) that any Security not tendered for payment shall continue to
accrue interest in accordance with the terms thereof;
(d) that, unless the Company shall default in the payment of the
purchase price, any Security accepted for payment pursuant to the Asset
Sale Offer shall cease to accrue interest after the Asset Sale Offer
Purchase Date;
69
<PAGE>
(e) that Holders electing to have Securities purchased pursuant to an
Asset Sale Offer shall be required to surrender their Securities to the
Paying Agent at the address specified in the notice prior to 5:00 p.m., New
York City time, on the Asset Sale Offer Purchase Date and must complete any
form letter of transmittal proposed by the Company and acceptable to the
Trustee and the Paying Agent;
(f) that Holders of Securities shall be entitled to withdraw their
election if the Paying Agent receives, not later than 5:00 p.m., New York
City time, on the Asset Sale Offer Purchase Date, a facsimile transmission
or letter setting forth the name of the Holders, the principal amount of
Securities the Holders delivered for purchase, the Security certificate
number (if any) and a statement that such Holder is withdrawing his
election to have such Securities purchased;
(g) that Holders whose Securities are purchased only in part shall
be issued Securities of like tenor equal in principal amount to the
unpurchased portion of the Securities surrendered;
(h) the instructions that Holders must follow in order to tender
their Securities; and
(i) information concerning the business of the Company, the most
recent annual and quarterly reports of the Company filed with the
Commission pursuant to the Exchange Act (or, if the Company is not
permitted to file any such reports with the Commission, the comparable
reports prepared pursuant to Section 10.09), a description of material
developments in the Company's business, information with respect to pro
forma historical financial position and results of operations after giving
effect to such Asset Sale and such other information concerning the
circumstances and relevant facts regarding such Asset Sale and Asset Sale
Offer as would, in the good faith judgment of the Company, be material to a
Holder of Securities in connection with the decision of such Holder as to
whether or not it should tender Securities pursuant to the Asset Sale
Offer. On the Asset Sale Offer Purchase Date, the Company shall (i) accept
for payment (subject to pro ration as described in the second preceding
paragraph) Securities or portions thereof tendered pursuant to the Asset
Sale Offer, (ii) deposit with the Paying Agent money, in immediately
available funds, sufficient to pay the purchase price of all Securities or
portions thereof so tendered and accepted and (iii) deliver to the Trustee
the Securities so accepted together with an Officers' Certificate setting
forth the Securities or portions thereof tendered to and accepted for
payment by the Company. The Paying Agent shall promptly mail or deliver to
the Holders of Securities so accepted payment in an amount equal to the
purchase price, and the Trustee shall promptly authenticate and mail or
deliver to such Holders a new Security of like tenor equal in principal
amount to any unpurchased portion of the Security surrendered. Any
Securities not so accepted shall be promptly mailed or delivered by the
Company to the Holder thereof. The Company shall publicly announce the
results of the Asset Sale Offer not later than the first Business Day
following the Asset Sale Offer Purchase Date.
In the event that the Company makes an Asset Sale Offer, the Company
shall comply, to the extent applicable, with the requirements of Section 14(e)
of the Exchange Act, and any other applicable securities laws or regulations and
any applicable requirements of any
70
<PAGE>
securities exchange on which the Securities are listed, and any violation of
this Section 10.15 occurring as a result of such compliance shall not be deemed
a Default.
Section 10.16. Limitation on Liens. The Company shall not, and shall
--------------------
not cause or permit any Restricted Subsidiary to, create, incur, assume or
suffer to exist any Lien (except Permitted Liens) of any kind, upon any of its
property or assets, whether now owned or acquired after the Issue Date, or any
proceeds therefrom, or assign or convey any right to receive income therefrom;
provided, however, the Company or any Guarantor may secure either (i)
Subordinated Indebtedness, if the Securities, in the case of the Company, and
the Security Guarantee, in the case of a Restricted Subsidiary that is a
Guarantor, are secured by a Lien on such property, assets or proceeds that is
senior in priority to the Lien securing such Subordinated Indebtedness or (ii)
any other Indebtedness, if the Securities, in the case of the Company, and the
Security Guarantee, in the case of a Restricted Subsidiary that is a Guarantor,
are equally and ratably secured thereby.
Section 10.17. Limitation on Guarantees by Restricted Subsidiaries.
---------------------------------------------------
(a) The Company shall not cause or permit any of the Domestic
Subsidiaries, directly or indirectly, to guarantee the payment of any
Indebtedness of the Company ("Other Indebtedness") unless such Domestic
Subsidiary (A) is a Guarantor or (B) simultaneously executes and delivers a
supplemental indenture to the Indenture pursuant to which it shall become a
Guarantor under the Indenture and complies with the other provisions of
paragraph (b) of this Section 10.17; provided, however, that if such Other
Indebtedness is (i) pari passu in right of payment with the Securities, the
Security Guarantee of such Domestic Subsidiary shall be pari passu in right
of payment with the guarantee of the Other Indebtedness; or (ii)
Subordinated Indebtedness, the Security Guarantee of such Domestic
Subsidiary shall be senior in right of payment to the guarantee of the
Other Indebtedness (which guarantee of such Subordinated Indebtedness shall
provide that such guarantee is subordinated to the Security Guarantee of
such Domestic Subsidiary to the same extent and in the same manner as the
Other Indebtedness is subordinated to the Securities); provided, further,
however, that each Domestic Subsidiary issuing a Security Guarantee shall
be automatically and unconditionally released and discharged from its
obligations under such Security Guarantee upon the release or discharge of
the guarantee of the Other Indebtedness that resulted in the creation of
such Security Guarantee, except a discharge or release by, or as a result
of, any payment under the guarantee of such Other Indebtedness by such
Domestic Subsidiary. The Company may, at any time, cause a Domestic
Subsidiary to become a Guarantor by executing and delivering a supplemental
indenture providing for the guarantee of payment of the Securities by such
Domestic Subsidiary on the basis provided in the Indenture and complying
with the other provisions of paragraph (b) of this Section 10.17.
(b) Any Person required by paragraph (a) of this Section 10.17 to
become, or is at the option of the Company becoming, a Guarantor shall
execute and deliver to the Trustee (a) a supplemental indenture in form and
substance satisfactory to the Trustee, which subjects such person to the
provisions (including the representations and warranties) of this Indenture
as a Guarantor,
71
<PAGE>
(c) in the event that as of the date of such supplemental indenture
any Registrable Securities are outstanding, an instrument in form and
substance satisfactory to the Trustee which subjects such person to the
provisions of the Registration Rights Agreement with respect to such
outstanding Registrable Securities, and
(d) an Opinion of Counsel to the effect that such supplemental
indenture and such instrument have been duly authorized and executed by
such Person and constitutes the legal, valid and binding obligation of such
Person (subject to customary assumptions and exceptions).
Section 10.18 Restrictions on Preferred Stock of Restricted
---------------------------------------------
Subsidiaries. The Company shall not sell, and shall not cause or permit any of
- ------------
the Restricted Subsidiaries to issue, any Preferred Stock of any Restricted
Subsidiary (other than to the Company or to a Wholly-Owned Restricted
Subsidiary) or permit any Person (other than the Company or a Wholly-Owned
Restricted Subsidiary) to own any Preferred Stock of any Restricted Subsidiary.
Section 10.19 Limitation on Dividends and Other Payment Restrictions
------------------------------------------------------
Affecting Restricted Subsidiaries. The Company shall not, and shall not cause
- ---------------------------------
or permit any Restricted Subsidiary to, directly or indirectly, create or
otherwise cause or suffer to exist, or enter into any agreement with any Person
that would cause to become effective, any consensual encumbrance or restriction
of any kind, on the ability of any Restricted Subsidiary to (a) pay dividends,
in cash or otherwise, or make any other distribution on or in respect of its
Capital Stock or any other interest or participation in, or measured by, its
profits, to the Company or any other Restricted Subsidiary, (b) pay any
Indebtedness owed to the Company or any other Restricted Subsidiary, (c) make
loans or advances to, or guarantee any Indebtedness or other obligations of, the
Company or any other Restricted Subsidiary or (d) transfer any of its property
or assets to the Company or any other Restricted Subsidiary, except any
encumbrance or restriction (i) existing under the New Revolving Credit Facility
as in effect on the Issue Date relating to assets subject to a Lien created at
any time thereby; (ii) with respect to a Restricted Subsidiary that is not a
Restricted Subsidiary on the Issue Date, in existence at the time such Person
becomes a Restricted Subsidiary (but not created in contemplation thereof);
provided, however, that such encumbrances and restrictions are not applicable to
the Company or any other Restricted Subsidiary, or the properties or assets of
the Company or any other Restricted Subsidiary; (iii) customary non-assignment
provisions in leases entered into in the ordinary course of business and
consistent with past practices; (iv) Purchase Money Indebtedness for property
acquired in the ordinary course of business that only imposes encumbrances and
restrictions on the property so acquired; (v) any agreement for the sale or
disposition of the Capital Stock or assets of any Restricted Subsidiary;
provided, however, that such encumbrances and restrictions described in this
clause (v) are only applicable to such Restricted Subsidiary or assets, as
applicable, and any such sale or disposition is made in compliance with Section
10.15 to the extent applicable thereto; and (vi) any encumbrance or restriction
existing under any agreement that Refinances the agreements containing the
encumbrance or restrictions in the foregoing clauses (i) and (ii); provided,
however, that the terms and conditions of any such restrictions permitted under
this clause (vi) are not materially less favorable to the holders of the
Securities than those under or pursuant to the agreement evidencing the
Indebtedness Refinanced.
Section 10.20. Limitation on Designations of Unrestricted
------------------------------------------
Subsidiaries.
- ------------
72
<PAGE>
(a) The Company may designate after the Issue Date any Subsidiary
(other than a Guarantor) as an "Unrestricted Subsidiary" under the
Indenture (a "Designation") only if:
(i) no Default shall have occurred and be continuing at the
time of or after giving effect to such Designation;
(ii) the Company would be permitted to make an Investment
(other than a Permitted Investment) at the time of Designation
(assuming the effectiveness of such Designation) pursuant to the first
paragraph of Section 10.13 in an amount (the "Designation Amount")
equal to the Fair Market Value of the Company's interest in such
Subsidiary on such date calculated in accordance with GAAP; and
(iii) the Company would be permitted under the Indenture to
incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) pursuant to Section 10.11 at the time of such
Designation (assuming the effectiveness of such Designation).
In the event of any such Designation, the Company shall be deemed to
have made an Investment constituting a Restricted Payment pursuant to Section
10.13 for all purposes of this Indenture in the Designation Amount. The Company
shall not, and shall not cause or permit any Restricted Subsidiary to, at any
time (x) provide credit support for or subject any of its property or assets
(other than the Capital Stock of any Unrestricted Subsidiary) to the
satisfaction of, any Indebtedness of any Unrestricted Subsidiary (including any
undertaking, agreement or instrument evidencing such Indebtedness), (y) be
directly or indirectly liable for any Indebtedness of any Unrestricted
Subsidiary or (z) be directly or indirectly liable for any Indebtedness which
provides that the holder thereof may (upon notice, lapse of time or both)
declare a default thereon or cause the payment thereof to be accelerated or
payable prior to its final scheduled maturity upon the occurrence of a default
with respect to any Indebtedness of any Unrestricted Subsidiary (including any
right to take enforcement action against such Unrestricted Subsidiary), except
any non-recourse guarantee given solely to support the pledge by the Company or
any Restricted Subsidiary of the Capital Stock of an Unrestricted Subsidiary. No
Unrestricted Subsidiary shall at any time guarantee or otherwise provide credit
support for any obligation of the Company or any Restricted Subsidiary. All
Subsidiaries of Unrestricted Subsidiaries shall automatically be deemed to be
Unrestricted Subsidiaries.
(b) The Company may revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "Revocation") if:
(i) no Default shall have occurred and be continuing at the
time of and after giving effect to such Revocation;
(ii) all Liens and Indebtedness of such Unrestricted
Subsidiary outstanding immediately following such Revocation would, if
incurred at such time, have been permitted to be incurred for all
purposes of this Indenture; and
(iii) any transaction (or series of related transactions)
between such Subsidiary and any of its Affiliates that occurred while
such Subsidiary was an
73
<PAGE>
Unrestricted Subsidiary would be permitted by Section 10.14 as if such
transaction (or series of related transactions) had occurred at the
time of such Revocation.
(c) All Designations and Revocations must be evidenced by Board
Resolutions of the Company delivered to the Trustee certifying compliance
with the foregoing provisions.
Section 10.21 Compliance Certificates and Opinions. Upon any
------------------------------------
application or request by the Company to the Trustee to take any action under
any provision of this Indenture, the Company, the Guarantors and any other
obligor on the Securities shall furnish to the Trustee an Officers' Certificate
stating that all conditions precedent, if any, provided for in this Indenture
(including any covenants compliance with which constitutes a condition
precedent) relating to the proposed action have been complied with, and an
Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that, in the case
of any such application or request as to which the furnishing of such documents,
certificates and/or opinions is specifically required by any provision of this
Indenture relating to such particular application or request, no additional
certificate or opinion need be furnished. Every Officer's Certificate or Opinion
of Counsel with respect to compliance with a condition or covenant provided for
in this Indenture shall include:
(i) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether such covenant
or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 11.01. Right of Redemption. The Securities may be redeemed
-------------------
at the option of the Company, in whole or in part, pursuant to the provisions of
and at the Redemption Prices specified in paragraphs 2 and 3 on the reverse of
the Securities.
Section 11.02. Applicability of Article. Redemption of Securities at
------------------------
the election of the Company or otherwise, as permitted or required by any
provision of this Indenture, shall be made in accordance with such provision and
this Article Eleven.
Section 11.03 Election To Redeem; Notice to Trustee. The election
-------------------------------------
of the Company to redeem any Securities pursuant to Section 11.01 shall be
evidenced by a Board
74
<PAGE>
Resolution and an Officers' Certificate. The Company shall, at least 60 days
prior to the Redemption Date fixed by the Company (unless a shorter notice
period shall be satisfactory to the Trustee), notify the Trustee in writing of
such Redemption Date and of the principal amount of Securities to be redeemed.
Section 11.04. Selection by Trustee of Securities To Be Redeemed. If
-------------------------------------------------
less than all the Securities are to be redeemed, the particular Securities or
portions thereof to be redeemed shall be selected not more than 60 days prior to
the Redemption Date by the Trustee, from the Outstanding Securities not
previously called for redemption in compliance with the requirements of the
principal national securities exchange, if any, on which the Securities are
listed, or, if the Securities are not listed on a national security exchange, by
lot or by such method as the Trustee shall deem fair and appropriate; provided,
however, that no Securities of a principal amount of $1,000 or less will be
redeemed in part; provided, further, however, that any such redemption pursuant
to paragraph 3 on the reverse of the Securities shall be made on a pro rata
basis or on as nearly a pro rata basis as practicable (subject to the procedures
of the Depository or any other depository). The Trustee shall promptly notify
the Company and each Security Registrar in writing of the Securities selected
for partial redemption and the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Securities shall relate, in
the case of any Security redeemed or to be redeemed only in part, to the portion
of the principal amount of such Security which has been or is to be redeemed.
Section 11.05. Notice of Redemption. Notice of redemption shall be
--------------------
given by first-class mail, postage prepaid, mailed not less than 30 nor more
than 60 days prior to the Redemption Date, to each Holder of Securities to be
redeemed, at the address of such Holder appearing in the Security Register;
provided, however, that notice of redemption pursuant to paragraph 3 on the
reverse of the Securities shall be mailed no later than 60 days after the
consummation of the relevant Public Equity Offering (as defined in the
Security).
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) if less than all Outstanding Securities are to be redeemed,
the identification of the particular Securities to be redeemed;
(iv) in the case of a Security to be redeemed in part, the
principal amount of such Security to be redeemed and that after the
Redemption Date upon surrender of such Security, a new Security or
Securities in the aggregate principal amount equal to the unredeemed
portion thereof shall be issued and authenticated;
(v) that Securities called for redemption must be surrendered
to the Paying Agent to collect the Redemption Price;
75
<PAGE>
(vi) that on the Redemption Date the Redemption Price shall
become due and payable upon each such Security or portion thereof, and
that (unless the Company shall default in payment of the Redemption
Price) interest thereon shall cease to accrue on and after Redemption
Date;
(vii) the name and address of the Paying Agent where such
Securities are to be surrendered for payment of the Redemption Price;
(viii) the CUSIP number, relating to such Securities; and
(ix) the paragraph of the Securities pursuant to which the
Securities are being redeemed.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's written request,
by the Trustee in the name and at the expense of the Company.
Section 11.06. Deposit of Redemption Price. On or prior to any
---------------------------
Redemption Date, the Company shall deposit with the Trustee or with a Paying
Agent (or, if the Company, a Guarantor or any of their respective Affiliates is
acting as Paying Agent, segregate and hold in trust as provided in Section
10.03) an amount of money in same day funds sufficient to pay the Redemption
Price of, plus accrued and unpaid interest on, if any, all the Securities or
portions thereof which are to be redeemed on the Redemption Date.
Section 11.07 Securities Payable on Redemption Date. Notice of
-------------------------------------
redemption having been given as aforesaid, the Securities so to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price
therein specified, plus accrued and unpaid interest, if any, to the Redemption
Date, and from and after such date (unless the Company shall default in the
payment of the Redemption Price) interest on such Securities shall cease to
accrue. Upon surrender of any such Security for redemption in accordance with
said notice, such Security shall be paid by the Company at the Redemption Price,
plus accrued and unpaid interest, if any, to the Redemption Date; provided,
however, that installments of interest whose Stated Maturity is on or prior to
the Redemption Date shall be payable to the Holders of such Securities
registered as such on the relevant Regular Record Dates according to the terms
and the provisions of Section 3.07. If any Security called for redemption shall
not be so paid upon surrender thereof for redemption, interest shall continue to
accrue on such Security at the rate then borne by such Security.
Section 11.08 Securities Redeemed in Part. Any Security which is to
---------------------------
be redeemed only in part shall be surrendered to the Paying Agent at the office
or agency maintained for such purpose pursuant to Section 10.02, and the Company
shall execute, and the Trustee shall authenticate and deliver to the Holder of
such Security without charge, a new Security or Securities, of any authorized
denomination as requested by such Holder in aggregate principal amount equal to,
and in exchange for, the unredeemed portion of the principal of the Security so
surrendered that is not redeemed.
76
<PAGE>
ARTICLE TWELVE
SATISFACTION AND DISCHARGE
Section 12.01. Satisfaction and Discharge of Indenture. This
---------------------------------------
Indenture shall cease to be of further effect (except as to surviving rights or
registration of transfer or exchange of Securities herein expressly provided
for) and the Trustee, on written demand of and at the expense of the Company,
shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture, when either
(a) all Securities theretofore authenticated and delivered (other
than (A) Securities which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 3.06 hereof and (B)
Securities for whose payment money has theretofore been deposited in trust
or segregated and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust, as provided in Section 10.03) have
been delivered to the Trustee for cancellation; or
(b) (i) all such Securities not theretofore delivered to the Trustee
for cancellation have become due and payable and the Company or any
Guarantor has irrevocably deposited or caused to be deposited with the
Trustee in trust an amount of money in dollars sufficient to pay and
discharge the entire Indebtedness on such Securities not theretofore
delivered to the Trustee for cancellation, for the principal of, premium,
if any, and interest to the date of such deposit; (ii)the Company or any
Guarantor has paid or caused to be paid all other sums payable hereunder by
the Company and the Guarantors; and (iii) the Company and each of the
Guarantors have delivered to the Trustee (i) irrevocable instructions to
apply the deposited money toward payment of the Securities at the Stated
Maturities and the Redemption Dates thereof, and (ii) an Officers'
Certificate and an Opinion of Counsel each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of
this Indenture have been complied with;
provided, however, that such Opinion of Counsel may rely, as to matters of
fact, upon an Officers' Certificate. Notwithstanding the satisfaction and
discharge of this Indenture, the obligations of the Company to the Trustee
under Section 6.07 and, if money shall have been deposited with the Trustee
pursuant to subclause (a)(ii) of this Section 12.01, the obligations of the
Trustee under Section 12.02 and the last paragraph of Section 10.03 shall
survive.
Section 12.02 Application of Trust Money. Subject to the provisions
--------------------------
of the last paragraph of Section 10.03, all money deposited with the Trustee
pursuant to Section 12.01 shall be held in trust and applied by it, in
accordance with the provisions of the Securities and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Persons
entitled thereto, of the principal of, premium, if any, and interest on the
Securities for whose payment such money has been deposited with the Trustee.
77
<PAGE>
ARTICLE THIRTEEN
GUARANTEE OF SECURITIES
Section 13.01. Unconditional Guarantee. Each Guarantor hereby jointly
-----------------------
and severally fully and unconditionally guarantees to each Holder of a Security
authenticated and delivered by the Trustee and to the Trustee and its successors
and assigns, irrespective of the validity and enforceability of this Indenture,
the Securities or the obligations of the Company or any other Guarantor to the
Holders or the Trustee hereunder or thereunder, that: (a) the principal of,
premium, if any, and interest on the Securities shall be duly and punctually
paid in full when due, whether at Stated Maturity, upon redemption or
repurchase, by acceleration or otherwise, and interest on the overdue principal
and (to the extent permitted by law) overdue installments of interest, if any,
on the Securities and all other obligations of the Company or the Guarantor to
the Holders or the Trustee hereunder or thereunder (including fees, expenses or
other) and all other Indenture Obligations shall be promptly paid in full or
performed, all in accordance with the terms hereof and thereof; and (b) in case
of any extension of time of payment or renewal of any Securities or any of such
other Indenture Obligations, the same shall be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
Stated Maturity, by acceleration or otherwise. Failing payment when due of any
amount so guaranteed, or failing performance of any other obligation of the
Company to the Holders, for whatever reason, each Guarantor shall be obligated
to pay, or to perform or cause the performance of, the same immediately. An
Event of Default under this Indenture or the Securities shall constitute an
event of default under this Security Guarantee, and shall entitle the Holders of
Securities to accelerate the obligations of the Guarantors hereunder in the same
manner and to the same extent as the obligations of the Company.
Each Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Securities or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Securities with respect to any provisions
hereof or thereof, any release of any other Guarantor, the recovery of any
judgment against the Company, any action to enforce the same, or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a Guarantor.
Each Guarantor hereby waives the benefit of diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest, notice and all demands whatsoever and covenants that its
Security Guarantee shall not be discharged except by complete performance of the
obligations contained in the Securities, this Indenture and this Security
Guarantee. This Security Guarantee is a guarantee of payment and not of
collection. If any Holder or the Trustee is required by any court or otherwise
to return to the Company or to any Guarantor, or any custodian, trustee,
liquidator or other similar official acting in relation to the Company or such
Guarantor, any amount paid by the Company or such Guarantor to the Trustee or
such Holder, this Security Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect. Each Guarantor further agrees
that, as between it, on the one hand, and the Holders of Securities and the
Trustee, on the other hand, (a) subject to this Article Thirteen, the maturity
of the obligations guaranteed hereby may be accelerated as provided in Article
Five hereof for the purposes of this Security Guarantee, notwithstanding any
stay, injunction or other prohibition
78
<PAGE>
preventing such acceleration in respect of the obligations guaranteed hereby,
and (b) in the event of any acceleration of such obligations as provided in
Article Five hereof, such obligations (whether or not due and payable) shall
forthwith become due and payable by each Guarantor for the purpose of this
Security Guarantee.
Section 13.02. Execution and Delivery of Security Guarantee. To
--------------------------------------------
further evidence the Security Guarantee set forth in Section 13.01, each
Guarantor hereby agrees that a notation of such Security Guarantee in the form
of Exhibit E hereto shall be endorsed on each Security authenticated and
delivered by the Trustee after the time such Guarantor is required to become a
Guarantor hereunder, which notation shall be executed by either manual or
facsimile signature of an Officer of each Guarantor.
Each of the Guarantors hereby agrees that its Security Guarantee set
forth in Section 13.01 shall remain in full force and effect notwithstanding any
failure to endorse on each Security authenticated and delivered by the Trustee
after the time such Guarantor is required to become a Guarantor hereunder a
notation of such Security Guarantee.
If an Officer of a Guarantor whose signature is on a supplemental
indenture or a notation of this Security Guarantee no longer holds that office
at the time the Trustee authenticates such Security or at any time thereafter,
such Guarantor's Security Guarantee of such Security shall be valid
nevertheless.
The delivery of any Security by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of any Security Guarantee set
forth in this Indenture on behalf of each Guarantor.
Section 13.03. Release of a Guarantor. Subject to Section 8.01(a), (x)
----------------------
upon the sale, exchange, transfer or other disposition (by merger or otherwise),
other than a lease, by the Company of all of the Capital Stock of a Guarantor or
all, or substantially all, the assets of a Guarantor, to any Person that is not
an Affiliate of the Company, and which sale or other disposition is otherwise in
compliance with the terms of this Indenture (including, without limitation,
Section 10.15) or (y) upon the occurrence of the condition in the second proviso
of the first sentence of Section 10.17(a) with respect to a Guarantor, such
Guarantor shall be deemed automatically and unconditionally released and
discharged from all obligations under this Article Thirteen without any further
action required on the part of the Trustee or any Holder. The Trustee shall
deliver an appropriate instrument evidencing such release upon receipt of a
request of the Company accompanied by an Officers' Certificate certifying as to
the compliance with this Section 13.03. Any Guarantor not so released shall
remain liable for the full amount of principal of, premium, if any, and interest
on the Securities as provided in this Article Thirteen.
Section 13.04. Waiver of Subrogation. Until this Indenture is
---------------------
discharged and all of the Securities are discharged and paid in full, each
Guarantor hereby irrevocably waives and agrees not to exercise any claim or
other rights which it may now or hereafter acquire against the Company that
arise from the existence, payment, performance or enforcement of the Company's
obligations under the Securities or this Indenture and such Guarantor's
obligations under this Security Guarantee and this Indenture, in any such
instance including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution, indemnification, and any right to
79
<PAGE>
participate in any claim or remedy against the Company, whether or not such
claim, remedy or right arises in equity, or under contract, statute or common
law, including, without limitation, the right to take or receive from the
Company, directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security on account of such claim or other rights.
If any amount shall be paid to any Guarantor in violation of the preceding
sentence and any amounts owing to the Trustee or the Holders of Securities under
the Securities, this Indenture, or any other document or instrument delivered
under or in connection with such agreements or instruments, shall not have been
paid in full, such amount shall have been deemed to have been paid to such
Guarantor for the benefit of, and held in trust for the benefit of, the Holders
of the Securities, and shall forthwith be paid to the Trustee for the benefit of
such Holders to be credited and applied to the Securities, whether matured or
unmatured, in accordance with the terms of this Indenture. Each Guarantor
acknowledges that it will receive direct and indirect benefits from the
financing arrangements contemplated by this Indenture and that the waiver set
forth in this Section 13.04 is knowingly made in contemplation of such benefits.
Section 13.05. Reliance on Judicial Order or Certificate of
--------------------------------------------
Liquidating Agent Regarding Dissolution, etc. of Guarantors. Upon any payment or
- -----------------------------------------------------------
distribution of assets of any Guarantor referred to in this Article Thirteen,
the Trustee, subject to the provisions of Section 6.01, and the Holders, shall
be entitled to rely upon any order or decree entered by any court of competent
jurisdiction in which such insolvency, bankruptcy, receivership, liquidation,
reorganization, dissolution, winding-up or similar case or proceeding is
pending, or a certificate of the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee for the benefit of creditors, agent or other person
making such payment or distribution, delivered to the Trustee or to the Holders,
for the purpose of ascertaining the persons entitled to participate in such
payment or distribution, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto or to
this Article Thirteen; provided, however, that the foregoing shall apply only if
such court has been fully apprised of the provisions of this Article Thirteen.
Section 13.06. Article Thirteen Applicable to Paying Agents. In case
--------------------------------------------
at any time any Paying Agent other than the Trustee shall have been appointed by
the Company and be then acting hereunder, the term "Trustee" as used in this
Article Thirteen shall in such case (unless the context otherwise requires) be
construed as extending to and including such Paying Agent within its meaning as
fully for all intents and purposes as if such Paying Agent were named in this
Article Thirteen in addition to or in place of the Trustee.
Section 13.07. No Suspension of Remedies. Nothing contained in this
-------------------------
Article Thirteen shall limit the right of the Trustee or the Holders of
Securities to take any action to accelerate the maturity of the Securities
pursuant to Article Five or to pursue any rights or remedies hereunder or under
applicable law.
Section 13.08. Limitation of Subsidiary Guarantor's Liability. Each
----------------------------------------------
Guarantor, and by its acceptance hereof each Holder, hereby confirms that it is
the intention of all such parties that the Security Guarantee by such Guarantor
pursuant to its Security Guarantee not constitute a fraudulent transfer or
conveyance for purposes of any Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar Federal or state law. To
effectuate the foregoing intention, the Holders and such Guarantor hereby
irrevocably agree that the
80
<PAGE>
obligations of such Guarantor under this Security Guarantee shall be limited to
the maximum amount which, after giving effect to all other contingent and fixed
liabilities of such Guarantor, and after giving effect to any collections from
or payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under its Security Guarantee or pursuant to
its contribution obligations under this Article Thirteen, shall result in the
obligations of such Guarantor under its Security Guarantee not constituting such
fraudulent transfer or conveyance.
Section 13.09. Contribution from Other Guarantors. Each Guarantor that
----------------------------------
makes a payment or distribution under its Security Guarantee shall be entitled
to a contribution from each other Guarantor in a pro rata amount based on the
net assets of each Guarantor, determined in accordance with GAAP.
Section 13.10. Obligations Reinstated. The obligations of each
----------------------
Guarantor hereunder shall continue to be effective or shall be reinstated, as
the case may be, if at any time any payment which would otherwise have reduced
the obligations of any Guarantor hereunder (whether such payment shall have been
made by or on behalf of the Company or by or on behalf of a Guarantor) is
rescinded or reclaimed from any of the Holders upon the insolvency, bankruptcy,
liquidation or reorganization of the Company or any Guarantor or otherwise, all
as though such payment had not been made. If demand for, or acceleration of the
time for, payment by the Company is stayed upon the insolvency, bankruptcy,
liquidation or reorganization of the Company, all such Indebtedness otherwise
subject to demand for payment or acceleration shall nonetheless be payable by
each Guarantor as provided herein.
Section 13.11. No Obligation To Take Action Against the Company.
------------------------------------------------
Neither the Trustee nor any other Person shall have any obligation to enforce or
exhaust any rights or remedies or to take any other steps under any security for
the Indenture Obligations or against the Company or any other Person or any
property of the Company or any other Person before the Trustee is entitled to
demand payment and performance by any or all Guarantors of their liabilities and
obligations under their Security Guarantees or under this Indenture.
Section 13.12. Dealing with the Company and Others. The Holders,
-----------------------------------
without releasing, discharging, limiting or otherwise affecting in whole or in
part the obligations and liabilities of any Guarantor hereunder and without the
consent of or notice to any Guarantor, may
(a) grant time, renewals, extensions, compromises, concessions,
waivers, releases, discharges and other indulgences to the Company or any
other Person;
(b) take or abstain from taking security or collateral from the
Company or from perfecting security or collateral of the Company;
(c) release, discharge, compromise, realize, enforce or otherwise
deal with or do any act or thing in respect of (with or without
consideration) any and all collateral, mortgages or other security given by
the Company or any third party with respect to the obligations or matters
contemplated by this Indenture or the Securities;
(d) accept compromises or arrangements from the Company;
81
<PAGE>
(e) apply all monies at any time received from the Company or from
any security upon such part of the Indenture Obligations as the Holders may
see fit or change any such application in whole or in part from time to
time as the Holders may see fit; and
(f) otherwise deal with, or waive or modify their right to deal
with, the Company and all other Persons and any security as the Holders or
the Trustee may see fit.
[Signature Pages Follow]
82
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the day and year first above written.
CHEMICAL LEAMAN CORPORATION
By: /s/ Eugene C. Parkerson
___________________________________
Name: Eugene C. Parkerson
Title: Executive Vice President - Administration
By: /s/ David M. Boucher
___________________________________
Name: David M. Boucher
Title: Senior Vice President, CFO and Secretary
FIRST UNION NATIONAL BANK, as Trustee
By: /s/ Alan G. Finn
___________________________________
Name: Alan G. Finn
Title: Assistant Vice President
83
<PAGE>
EXHIBIT A-1
-----------
[FORM OF SECURITY]
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR OTHER
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT
(A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN "ACCREDITED
INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN
"OFFSHORE TRANSACTION" PURSUANT TO RULE 904 OF REGULATION S, (2) AGREES THAT IT
WILL NOT PRIOR TO (X) THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF
TIME AS PERMITTED BY RULE 144(K) UNDER THE SECURITIES ACT OR ANY SUCCESSOR
PROVISION THEREUNDER) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF
ANY PREDECESSOR OF THIS SECURITY) OR THE LAST DAY ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY OR ANY PREDECESSOR OF
THIS SECURITY AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE
LAWS (THE "RESALE RESTRICTION TERMINATION DATE"), OFFER, SELL OR OTHERWISE
TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND
SALES TO NON-US PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING
OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN ACCREDITED INVESTOR THAT IS
ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE
A-1-1 TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND; PROVIDED THAT THE COMPANY, THE TRUSTEE, THE
TRANSFER AGENT AND THE REGISTRAR SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER (I) PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY
A-1
<PAGE>
OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO
EACH OF THEM, AND (II) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A
CERTIFICATION OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS
SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS
LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION",
"UNITED STATES" AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES
A-2
<PAGE>
CHEMICAL LEAMAN CORPORATION
---------------------------
10-3/8% SENIOR NOTES DUE 2005, SERIES A
CUSIP No. __________
No. ___________
$ ___________
CHEMICAL LEAMAN CORPORATION, a Pennsylvania corporation (herein called
the "Company," which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
_______________ or registered assigns, the principal sum of _______________
Dollars on June 15, 2005, at the office or agency of the Company referred to
below, and to pay interest thereon on June 15 and December 15 (each an "Interest
Payment Date") of each year, commencing on December 15, 1997, accruing from the
Issue Date or from the most recent Interest Payment Date on which interest has
been paid or duly provided for, at the rate of 10-3/8% per annum, until the
principal hereof is paid or duly provided for. Interest shall be computed on the
basis of a 360-day year of twelve 30-day months.
The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date shall, as provided in the Indenture, be paid to the
person in whose name this Security is registered at the close of business on
June 1 and December 1 (each a "Regular Record Date"), whether or not a Business
Day, as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid, or duly provided for, and interest on such
defaulted interest at the then applicable interest rate borne by the Securities,
to the extent lawful, shall forthwith cease to be payable to the Holder on such
Regular Record Date, and may be paid to the person in whose name this Security
is registered at the close of business on a Special Record Date for the payment
of such defaulted interest to be fixed by the Trustee, notice of which shall be
given to Holders of Securities not less than 10 days prior to such Special
Record Date, or may be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in the Indenture.
Payment of the principal of, premium, if any, and interest on this
Security shall be made at the office or agency of the Company maintained for
that purpose in the Borough of Manhattan in The City of New York, State of New
York, or at such other office or agency of the Company as may be maintained for
such purpose, in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts;
provided, however, that payment of interest may be made at the option of the
Company by check mailed to the address of the Person entitled thereto as such
address shall appear on the Security Register.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof. Unless the certificate of authentication
hereon has been duly executed by the Trustee referred to on the reverse hereof
by manual signature, this Security shall not be entitled to any benefit under
the Indenture, or be valid or obligatory for any purpose.
[Remainder of Page Intentionally Left Blank]
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
CHEMICAL LEAMAN CORPORATION
By:____________________________________
Name:
Title:
By:____________________________________
Name:
Title:
Dated: ____________________
2
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
---------------------------------------
This is one of the 10-3/8% Senior Notes due 2005, Series A, referred
to in the within-mentioned Indenture.
FIRST UNION NATIONAL BANK,
as Trustee
By:____________________________________
Authorized Officer
Dated: _________________________________
<PAGE>
[REVERSE OF SECURITY]
1. Indenture. This Security is one of a duly authorized issue of Securities
of the Company designated as its 10-3/8% Senior Notes due 2005, Series A
(herein called the "Initial Securities"). The Securities are limited
(except as otherwise provided in the Indenture referred to below) in
aggregate principal amount to $100,000,000, which may be issued under an
indenture (herein called the "Indenture") dated as of June 16, 1997, by and
between the Company and First Union National Bank, as trustee (herein
called the "Trustee," which term includes any successor Trustee under the
Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights,
limitations of rights, duties, obligations and immunities thereunder of the
Company, the Trustee, any Guarantors and the Holders of the Securities, and
of the terms upon which the Securities are, and are to be, authenticated
and delivered. The Securities include the Initial Securities, the Private
Exchange Securities and the Unrestricted Securities (including the Exchange
Securities referred to below), issued in exchange for the Initial
Securities pursuant to the Registration Rights Agreement. The Initial
Securities, the Private Exchange Securities and the Unrestricted Securities
are treated as a single class of securities under the Indenture. All
capitalized terms used in this Security which are defined in the Indenture
and not otherwise defined herein shall have the meanings assigned to them
in the Indenture.
The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S.C. ss.ss. 77aaa-77bbbb) (the "TIA"), as in effect on the date of the
Indenture. Notwithstanding anything to the contrary herein, the Securities are
subject to all such terms, and Holders of Securities are referred to the
Indenture and the TIA for a statement of such terms. No reference herein to the
Indenture and no provisions of this Security or of the Indenture shall alter or
impair the obligation of the Company or any Guarantor, which is absolute and
unconditional, to pay the principal of, premium, if any, and interest on this
Security at the times, place, and rate, and in the coin or currency, herein
prescribed.
2. Optional Redemption. The Securities will be redeemable at the option of
the Company, in whole or in part, at any time on or after June 15, 2001, at
the Redemption Prices (expressed as percentages of principal amount) set
forth below, plus accrued and unpaid interest thereon, if any, to the
Redemption Date, if redeemed during the 12-month period beginning on June
15 of the years indicated below:
<TABLE>
<CAPTION>
REDEMPTION YEAR PRICE
<S> <C>
2001.................................................. 105.188%
2002.................................................. 103.458%
2003.................................................. 101.729%
2004 and thereafter................................... 100.000%
</TABLE>
3. Optional Redemption upon Public Equity Offering. On or prior to June 15,
2000, the Company may, at its option, use the net proceeds of a Public
Equity Offering to redeem up
2
<PAGE>
to 25% of the originally issued aggregate principal amount of the
Securities, at a Redemption Price in cash equal to 110.375% of the
principal amount thereof, plus accrued and unpaid interest thereon, if any,
to the Redemption Date; provided, however, that not less than $75.0 million
in aggregate principal amount of Securities is outstanding following such
redemption. Notice of any such redemption must be given not later than 60
days after the consummation of the Public Equity Offering. As used in the
preceding paragraph, a "Public Equity Offering" means an underwritten
public offering of Capital Stock (other than Redeemable Capital Stock) of
the Company made on a primary basis by the Company pursuant to a
registration statement filed with and declared effective by the Commission
in accordance with the Securities Act resulting in net cash proceeds to the
Company (after deducting any underwriting discounts and commissions) of at
least $50.0 million.
4. Offers to Purchase. Sections 10.10 and 10.15 of the Indenture provide that
upon the occurrence of a Change of Control and following certain Asset
Sales, and subject to certain conditions and limitations contained therein,
the Company shall make an offer to purchase all or a portion of the
Securities in accordance with the procedures set forth in the Indenture.
5. Defaults and Remedies. If an Event of Default occurs and is continuing,
the principal and premium, if any, of all of the Outstanding Securities,
plus all accrued and unpaid interest, if any, to and including the date the
Securities are paid, may be declared due and payable in the manner and with
the effect provided in the Indenture.
6. Defeasance. The Indenture contains provisions (which provisions apply to
this Security) for defeasance at any time of (a) the entire Indebtedness of
the Company and the Guarantors on this Security and (b) certain restrictive
covenants and related Defaults and Events of Default, in each case upon
compliance by the Company with certain conditions set forth therein.
7. Amendments and Waivers. The Indenture permits, with certain exceptions as
provided therein, the amendment thereof and the modification of the rights
and obligations of the Company and the rights of the Holders under the
Indenture at any time by the Company, the Guarantors and the Trustee with
the consent of the Holders of not less than a majority in aggregate
principal amount of the Securities at the time Outstanding. The Indenture
also contains provisions permitting the Holders of specified percentages in
aggregate principal amount of the Securities at the time Outstanding, on
behalf of the Holders of all the Securities, to waive compliance by the
Company with certain provisions of the Indenture and certain past Defaults
under the Indenture and this Security and their consequences. Any such
consent or waiver by or on behalf of the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of
such consent or waiver is made upon this Security.
8. Denominations, Transfer and Exchange. The Securities are issuable only in
registered form without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, the Securities are exchangeable for a like
aggregate principal amount of Securities of a different authorized
3
<PAGE>
denomination, as requested by the Holder surrendering the same. As provided
in the Indenture and subject to certain limitations therein set forth, the
transfer of this Security is registrable on the Security Register of the
Company, upon surrender of this Security for registration of transfer at
the office or agency of the Company maintained for such purpose in the
Borough of Manhattan in The City of New York, State of New York, or at such
other office or agency of the Company as may be maintained for such
purpose, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing,
and thereupon one or more new Securities, of authorized denominations and
for the same aggregate principal amount, will be issued to the designated
transferee or transferees. No service charge shall be made for any
registration of transfer or exchange or redemption of Securities, but the
Company may, under certain circumstances, require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
9. Persons Deemed Owners. Prior to and at the time of due presentment of this
Security for registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the person in whose name this
Security is registered as the owner hereof for all purposes, whether or not
this Security shall be overdue, and neither the Company, the Trustee nor
any agent shall be affected by notice to the contrary.
10. Registration Rights. Pursuant to the Registration Rights Agreement by and
between the Company and the Initial Purchasers, the Company will be
obligated to consummate an exchange offer pursuant to which the Holder of
this Security shall have the right to exchange this Security for 10-3/8%
Senior Notes due 2005, Series B, of the Company (herein called the
"Exchange Securities"), which have been registered under the Securities
Act, in like principal amount and having identical terms as the Securities
(other than as set forth in this paragraph). The Holders of Securities
shall be entitled to receive certain additional interest payments in the
event such exchange offer is not consummated and upon certain other
conditions, all pursuant to and in accordance with the terms of the
Registration Rights Agreement.
11. GOVERNING LAW. THE INDENTURE, THIS SECURITY AND ANY SECURITY GUARANTEE SET
FORTH BELOW SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAW. The Company will furnish to any Holder of a Security
upon written request and without charge a copy of the Indenture. Requests
may be made to:
CHEMICAL LEAMAN CORPORATION
102 Pickering Way
Exton, Pennsylvania 19341.
4
<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Security, fill in the form below
and have your signature guaranteed: I or we assign and transfer this Security to
_____________________________________________
(Insert assignee's social security or tax ID number)
________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for such agent. In connection with any transfer of
this Security occurring prior to the date which is the earlier of (i) the date
of the declaration by the Commission of the effectiveness of a registration
statement under the Securities Act of 1933, as amended (the "Securities Act"),
covering resales of this Security (which effectiveness shall not have been
suspended or terminated at the date of the transfer) and (ii) the date two years
(or such shorter period of time as permitted by Rule 144(k) under the Securities
Act or any successor provision thereunder) after the later of the original
issuance date appearing on the face of this Security (or any predecessor
thereto) or the last date on which the Company or any Affiliate of the Company
was the owner of this Security (or any predecessor thereto), the undersigned
confirms that it has not utilized any general solicitation or general
advertising in connection with the transfer and that:
[Check One]
[ ] (a) this Security is being transferred in compliance with the exemption
from registration under the Securities Act provided by Rule 144A thereunder.
or
[ ] (b) this Security is being transferred other than in accordance with (a)
above and documents, including (i) a transferee certificate substantially in the
form of Exhibit C to the Indenture in the case of a transfer to non-QIB
Accredited Investors or (ii) a transferor certificate substantially in the form
of Exhibit D to the Indenture in the case of a transfer pursuant to Regulation
S, are being furnished which comply with the conditions of transfer set forth in
this Security and the Indenture. If none of the foregoing boxes is checked and,
in the case of (b) above, if the appropriate document is not attached or
otherwise furnished to the Trustee, the Trustee or Registrar shall not be
obligated to register this Security in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 3.16 of the Indenture shall have
been satisfied.
<PAGE>
Date: ______________ Your signature: ________________________________
(Sign exactly as your name appears
on the other side of this Security)
By:___________________________________
NOTICE: To be executed by an executive officer
Signature Guarantee:____________________
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A (including the information
specified in Rule 144A(d)(4)) or has determined not to request such information
and that it is aware that the transferor is relying upon the undersigned's
foregoing representations in order to claim the exemption from registration
provided by Rule 144A.
Dated: ______________ ________________
NOTICE: To be executed by an executive officer
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Security purchased by the Company pursuant to
Section 10.10 or 10.15 of the Indenture, check the appropriate box:
Section 10.10 [ ] Section 10.15 [ ]
If you wish to have a portion of this Security purchased by the
Company pursuant to Section 10.10 or 10.15 of the Indenture, state the amount:
$_________________
Date: ______________ Your signature: __________________________
(Sign exactly as your name appears
on the other side of this Security)
By:___________________________________
NOTICE: To be executed by an executive officer
Signature Guarantee:____________________
<PAGE>
EXHIBIT A-2
-----------
CHEMICAL LEAMAN CORPORATION
---------------------------
10-3/8% SENIOR NOTES DUE 2005, SERIES B
CUSIP No. __________
No. ___________ $ ___________
CHEMICAL LEAMAN CORPORATION, a Pennsylvania corporation (herein called
the "Company," which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
_______________ or registered assigns, the principal sum of _______________
Dollars on June 15, 2005, at the office or agency of the Company referred to
below, and to pay interest thereon on June 15 and December 15 (each an "Interest
Payment Date"), of each year, commencing on December 15, 1997, accruing from the
Issue Date or from the most recent Interest Payment Date on which interest has
been paid or duly provided for, at the rate of 10-3/8% per annum, until the
principal hereof is paid or duly provided for. Interest shall be computed on the
basis of a 360-day year of twelve 30-day months. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date shall, as
provided in the Indenture, be paid to the person in whose name this Security is
registered at the close of business on June 1 and December 1 (each a "Regular
Record Date"), whether or not a Business Day, as the case may be, next preceding
such Interest Payment Date. Any such interest not so punctually paid, or duly
provided for, and interest on such defaulted interest at the then applicable
interest rate borne by the Securities, to the extent lawful, shall forthwith
cease to be payable to the Holder on such Regular Record Date, and may be paid
to the person in whose name this Security is registered at the close of business
on a Special Record Date for the payment of such defaulted interest to be fixed
by the Trustee, notice of which shall be given to Holders of Securities not less
than 10 days prior to such Special Record Date, or may be paid at any time in
any other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in the Indenture.
Payment of the principal of, premium, if any, and interest on this
Security shall be made at the office or agency of the Company maintained for
that purpose in the Borough of Manhattan in The City of New York, State of New
York, or at such other office or agency of the Company as may be maintained for
such purpose, in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts;
provided, however, that payment of interest may be made at the option of the
Company by check mailed to the address of the Person entitled thereto as such
address shall appear on the Security Register.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof. Unless the certificate of authentication
hereon has been duly executed by the Trustee referred to on the reverse hereof
by manual signature, this Security shall not be entitled to any benefit under
the Indenture, or be valid or obligatory for any purpose.
[Remainder of Page Intentionally Left Blank]
A-2-1
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
CHEMICAL LEAMAN CORPORATION
By:____________________________________
Name:
Title:
By:____________________________________
Name:
Title:
Dated:
A-2-2
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
---------------------------------------
This is one of the 10-3/8% Senior Notes due 2005, Series B, referred
to in the within-mentioned Indenture.
FIRST UNION NATIONAL BANK,
as Trustee
By:____________________________________
Authorized Officer
Dated:
<PAGE>
[REVERSE OF SECURITY]
1. Indenture. This Security is one of a duly authorized issue of Securities
of the Company designated as its 10-3/8% Senior Notes due 2005, Series B
(herein called the "Unrestricted Securities"). The Securities are limited
(except as otherwise provided in the Indenture referred to below) in
aggregate principal amount to $100,000,000, which may be issued under an
indenture (herein called the "Indenture") dated as of June 16, 1997, by and
between the Company and First Union National Bank, as trustee (herein
called the "Trustee," which term includes any successor Trustee under the
Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights,
limitations of rights, duties, obligations and immunities thereunder of the
Company, the Trustee, any Guarantors and the Holders of the Securities, and
of the terms upon which the Securities are, and are to be, authenticated
and delivered. The Securities include the Initial Securities, the Private
Exchange Securities and the Unrestricted Securities (including the Exchange
Securities), issued in exchange for the Initial Securities pursuant to the
Registration Rights Agreement. The Initial Securities, the Private
Exchange Securities and the Unrestricted Securities are treated as a single
class of securities under the Indenture. All capitalized terms used in
this Security which are defined in the Indenture and not otherwise defined
herein shall have the meanings assigned to them in the Indenture.
The terms of the Securities include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S.C. ss.ss. 77aaa-77bbbb) (the "TIA"), as in effect on the date of
the Indenture. Notwithstanding anything to the contrary herein, the
Securities are subject to all such terms, and Holders of Securities are
referred to the Indenture and the TIA for a statement of such terms. No
reference herein to the Indenture and no provisions of this Security or of
the Indenture shall alter or impair the obligation of the Company or any
Guarantor, which is absolute and unconditional, to pay the principal of,
premium, if any, and interest on this Security at the times, place, and
rate, and in the coin or currency, herein prescribed.
2. Optional Redemption. The Securities will be redeemable at the option of
the Company, in whole or in part, at any time on or after June 15, 2001, at
the Redemption Prices (expressed as percentages of principal amount) set
forth below, plus accrued and unpaid interest thereon, if any, to the
Redemption Date, if redeemed during the 12-month period beginning on June
15 of the years indicated below:
<TABLE>
<CAPTION>
REDEMPTION YEAR PRICE
<S> <C>
2001............................... 105.188%
2002............................... 103.458%
2003............................... 101.729%
2004 and thereafter................ 100.000%
</TABLE>
3. Optional Redemption upon Public Equity Offering. On or prior to June 15,
2000, the Company may, at its option, use the net proceeds of a Public
Equity Offering to redeem up
2
<PAGE>
to 25% of the originally issued aggregate principal amount of the
Securities, at a Redemption Price in cash equal to 110.375% of the
principal amount thereof, plus accrued and unpaid interest thereon, if any,
to the Redemption Date; provided, however, that not less than $75.0 million
in aggregate principal amount of Securities is outstanding following such
redemption. Notice of any such redemption must be given not later than 60
days after the consummation of the Public Equity Offering. As used in the
preceding paragraph, a "Public Equity Offering" means an underwritten
public offering of Capital Stock (other than Redeemable Capital Stock) of
the Company made on a primary basis by the Company pursuant to a
registration statement filed with and declared effective by the Commission
in accordance with the Securities Act resulting in net cash proceeds to the
Company (after deducting any underwriting discounts and commissions) of at
least $50.0 million.
4. Offers to Purchase. Sections 10.10 and 10.15 of the Indenture provide that
upon the occurrence of a Change of Control and following certain Asset
Sales, and subject to certain conditions and limitations contained therein,
the Company shall make an offer to purchase all or a portion of the
Securities in accordance with the procedures set forth in the Indenture.
5. Defaults and Remedies. If an Event of Default occurs and is continuing,
the principal and premium, if any, of all of the Outstanding Securities,
plus all accrued and unpaid interest, if any, to and including the date the
Securities are paid, may be declared due and payable in the manner and with
the effect provided in the Indenture.
6. Defeasance. The Indenture contains provisions (which provisions apply to
this Security) for defeasance at any time of (a) the entire Indebtedness of
the Company and the Guarantors on this Security and (b) certain restrictive
covenants and related Defaults and Events of Default, in each case upon
compliance by the Company with certain conditions set forth therein.
7. Amendments and Waivers. The Indenture permits, with certain exceptions as
provided therein, the amendment thereof and the modification of the rights
and obligations of the Company and the rights of the Holders under the
Indenture at any time by the Company, the Guarantors and the Trustee with
the consent of the Holders of not less than a majority in aggregate
principal amount of the Securities at the time Outstanding. The Indenture
also contains provisions permitting the Holders of specified percentages in
aggregate principal amount of the Securities at the time Outstanding, on
behalf of the Holders of all the Securities, to waive compliance by the
Company with certain provisions of the Indenture and certain past Defaults
under the Indenture and this Security and their consequences. Any such
consent or waiver by or on behalf of the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of
such consent or waiver is made upon this Security.
8. Denominations, Transfer and Exchange. The Securities are issuable only in
registered form without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the
B-3
<PAGE>
Indenture and subject to certain limitations therein set forth, the
Securities are exchangeable for a like aggregate principal amount of
Securities of a different authorized denomination, as requested by the
Holder surrendering the same. As provided in the Indenture and subject to
certain limitations therein set forth, the transfer of this Security is
registrable on the Security Register of the Company, upon surrender of this
Security for registration of transfer at the office or agency of the
Company maintained for such purpose in the Borough of Manhattan in The City
of New York, State of New York, or at such other office or agency of the
Company as may be maintained for such purpose, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new
Securities, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or
transferees.
No service charge shall be made for any registration of transfer or
exchange or redemption of Securities, but the Company may, under certain
circumstances, require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith.
9. Persons Deemed Owners. Prior to and at the time of due presentment of this
Security for registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the person in whose name this
Security is registered as the owner hereof for all purposes, whether or not
this Security shall be overdue, and neither the Company, the Trustee nor
any agent shall be affected by notice to the contrary.
10. GOVERNING LAW. THE INDENTURE, THIS SECURITY AND ANY SECURITY GUARANTEE SET
FORTH BELOW SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAW.
The Company will furnish to any Holder of a Security upon written request
and without charge a copy of the Indenture. Requests may be made to:
CHEMICAL LEAMAN CORPORATION
102 Pickering Way
Exton, Pennsylvania 19341.
B-4
<PAGE>
ASSIGNMENT FORM
---------------
If you the holder want to assign this Security, fill in the form below
and have your signature guaranteed:
I or we assign and transfer this Security to
_______________________________________________________________________________
(Insert assignee's social security or tax ID number)________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint__________________________________________________ agent
to transfer this Security on the books of the Company. The agent may substitute
another to act for such agent.
Date: __________________ Your signature:_____________________________________
(Sign exactly as your name appears on
the other side of this Security)
By:____________________________________
NOTICE: To be executed by an executive officer
Signature Guarantee:___________________
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
----------------------------------
If you wish to have this Security purchased by the Company pursuant to
Section 10.10 or 10.15 of the Indenture, check the appropriate box:
Section 10.10 [ ] Section 10.15 [ ]
If you wish to have a portion of this Security purchased by the
Company pursuant to Section 10.10 or 10.15 of the Indenture, state the amount:
$_______________
Date:____________________ Your signature:________________________
(Sign exactly as your name appears on
the other side of this Security)
By:__________________________________
NOTICE: To be executed by an executive officer
Signature Guarantee:_________________
<PAGE>
EXHIBIT B
---------
FORM OF LEGEND FOR BOOK-ENTRY SECURITIES
Any Global Security authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Security) in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS SECURITY IS NOT
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS
SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A
NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE INDENTURE. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
B-1
<PAGE>
EXHIBIT C
---------
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
-----------------------------------------
Chemical Leaman Corporation
102 Pickering Way
Exton, Pennsylvania 19341
Ladies and Gentlemen:
In connection with our proposed purchase of $______ aggregate
principal amount of the 10-3/8% Senior Securities due 2005 (the "Securities" of
Chemical Leaman Corporation (the "Company"), we confirm that:
1. We understand that the Securities have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and, unless
so registered, may not be sold except as permitted in the following
sentence. We agree on our own behalf and on behalf of any investor
account for which we are purchasing Securities to offer, sell or
otherwise transfer such Securities prior to (x) the date which is two
years (or such shorter period of time as permitted by Rule 144(k)
under the Securities Act) after the later of the date of original
issue of the Securities and the last date on which the Company or any
affiliate of the Company was the owner of the Securities or any
predecessor thereto and (y) such later date, if any, as may be
required by any subsequent change in applicable law (the "Resale
Restriction Termination Date") only (a) to the Company, (b) pursuant
to a registration statement which has been declared effective under
the Securities Act, (c) so long as the Securities are eligible for
resale pursuant to Rule 144A under the Securities Act, to a person we
reasonably believe is a "qualified institutional buyer" under Rule
144A (a "QIB") that purchases for its own account or for the account
of a QIB and to whom notice is given that the transfer is being made
in reliance on Rule 144A, (d) pursuant to offers and sales to non-U.S.
persons that occur outside the United States within the meaning of
Regulation S under the Securities Act, (e) to an institutional
"accredited investor" within the meaning of subparagraph (a)(1), (2),
(3) or (7) of Rule 501 under the Securities Act (an "Accredited
Investor") that is purchasing for its own account or for the account
of such an Accredited Investor for investment purposes and not with a
view to, or for offer or sale in connection with, any distribution in
violation of the Securities Act, or (f) pursuant to any other
available exemption from the registration requirements of the
Securities Act, subject, in each of the foregoing cases, to any
requirement of law that the disposition of our property or the
property of such investor account or accounts be at all times within
our or their control and to compliance with any applicable state
securities laws. The foregoing restrictions on resale will not apply
subsequent to the Resale Restriction Termination Date. If any
resale or other transfer of the Securities is proposed to be made
pursuant to clause (c) above prior to the Resale Restriction
Termination Date, the transferor shall
C-1
<PAGE>
deliver a letter from the transferee substantially in the form of this
letter to the Trustee, which shall provide, among other things, that
the transferee is an Accredited Investor within the meaning of
subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Securities
Act and that it is acquiring such Securities for investment purposes
and not for distribution in violation of the Securities Act. Each
purchaser acknowledges that the Company, the Trustee and the Transfer
Agent and Registrar reserve the right prior to any offer, sale or
other transfer prior to the Resale Restriction Termination Date of the
Securities pursuant to clause (d), (e) or (f) above to require the
delivery of an opinion of counsel, certification and/or other
information satisfactory to the Company and the Trustee.
2. We are an Accredited Investor or a QIB purchasing Securities for our
own account or for the account of one or more Accredited Investors,
and we are acquiring the Securities for investment purposes and not
with a view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act or the securities laws
of any state of the United States and we have such knowledge and
experience in financial and business matters as to be capable of
evaluating the merits and risks of our investment in the Securities,
and we and any accounts for which we are acting are each able to bear
the economic risk of our or its investment in the Securities for an
indefinite period.
3. We are acquiring the Securities purchased by us for our own account or
for one or more accounts as to each of which we exercise sole
investment discretion and we and any such account are (a) a QIB, aware
that the sale is being made in reliance on Rule 144A under the
Securities Act, (b) an Accredited Investor, or (c) a person other than
a U.S. person ("foreign purchasers"), which term shall include dealers
or other professional fiduciaries in the United States acting on a
discretionary basis for foreign beneficial owners (other than an
estate or trust) in offshore transactions meeting the requirements of
Rules 903 and 904 of Regulation S under the Securities Act.
4. We have received a copy of the Offering Memorandum and acknowledge
that we have had access to such financial and other information, and
have been afforded the opportunity to ask such questions of
representatives of the Company and receive answers thereto, as we deem
necessary in order to verify the information contained in the Offering
Memorandum.
We understand that the Trustee and the Transfer Agent will not be
required to accept for registration of transfer any Securities acquired by us,
except upon presentation of evidence satisfactory to the Company and the Trustee
that the foregoing restrictions on transfer have been complied with. We further
understand that the Securities purchased by us will be in the form of definitive
physical certificates and that such certificates will bear a legend reflecting
the substance of this paragraph. We further agree to provide to any person
acquiring any of the Securities from us a notice advising such person that
transfers of such Securities are restricted as stated herein and that
certificates representing such Securities will bear a legend to that effect. We
represent that you, the Company, the Trustee and others are entitled to rely
upon the truth and accuracy of our acknowledgements, representations and
agreements set forth herein, and we agree to notify you
C-2
<PAGE>
promptly in writing if any of our acknowledgements, representations or
agreements herein cease to be accurate and complete. You are also irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceeding or official inquiry with respect to the
matters covered hereby. We represent to you that we have full power to make the
foregoing acknowledgements, representations and agreements on our own behalf and
on behalf of any investor account for which we are acting as fiduciary agent. As
used herein, the terms "offshore transaction," "United States" and "U.S. person"
have the respective meanings given to them in Regulation S under the Securities
Act. THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.
Very truly yours,
(Name of Purchaser)
By:________________________________
Date:______________________________
Upon transfer, the Securities would be registered in the name of the
new beneficial owner as follows:
Name:______________________________
Address:______________________________
C-3
<PAGE>
EXHIBIT D
---------
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S
------------------------
Date: ______________, ____
First Union National Bank
40 Broad Street
Suite 550, Fifth Floor
New York, New York 10004
Attention: Corporate Trustee Administration
Re: Chemical Leaman Corporation (the "Company")
10-3/8% Senior Notes due 2005 (the "Securities")
Ladies and Gentlemen:
In connection with our proposed sale of $__________ aggregate
principal amount of the Securities, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the U.S. Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Securities was not made to a person in the United
States;
(2) either (a) at the time the buy offer was originated, the transferee
was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we
nor any person acting on our behalf knows that the transaction has
been pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act;
(5) we have advised the transferee of the transfer restrictions applicable
to the Securities;
(6) if the circumstances set forth in Rule 904(c) under the Securities Act
are applicable, we have complied with the additional conditions
therein, including (if applicable) sending a confirmation or other
notice stating that the Securities may be offered and sold during the
restricted period specified in Rule 903(c)(2) or (3), as applicable,
in
D-1
<PAGE>
accordance with the provisions of Regulation S; pursuant to
registration of the Securities under the Securities Act; or pursuant
to an available exemption from the registration requirements under the
Securities Act; and
(7) if the sale is made during a restricted period and the provisions of
Rule 903(c)(3) are applicable thereto, we confirm that such sale has
been made in accordance with such provisions.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:_____________________________
Authorized Signature
D-2
<PAGE>
EXHIBIT E
---------
FORM OF SECURITY GUARANTEE
--------------------------
For value received, the undersigned hereby fully and unconditionally
guarantees to the Holder of this Security the cash payments in United States
dollars of principal of, premium, if any, and interest on this Security in the
amounts and at the time when due and interest on the overdue principal, premium,
if any, and interest, if any, on this Security, if lawful, and the payment or
performance of all other obligations of the Company under the Indenture or the
Securities, to the Holder of this Security and the Trustee, all in accordance
with and subject to the terms and limitations of this Security, Article Thirteen
of the Indenture and this Security Guarantee. This Security Guarantee will
become effective in accordance with Article Thirteen of the Indenture and its
terms shall be evidenced therein. The validity and enforceability of any
Security Guarantee shall not be affected by the fact that it is not affixed to
any particular Security. Capitalized terms used but not defined herein shall
have the meanings ascribed to them in the Indenture dated as of June 16, 1997,
by and between Chemical Leaman Corporation and The First Union National Bank, as
Trustee, as amended or supplemented (the "Indenture").
The obligations of the undersigned to the Holders of Securities and to
the Trustee pursuant to the Security Guarantee and the Indenture are expressly
set forth in Article Thirteen of the Indenture and reference is hereby made to
the Indenture for the precise terms of the Security Guarantee and all of the
other provisions of the Indenture to which this Security Guarantee relates.
THIS SECURITY GUARANTEE WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW. THE GUARANTORS HEREUNDER AGREES TO SUBMIT TO THE NON-
EXCLUSIVE JURISDICTION OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THE INDENTURE, THE SECURITIES OR THIS SECURITY
GUARANTEE.
This Security Guarantee is subject to release upon the terms set forth
in the Indenture.
IN WITNESS WHEREOF, the undersigned Guarantor has caused this Security
Guarantee to be duly executed.
Dated:
[NAME OF GUARANTOR]
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
E-1
<PAGE>
EXHIBIT 4.8
________________________________________________________________________________
Chemical Leaman Corporation
as Issuer,
$100,000,000
10?% SENIOR NOTES DUE 2005
______________________________
____________________
First Supplemental Indenture
Dated as of August 12, 1998
____________________
____________________
First Union National Bank
____________________
Trustee
________________________________________________________________________________
<PAGE>
FIRST SUPPLEMENTAL INDENTURE dated as of August 12, 1998, between
Chemical Leaman Corporation, a Pennsylvania corporation (the "Company"), as
issuer, and First Union National Bank, as trustee (the "Trustee"), to the
INDENTURE, dated as of June 16, 1997, between the Company and the Trustee.
Section 1. Amendments to the Indenture
---------------------------
(a) The following covenants and all references thereto are hereby
deleted from the Indenture: Sections 8.01, 8.02, 10.03, 10.07, 10.09, 10.11,
10.13, 10.14, 10.16, 10.17, 10.18, 10.19 and 10.20.
(b) The following Events of Default and all references thereto are
hereby deleted from the Indenture: clauses (c), (d), (e), (f), (g) and (k) of
Section 5.01, as they relate to compliance with the covenants contained in
Sections 8.01, 8.02, 10.03, 10.07, 10.09, 10.11, 10.13, 10.14, 10.16, 10.17,
10.18, 10.19 and 10.20, and clauses (e), (f), (g) and (k) of Section 5.01, as
they relate to defaults with respect to other indebtedness or judgments rendered
in court.
(c) All definitions in the Indenture which are used exclusively in
the Sections and clauses pursuant to (a) and (b) above are hereby deleted.
Section 2. Effectiveness; Operativeness; Termination
-----------------------------------------
(a) This First Supplemental Indenture will become effective and
binding upon the Company, the Trustee and the Holders of the Notes as of the day
and year first above written and (b) this First Supplemental Indenture will
become operative upon the Payment Date (as defined in the Offer to Purchase and
Consent Solicitation Statement dated July 28, 1998); provided, however, that if
-------- -------
the Offer (as defined in the Offer to Purchase and Consent Solicitation
Statement dated July 28, 1998) is terminated or withdrawn, or those Notes
validly tendered prior to the Expiration Date are not purchased pursuant to the
Offer, this Supplemental Indenture shall not become operative.
Section 3. Reference to and Effect on the Indenture
----------------------------------------
(a) On and after the effective date of this First Supplemental
Indenture, each reference in the Indenture to "this Indenture," "hereunder,"
"hereof," or "herein" shall mean and be a reference to the Indenture as
supplemented by this First Supplemental Indenture unless the context otherwise
requires.
(b) Except as specifically amended above, the Indenture shall
remain in full force and effect and is hereby ratified and confirmed.
Section 4. Governing Law
-------------
This First Supplemental Indenture shall be construed and enforced in
accordance with the laws of the State of New York.
<PAGE>
Section 5. Defined Terms
-------------
Capitalized terms used herein and not defined shall have the
respective meanings given such terms in the Indenture.
Section 6. Counterparts and Method of Execution
------------------------------------
This First Supplemental Indenture may be executed in several
counterparts, all of which together shall constitute one agreement binding on
all parties hereto, notwithstanding that all the parties have not signed the
same counterpart.
Section 7. Titles
------
Section titles are for descriptive purposes only and shall not
control or alter the meaning of this First Supplemental Indenture as set forth
in the text.
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be executed as of the day and year first above
written.
Chemical Leaman Corporation
By: __________________________
Its:
First Union National Bank,
as Trustee
By: __________________________
Its:
3
<PAGE>
EXHIBIT 4.11
REGISTRATION RIGHTS AGREEMENT
Dated as of June 9, 1998
Among
MTL INC.
as Issuer
THE GUARANTORS NAMED HEREIN
and
BT ALEX. BROWN INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
SALOMON BROTHERS INC
as Initial Purchasers
$100,000,000
10% SENIOR SUBORDINATED NOTES DUE 2006
$40,000,000
FLOATING INTEREST RATE SUBORDINATED TERM
SECURITIES DUE 2006
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement"), dated as of
---------
June 9, 1998, is being entered into among MTL Inc., a corporation organized
under the laws of the State of Florida (the "Company"), each of the subsidiaries
-------
of the Company listed on the signature pages hereto (the "Guarantors" and,
----------
together with the Company, the "Issuers") and BT Alex. Brown Incorporated,
-------
Credit Suisse First Boston Corporation and Salomon Brothers Inc (collectively,
the "Initial Purchasers").
------------------
This Agreement is being entered into in connection with the Purchase
Agreement, dated as of June 14, 1998, among the Company, the Guarantors and the
Initial Purchasers (the "Purchase Agreement"), which provides for the sale by
------------------
the Company to the Initial Purchasers of $100,000,000 aggregate principal amount
of the Company's 10% Senior Subordinated Notes Due 2006 (the "Fixed Rate Notes")
----------------
and $40,000,000 aggregate principal amount of the Company's Floating Interest
Rate Subordinated Term Securities due 2006 (the "Floating Rate Notes", and
-------------------
together with the Fixed Rate Notes, the "Notes"), in each case guaranteed by the
-----
Guarantors (the "Guarantees"). In order to induce the Initial Purchasers to
----------
enter into the Purchase Agreement, the Issuers have agreed to provide the
registration rights set forth in this Agreement for the benefit of the Initial
Purchasers and their direct and indirect transferees. The execution and
delivery of this Agreement is a condition to the obligation of the Initial
Purchasers to purchase the Notes under the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
-----------
As used in this Agreement, the following terms shall have the
following meanings:
Additional Interest: See Section 4(a) hereof.
-------------------
Advice: See the last paragraph of Section 5 hereof.
------
Agreement: See the first introductory paragraph hereto.
---------
Applicable Period: See Section 2(b) hereof.
-----------------
<PAGE>
-2-
Closing Date: The Closing Date as defined in the Purchase Agreement.
------------
Company: See the first introductory paragraph hereto.
-------
Effectiveness Date: The 210th day after the Issue Date; provided,
------------------ --------
however, that with respect to any Shelf Registration other than a Shelf
- -------
Registration if no Exchange Registration Statement has been filed, the
Effectiveness Date shall be the 60th day after the applicable Registration
Statement with respect thereto is filed.
Effectiveness Period: See Section 3(a) hereof.
--------------------
Event Date: See Section 4(b) hereof.
----------
Exchange Act: The Securities Exchange Act of 1934, as amended, and
------------
the rules and regulations of the SEC promulgated thereunder.
Exchange Notes: See Section 2(a) hereof.
--------------
Exchange Offer: See Section 2(a) hereof.
--------------
Exchange Registration Statement: See Section 2(a) hereof.
-------------------------------
Filing Date: The 150th day after the Issue Date.
-----------
Fixed Rate Notes: See the introductory paragraphs hereto.
----------------
Fixed Rate Exchange Notes: See section 2(a) hereof.
-------------------------
Floating Rate Notes: See the introductory paragraphs hereto.
-------------------
Floating Rate Exchange Notes: See section 2(a) hereof.
----------------------------
Guarantors: See the first introductory paragraph hereto.
----------
Holder: Any holder of a Registrable Note or Registrable Notes.
------
Indemnified Person: See Section 7(c) hereof.
------------------
<PAGE>
-3-
Indemnifying Person: See Section 7(c) hereof.
-------------------
Indenture: The Indenture, dated as of June 9, 1998 among the Company,
---------
the Guarantors and United States Trust Company of New York, as trustee, pursuant
to which the Notes and the Guarantees are being issued, as amended or
supplemented from time to time in accordance with the terms thereof.
Initial Purchasers: See the first introductory paragraph hereto.
------------------
Inspectors: See Section 5(o) hereof.
----------
Issue Date: The date on which the Notes were sold to the Initial
----------
Purchasers pursuant to the Purchase Agreement.
Issuers: See the first introductory paragraph hereto.
-------
NASD: See Section 5(s) hereof.
----
Notes: See the second introductory paragraph hereto.
-----
Participant: See Section 7(a) hereof.
-----------
Participating Broker-Dealer: See Section 2(a) hereof.
---------------------------
Person: An individual, corporation, partnership, limited liability
------
company, trust, or joint venture, or a governmental agency or political
subdivision thereof or other legal entity.
Private Exchange: See Section 2(b) hereof.
----------------
Private Exchange Notes: See Section 2(b) hereof.
----------------------
Prospectus: The prospectus included in any Registration Statement
----------
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, and all other amendments and supplements to the
Prospectus, with respect to the terms of the offering of any portion of the
Registrable Notes covered by such Registration Statement including post-
effective amend-
<PAGE>
-4-
ments, and all material incorporated by reference or deemed to be incorporated
by reference in such Prospectus.
Purchase Agreement: See the second introductory paragraph hereto.
------------------
Records: See Section 5(o) hereof.
-------
Registrable Notes: Each Note upon original issuance of the Notes and
-----------------
at all times subsequent thereto, each Exchange Note as to which Section 2(c)(iv)
hereof is applicable upon original issuance and at all times subsequent thereto
and each Private Exchange Note upon original issuance thereof and at all times
subsequent thereto, until in the case of any such Note, Exchange Note or Private
Exchange Note, as the case may be, the earliest to occur of (i) a Registration
Statement (other than, with respect to any Exchange Note as to which Section
2(c)(iv) hereof is applicable, the Exchange Registration Statement) covering
such Note, Exchange Note or Private Exchange Note, as the case may be, has been
declared effective by the SEC and such Note (unless such Note was not tendered
for exchange by the Holder thereof), Exchange Note or Private Exchange Note, as
the case may be, has been disposed of in accordance with such effective
Registration Statement, (ii) such Note, Exchange Note or Private Exchange Note,
as the case may be, is sold in compliance with Rule 144 or may be sold pursuant
to Rule 144(k), (iii) such note has been exchanged for an Exchange Note or
Exchange Notes pursuant to an Exchange Offer and is entitled to be resold
without complying with the prospectus delivery requirements of the Securities
Act or (iv) such Note, Exchange Note or Private Exchange Note, as the case may
be, ceases to be outstanding for purposes of the Indenture.
Registration Statement: Any registration statement of the Company and
----------------------
the Guarantors, including, but not limited to, the Exchange Registration
Statement and any registration statement filed with the SEC pursuant to the
provisions of this Agreement, including post-effective amendments, all exhibits,
and all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as such Rule
--------
may be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such
<PAGE>
-5-
securities being free of the registration and prospectus delivery requirements
of the Securities Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as such
---------
Rule may be amended from time to time, or any similar rule (other than Rule 144)
or regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as such Rule
--------
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
---
Securities Act: The Securities Act of 1933, as amended, and the rules
--------------
and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(c) hereof.
------------
Shelf Registration: See Section 3(a) hereof.
------------------
TIA: The Trust Indenture Act of 1939, as amended.
---
Trustee: The trustee under the Indenture and, if existent, the
-------
trustee under any indenture governing the Exchange Notes and Private Exchange
Notes (if any).
Underwritten registration or underwritten offering: A registration in
--------------------------------------------------
which securities of one or more of the Issuers are sold to an underwriter for
reoffering to the public.
2. Exchange Offer
--------------
(a) The Issuers agree to file with the SEC no later than the Filing
Date an offer to exchange (the "Exchange Offer") any and all of the Registrable
--------------
Notes (other than the Private Exchange Notes, if any) for a like aggregate
principal amount of senior subordinated notes of the Company, guaranteed on a
senior subordinated basis by the Guarantors, that are identical in all material
respects to the Fixed Rate Notes and the Floating Rate Notes, as applicable,
(and that are entitled to the benefits of the Indenture or a trust indenture
that is identical in all material respects to the Indenture (other than such
changes to the Indenture or any such identical trust indenture as are necessary
to comply with any requirements of the SEC to effect or maintain the
qualification thereof under the TIA) and
<PAGE>
-6-
that, in either case, has been qualified under the TIA), except that the
Exchange Notes (other than Private Exchange Notes, if any) shall have been
registered pursuant to an effective Registration Statement under the Securities
Act and shall contain no restrictive legend thereon (the "Fixed Rate Exchange
-------------------
Notes" and the "Floating Rate Exchange Notes," respectively, and together, the
- ----- ----------------------------
"Exchange Notes"). The Exchange Offer shall be registered under the Securities
--------------
Act on an appropriate form (the "Exchange Registration Statement") and shall
-------------------------------
comply with all applicable tender offer rules and regulations under the Exchange
Act. The Issuers agree to use their commercially reasonable efforts to (x) cause
the Exchange Registration Statement to be declared effective under the
Securities Act on or before the Effectiveness Date; (y) keep the Exchange Offer
open for at least 20 business days (or longer if required by applicable law)
after the date that notice of the Exchange Offer is mailed to Holders; and (z)
consummate the Exchange Offer on or before the 240th day following the Issue
Date. If after such Exchange Registration Statement is declared effective by the
SEC, the Exchange Offer or the issuance of the Exchange Notes thereunder is
interfered with by any stop order, injunction or other order or requirement of
the SEC or any other governmental agency or court, such Exchange Registration
Statement shall be deemed not to be effective for purposes of this Agreement.
Each Holder who participates in the Exchange Offer will be required to
represent that any Exchange Notes received by it will be acquired in the
ordinary course of its business, that at the time of the commencement of the
Exchange Offer such Holder will have no arrangement or understanding with any
Person to participate in the distribution (within the meaning of the Securities
Act) of the Exchange Notes in violation of the provisions of the Securities Act,
that such Holder is not an affiliate of the Company or any Guarantor within the
meaning of the Securities Act and that if such Holder is not a broker-dealer,
that it is not engaged in, and does not intend to engage in, the distribution of
Exchange Notes and is not acting on behalf of any persons or entities who could
not truthfully make the foregoing representations. In addition, each broker-
dealer that desires to participate in the Exchange Offer and to receive Exchange
Notes for its own account will be required to represent that the Notes being
tendered by such broker-dealer were acquired as a result of market-making or
other trading activities and not in transactions directly with any Issuer or an
affiliate thereof and that it will deliver a prospectus in connection with any
resale of such Exchange Notes (a "Participat-
----------
<PAGE>
-7-
ing Broker-Dealer"). A broker-dealer that is not able to make the foregoing
- -----------------
representation will not be permitted to participate in the Exchange Offer.
Upon consummation of the Exchange Offer in accordance with this
Section 2, the provisions of this Agreement shall continue to apply mutatis
-------
mutandis, solely with respect to Registrable Notes that are Private Exchange
- --------
Notes and Exchange Notes held by Participating Broker-Dealers, the Issuers shall
have no further obligation to register Registrable Notes (other than Private
Exchange Notes and other than in respect of any Exchange Notes as to which
clause 2(c)(iv) hereof applies) pursuant to Section 3 hereof. No securities
other than the Exchange Notes and Guarantees shall be included in the Exchange
Registration Statement.
(b) The Issuers shall include within the Prospectus contained in the
Exchange Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the Initial Purchasers, which shall contain a summary
statement of the publicly disseminated positions taken or policies made by the
Staff of the SEC with respect to the potential "underwriter" status of any
broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act) of Exchange Notes received by such broker-dealer. Such "Plan of
Distribution" section shall also expressly permit the use of the Prospectus by
all Persons subject to the prospectus delivery requirements of the Securities
Act, including all Participating Broker-Dealers, and include a statement
describing the means by which Participating Broker-Dealers may resell the
Exchange Notes.
The Issuers shall use their commercially reasonable efforts to keep
the Exchange Registration Statement effective and to amend and supplement the
Prospectus contained therein, in order to permit such Prospectus to be lawfully
delivered by all Persons subject to the prospectus delivery requirements of the
Securities Act for such period of time as is necessary to comply with applicable
law in connection with any resale of the Exchange Notes; provided, however, that
-------- -------
such period shall not exceed 150 days after the consummation of the Exchange
Offer (or such longer period if extended pursuant to the last paragraph of
Section 5 hereof) (the "Applicable Period").
-----------------
If, prior to consummation of the Exchange Offer, the Initial
Purchasers hold any Notes acquired by them having, or that are reasonably likely
to be determined to have, the status of an unsold allotment in the initial
distribution, the Issuers
<PAGE>
-8-
shall, upon the request of the Initial Purchasers, simultaneously with the
delivery of the Exchange Notes in the Exchange Offer, issue and deliver to the
Initial Purchasers in exchange (the "Private Exchange") for such Notes held by
----------------
the Initial Purchasers a like principal amount of senior subordinated notes of
the Company, guaranteed on a senior subordinated basis by the Guarantors, that
are identical in all material respects to the Fixed Rate Exchange Notes and the
Floating Rate Exchange Notes, as applicable, (the "Private Exchange Notes") (and
----------------------
that are issued pursuant to the same indenture as the Exchange Notes) except for
the placement of a restrictive legend on such Private Exchange Notes. The
Private Exchange Notes shall bear the same CUSIP number as the Exchange Notes.
Interest on the Exchange Notes and the Private Exchange Notes will
accrue from the last interest payment date on which interest was paid on the
Notes surrendered in exchange therefor or, if no interest has been paid on the
Notes, from the Issue Date.
In connection with the Exchange Offer, the Issuers shall:
(1) mail to each Holder a copy of the Prospectus forming part of the
Exchange Registration Statement, together with an appropriate letter of
transmittal and related documents;
(2) utilize the services of a depositary for the Exchange Offer with
an address in the Borough of Manhattan, The City of New York;
(3) permit Holders to withdraw tendered Notes at any time prior to the
close of business, New York time, on the last business day on which the
Exchange Offer shall remain open; and
(4) otherwise comply in all material respects with all applicable
laws, rules and regulations.
As soon as practicable after the close of the Exchange Offer or the
Private Exchange, as the case may be, the Issuers shall:
(1) accept for exchange all Notes tendered and not validly withdrawn
pursuant to the Exchange Offer or the Private Exchange;
<PAGE>
-9-
(2) deliver to the Trustee for cancellation all Notes so accepted for
exchange; and
(3) cause the Trustee to authenticate and deliver promptly to each
Holder of Notes, Exchange Notes or Private Exchange Notes, as the case may
be, equal in principal amount to the Notes of such Holder so accepted for
exchange.
The Exchange Notes and the Private Exchange Notes may be issued under
(i) the Indenture or (ii) an indenture identical in all material respects to the
Indenture, which in either event shall provide that (1) the Exchange Notes shall
not be subject to the transfer restrictions set forth in the Indenture and (2)
the Private Exchange Notes shall be subject to the transfer restrictions set
forth in the Indenture. The Indenture or such indenture shall provide that the
Exchange Notes, the Private Exchange Notes and the Notes shall vote and consent
together on all matters as one class and that none of the Exchange Notes, the
Private Exchange Notes or the Notes will have the right to vote or consent as a
separate class on any matter.
(c) If, (i) because of any change in law or in currently prevailing
interpretations of the Staff of the SEC, the Issuers are not permitted to effect
an Exchange Offer, (ii) the Exchange Offer is not consummated within 240 days of
the Issue Date, (iii) any holder of Private Exchange Notes so requests at any
time after the consummation of the Private Exchange or (iv) in the case of any
Holder that participates in the Exchange Offer, such Holder does not receive
Exchange Notes on the date of the exchange that may be sold without restriction
under state and federal securities laws (other than due solely to the status of
such Holder as an affiliate of the Issuers or as an "underwriter" within the
meaning of the Securities Act), then in each case, the Company shall promptly
upon becoming aware of any of the matters contemplated in clauses (i) -(iv)
above deliver to the Holders and the Trustee written notice thereof (the "Shelf
-----
Notice") and shall file a Shelf Registration pursuant to Section 3 hereof.
- ------
3. Shelf Registration
------------------
If a Shelf Notice is delivered as contemplated by Section 2(c) hereof,
then:
(a) Shelf Registration. The Issuers shall as promptly as reasonably
------------------
practicable file with the SEC a Reg-
<PAGE>
-10-
istration Statement for an offering to be made on a continuous basis pursuant to
Rule 415 covering all of the Registrable Notes (the "Shelf Registration"). If
------------------
the Issuers shall not have yet filed an Exchange Registration Statement, the
Issuers shall use their commercially reasonable efforts to file with the SEC the
Shelf Registration on or prior to the Filing Date. The Shelf Registration shall
be on Form S-1 or another appropriate form permitting registration of such
Registrable Notes for resale by Holders in the manner or manners designated by
them (including, without limitation, one or more underwritten offerings). The
Issuers shall not permit any securities other than the Registrable Notes to be
included in the Shelf Registration.
The Issuers shall use their commercially reasonable efforts to cause
the Shelf Registration to be declared effective under the Securities Act on or
prior to the Effectiveness Date and to keep the Shelf Registration continuously
effective under the Securities Act until the date that is two years from the
Issue Date, subject to extension pursuant to the last paragraph of Section 5
hereof (the "Effectiveness Period"), or such shorter period ending when all
--------------------
Registrable Notes covered by the Shelf Registration have been sold in the manner
set forth and as contemplated in the Shelf Registration.
(b) Withdrawal of Stop Orders. If the Shelf Registration ceases to be
-------------------------
effective for any reason at any time during the Effectiveness Period (other than
because of the sale of all of the securities registered thereunder), the Issuers
shall use their best efforts to obtain the prompt withdrawal of any order
suspending the effectiveness thereof.
(c) Supplements and Amendments. The Issuers shall promptly supplement
--------------------------
and amend the Shelf Registration if required by the rules, regulations or
instructions applicable to the registration form used for such Shelf
Registration, if required by the Securities Act, or if reasonably requested by
any underwriter of such Registrable Notes.
4. Additional Interest
-------------------
(a) The Issuers and the Initial Purchasers agree that the Holders of
Registrable Notes will suffer damages if the Issuers fail to fulfill their
obligations under Section 2 or Section 3 hereof and that it would not be
feasible to ascertain the extent of such damages with precision. Accordingly,
the Issuers agree to pay, as liquidated damages,
<PAGE>
-11-
additional interest on the Notes ("Additional Interest") under the circumstances
-------------------
and to the extent set forth below:
(i) if (A) neither the Exchange Registration Statement nor the Shelf
Registration has been filed with the SEC on or prior to the Filing Date or
(B) notwithstanding that the Issuers have consummated or will consummate
the Exchange Offer, the Issuers are required to file a Shelf Registration
and such Shelf Registration is not filed on or prior to the Filing Date,
then, commencing on the 151st day after the Issue Date, Additional Interest
shall accrue on the Notes over and above the stated interest at a rate of
0.25% per annum for the first 90 days immediately following the Filing
Date, such Additional Interest increasing by an additional 0.25% per annum
at the beginning of each subsequent 90-day period;
(ii) if (A) neither the Exchange Registration Statement nor the Shelf
Registration is declared effective by the SEC on or prior to the
Effectiveness Date or (B) notwithstanding that the Issuers have consummated
or will consummate the Exchange Offer, the Issuers are required to file a
Shelf Registration and such Shelf Registration is not declared effective by
the SEC on or prior to the Effectiveness Date in respect of such Shelf
Registration, then, commencing on the day after the applicable
Effectiveness Date, Additional Interest shall accrue on the Notes over and
above the stated interest at a rate of 0.25% per annum for the first 90
days immediately following such Effectiveness Date, such Additional
Interest increasing by an additional 0.25% per annum at the beginning of
each subsequent 90-day period; and
(iii) if (A) the Company has not exchanged Exchange Notes for all Notes
validly tendered in accordance with the terms of the Exchange Offer on or
prior to the 240th day after the Issue Date or (B) if applicable, the Shelf
Registration has been declared effective and such Shelf Registration ceases
to be effective at any time during the Effectiveness Period, subject to the
last sentence of Section 4(a), then Additional Interest shall accrue (over
and above any interest otherwise payable on such Notes) at a rate of 0.25%
per annum on (x) the 241st day after the Issue Date with respect to the
Notes validly tendered and not exchanged by the Company, in the case of (A)
above, or (y) the day such Shelf Registration ceases to be effective, in
the case of (B) above, such Additional Interest increasing by an additional
0.25% per annum at the begin-
<PAGE>
-12-
ning of each such subsequent 90-day period (it being understood and agreed
that, notwithstanding any provision to the contrary, so long as any Note
that is the subject of a Shelf Notice is then covered by an effective Shelf
Registration Statement, no Additional Interest shall accrue on such Note);
provided, however, that the Additional Interest rate on any affected Note may
- -------- -------
not exceed in the aggregate 1.0%; and provided, further, that (1) upon the
-------- -------
filing of the Exchange Registration Statement or a Shelf Registration (in the
case of clause (i) of this Section 4(a)), (2) upon the effectiveness of the
Exchange Registration Statement or the Shelf Registration (in the case of clause
(ii) of this Section 4(a)), or (3) upon the exchange of Exchange Notes for all
Notes tendered and not validly withdrawn (in the case of clause (iii)(A) of this
Section 4(a)), or upon the effectiveness of the Exchange Registration Statement
that had ceased to remain effective (in the case of (iii)(B) of this Section
4(a)), or upon the effectiveness of the Shelf Registration that had ceased to
remain effective (in the case of (iii)(C) of this Section 4(a)), Additional
Interest on the affected Notes as a result of such clause (or the relevant
subclause thereof), as the case may be, shall cease to accrue. Notwithstanding
the foregoing, the Company may publish a notice ("Shelf Registration Suspension
-----------------------------
Notice") that the Shelf Registration is no longer effective or that the
- ------
prospectus included therein is unusable pending the announcement of a material
corporate transaction and, in the event that the aggregate number of days in any
12-month period for which all such notices does not exceed 45 days, Additional
Interest will not accrue and be payable with respect to such 45 days, as set
forth above, as the result of such suspension.
(b) The Issuers shall notify the Trustee within three business days
after each and every date on which an event occurs in respect of which
Additional Interest is required to be paid (an "Event Date"). Any amounts of
----------
Additional Interest due pursuant to clauses (a)(i), (a)(ii) or (a)(iii) of this
Section 4 shall be payable to the Holders of affected Notes as of the relevant
record date in cash semi-annually on the same original interest payment dates as
the Notes (as set forth in the Indenture) commencing with the first such date
occurring after any such Additional Interest commences to accrue. The amount of
Additional Interest will be determined by multiplying the applicable Additional
Interest rate by the principal amount of the affected Registrable Notes of such
Holders, multiplied by a fraction, the numerator of which is the number of days
such Additional
<PAGE>
-13-
Interest rate was applicable during such period (determined on the basis of a
360-day year comprised of twelve 30-day months and, in the case of a partial
month, the actual number of days elapsed), and the denominator of which is 360.
5. Registration Procedures
-----------------------
In connection with the filing of any Registration Statement pursuant
to Sections 2 or 3 hereof, the Issuers shall effect such registration(s) to
permit the sale of the securities covered thereby in accordance with the
intended method or methods of disposition thereof, and pursuant thereto and in
connection with any Registration Statement filed by the Issuers hereunder, the
Issuers shall:
(a) Prepare and file with the SEC on or prior to the Filing Date a
Registration Statement or Registration Statements as prescribed by Sections 2 or
3 hereof and use their commercially reasonable efforts to cause each such
Registration Statement to become effective and remain effective as provided
herein; provided, however, that, if (1) such filing is made pursuant to Section
-------- -------
3 hereof, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 hereof is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period, before filing any Registration Statement or
Prospectus or any amendments or supplements thereto, the Issuers shall furnish
to and afford the Holders of the Registrable Notes covered by such Registration
Statement (in the case of a Registration Statement filed pursuant to Section 3
hereof) or each such Participating Broker-Dealer (in the case where a Prospectus
contained in an Exchange Registration Statement filed pursuant to Section 2
hereof is required to be delivered by Participating Broker-Dealers), as the case
may be, their counsel and the managing underwriters, if any, a reasonable
opportunity to review copies of all such documents (including copies of any
documents to be incorporated by reference therein and all exhibits thereto)
proposed to be filed (in each case at least five business days prior to such
filing). The Issuers shall not file any Registration Statement or Prospectus or
any amendments or supplements thereto if any such Participating Broker-Dealer or
the managing underwriters, if any, shall reasonably object.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration or
<PAGE>
-14-
Exchange Registration Statement, as the case may be, as may be necessary to keep
such Registration Statement continuously effective for the Effectiveness Period
or the Applicable Period or until consummation of the Exchange Offer, as the
case may be; cause the related Prospectus to be supplemented by any Prospectus
supplement required by applicable law and, as so supplemented, to be filed
pursuant to Rule 424 (or any similar provisions then in force) promulgated under
the Securities Act; and comply with the provisions of the Securities Act and the
Exchange Act applicable to them with respect to the disposition of all
securities covered by such Registration Statement as so amended or in such
Prospectus as so supplemented and with respect to the subsequent resale of any
securities being sold by a Participating Broker-Dealer covered by any such
Prospectus; the Issuers shall be deemed not to have used their commercially
reasonable efforts to keep a Registration Statement effective during the
Applicable Period if they voluntarily take any action that would result in
selling Holders of the Registrable Notes covered thereby or Participating
Broker-Dealers seeking to sell Exchange Notes not being able to sell such
Registrable Notes or such Exchange Notes during that period, unless such action
is required by applicable law or unless the Issuers comply with this Agreement,
including without limitation, the provisions of paragraph 5(k) hereof, the last
paragraph of this Section 5 and the last sentence of Section 4(a).
(c) If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, notify the selling Holders of Registrable Notes, or each
such Participating Broker-Dealer, as the case may be, their counsel and the
managing underwriters, if any, promptly (but in any event within two business
days), and confirm such notice in writing, (i) when a Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and, with
respect to a Registration Statement or any post-effective amendment, when the
same has become effective under the Securities Act (including in such notice a
written statement that any Holder may, upon request, obtain, at the sole expense
of the Issuers, one conformed copy of such Registration Statement or post-
effective amendment, including financial statements and schedules, documents
incorporated or deemed to be incorporated by reference and exhibits), (ii) of
the issuance by
<PAGE>
-15-
the SEC of any stop order suspending the effectiveness of a Registration
Statement or of any order preventing or suspending the use of any preliminary
prospectus or the initiation of any proceedings for that purpose, (iii) if at
any time when a prospectus is required by the Securities Act to be delivered in
connection with sales of the Registrable Notes or resales of Exchange Notes by
Participating Broker-Dealers upon written notice by any such Participating
Broker-Dealer of a resale the representations and warranties of the Issuers
contained in any agreement (including any underwriting agreement), contemplated
by Section 5(n) hereof cease to be true and correct, (iv) of the receipt by any
Issuer of any notification with respect to the suspension of the qualification
or exemption from qualification of a Registration Statement or any of the
Registrable Notes or the Exchange Notes to be sold by any Participating Broker-
Dealer for offer or sale in any jurisdiction, or the initiation or threatening
of any proceeding for such purpose, (v) of the happening of any event, the
existence of any condition or any information becoming known that makes any
statement made in such Registration Statement or related Prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in or
amendments or supplements to such Registration Statement, Prospectus or
documents so that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and that in the case of the Prospectus, it will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading and (vi) of the
determination by the Issuers that a post-effective amendment to a Registration
Statement would be appropriate.
(d) Use their commercially reasonable efforts to prevent the issuance
of any order suspending the effectiveness of a Registration Statement or of any
order preventing or suspending the use of a Prospectus or suspending the
qualification (or exemption from qualification) of any of the Registrable Notes
or the Exchange Notes for sale in any jurisdiction, and, if any such order is
issued, to use its commercially reasonable efforts to obtain the withdrawal of
any such order at the earliest possible moment.
<PAGE>
-16-
(e) If a Shelf Registration is filed pursuant to Section 3 and if
requested by the managing underwriter or underwriters, if any, (i) promptly
incorporate in a prospectus supplement or post-effective amendment such
information as the managing underwriter or underwriters, if any, or counsel for
any of them, reasonably request to be included therein, and (ii) make all
required filings of such prospectus supplement or such post-effective amendment
as soon as practicable after the Issuers have received notification of the
matters to be incorporated in such prospectus supplement or post-effective
amendment.
(f) If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, furnish to each selling Holder of Registrable Notes and
to each such Participating Broker-Dealer who so requests and to their respective
counsel and each managing underwriter, if any, at the sole expense of the
Issuers, one conformed copy of the Registration Statement or Registration
Statements and each post-effective amendment thereto, including financial
statements and schedules, and, if requested, all documents incorporated or
deemed to be incorporated therein by reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, deliver to each selling Holder of Registrable Notes, or
each such Participating Broker-Dealer, as the case may be, their respective
counsel, and the underwriters, if any, at the sole expense of the Issuers, as
many copies of the Prospectus or Prospectuses (including each form of
preliminary prospectus) and each amendment or supplement thereto and any
documents incorporated by reference therein as such Persons may reasonably
request; and, subject to the last paragraph of this Section 5, the Issuers
hereby consent to the use of such Prospectus and each amendment or supplement
thereto by each of the selling Holders of Registrable Notes or each such
Participating Broker-Dealer, as the case may be, and the underwriters or agents,
if any, and dealers if any, in connection with the offering and sale of the
Registrable Notes covered
<PAGE>
-17-
by, or the sale by Participating Broker-Dealers of the Exchange Notes pursuant
to, such Prospectus and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Notes or any delivery
of a Prospectus contained in the Exchange Registration Statement by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, use their commercially reasonable efforts to register or
qualify such Registrable Notes (and to cooperate with selling Holders of
Registrable Notes or each such Participating Broker-Dealer, as the case may be,
the managing underwriter or underwriters, if any, and their respective counsel
in connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Notes) for offer and sale
under the securities or Blue Sky laws of such jurisdictions within the United
States as any selling Holder, Participating Broker-Dealer, or the managing
underwriter or underwriters reasonably request in writing; provided, however,
-------- -------
that where Exchange Notes held by Participating Broker-Dealers or Registrable
Notes are offered other than through an underwritten offering, the Issuers agree
to cause their counsel to perform Blue Sky investigations and file registrations
and qualifications required to be filed pursuant to this Section 5(h); keep each
such registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and do any
and all other acts or things reasonably necessary or in the Issuers' reasonable
judgment advisable to enable the disposition in such jurisdictions of the
Exchange Notes held by Participating Broker-Dealers or the Registrable Notes
covered by the applicable Registration Statement; provided, however, that none
-------- -------
of the Issuers shall be required to (A) qualify generally to do business in any
jurisdiction where any such Issuer is not then so qualified, (B) take any action
that would subject any such Issuer to general service of process in any such
jurisdiction where any such Issuer is not then so subject or (C) become subject
to taxation in any such jurisdiction where any such Issuer is not then so
subject.
(i) If a Shelf Registration is filed pursuant to Section 3 hereof,
cooperate with the selling Holders of Registrable Notes and the managing
underwriter or underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Notes to be sold, which
certificates shall not bear any restrictive legends
<PAGE>
-18-
and shall be in a form eligible for deposit with The Depository Trust Company;
and enable such Registrable Notes to be in such denominations and registered in
such names as the managing underwriter or underwriters, if any, or Holders may
reasonably request.
(j) Use their commercially reasonable efforts to cause the Registrable
Notes covered by the Registration Statement to be registered with or approved by
such other governmental agencies or authorities, if any, as may be necessary to
enable the Holders thereof or the underwriter or underwriters, if any, to
dispose of such Registrable Notes, except as may be required solely as a
consequence of the nature of a selling Holder's business, in which case the
Issuers will cooperate in all reasonable respects with the filing of such
Registration Statement and the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, upon the occurrence of any event contemplated by
paragraph 5(c)(v) or 5(c)(vi) hereof, as promptly as practicable prepare and
(subject to Section 5(a) hereof) file with the SEC, at the sole expense of the
Issuers, a supplement or post-effective amendment to the Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable Notes being
sold thereunder or to the purchasers of the Exchange Notes to whom such
Prospectus will be delivered by a Participating Broker-Dealer, any such
Prospectus will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. Notwithstanding the foregoing, the Issuer shall not have
any obligations under this Section 5(k) to file a supplement or post-effective
amendment to the Exchange Registration Statement or Prospectus (or other such
document) while a Shelf Registration Suspension Notice pursuant to the last
sentence of paragraph 4(a) is applicable.
<PAGE>
-19-
(l) Use their reasonable best efforts to cause the Registrable Notes
covered by a Registration Statement or the Exchange Notes, as the case may be,
to be rated with the appropriate rating agencies, if so requested by the Holders
of a majority in aggregate principal amount of Registrable Notes covered by such
Registration Statement or the Exchange Notes, as the case may be, or the
managing underwriter or underwriters, if any.
(m) Prior to the effective date of the first Registration Statement
relating to the Registrable Notes, (i) provide the Trustee with certificates for
the Registrable Notes or Exchange Notes, as the case may be, in a form eligible
for deposit with The Depository Trust Company and (ii) provide a CUSIP number
for the Registrable Notes or Exchange Notes, as the case may be.
(n) In connection with any underwritten offering of Registrable Notes
pursuant to a Shelf Registration, enter into an underwriting agreement as is
customary in underwritten offerings of debt securities similar to the Notes and
take all such other actions as are reasonably requested by the managing
underwriter or underwriters in order to expedite or facilitate the registration
or the disposition of such Registrable Notes and, in such connection, (i) make
such representations and warranties to, and covenants with, the underwriters
with respect to the business of the Issuers (including any acquired business,
properties or entities, if applicable) and the Registration Statement,
Prospectus and documents, if any, incorporated or deemed to be incorporated by
reference therein, in each case, as are customarily made by issuers to
underwriters in underwritten offerings of debt securities similar to the Notes,
and confirm the same in writing if reasonably requested; (ii) obtain the written
opinion of counsel to the Issuers in form, scope and substance reasonably
satisfactory to the managing underwriter or underwriters, addressed to the
underwriters covering the matters customarily covered in opinions requested in
underwritten offerings of debt securities similar to the Notes and such other
matters as may be reasonably requested by the managing underwriter or
underwriters; (iii) obtain "cold comfort" letters and updates thereof in form,
scope and substance reasonably satisfactory to the managing underwriter or
underwriters from the independent certified public accountants of the Issuers
(and, if necessary, any other independent certified public accountants of any
subsidiary of the Issuers or of any business acquired by the Company for which
financial statements and financial data are, or are
<PAGE>
-20-
required to be, included or incorporated by reference in the Registration
Statement), addressed to each of the underwriters, such letters to be in
customary form and covering matters of the type customarily covered in "cold
comfort" letters in connection with underwritten offerings of debt securities
similar to the Notes and such other matters as reasonably requested by the
managing underwriter or underwriters; and (iv) if an underwriting agreement is
entered into, the same shall contain indemnification provisions and procedures
no less favorable than those set forth in Section 7 hereof (or such other
provisions and procedures acceptable to Holders of a majority in aggregate
principal amount of Registrable Notes covered by such Registration Statement and
the managing underwriter or underwriters or agents) with respect to all parties
to be indemnified pursuant to said Section. The above shall be done at each
closing under such underwriting agreement or as and to the extent required
thereunder.
(o) If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, make available for inspection by any selling Holder of
such Registrable Notes being sold, or each such Participating Broker-Dealer, as
the case may be, any underwriter participating in any such disposition of
Registrable Notes, if any, and any attorney, accountant or other agent retained
by any such selling Holder or each such Participating Broker-Dealer, as the case
may be, or underwriter (collectively, the "Inspectors"), at the offices where
----------
normally kept, during reasonable business hours and upon reasonable notice, all
financial and other records, pertinent corporate documents and instruments of
the Issuers and their subsidiaries (collectively, the "Records") as shall be
-------
reasonably necessary to enable them to exercise any applicable due diligence
responsibilities, and cause the respective officers, directors and employees of
the Issuers and their subsidiaries to supply all information reasonably
requested by any such Inspector in connection with such Registration Statement.
Records that the Issuers determine, in good faith, to be confidential and any
Records that it notifies the Inspectors are confidential shall not be disclosed
by the Inspectors unless (i) the disclosure of such Records is necessary to
avoid or correct a misstatement or omission in such Registration Statement, (ii)
the release of such Records is ordered pur-
<PAGE>
-21-
suant to a subpoena or other final order from a court of competent jurisdiction
or (iii) the information in such Records has been made generally available to
the public other than in violation of any obligation of confidentiality,
hereunder or otherwise. Each selling Holder of such Registrable Securities and
each such Participating Broker-Dealer will be required, prior to the disclosure
of any such information, to agree in writing that information obtained by it as
a result of such inspections shall be deemed confidential and shall not be used
by it for any purpose other than the sale or exchange of Notes pursuant to an
Exchange Offer or Shelf Registration. Each selling Holder of such Registrable
Notes and each such Participating Broker-Dealer will be required to further
agree that it will, upon learning that disclosure of such Records is sought in a
court of competent jurisdiction, promptly give notice to the Issuers and allow
the Issuers to undertake appropriate action to prevent disclosure of the Records
deemed confidential at the Issuers' sole expense.
(p) Provide an indenture trustee for the Registrable Notes or the
Exchange Notes, as the case may be, and cause the Indenture or the trust
indenture provided for in Section 2(a) hereof, as the case may be, to be
qualified under the TIA not later than the effective date of the Exchange Offer
or the first Registration Statement relating to the Registrable Notes; and in
connection therewith, cooperate with the trustee under any such indenture and
the Holders of the Registrable Notes, to effect such changes to such indenture
as may be required for such indenture to be so qualified in accordance with the
terms of the TIA; and execute, and use their reasonable best efforts to cause
such trustee to execute, all documents as may be required to effect such
changes, and all other forms and documents required to be filed with the SEC to
enable such indenture to be so qualified in a timely manner.
(q) Comply with all applicable rules and regulations of the SEC and
make generally available to its securityholders earning statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder
(or any similar rule promulgated under the Securities Act) no later than 45 days
after the end of any 12-month period (or 90 days after the end of any 12-month
period if such period is a fiscal year) (i) commencing at the end of any fiscal
quarter in which Registrable Notes are sold to underwriters in a firm commitment
or best efforts underwritten offering and (ii) if not sold to underwriters in
such an of-
<PAGE>
-22-
fering, commencing on the first day of the first fiscal quarter of the Company
after the effective date of a Registration Statement, which statements shall
cover said 12-month periods.
(r) If an Exchange Offer or a Private Exchange is to be consummated,
upon delivery of the Registrable Notes by Holders to the Company (or to such
other Person as directed by the Issuers) in exchange for the Exchange Notes or
the Private Exchange Notes, as the case may be, the Issuers shall mark, or cause
to be marked, on such Registrable Notes that such Registrable Notes are being
cancelled in exchange for the Exchange Notes or the Private Exchange Notes, as
the case may be; in no event shall such Registrable Notes be marked as paid or
otherwise satisfied.
(s) Reasonably cooperate with each seller of Registrable Notes covered
by any Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Notes and their respective counsel in connection
with any filings required to be made with the National Association of Securities
Dealers, Inc. (the "NASD").
----
(t) Use their reasonable best efforts to take all other steps
necessary or advisable to effect the registration of the Registrable Notes
covered by a Registration Statement contemplated hereby.
The Company may require each seller of Registrable Notes as to which
any Registration is being effected to furnish to the Issuers such information
regarding such seller and the distribution of such Registrable Notes as the
Issuers may, from time to time, reasonably request. The Issuers may exclude
from such registration the Registrable Notes of any seller who unreasonably
fails to furnish such information within a reasonable time after receiving such
request. Each seller as to which any Shelf Registration is being effected agrees
to furnish promptly to the Issuers all information required to be disclosed in
order to make the information previously furnished to the Issuers by such seller
not materially misleading.
Each Holder of Registrable Notes and each Participating Broker-Dealer
agrees by acquisition of such Registrable Notes or Exchange Notes to be sold by
such Participating Broker-Dealer, as the case may be, that, upon actual receipt
of a Shelf Registration Suspension Notice or any notice from the Issuers of the
happening of any event of the kind described in Section 5(c)(ii), 5(c)(iv),
5(c)(v) or 5(c)(vi) hereof, such
<PAGE>
-23-
Holder will forthwith discontinue disposition of such Registrable Notes covered
by such Registration Statement or Prospectus or Exchange Notes to be sold by
such Holder or Participating Broker-Dealer, as the case may be, until such
Holder's or Participating Broker-Dealer's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 5(k) hereof, or until
it is advised in writing (the "Advice") by the Issuers that the use of the
------
applicable Prospectus may be resumed and has received copies of any amendments
or supplements thereto. In the event the Issuers shall give any such notice,
each of the Effectiveness Period and the Applicable Period shall be extended by
the number of days during such periods from and including the date of the giving
of such notice to and including the date when each seller of Registrable Notes
covered by such Registration Statement or Exchange Notes to be sold by such
Participating Broker-Dealer, as the case may be, shall have received (x) the
copies of the supplemented or amended Prospectus contemplated by Section 5(k)
hereof or (y) the Advice.
6. Registration Expenses
---------------------
(a) All fees and expenses incident to the performance of or compliance
with this Agreement by the Issuers shall be borne by the Issuers whether or not
the Exchange Offer or a Shelf Registration is filed or becomes effective,
including, without limitation, (i) all registration and filing fees (including,
without limitation, (A) fees with respect to filings required to be made with
the NASD in connection with an underwritten offering and (B) fees and expenses
of compliance with state securities or Blue Sky laws (including, without
limitation, reasonable fees and disbursements of counsel in connection with Blue
Sky qualifications of the Registrable Notes or Exchange Notes and determination
of the eligibility of the Registrable Notes or Exchange Notes for investment
under the laws of such jurisdictions (x) where the holders of Registrable Notes
are located, in the case of the Exchange Notes, or (y) as provided in Section
5(h) hereof, in the case of Registrable Notes or Exchange Notes to be sold by a
Participating Broker-Dealer during the Applicable Period)), (ii) printing
expenses, including, without limitation, expenses of printing certificates for
Registrable Notes or Exchange Notes in a form eligible for deposit with The
Depository Trust Company and of printing prospectuses if the printing of
prospectuses is requested by the managing underwriter or underwriters, if any,
by the Holders of a majority in aggregate principal amount of the Registrable
Notes included in any Registration State-
<PAGE>
-24-
ment or sold by any Participating Broker-Dealer, as the case may be, (iii)
messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Issuers and fees and disbursements of special counsel for the
sellers of Registrable Notes (subject to the provisions of Section 6(b) hereof),
(v) fees and disbursements of all independent certified public accountants
referred to in Section 5(n)(iii) hereof (including, without limitation, the
expenses of any special audit and "cold comfort" letters required by or incident
to such performance), (vi) rating agency fees, if any, and any fees associated
with making the Registrable Notes or Exchange Notes eligible for trading through
The Depository Trust Company, (vii) Securities Act liability insurance, if the
Company desires such insurance, (viii) fees and expenses of all other Persons
retained by the Issuers, (ix) internal expenses of the Issuers (including,
without limitation, all salaries and expenses of officers and employees of the
Issuers performing legal or accounting duties), (x) the expense of any annual
audit, (xi) the fees and expenses incurred in connection with the listing of the
securities to be registered on any securities exchange, if applicable and (xii)
the expenses relating to printing, word processing and distributing all
Registration Statements, underwriting agreements, securities sales agreements,
indentures and any other documents necessary in order to comply with this
Agreement.
(b) The Issuers shall reimburse the Holders of the Registrable Notes
being registered in a Shelf Registration for the reasonable fees and
disbursements of not more than one counsel (in addition to appropriate local
counsel) chosen by the Holders of a majority in aggregate principal amount of
the Registrable Notes to be included in such Registration Statement.
7. Indemnification
---------------
(a) The Issuers agree, jointly and severally, to indemnify and hold
harmless each Holder of Registrable Notes offered pursuant to a Shelf
Registration Statement and each Participating Broker-Dealer selling Exchange
Notes during the Applicable Period, the affiliates, directors, officers, agents,
representatives and employees of each such Person or its affiliates, and each
other Person, if any, who controls any such Person or its affiliates within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act (each, a "Participant"), against any and all losses, claims, damages and
-----------
liabilities (including, without
<PAGE>
-25-
limitation, the reasonable legal fees and other expenses actually incurred in
connection with any suit, action or proceeding or any claim asserted) caused by,
arising out of or based upon
(i) any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement pursuant to which the offering
of such Registrable Notes or Exchange Notes, as the case may be, is
registered (or any amendment thereto) or related Prospectus (or any
amendments or supplements thereto) or any related preliminary prospectus,
or
(ii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading;
and, subject to the following provisions hereof, will reimburse, as incurred,
each Participant and each such controlling person for any legal or other
expenses incurred by the Participant or such controlling person in connection
with investigating, defending against or appearing as a third-party witness in
connection with any such loss, claim, damage, liability or action; provided,
--------
however, that the Issuers will not be required to indemnify a Participant if (i)
- -------
such losses, claims, damages or liabilities are caused by any untrue statement
or omission or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to any Participant furnished to the Issuers
in writing by or on behalf of such Participant expressly for use therein or (ii)
if such Participant sold to the person asserting the claim the Registrable Notes
or Exchange Notes that are the subject of such claim and such untrue statement
or omission or alleged untrue statement or omission was contained or made in any
preliminary prospectus and corrected in the Prospectus or any amendment or
supplement thereto, and the Prospectus does not contain any other untrue
statement or omission or alleged untrue statement or omission of a material fact
that was the subject matter of the related proceeding and it is established by
the Issuers in the related proceeding that such Participant failed to deliver or
provide a copy of the Prospectus (as amended or supplemented) to such Person
with or prior to the confirmation of the sale of such Registrable Notes or
Exchange Notes sold to such Person unless such failure to deliver or provide a
copy of the Prospectus (as amended or supplemented) was a result of
noncompliance by the Issuers with Section 5 of this Agreement.
<PAGE>
-26-
(b) Each Participant agrees, severally and not jointly, to indemnify
and hold harmless each of the Issuers, their directors and officers and each
Person who controls each of the Issuers within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Issuers to each Participant, but only (i) with
reference to information relating to such Participant furnished to the Issuers
in writing by or on behalf of such Participant expressly for use in any
Registration Statement or Prospectus, any amendment or supplement thereto or any
preliminary prospectus or (ii) with respect to any untrue statement or
representation made by such Participant in writing to the Company. The
liability of any Participant under this paragraph shall in no event exceed the
proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes giving rise to such obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such Person (the "Indemnified Person") shall promptly
------------------
notify the Person against whom such indemnity may be sought (the "Indemnifying
------------
Person") in writing, and the Indemnifying Person, upon request of the
- ------
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may reasonably designate in such proceeding and shall pay
the reasonable fees and expenses actually incurred by such counsel related to
such proceeding; provided, however, that the failure to so notify the
-------- -------
Indemnifying Person shall not relieve it of any obligation or liability that it
may have hereunder or otherwise (unless and only to the extent that such failure
directly results in the forfeiture of any substantial rights or defenses by the
Indemnifying Person). In any such proceeding, any Indemnified Person shall have
the right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Person unless (i) the Indemnifying
Person and the Indemnified Person shall have mutually agreed in writing to the
contrary, (ii) the Indemnifying Person shall have failed within a reasonable
period of time to retain counsel reasonably satisfactory to the Indemnified
Person or (iii) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person and in a written opinion of counsel reasonably accept-
<PAGE>
-27-
able to the Indemnifying Person representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood that the Indemnifying Person shall not, in
connection with any one such proceeding or separate but substantially similar
related proceeding in the same jurisdiction arising out of the same general
allegations, be liable for the fees and expenses of more than one separate firm
(in addition to any appropriate local counsel) for all Indemnified Persons and
that all such fees and expenses shall be reimbursed promptly as they are
incurred. Any such separate firm for the Participants and such control Persons
of Participants shall be designated in writing by Participants who sold a
majority in interest of Registrable Notes and Exchange Notes sold by all such
Participants and any such separate firm for the Issuers, its directors, its
officers and such control Persons of the Issuers shall be designated in writing
by the Issuers. The Indemnifying Person shall not be liable for any settlement
of any proceeding effected without its prior written consent, but if settled
with such consent or if there be a final non-appealable judgment for the
plaintiff for which the Indemnified Person is entitled to indemnification
pursuant to this Agreement, the Indemnifying Person agrees to indemnify and hold
harmless each Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. No Indemnifying Person shall, without the
prior written consent of the Indemnified Person, effect any settlement or
compromise of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party, and indemnity could have been
sought hereunder by such Indemnified Person, unless such settlement (A) includes
an unconditional written release of such Indemnified Person, in form and
substance reasonably satisfactory to such Indemnified Person, from all liability
on claims that are the subject matter of such proceeding and (B) does not
include any statement as to an admission of fault, culpability or failure to act
by or on behalf of any Indemnified Person.
(d) If the indemnification provided for in the first and second
paragraphs of this Section 7 is for any reason unavailable to, or insufficient
to hold harmless, an Indemnified Person in respect of any losses, claims,
damages or liabilities referred to therein, then each Indemnifying Person under
such paragraphs, in lieu of indemnifying such Indemnified Person thereunder and
in order to provide for just and equitable contribution, shall contribute to the
amount paid or payable by such Indemnified Person as a re-
<PAGE>
-28-
sult of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Person or Persons
on the one hand and the Indemnified Person or Persons on the other in connection
with the statements or omissions or alleged statements or omissions that
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof). The relative fault of the parties shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Issuers on the one hand or such Participant or such
other Indemnified Person, as the case may be, on the other, the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission, and any other equitable considerations
appropriate in the circumstances.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
--- ----
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes, as the case may be, exceeds the amount of any damages that such
Participant has otherwise been required to pay or has paid by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in this
Section 7 will be in addition to any liability that the Indemnifying Persons may
otherwise have to the Indemnified Persons referred to above.
<PAGE>
-29-
8. Rule 144 and 144A
-----------------
Each of the Issuers covenants that it will file the reports required
to be filed by it under the Securities Act and the Exchange Act and the rules
and regulations adopted by the SEC thereunder in a timely manner in accordance
with the requirements of the Securities Act and the Exchange Act and, if at any
time the Issuers are not required to file such reports, it will, upon the
request of any Holder of Registrable Notes, make publicly available annual
reports and such information, documents and other reports of the type specified
in Sections 13 and 15(d) of the Exchange Act. Each of the Issuers further
covenants for so long as any Registrable Notes remain outstanding, to make
available to any Holder or beneficial owner of Registrable Notes in connection
with any sale thereof and any prospective purchaser of such Registrable Notes
from such Holder or beneficial owner the information required by Rule 144A(d)(4)
under the Securities Act in order to permit resales of such Registrable Notes
pursuant to Rule 144A.
9. Underwritten Registrations
--------------------------
If any of the Registrable Notes covered by any Shelf Registration are
to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority in aggregate principal amount of such Registrable
Notes included in such offering and reasonably acceptable to the Issuers, and
such Holders shall be responsible for all underwriting discounts and commissions
in connection therewith.
No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
10. Miscellaneous
-------------
(a) No Inconsistent Agreements. None of the Issuers has entered, as
--------------------------
of the date hereof, and none of the Issuers will, after the date of this
Agreement, enter into any agreement with respect to any of its securities that
is inconsistent with the rights granted to the Holders of Registrable Notes in
this Agreement or otherwise conflicts with
<PAGE>
-30-
the provisions hereof. None of the Issuers has entered and none of the Issuers
will enter into any agreement with respect to any of its securities that will
grant to any Person piggy-back registration rights with respect to a
Registration Statement required to be filed by the Issuers pursuant to this
Agreement.
(b) Adjustments Affecting Registrable Notes. None of the Issuers
---------------------------------------
will, directly or indirectly, take any action with respect to the Registrable
Notes as a class that would adversely affect the ability of the Holders of
Registrable Notes to include such Registrable Notes in a registration undertaken
pursuant to this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement may not
----------------------
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, otherwise than with the prior written
consent of the Holders of not less than a majority in aggregate principal amount
of the then outstanding Registrable Notes. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of Holders of Registrable Notes whose
securities are being sold pursuant to a Registration Statement and that does not
directly or indirectly affect, impair, limit or compromise the rights of other
Holders of Registrable Notes may be given by Holders of at least a majority in
aggregate principal amount of the Registrable Notes being sold by such Holders
pursuant to such Registration Statement; provided, however, that the provisions
-------- -------
of this sentence may not be amended, modified or supplemented except in
accordance with the provisions of the immediately preceding sentence.
(d) Notices. All notices and other communications (including without
-------
limitation any notices or other communications to the Trustee) provided for or
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, next-day air courier or facsimile:
1. if to a Holder of the Registrable Notes or any Participating
Broker-Dealer, at the most current address of such Holder or Participating
Broker-Dealer, as the case may be, set forth on the records of the
registrar under the Indenture, with a copy in like manner to the Initial
Purchasers as follows:
BT ALEX. BROWN INCORPORATED
<PAGE>
-31-
130 Liberty Street
New York, New York
Facsimile No: (212) 250-7200
Attention: Corporate Finance Department
CREDIT SUISSE FIRST BOSTON CORPORATION
11 Madison Avenue
New York, New York 10010-3629
Facsimile No.: (212) 325-8030
Attention: High Yield Capital Markets
SALOMON BROTHERS INC
Seven World Trade Center
New York, New York 10048
Facsimile No.: (212) 783-4548
Attention: Capital Markets
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Facsimile No: (212) 269-5420
Attention: James J. Clark
2. if to the Initial Purchasers, at the addresses specified in
Section 10(d)(1);
<PAGE>
-32-
3. if to the Company, as follows:
MTL INC.
3108 Central Drive
Plant City, FL 33567
Facsimile No: (813) 757-2305
Attention: President
with copies to:
DEWEY BALLANTINE LLP
1301 Avenue of the Americas
New York, New York
Facsimile No: (212) 259-6333
Attention: Morton A. Pierce
Douglas L. Getter
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; one business day
after being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if sent by facsimile.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address and in the manner specified in such Indenture.
(e) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors and assigns of each of the parties hereto;
provided, however, that this Agreement shall not inure to the benefit of or be
- -------- -------
binding upon a successor or assign of a Holder unless and to the extent such
successor or assign holds Registrable Notes and agrees in writing to be bound by
the provisions hereof as if it were a signatory hereto.
(f) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
<PAGE>
-33-
(H) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
(i) Severability. If any term, provision, covenant or restriction of
------------
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(j) Notes Held by the Issuers or their Affiliates. Whenever the
---------------------------------------------
consent or approval of Holders of a specified percentage of Registrable Notes is
required hereunder, Registrable Notes held by the Issuers or their affiliates
(as such term is defined in Rule 405 under the Securities Act) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
(k) Third Party Beneficiaries. Holders of Registrable Notes and
-------------------------
Participating Broker-Dealers are intended third party beneficiaries of this
Agreement and this Agreement may be enforced by such Persons.
(l) Entire Agreement. This Agreement, together with the Purchase
----------------
Agreement and the Indenture, is intended by the parties as a final and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein and any and all prior oral or
written agreements, representations, or warranties, contracts, understandings,
correspondence, conversations and memoranda between the Initial Purchasers
on the one hand and the Issuers on the other, or between or among any agents,
representatives, parents, subsidiaries, affiliates, predecessors in interest or
successors in inter-
<PAGE>
-34-
est with respect to the subject matter hereof and thereof are merged herein and
replaced hereby.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
THE COMPANY:
-----------
MTL INC.
By:______________________________________
Name:
Title:
THE GUARANTORS:
--------------
MONTGOMERY TANK LINES, INC.
By:______________________________________
Name:
Title:
QUALITY CARRIERS, INC.
By:______________________________________
Name:
Title:
LAKESHORE LEASING, INC.
By:______________________________________
Name:
Title:
MTL INVESTMENTS, INC.
By:______________________________________
Name:
Title:
<PAGE>
MEXICO INVESTMENTS, INC.
By:______________________________________
Name:
Title:
MTL OF NEVADA
By:______________________________________
Name:
Title:
<PAGE>
THE INITIAL PURCHASERS:
- ----------------------
BT ALEX. BROWN INCORPORATED
By:_______________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON CORPORATION
By:_______________________
Name:
Title:
SALOMON BROTHERS INC
By:_______________________
Name:
Title:
<PAGE>
EXHIBIT 5.1
[Letterhead of Dewey Ballantine LLP]
November 2, 1998
MTL Inc.
3108 Central Drive
Plant City, Florida 33567
Re: 10% Series B Senior Subordinated Notes due 2006 and Series B
Floating Interest Rate Subordinated Term Securities due 2006,
(together, the "Exchange Notes")
---------------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel for MTL Inc., a Florida corporation (the
"Company"), in connection with the Company's offer to exchange (the "Exchange
Offer") up to $140,000,000 aggregate principal amount of Exchange Notes which
have been registered under the Securities Act of 1933, as amended (the
"Securities Act") for its existing 10% Senior Subordinated Notes due 2006 and
Floating Interest Rate Subordinated Term Securities due 2006 (together, the
"Old Notes"), as described in the Prospectus (the "Prospectus") contained in
the Registration Statement on Form S-4 (the "Registration Statement"), to be
filed with the Securities and Exchange Commission. The Old Notes were issued,
and the Exchange Notes are proposed to be issued, under an indenture dated as
of June 9, 1998 (the "Indenture"), between the Company and United States Trust
Company of New York, as Trustee. Capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in the Registration Statement.
In arriving at the opinion expressed below, we have examined the
Registration Statement, the Prospectus contained therein, the Indenture and
Exchange Notes, which are filed as exhibits to the Registration Statement, and
originals or copies, certified or otherwise identified to our satisfaction, of
such other documents, records, certificates, agreements and other matters as
we have deemed necessary for the purposes of this opinion.
In such examination, we have assumed, without independent investigation, (i)
the genuineness of all signatures; (ii) the legal capacity of all individuals
who have executed any of the documents reviewed by us; (iii) the authenticity
of all documents submitted to us as originals; (iv) the conformity to executed
documents of all unexecuted copies submitted to us; and (v) the authenticity
of, and the conformity to, original documents of all documents submitted to us
as certified or photocopied copies. As to certain factual matters material to
our opinion, we have relied upon oral statements, written information and
certificates of officials and representatives of the Company and others, and
we have not independently verified the accuracy of the statements contained
therein.
Based on the foregoing, and subject to the assumptions, exceptions and
qualifications set forth herein, we are of the opinion that the Exchange Notes
to be offered and issued by the Company have been duly authorized and, when
executed and authenticated in accordance with the terms of the Indenture
pursuant to which they will be issued and delivered in exchange for the
applicable Old Notes in accordance with the Exchange Offer, will be validly
issued and constitute binding obligations of the Company, except as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally or by
general equitable principles.
In rendering the foregoing opinion, our examination of matters of law has
been limited to the laws of the State of New York and the federal laws of the
United States of America, as in effect on the date hereof.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference made to this firm under the
caption "Legal Matters" in the Prospectus. In giving this consent, we do
<PAGE>
not thereby admit that we are included within the category of persons whose
consent is required under Section 7 of the Securities Act, or the rules and
regulations of the Securities and Exchange Commission promulgated thereunder.
This opinion is rendered solely to you in connection with the above matter.
This opinion may not be relied upon by you for any other purpose or relied
upon by or furnished to any other person without our prior written consent.
Very truly yours,
/s/ Dewey Ballantine LLP
-------------------------------------
DEWEY BALLANTINE LLP
<PAGE>
EXHIBIT 10.1
MTL INC.
1998 STOCK OPTION PLAN
----------------------
1. PURPOSE OF THE PLAN.
The purpose of the MTL, INC. 1998 STOCK OPTION PLAN (the "Plan") is (i) to
further the growth and success of MTL, Inc., a Florida corporation (the
"Company"), by permitting employees of the Company to acquire shares of common
-------
stock, $.01 par value, of the Company (the "Shares"), thereby increasing such
------
employees' personal interest in such growth and success and (ii) to provide a
means of rewarding outstanding contribution by such persons to the Company.
Options granted under this Plan (the "Options") are not intended to qualify as
"incentive stock options" under the provisions of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
----
2. DEFINITIONS.
As used in this Plan, the following capitalized terms shall have the
meanings set forth below:
"AFFILIATE" means any Person that is controlled by, controlling or under
common control with the Company and shall include Apollo and each of its
partners and each Person in which Apollo or such partners hold or have the right
to acquire, collectively, more than 25% of the voting Equity Interest.
"APOLLO" means Apollo Management, L.P.
"BOARD" has the meaning set forth in Section 3(a).
"CAPITAL STOCK" means any and all shares, interests, participation or other
equivalents (however designated) of corporate stock, including all common stock
and preferred stock.
"CODE" has the meaning set forth in Section 1.
"COMMITTEE" has the meaning set forth in Section 3(a).
"COMPANY" has the meaning set forth in Section 1.
"DISABILITY" shall have the meaning defined in an employment or similar
agreement between the Company and the Optionee, or, if there is no employment or
similar agreement between the Company and the Optionee that defines "disability"
for purposes of such agreement, what constitutes a "disability" shall be
determined by the Committee in good faith.
"EBITDA" means, for any period of determination thereof, Net Income of the
Company and its subsidiaries plus, without duplication, (a) Interest Expense,
(b) income
<PAGE>
tax expense, refunds or credits for such periods, and (c) depreciation and
amortization expense of the Company and its subsidiaries, all determined in
accordance with GAAP.
"EFFECTIVE DATE" means the date of consummation of the transactions
contemplated under that certain Agreement and Plan of Merger by and between the
Company and Sombrero Acquisition Corp. dated as of February 10, 1998.
"EQUITY INTEREST" means (a) with respect to a corporation, any and all
Capital Stock or warrants, options or other rights to acquire Capital Stock (but
excluding any debt security which is convertible into, or exchangeable for,
Capital Stock) and (b) with respect to a partnership, limited liability company
or similar Person, any and all units, interests, rights to purchase, warrants,
options or other equivalents of, or other ownership interests in, any such
Person.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXPIRATION DATE" has the meaning set forth in Section 10.
"FAIR MARKET VALUE" means:
(a) if the Shares are publicly traded and reported on a closing price
basis, the closing price on the principal national securities exchange, market
or system on which the Shares are traded on the trading day immediately
preceding the date of determination or, if no trades were made on such day, on
the next preceding day on which trades were made, otherwise, the average of the
high bid and low asked prices for the Shares on the trading day immediately
preceding the date of determination in the over-the-counter market as reported
by the Nasdaq National Market ("Nasdaq") or, if not reported by Nasdaq, by an
------
established quotation service for over-the-counter securities; or
(b) if there is no public trading market for the Shares, the fair value of
such Shares on the date of any determination as reasonably determined in good
faith by the Committee after taking into consideration all factors which it
deems appropriate, including, without limitation recent sale and offer prices of
Shares in private transactions negotiated at arms' length.
Notwithstanding anything contained in this Plan to the contrary, all
determinations pursuant to this Section shall be made without regard to any
restriction other than a restriction which, by its terms, will never lapse.
"GAAP" means generally accepted accounting principles in the United States,
consistently applied, and statements and interpretations (if applicable) issued
by the Financial Accounting Standards Board, or any successor body, as in effect
from time to time, unless otherwise stated.
"INDEBTEDNESS" means (a) indebtedness for borrowed money, (b) reimbursement
obligations with respect to letters of credit and similar instruments, (c)
obligations incurred, issued or assumed as the deferred purchase price of
property or services (other than accounts payable incurred in the ordinary
course of business consistent with past
2
<PAGE>
practice), (d) obligations of others secured by (or, for which the holder of
such indebtedness has an existing right, contingent or otherwise, to be secured
by) any lien on property or assets of the Company or any subsidiary, (e) capital
lease obligations, (f) obligations in respect of guarantees of any of the
foregoing or any "keep well" or other agreement to maintain any financial
statement condition of another person, in each case, whether or not matured,
liquidated, fixed, contingent, or disputed, and (g) any prepayment penalties or
similar charges incurred by the Company in connection with any of the foregoing
indebtedness or obligations.
"INTEREST EXPENSE" means, for any period, all interest (including
capitalized interest) and all amortization of debt discount and expense on any
particular Indebtedness (including, without limitation payment-in-kind, zero
coupon and other like securities and the interest component of capital lease
obligations applicable to such period) of the Company and its subsidiaries
determined on a consolidated basis in accordance with GAAP.
"INVESTMENT" in any Person, means any loan or advance to such Person, any
purchase or other acquisition of any Equity Interest or other ownership or
profit interest, warrants, rights, options, obligations or other securities of
such Person, any capital contribution to such Person or any other investment in
such Person, including any arrangement pursuant to which an investing Person
incurs Indebtedness of the types referred to in the definition of "Indebtedness"
in respect of such Person.
"NET DEBT" means (a) all amounts owing by the Company in respect of
outstanding Indebtedness (including principal, interest, fees, expenses and
prepayment penalties), less (b) cash of the Company, all determined on a
consolidated basis in accordance with GAAP.
"NET INCOME" means, for any period, the gross revenues of the Company and
its consolidated subsidiaries for such period less all expenses and other proper
charges, in each case determined in accordance with GAAP, but (a) excluding in
any event Apollo's annual management fee charged to the Company, (b) adjusted to
reflect business acquisitions or dispositions occurring in the first two
quarters of a year on a pro-forma combined basis as if the transactions had
occurred at the beginning of such year, taking into account synergies that are
allowed to be included in pro-forma calculations under Regulation S-X
promulgated by the SEC, and (c) adjusted to reflect business acquisitions or
dispositions occurring in the last two quarters of a year as and to the extent
deemed appropriate by the Committee in its sole discretion and (d) adjusted for
the after-tax effect of extraordinary gains or losses other than business
acquisitions and dispositions, and other non-recurring or non-operating gains or
losses which affect Net Income as and to the extent deemed appropriate by the
Committee in its sole discretion.
"OPTION" has the meaning set forth in Section 1.
"OPTION AGREEMENT" has the meaning set forth in Section 4(c).
"OPTION PRICE" has the meaning set forth in Section 5(a).
3
<PAGE>
"OPTIONED SHARES" has the meaning set forth in Section 11(b).
"OPTIONEES" has the meaning set forth in Section 4(a).
"PER SHARE EQUITY VALUE" means, in respect of any Tranche B, Tranche C or
Tranche D Performance Measurement Date or other applicable measurement date
under the Shareholders' Agreement, (a) the product of (i) EBITDA for the twelve-
month period ending on such date, multiplied by (ii) 6.5, plus (b) (i) the
aggregate amount of the consolidated cash on hand of the Company and its
subsidiaries plus the aggregate Option Price for all Options that are "in the
money" (as defined below), minus (ii) the liquidation value of the outstanding
consolidated Indebtedness and Company preferred stock (as adjusted to reflect a
Sale of the Company, if applicable, and excluding any debt or preferred stock
associated with an acquisition, the earnings of which are not included in
EBITDA), divided by (c) the sum of (i) the number of Shares outstanding as of
the end of such twelve-month period and (ii) the number of Shares issuable upon
the conversion of securities convertible into Shares or upon the exercise of
options or warrants exercisable for Shares, in each case in this clause (c),
which are "in the money." For purposes hereof, an option or warrant is "in the
money" if the exercise price or conversion price is less than the Per Share
Equity Value, calculated without giving effect to such convertible securities,
options or warrants. Notwithstanding the foregoing, in the case of a Qualified
Public Offering, Per Share Equity Value shall have the meaning set forth in
Sections 7(d), 8(d) and 9(d), as applicable, or, for certain purposes under the
Shareholders' Agreement, the average closing stock price for the 90 trading days
immediately preceding the applicable measurement date (with the five highest and
five lowest closing prices disregarded).
"PERSON" is to be construed in the broadest sense and means and includes
any natural person, company, limited liability company, partnership, joint
venture, corporation, business trust, or unincorporated organization or any
national, federal, state, municipal, local, territorial, foreign or other
government or any department, commission, board, bureau, agency, regulatory
authority or instrumentality thereof, or any court, judicial, administrative or
arbitral body or public or private tribunal.
"QUALIFIED PUBLIC OFFERING" means a public offering of Shares of the
Company in which the proceeds to the Company, net of all fees, commissions,
discounts and expenses, equals or exceeds $20 million.
"SALE OF THE COMPANY" means the occurrence of one or more of the following:
(a) a sale or series of sales to any Person or group of Persons in related
transactions, other than an Affiliate of the Company, of all or substantially
all of the assets of the Company;
(b) a sale or series of sales by the Company of Shares (whether by merger
or otherwise), if any such sale or series of sales is made to a Person or group
of Persons in related transactions, other than an Affiliate of the Company,
which Person (or group of
4
<PAGE>
Persons), after giving effect to such sale or series of sales, will own more
than 50% of the outstanding Capital Stock of the Company; or
(c) a sale or series of sales by the stockholders of the Company of Shares,
if any such sale is made to a Person or group of Persons in related
transactions, other than an Affiliate of the Company, which Person (or group of
Persons), after giving effect to such sale or series of sales, will own more
than 50% of the outstanding Shares.
"SEC" means the Securities and Exchange Commission.
"SHARES" has the meaning set forth in Section 1.
"SHAREHOLDERS' AGREEMENT" means that certain Shareholders' Agreement among
the Company, Apollo Investment Fund III, L.P., Apollo Overseas Partners III,
L.P., Apollo U.K. Fund III, L.P. Charles J. O'Brien, Jr., Marvin Sexton, Richard
Brandewie and Elton Babbitt dated as of February 10, 1998.
"SECURITIES ACT" has the meaning set forth in Section 13(b).
"TRANCHE A OPTIONS" has the meaning set forth in Section 4(d).
"TRANCHE B MISSED PERFORMANCE MEASUREMENT DATE" has the meaning set forth
in Section 7(c).
"TRANCHE B OPTIONS" has the meaning set forth in Section 4(d).
"TRANCHE B PERFORMANCE MEASUREMENT DATE" has the meaning set forth in
Section 7(a).
"TRANCHE B PER SHARE TARGET VALUE" has the meaning set forth in Section
7(a).
"TRANCHE B VESTING DATE" has the meaning set forth in Section 7(a).
"TRANCHE C MISSED PERFORMANCE MEASUREMENT DATE" has the meaning set forth
in Section 8(c).
"TRANCHE C OPTIONS" has the meaning set forth in Section 4(d).
"TRANCHE C PERFORMANCE MEASUREMENT DATE" has the meaning set forth in
Section 8(a).
"TRANCHE C PER SHARE TARGET VALUE" has the meaning set forth in Section
8(a).
"TRANCHE C VESTING DATE" has the meaning set forth in 8(a).
"TRANCHE D MISSED PERFORMANCE MEASUREMENT DATE" has the meaning set forth
in Section 9(c).
"TRANCHE D OPTIONS" has the meaning set forth in Section 4(d).
5
<PAGE>
"TRANCHE D PERFORMANCE MEASUREMENT DATE" has the meaning set forth in
Section 9(a).
"TRANCHE D PER SHARE TARGET VALUE" has the meaning set forth in Section
9(a).
"TRANCHE D VESTING DATE" has the meaning set forth in 9(a).
"TRANSFERRED" means, with respect to any security (including any Option),
sold, transferred, assigned, encumbered, pledged or otherwise disposed of,
either voluntarily or involuntarily and with or without consideration
(including, without limitation, by way of foreclosure or other acquisition by
any lender with respect to any Shares pledged to such lender by an Optionee).
"VESTED OPTION" means an option which has vested and become exercisable in
accordance with this Plan, or pursuant to an Option Agreement, as the case may
be.
3. ADMINISTRATION OF THE PLAN.
(a) Stock Option Committee. This Plan shall be administered by a committee
----------------------
(the "Committee") of the Board of Directors of the Company (the "Board"),
--------- -----
appointed from time to time by the Board. The Committee shall have the power
and authority to grant Options under this Plan. The Board may exercise any
power to be exercised by the Committee hereunder.
(b) Procedures. The members of the Committee shall from time to time
----------
select a Chairman from among the members of the Committee. The Committee shall
adopt such rules and regulations as it shall deem appropriate concerning the
holding of meetings and the administration of this Plan. A majority of the
entire Committee shall constitute a quorum and the actions of a majority of the
members of the Committee present at a meeting at which a quorum is present, or
actions approved in writing by all of the members of the Committee, shall be the
actions of the Committee.
(c) Administration. Except as may otherwise be expressly reserved to the
--------------
Board as provided herein, the Committee shall have all powers with respect to
the administration of this Plan, including the interpretation of the provisions
of this Plan and any Option Agreement and the making of all factual
determinations and financial calculations required under the Plan. All
decisions of the Board or the Committee, as the case may be, not inconsistent
with the Plan or Option Agreement terms, shall be conclusive and binding on all
participants in this Plan. No member of the Board or Committee will be liable
for any action or determination made in good faith by the Board or Committee
with respect to the Plan or any Option Agreement under it.
4. GRANT OF OPTIONS; SHARES SUBJECT TO THIS PLAN.
(a) Power to Grant Options. Subject to the provisions of this Plan, the
----------------------
Committee shall have the power and authority, in its sole discretion, to
determine:
6
<PAGE>
(i) the persons (from among the class of persons eligible to receive
Options under this Plan) to whom Options shall be granted (the
"Optionees");
---------
(ii) the time or times at which Options shall be granted; and
(iii) the number of Shares subject to such Option.
Notwithstanding anything to the contrary contained herein, as of the Effective
Date, each Person listed in Exhibit A shall be granted Options which shall
----------
represent the right to acquire, subject to Section 6, that number of Shares set
forth opposite such Person's name on Exhibit A.
---------
(b) Eligibility. Options may be granted under this Plan at any time and
-----------
from time to time on or prior to the tenth anniversary of the Effective Date to
any person who is an employee of the Company or any of its Subsidiaries at the
time of grant. Notwithstanding anything contained in Section 4(a) to the
contrary, Options (other than Options granted as of the Effective Date to any
Person listed in Exhibit A) may not be granted to any Person in any one taxable
---------
year of the Company in excess of 25% of the Options issued or issuable under
this Plan. Notwithstanding any other provisions of this Plan to the contrary,
the Committee may, in its discretion, provide that, with respect to any Option,
the terms of the Option Agreement evidencing such Option shall control any
conflicts between provisions of this Plan and provisions of such Option
Agreement.
(c) Option Agreements. Each Option shall be evidenced by a written
-----------------
agreement (an "Option Agreement"), in substantially the form of Exhibit B, with
---------------- ---------
such changes thereto as are consistent with this Plan as the Committee shall
deem appropriate. Each Option Agreement shall be executed by the Company and
the Optionee.
(d) Tranche A Options, Tranche B Options, Tranche C Options, and Tranche D
----------------------------------------------------------------------
Options. One half of the Options granted to each Optionee on the Effective Date
- -------
shall vest in accordance with Section 6 ("Tranche A Options"), one-sixth of the
-----------------
options granted to each Optionee on the Effective Date shall vest in accordance
with Section 7 ("Tranche B Options"), one-sixth of the options granted to each
-----------------
Optionee on the Effective Date shall vest in accordance with Section 8 ("Tranche
-------
C Options) and one-sixth of the options granted to each Optionee on the
- ---------
Effective Date shall vest in accordance with Section 9 ("Tranche D Options").
-----------------
Options granted after the Effective Date shall vest as determined by the
Committee, in its sole and absolute discretion, and as set forth in the
applicable Option Agreement.
(e) Date of Grant. Other than Options granted as of the Effective Date,
-------------
the date of grant of an Option under this Plan shall be the date as of which the
Committee approves the grant of the Option.
(f) Vesting of Options. Other than Options granted as of the Effective
------------------
Date, Options granted under the Plan shall become vested and exercisable as
determined by the Committee and set forth in the Option Agreement.
7
<PAGE>
(g) Number of Shares. Subject to any equitable adjustments pursuant to
----------------
Section 12 and subject to the vesting provisions set forth herein, each Option
shall be exercisable for one Share. Subject to any equitable adjustments
pursuant to Section 12, the number of Shares subject at any one time to Options
granted under this Plan, and the number of Shares theretofore issued and
delivered pursuant to the exercise of Options granted under this Plan, shall be
222,222 Shares. If and to the extent that Options granted under this Plan
terminate, expire or are canceled without having been fully exercised, new
Options may be granted under this Plan with respect to the Shares covered by the
unexercised portion of such terminated, expired or canceled Options.
(h) Character of Shares. The Shares issuable upon exercise of Options
-------------------
granted under this Plan shall be (i) authorized but unissued Shares, (ii) Shares
held in the Company's treasury or (iii) a combination of the foregoing.
(i) Reservation of Shares. The Company shall ensure that the number of
---------------------
Shares reserved for issuance under this Plan shall at all times be equal to the
maximum number of Shares which may be purchased at such time pursuant to
outstanding Options.
5. OPTION PRICE.
(a) General. The exercise price (the "Option Price") for each Share
------- ------------
subject to an Option shall be determined by the Committee and set forth in the
Option Agreement, except that the exercise price for Options granted on the
Effective Date shall be $40.00 per share (subject to equitable adjustment
pursuant to Section 12 hereof).
(b) Repricing of Options. Subsequent to the date of grant of any Option,
--------------------
the Committee may (i) in its discretion, establish a new Option Price for such
Option so as to decrease the Option Price of such Option or (ii) with the
consent of the Optionee, establish a new Option Price for such Option so as to
increase the Option Price of such Option.
6. EXERCISABILITY AND VESTING OF TRANCHE A OPTIONS.
(a) Vesting Schedule. 25% of the Tranche A Options shall become Vested
----------------
Options on each of the first four anniversaries of June 30, 1998 if the Optionee
is employed by the Company on such anniversary date.
(b) Termination of Employment. Except as may otherwise be provided in the
-------------------------
Option Agreement evidencing such Option, each Tranche A Option shall cease
vesting as of the time that an Optionee's employment with the Company is
terminated for any reason, and any Tranche A Option that is not a Vested Option
as of such time shall become null and void and be of no further force or effect.
7. EXERCISABILITY AND VESTING OF TRANCHE B OPTIONS
(a) Vesting Schedule. All of the Tranche B Options shall become Vested
----------------
Options on the date that is nine years immediately following the date of grant
("Tranche B Vesting Date") if the Optionee is employed by the Company on the
----------------------
Tranche B Vesting
8
<PAGE>
Date. However, if the Per Share Equity Value as of a Tranche B Performance
---------------------
Measurement Date indicated below (each a "Tranche B Performance Measurement
- ----------------
Date") equals or exceeds the corresponding Tranche B Per Share Target Value
indicated below (the "Tranche B Per Share Target Value") and the Optionee is
--------------------------------
employed by the Company on such Tranche B Performance Measurement Date, then 25%
of the Tranche B Options shall vest on such Tranche B Performance Measurement
Date.
------------------------------------------------------
TRANCHE B PERFORMANCE TRANCHE B PER SHARE
MEASUREMENT DATE TARGET VALUE
------------------------------------------------------
June 30, 1999 $ 56.00
------------------------------------------------------
June 30, 2000 $ 78.40
------------------------------------------------------
June 30, 2001 $109.76
------------------------------------------------------
June 30, 2002 $153.66
------------------------------------------------------
(b) Acceleration Right. If the Tranche B Per Share Target Value is not
------------------
achieved for any year, the Committee, upon consultation with management, will
have the discretion to cause all or part of the applicable Tranche B Options to
become Vested Options.
(c) Rollover Vesting. If both (i) the Per Share Equity Value as of any
----------------
Tranche B Performance Measurement Date equals at least 80% of the Tranche B Per
Share Target Value established for such Tranche B Performance Measurement Date
(the "Tranche B Missed Performance Measurement Date"), but is less than 100% of
---------------------------------------------
the Tranche B Per Share Target Value established for such Tranche B Performance
Measurement Date and (ii) either (A) the Per Share Equity Value as of the
immediately subsequent Tranche B Performance Measurement Date equals or exceeds
100% of the Tranche B Per Share Target Value established for such subsequent
Tranche B Performance Measurement Date or (B) both (x) the Per Share Equity
Value as of the immediately subsequent Tranche B Performance Measurement Date
equals at least 80% of the Tranche B Per Share Target Value established for such
Tranche B Performance Measurement Date, but is less than 100% of the Tranche B
Per Share Target Value established for such subsequent Tranche B Performance
Measurement Date and (y) the Per Share Equity Value as of the second subsequent
Tranche B Performance Measurement Date equals or exceeds 100% of the Tranche B
Per Share Target Value established for such second subsequent Tranche B
Performance Measurement Date, then the Tranche B Options shall become Vested
Options as of the first or second anniversary of the Tranche B Missed
Performance Measurement Date, as applicable, if the Optionee holding the
applicable Tranche B Option is employed by the Company as of the first or second
anniversary of the Tranche B Missed Performance Measurement Date, as applicable.
Tranche B Options that have not become Vested Options as of the June 30,
9
<PAGE>
2002 Tranche B Performance Measurement Date will no longer be subject to vesting
under this Section 7(c).
(d) IPO Prior to Final Performance Measurement Date. Notwithstanding the
-----------------------------------------------
foregoing provisions of this Section 7, if the Company sells Shares in a
Qualified Public Offering prior to the June 30, 2002 Tranche B Performance
Measurement Date, the Per Share Equity Value as of each Tranche B Performance
Measurement Date following the Qualified Public Offering shall be the average
closing stock price for the 90 trading days immediately preceding such Tranche B
Performance Measurement Date (with the five highest and five lowest closing
prices disregarded), subject to adjustment pursuant to Section 12 hereof.
(e) Sale of the Company. Notwithstanding the foregoing provisions of this
-------------------
Section 7, if a Sale of the Company shall occur prior to June 30, 2004 all of
the Tranche B Options that have not previously become Vested Options shall
become Vested Options as of the effective date of the Sale of the Company,
subject to the conditions that the Optionee is employed by the Company on such
date and that the Fair Market Value of the per share consideration received by
the holders of Shares (after giving effect to the vesting described herein)
equals or exceeds (i) the Tranche B Per Share Target Value for the Tranche B
Performance Measurement Date immediately preceding such Sale of the Company,
plus (ii) the product of (x) (A) the Tranche B Per Share Target Value for the
Tranche B Performance Measurement Date immediately following such Sale of the
Company, less (B) the Tranche B Per Share Target Value for the Tranche B
Performance Measurement Date immediately preceding such Sale of the Company,
multiplied by (y) a fraction, the numerator of which is the number of days
elapsed as of the consummation of such Sale of the Company since the immediately
preceding Tranche B Performance Measurement Date and the denominator of which is
365. If the foregoing conditions are not met, such Tranche B Options shall not
become Vested Options upon the Sale of the Company, but such Tranche B Options
shall remain eligible to become Vested Options on the Tranche B Vesting Date if
the Optionee remains employed by the Company until the Tranche B Vesting Date.
For purposes of this Section 7(e) only, any Tranche B Performance Measurement
Dates for years after 2002 shall be deemed to occur on June 30 of each such year
and any Tranche B Per Share Target Values for years after 2002 shall be
calculated assuming the Tranche B Per Share Target Values set forth in Section
7(a) were extrapolated based on a progression rate consistent with such Tranche
B Per Share Target Values.
(f) Calculations. Notwithstanding anything to the contrary contained in
------------
this Plan, the determination as to whether the Per Share Equity Value equals or
exceeds the Tranche B Per Share Target Value shall be made after the Company's
audited financials for the applicable period become available. All decisions by
the Committee with respect to any calculations pursuant to this Section (absent
manifest error) shall be final and binding on all Optionees. The Committee
shall provide each affected Optionee with a notice as to the results of its
calculations as they relate to the vesting of Options within 60 days of the date
the audited financials for the applicable period become available.
10
<PAGE>
(g) Termination of Employment. Except as may otherwise be provided in the
-------------------------
Option Agreement evidencing such Option, each Tranche B Option shall cease
vesting as of the time that an Optionee's employment with the Company is
terminated for any reason, and no Tranche B Option which is not a Vested Option
as of such time shall become a Vested Option thereafter.
8. EXERCISABILITY AND VESTING OF TRANCHE C OPTIONS.
(a) Vesting Schedule. All of the Tranche C Options shall become Vested
----------------
Options on the date that is nine years immediately following the date of the
grant ("Tranche C Vesting Date") if the Optionee is employed by the Company on
----------------------
the Tranche C Vesting Date. However, if the Per Share Equity Value as of the
Tranche C Performance Measurement Date indicated below (each a "Tranche C
---------
Performance Measurement Date") equals or exceeds the corresponding Tranche C Per
- ----------------------------
Share Target Value indicated below (the "Tranche C Per Share Target Value") and
--------------------------------
the Optionee is employed by the Company on such Tranche C Performance
Measurement Date indicated below, then 25% of the Tranche C Options shall vest
on such Tranche C Performance Measurement Date.
------------------------------------------------------
TRANCHE C PERFORMANCE TRANCHE C PER SHARE
MEASUREMENT DATE TARGET VALUE
------------------------------------------------------
June 30, 1999 $ 54.00
------------------------------------------------------
June 30, 2000 $ 72.90
------------------------------------------------------
June 30, 2001 $ 98.42
------------------------------------------------------
June 30, 2002 $132.86
------------------------------------------------------
(b) Acceleration Right. If the Tranche C Per Share Target Value is not
------------------
achieved for any year, the Committee, upon consultation with management, will
have the discretion to cause all or part of the applicable Tranche C Options, to
become Vested Options.
(c) Rollover Vesting. If both (i) the Per Share Equity Value as of any
----------------
Tranche C Performance Measurement Date equals at least 80% of the Tranche C Per
Share Target Value established for such Tranche C Performance Measurement Date
(the "Tranche C Missed Performance Measurement Date"), but is less than 100% of
---------------------------------------------
the Tranche C Per Share Target Value established for such Tranche C Performance
Measurement Date and (ii) either (A) the Per Share Equity Value as of the
immediately subsequent Tranche C Performance Measurement Date equals or exceeds
100% of the Tranche C Per Share Target Value established for such subsequent
Tranche C Performance Measurement Date or (B) both (x) the Per Share Equity
Value as of the immediately subsequent Tranche C Performance Measurement Date
equals at least 80%
11
<PAGE>
of the Tranche C Per Share Target Value established for such Tranche C
Performance Measurement Date, but is less than 100% of the Tranche C Per Share
Target Value established for such subsequent Tranche C Performance Measurement
Date and (y) the Per Share Equity Value as of the second subsequent Tranche C
Performance Measurement Date equals or exceeds 100% of the Tranche C Per Share
Target Value established for such second subsequent Tranche C Performance
Measurement Date, then the Tranche C Options shall become Vested Options as of
the first or second anniversary of the Tranche C Missed Performance Measurement
Date, as applicable, if the Optionee holding the applicable Tranche C Option is
employed by the Company as of the first or second anniversary of the Tranche C
Missed Performance Measurement Date, as applicable. Tranche C Options that have
not become Vested Options as of the June 30, 2002 Tranche C Performance
Measurement Date will no longer be subject to vesting under this Section 8(c).
(d) IPO Prior to Final Performance Measurement Date. Notwithstanding the
-----------------------------------------------
foregoing provisions of this Section 8, if the Company sells Shares in a
Qualified Public Offering prior to the June 30, 2002 Tranche C Performance
Measurement Date, the Per Share Equity Value as of each Tranche C Performance
Measurement Date following the Qualified Public Offering shall be the average
closing stock price for the 90 trading days immediately preceding such Tranche C
Performance Measurement Date (with the five highest and five lowest closing
prices disregarded), subject to adjustment pursuant to Section 12 hereof.
(e) Sale of the Company. Notwithstanding the foregoing provisions of this
-------------------
Section 8, if a Sale of the Company shall occur prior to June 30, 2004 all of
the Tranche C Options that have not previously become Vested Options shall
become Vested Options as of the effective date of the Sale of the Company,
subject to the conditions that the Optionee is employed by the Company on such
date and that the Fair Market Value of the per share consideration received by
the holders of Shares (after giving effect to the vesting described herein)
equals or exceeds (i) the Tranche C Per Share Target Value for the Tranche C
Performance Measurement Date immediately preceding such Sale of the Company,
plus (ii) the product of (x) (A) the Tranche C Per Share Target Value for the
Tranche C Performance Measurement Date immediately following such Sale of the
Company, less (B) the Tranche C Per Share Target Value for the Tranche C
Performance Measurement Date immediately preceding such Sale of the Company,
multiplied by (y) a fraction, the numerator of which is the number of days
elapsed as of the consummation of such Sale of the Company since the immediately
preceding Tranche C Performance Measurement Date and the denominator of which is
365. If the foregoing conditions are not met, such Tranche C Options shall not
become Vested Options upon the Sale of the Company, but such Tranche C Options
shall remain eligible to become Vested Options on the Tranche C Vesting Date if
the Optionee remains employed by the Company until the Tranche C Vesting Date.
For purposes of this Section 8(e) only, any Tranche C Performance Measurement
Dates for years after 2002 shall be deemed to occur on June 30 of each such year
and any Tranche C Per Share Target Values for years after 2002 shall be
calculated assuming the Tranche C Per Share Target Values set forth in Section
8(a) were extrapolated based on a progression rate consistent with such Tranche
C Per Share Target Values.
12
<PAGE>
(f) Calculations. Notwithstanding anything to the contrary contained in
------------
this Plan, the determination as to whether the Per Share Equity Value equals or
exceeds the Tranche C Per Share Target Value shall be made after the Company's
audited financials for the applicable period become available. All decisions by
the Committee with respect to any calculations pursuant to this Section (absent
manifest error) shall be final and binding on all Optionees. The Committee
shall provide each affected Optionee with a notice as to the results of its
calculations as they relate to the vesting of Options within 60 days of the date
the audited financials for the applicable period become available.
(g) Termination of Employment. Except as may otherwise be provided in the
-------------------------
Option Agreement evidencing such Option, each Tranche C Option shall cease
vesting as of the time that an Optionee's employment with the Company is
terminated for any reason, and no Tranche C Option which is not a Vested Option
as of such time shall become a Vested Option thereafter.
9. EXERCISABILITY AND VESTING OF TRANCHE D OPTIONS.
(a) Vesting Schedule. All of the Tranche D Options shall become Vested
----------------
Options on the date that is nine years immediately following the date of the
grant ("Tranche D Vesting Date") if the Optionee is employed by the Company on
----------------------
the Tranche D Vesting Date. However, if the Per Share Equity Value as of the
Tranche D Performance Measurement Date indicated below (each a "Tranche D
---------
Performance Measurement Date") equals or exceeds the corresponding Tranche D Per
- ----------------------------
Share Target Value indicated below (the "Tranche D Per Share Target Value") and
--------------------------------
the Optionee is employed by the Company on such Tranche D Performance
Measurement Date indicated below, then 25% of the Tranche D Options shall vest
on such Tranche D Performance Measurement Date.
------------------------------------------------------
TRANCHE D PERFORMANCE TRANCHE D PER SHARE
MEASUREMENT DATE TARGET VALUE
------------------------------------------------------
June 30, 1999 $ 52.00
------------------------------------------------------
June 30, 2000 $ 67.60
------------------------------------------------------
June 30, 2001 $ 87.88
------------------------------------------------------
June 30, 2002 $114.24
------------------------------------------------------
(b) Acceleration Right. If the Tranche D Per Share Target Value is not
------------------
achieved for any year, the Committee, upon consultation with management, will
have the discretion to cause all or part of the applicable Tranche D Options, to
become Vested Options.
13
<PAGE>
(c) Rollover Vesting. If both (i) the Per Share Equity Value as of any
----------------
Tranche D Performance Measurement Date equals at least 80% of the Tranche D Per
Share Target Value established for such Tranche D Performance Measurement Date
(the "Tranche D Missed Performance Measurement Date"), but is less than 100% of
---------------------------------------------
the Tranche D Per Share Target Value established for such Tranche D Performance
Measurement Date and (ii) either (A) the Per Share Equity Value as of the
immediately subsequent Tranche D Performance Measurement Date equals or exceeds
100% of the Tranche D Per Share Target Value established for such subsequent
Tranche D Performance Measurement Date or (B) both (x) the Per Share Equity
Value as of the immediately subsequent Tranche D Performance Measurement Date
equals at least 80% of the Tranche D Per Share Target Value established for such
Tranche D Performance Measurement Date, but is less than 100% of the Tranche D
Per Share Target Value established for such subsequent Tranche D Performance
Measurement Date and (y) the Per Share Equity Value as of the second subsequent
Tranche D Performance Measurement Date equals or exceeds 100% of the Tranche D
Per Share Target Value established for such second subsequent Tranche D
Performance Measurement Date, then the Tranche D Options shall become Vested
Options as of the first or second anniversary of the Tranche D Missed
Performance Measurement Date, as applicable, if the Optionee holding the
applicable Tranche D Option is employed by the Company as of the first or second
anniversary of the Tranche D Missed Performance Measurement Date, as applicable.
Tranche D Options that have not become Vested Options as of the June 30, 2002
Tranche D Performance Measurement Date will no longer be subject to vesting
under this Section 9(c).
(d) IPO Prior to Final Performance Measurement Date. Notwithstanding the
-----------------------------------------------
foregoing provisions of this Section 9, if the Company sells Shares in a
Qualified Public Offering prior to the June 30, 2002 Tranche D Performance
Measurement Date, the Per Share Equity Value for each Tranche D Performance
Measurement Date following the Qualified Public Offering shall be the average
closing stock price for the 90 trading days immediately preceding such Tranche D
Performance Measurement Date (with the five highest and five lowest closing
prices disregarded), subject to adjustment pursuant to Section 12 hereof.
(e) Sale of the Company. Notwithstanding the foregoing provisions of this
-------------------
Section 9, if a Sale of the Company shall occur prior to June 30, 2004 all of
the Tranche D Options that have not previously become Vested Options shall
become Vested Options as of the effective date of the Sale of the Company,
subject to the conditions that the Optionee is employed by the Company on such
date and that the Fair Market Value of the per share consideration received by
the holders of Shares (after giving effect to the vesting described herein)
equals or exceeds (i) the Tranche D Per Share Target Value for the Tranche D
Performance Measurement Date immediately preceding such Sale of the Company,
plus (ii) the product of (x) (A) the Tranche D Per Share Target Value for the
Tranche D Performance Measurement Date immediately following such Sale of the
Company, less (B) the Tranche D Per Share Target Value for the Tranche D
Performance Measurement Date immediately preceding such Sale of the Company,
multiplied by (y) a fraction, the numerator of which is the number of days
elapsed as of the consummation of such Sale of the Company since the immediately
preceding Tranche D Performance
14
<PAGE>
Measurement Date and the denominator of which is 365. If the foregoing
conditions are not met, such Tranche D Options shall not become Vested Options
upon the Sale of the Company, but such Tranche D Options shall remain eligible
to become Vested Options on the Tranche D Vesting Date if the Optionee remains
employed by the Company until the Tranche D Vesting Date. For purposes of this
Section 9(e) only, any Tranche D Performance Measurement Dates for years after
2002 shall be deemed to occur on June 30 of each such year and any Tranche D Per
Share Target Values for years after 2002 shall be calculated assuming the
Tranche D Per Share Target Values set forth in Section 9(a) were extrapolated
based on a progression rate consistent with such Tranche D Per Share Target
Values
(f) Calculations. Notwithstanding anything to the contrary contained in
------------
this Plan, the determination as to whether the Per Share Equity Value equals or
exceeds the Tranche D Per Share Target Value shall be made after the Company's
audited financials for the applicable period become available. All decisions by
the Committee with respect to any calculations pursuant to this Section (absent
manifest error) shall be final and binding on all Optionees. The Committee shall
provide each affected Optionee with a notice as to the results of its
calculations as they relate to the vesting of Options within 60 days of the date
the audited financials for the applicable period become available.
(g) Termination of Employment. Except as may otherwise be provided in the
-------------------------
Option Agreement evidencing such Option, each Tranche D Option shall cease
vesting as of the time that an Optionee's employment with the Company is
terminated for any reason, and no Tranche D Option which is not a Vested Option
as of such time shall become a Vested Option thereafter.
10. AUTOMATIC TERMINATION OF OPTION.
Each Vested Option that has not previously been exercised by an Optionee
shall automatically terminate and shall become null and void and be of no
further force or effect upon the first of the following to occur (the
"Expiration Date"):
---------------
(a) the tenth anniversary of the date on which such Option is granted;
(b) if an Optionee's employment with the Company is terminated for any
reason other than the death or Disability of the Optionee, the thirtieth day
following the later of (i) the date of such termination and (ii) the date on
which the Optionee ceases to be a member of the Board;
(c) if an Optionee's employment with the Company is terminated due to the
death or Disability of the Optionee, six months after the date of such death or
Disability; or
(d) notwithstanding the foregoing, the expiration of such other period of
time or the occurrence of such other event as the Committee, in its discretion,
may provide in the Option Agreement governing such Option, provided that no
Option shall be exercisable after the tenth anniversary of the date on which
such Option is granted.
15
<PAGE>
11. PROCEDURE FOR EXERCISE.
(a) Payment. At the time an Option is granted under this Plan, the
-------
Committee shall, in its discretion, specify one or more of the following forms
of payment which may be used by an Optionee upon exercise of his Vested Option:
(i) cash or personal or certified check payable to the Company in an
amount equal to the aggregate Option Price of the Shares with respect to
which the Option is being exercised;
(ii) stock certificates (in negotiable form) representing Shares
having a Fair Market Value on the date of exercise equal to the aggregate
Option Price of the Shares with respect to which the Option is being
exercised; or
(iii) a combination of the methods set forth in clauses (i) and (ii)
above.
(b) Notice. An Optionee (or other person, as provided in Section 13(c))
------
may exercise a Vested Option granted under this Plan in whole or in part (but
for the purchase of whole Shares only), as provided in the Option Agreement
evidencing his Option, by delivering a written notice (the "Notice") to the
------
Secretary of the Company. The Notice shall state:
(i) that the Optionee elects to exercise the Vested Option;
(ii) the number of Shares with respect to which the Vested Option is
being exercised (the "Optioned Shares");
---------------
(iii) the method of payment for the Optioned Shares (which method
must be available to the Optionee under the terms of his Option Agreement);
(iv) the date upon which the Optionee desires to consummate the
purchase (which date must be prior to the termination of such Option);
(v) a copy of any election filed by the Optionee pursuant to Section
83(b) of the Code; and
(vi) such further provisions consistent with this Plan as the
Committee may from time to time require.
The exercise date of a Vested Option shall be the date on which the Company
receives the Notice from the Optionee, or such later date as may be specified in
the Notice from the Optionee.
(c) Issuance of Certificates. The Company shall issue a stock certificate
------------------------
in the name of the Optionee (or such other person exercising the Option in
accordance with the provisions of Section 13(c)) for the Shares purchased upon
exercise of an Option as soon as practicable after receipt of the Notice and
payment of the aggregate Option Price for such Shares; provided, however, that
the Company may, in its discretion, reduce the
16
<PAGE>
number of Shares issued by such number of Shares having an aggregate Fair Market
Value equal to the Optionee's outstanding indebtedness to the Company as of the
exercise date of the Option (or any lesser amount). Neither the Optionee nor any
person exercising a Vested Option in accordance with the provisions of Section
13(c) shall have any privileges as a stockholder of the Company with respect to
any Shares subject to an Option granted under this Plan until the date of
issuance of a stock certificate pursuant to this Section 11(c).
12. ADJUSTMENTS.
(a) If the Company shall at any time change the number of issued Shares
without new consideration to the Company (such as by stock dividend, stock
split, recapitalization, reorganization, exchange of shares, liquidation,
combination or other change in corporate structure affecting the Shares) or make
a distribution of cash or property which has a substantial impact on the value
of issued Shares, the number of Shares covered by each outstanding Option and
the purchase price per Share under each outstanding Option shall be adjusted so
that the aggregate consideration payable to the Company and the value of each
such Option shall not be changed.
(b) Notwithstanding any other provision of the Plan, and without affecting
the number of Shares reserved or available hereunder, the Committee shall
authorize the issuance, continuation or assumption of outstanding Options or
provide for other equitable adjustments after changes in the Shares resulting
from any merger, consolidation, sale of assets, acquisition of property or
stock, recapitalization, reorganization or similar occurrence in which the
Company is the continuing or surviving corporation, upon such terms and
conditions as it may deem necessary to preserve Optionees' rights under the
Plan.
(c) In the case of any sale of assets, merger, consolidation or combination
of the Company with or into another corporation other than a transaction in
which the Company is the continuing or surviving corporation and which does not
result in the outstanding Shares being converted into or exchanged for different
securities, cash or other property, or any combination thereof (an
"Acquisition"), any Optionee who holds an outstanding Option shall have the
right (subject to the provisions of the Plan and any limitation applicable to
the Option) thereafter and during the term of the Option, to receive upon
exercise thereof the Acquisition Consideration (as defined below) receivable
upon the Acquisition by a holder of the number of Shares which would have been
obtained upon exercise of the Option or portion thereof, as the case may be,
immediately prior to the Acquisition. The term "Acquisition Consideration" shall
mean (i) the kind and amount of securities of the surviving or new corporation,
cash, or any combination thereof receivable in respect of Shares of the Company
upon consummation of an Acquisition or (ii) the kind and amount of shares of the
surviving or new corporation, cash, or any combination thereof (as determined by
the Committee) having a fair market value equal to the fair market value of
consideration other than cash or securities receivable in respect of Shares of
the Company upon consummation of an Acquisition.
17
<PAGE>
(d) Any adjustments or other determinations to be made as provided for in
this Section 12 shall be made by the Committee in its discretion acting in good
faith, and shall be conclusive and binding on all persons holding any Options
granted under this Plan.
13. RESTRICTIONS ON OPTIONS AND OPTIONED SHARES.
(a) No Options shall be granted under this Plan, and no Shares shall be
issued and delivered upon the exercise of Options granted under this Plan,
unless and until the Company and/or the Optionee shall have complied with all
applicable Federal or state registration, listing and/or qualification
requirements and all other requirements of law or of any regulatory agencies
having jurisdiction. The Company shall make all reasonable efforts to comply
with such requirements that relate to the Company.
(b) The Committee in its sole and absolute discretion may, as a condition
to the exercise of any Vested Option granted under this Plan, require an
Optionee (i) to represent in writing that the Shares received upon exercise of a
Vested Option are being acquired for investment and not with a view to
distribution (ii) to make such other representations and warranties as are
reasonably deemed appropriate by the Company to satisfy the requirements of
applicable law, including, without limitation, an applicable private placement
exemption of the Securities Act as determined by the Committee. Stock
certificates representing Shares acquired upon the exercise of Vested Options
that have not been registered under the Securities Act shall, if required by the
Committee, bear the following legend and such additional legends as may be
required by the Option Agreement evidencing a particular Option:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT
--------------
AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD OR TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES
UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL TO THE ISSUER
HEREOF THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT."
(c) No Option granted under this Plan may be Transferred by the Optionee,
except by will or by the laws of descent and distribution. A Vested Option may
be exercised during the lifetime of the Optionee only by the Optionee. If an
Optionee dies, his Vested Options shall thereafter be exercisable, during the
period specified in Section 10(d) or the applicable Option Agreement (as the
case may be), by his executors or administrators to the full extent (but only to
such extent) to which such Options were exercisable by the Optionee at the time
of his death.
(d) No Share issued upon exercise of an Option may be Transferred, except
as otherwise provided in this Plan, in the Shareholders' Agreement (if
applicable to the Optionee), by will, by the laws of descent and distribution or
to the Company or any of the Company's Affiliates.
18
<PAGE>
(e) The rights of an Optionee with respect to each Share issuable upon
exercise of an Option granted under the Plan shall be subject to and benefit
from the terms of the Shareholders' Agreement (if applicable to the Optionee),
and an Optionee shall be required, as a condition of exercising an Option, to
execute and deliver all such agreements and other instruments required by the
Company for such purpose.
(f) The Committee in its sole and absolute discretion may, as a condition
to receiving an Option granted under the Plan (other than the Options granted on
the Effective Date, which are subject to the Shareholders' Agreement), require
that the Optionee enter into a shareholders' or similar agreement in the form
approved by the Committee that shall provide for one or more of the following:
transfer restrictions, right of first refusal, call option, drag-along rights,
tag-along rights, option exercise "blackout" periods and other such rights or
restrictions with respect to the Options and the Optioned Shares as the
Committee in its discretion shall deem appropriate.
14. EFFECTIVE DATE AND TERMINATION OF THE PLAN.
(a) This Plan shall become effective on the Effective Date.
(b) No Options may be granted after the tenth anniversary of the Effective
Date.
(c) Any Option outstanding as of the tenth anniversary of the Effective
Date shall remain in effect until the earlier of the exercise thereof or the
Expiration Date with respect to such Option.
15. WITHHOLDING TAXES.
When taxable compensation is realized by an Optionee in respect of an
Option, such Optionee shall satisfy all applicable federal, state or local
taxes required by law to be withheld at such time. The Option Agreement shall
specify the manner in which the withholding obligation shall be satisfied with
respect to the Option.
16. MISCELLANEOUS.
Each Option granted under this Plan may contain such other terms and
conditions not inconsistent with this Plan as may be determined by the
Committee, in its sole and absolute discretion.
(a) Number and Gender. With respect to words used in this Plan, the
-----------------
singular form shall include the plural form, the masculine gender shall include
the feminine gender, and vice-versa, as the context requires.
(b) Captions. The use of captions in this Plan is for convenience. The
--------
captions are not intended to provide substantive rights.
19
<PAGE>
(c) Amendment of Plan. This Plan may be modified or amended in any respect
-----------------
by the Board, provided that no amendment or modification of the Plan shall in
any manner affect any Option theretofore granted without the consent of the
Optionee or the permitted transferee of such Option.
(d) Governing Law. All questions concerning the construction,
-------------
interpretation and validity of this Plan and the instruments evidencing the
Options granted hereunder shall be governed by and construed and enforced in
accordance with the domestic laws of the State of Florida, without giving effect
to any choice or conflict of law provision or rule (whether in the State of
Florida or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Florida. In furtherance of the
foregoing, the internal law of the State of Florida will control the
interpretation and construction of this Plan, even it under such jurisdiction's
choice of law or conflict of law analysis, the substantive law of some other
jurisdiction would ordinarily apply.
(e) No Evidence of Employment or Service. Nothing contained in this Plan
------------------------------------
or in any Option Agreement shall confer upon any Optionee any right with respect
to the continuation of his employment by or service with the Company or any of
its subsidiaries or interfere in any way with the right of the Company or any
such subsidiary (subject to the terms of any separate agreement to the contrary)
at any time to terminate such employment or service or to increase or decrease
the compensation of the Optionee from the rate in existence at the time of the
grant of an Option.
(f) Integration. The provisions contained in this Plan and any Option
-----------
Agreement shall supersede all prior plans, agreements and understandings with
respect to the subject matter hereof, including, without limitation, the "Option
Plan" term sheet set forth as Attachment A to the employment agreements dated as
of February 10, 1998 by and between Montgomery Tank Lines, Inc., and Charles J.
O'Brien, Jr., Marvin Sexton and Richard Brandewie.
20
<PAGE>
EXHIBIT A
LIST OF OPTIONEES AND NUMBER OF OPTIONS AWARDED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Options
Optionee -------------------------------------------------------------
Tranche A Tranche B Tranche C Tranche D
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Richard Brandewie 11,000 3,667 3,667 3,666
- ---------------------------------------------------------------------------------------------
Charles J. O'Brien, Jr. 11,000 3,667 3,667 3,666
- ---------------------------------------------------------------------------------------------
Marvin Sexton 11,000 3,667 3,667 3,666
- ---------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
EXHIBIT B
OPTION AGREEMENT
22
<PAGE>
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement"), dated as of February 10, 1998, by
and between Charles O'Brien, Jr. (the "Executive") and Montgomery Tank Lines,
Inc., an Illinois corporation (the "Company").
WHEREAS, the Executive is currently an employee of the Company;
WHEREAS, concurrently with the execution and delivery of this
Agreement, MTL Inc. and Sombrero Acquisition Corp. are entering into an
Agreement and Plan of Merger (the "Merger Agreement"), dated as of the date
hereof; and
WHEREAS, MTL Inc. and Sombrero Acquisition Corp. intend that the
Company continue the employment of the Executive pursuant to the terms and
conditions hereof.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, the Company and the Executive hereby agree as follows:
1. Employment. The Company hereby employs the Executive, and the
----------
Executive hereby accepts employment by the Company, upon the terms and
conditions hereinafter set forth. The Executive's employment hereunder shall
commence, and shall be effective only upon, the occurrence of the "Effective
Time" of the Merger Agreement (the "Effective Date").
2. Term. Subject to the provisions for earlier termination as
----
herein provided, the employment of the Executive hereunder will be for the
period commencing on the Effective Date and ending on the second anniversary of
such date. On the first anniversary of the Effective Date, and on each
anniversary thereafter, the term of this Agreement shall automatically be
extended by an additional one year unless, no later than 90 days prior to any
such renewal date, either the Company or the Executive gives written notice to
the other that the term will not be extended, in which case the Executive's
employment hereunder shall terminate upon the expiration of the then-current
term. The period of the Executive's employment under this Agreement, as it may
be terminated or extended from time to time as provided herein, is referred to
hereafter as the "Employment Period."
3. Duties and Responsibilities. The Executive will be employed by
---------------------------
the Company in the same capacity as such Executive is currently employed by the
Company. The Executive will faithfully perform the duties and responsibilities
of such office, as they may be assigned from time to time by the Board of
Directors of the Company (the "Board")
<PAGE>
or the Board's designee. The Executive shall devote full-time attention and
energy during all business hours during the Employment Period (subject to sick
leave and vacation time taken in accordance with Company policy) to the business
of the Company, and at all times the Executive shall use his best efforts to
serve and advance the business of the Company. During the Employment Period, the
Executive will not be engaged in any other business activity which, in the
reasonable judgment of the Board or its designee, conflicts with the duties of
the Executive hereunder, whether or not such activity is pursued for gain,
profit or other pecuniary advantage, except for such passive investments
permitted under Section 7(a)(i) hereof.
4. Compensation and Benefits.
-------------------------
(a) Base Salary. The Company will pay to the Executive an annual
-----------
base salary of not less than $192,238.80, payable in accordance with the
Company's normal payroll policy. The Executive's base salary shall be reviewed
annually by the Board and shall be subject to increase at the option and sole
discretion of the Board.
(b) Bonus. The Executive shall be eligible to receive, at the sole
-----
discretion of the Board, an annual cash bonus based on pre-determined
performance standards established pursuant to the Company's Goal-Oriented
Compensation Achievement Plan on the date hereof, or such other annual bonus
plan as may be in effect from time to time. The Executive shall have a target
bonus of 42% of his base salary under such plan. The bonus target under such
plan for 1998 shall be based on the annual bonus targets that have been set
prior to the Effective Date hereof, but adjusted by the Compensation Committee
of the Board (in consultation with management) to reflect the effect on the
Company of the transactions contemplated by the Merger Agreement. In addition,
the Company will reserve an additional bonus amount equal to 18% of base salary,
payable in whole or in part based on guidelines established and evaluated by the
Compensation Committee of the Board (in consultation with management) relating
to extraordinary performance by the Company and Executive.
(c) Benefits. In addition to the salary and cash bonus referred to
--------
above, the Executive shall be entitled during the Employment Period to
participate in such employee benefit plans or programs of the Company, and shall
be entitled to such other fringe benefits, as are from time to time made
available by the Company generally to employees of the Executive's position,
tenure, salary, and other qualifications, on terms and conditions at least as
favorable as those provided to such similarly situated employees. The employee
benefits plans available to the Executive during the Employment Period shall be
comparable, in the aggregate, to those made available to the Executive by the
Company immediately prior to the Effective Date. The Executive acknowledges and
agrees that the Company does not guarantee the adoption of any particular
employee benefit plan or program or other fringe benefit during the Employment
Period, and participation by the Executive in any such plan or program shall be
subject to the rules and regulations applicable thereto.
2
<PAGE>
(d) Stock Options. Upon consummation of the transactions
-------------
contemplated under the Merger Agreement, the Executive shall be granted options
to purchase 25,500 shares of common stock of the Company under the terms of the
Option Plan described in Attachment A hereto (the "New Options"). In addition,
the Executive shall be eligible for such other awards, if any, under the Option
Plan or any other stock option or other equity-based incentive plan as shall be
granted to the Executive from time to time by the Board or its designee, in its
sole discretion.
(e) Expenses. The Company will reimburse the Executive, in
--------
accordance with the practices in effect from time to time for other officers or
staff personnel of the Company, for all reasonable and necessary business
expenses incurred by the Executive for or on behalf of the Company in the
performance of the Executive's duties hereunder, upon presentation by the
Executive to the Company of appropriate vouchers or documentation.
5. Termination. The Company reserves the right to terminate the
-----------
Executive's employment hereunder at any time with or without Cause (as defined
herein), subject to the provisions of section 6(d) hereof. In addition, the
Executive's employment hereunder may be terminated by the Company under the
following circumstances:
(a) Death. The Executive's employment hereunder shall terminate upon
-----
his death.
(b) Disability. If, as a result of the Executive's incapacity due to
----------
physical or mental illness, the Executive shall have been absent from his duties
hereunder on a full-time basis for three consecutive months or for a period in
excess of six months within any twelve month period (whether or not
consecutive), and within thirty days after written notice of termination is
given (which may occur before or after the end of such absence period) shall not
have returned to the performance of his duties hereunder on a full-time basis,
the Company may terminate the Executive's employment hereunder on the basis of
disability.
(c) For Cause. The Company may terminate the Executive's employment
---------
hereunder for Cause. For purposes of this Agreement, the Company shall have
"Cause" to terminate the Executive's employment hereunder if such termination
shall be the result of:
(i) the willful failure by the Executive to substantially perform his
duties hereunder (which shall be deemed to include, without limitation,
habitual absenteeism or dereliction of duty), which failure continues
following written notice to the Executive by the Company;
(ii) disobeying in a material respect any written and legally
appropriate
3
<PAGE>
directives of the Board that are specific in nature;
(iii) a material breach of the Executive's fiduciary duty to the
Company or fraud, willful misconduct or material dishonesty in connection
with the Executive's performance hereunder;
(iv) the material breach of any of the covenants set forth in Section
7 hereof; or
(v) indictment or conviction for, or plea of guilty or nolo
----
contendere to a charge of commission of a felony.
----------
Any termination of the Executive's employment for Cause by the Company shall be
communicated by a written notice of termination, indicating the specific
termination provision in the Agreement relied upon and setting forth the facts
that provide the basis for the Executive's termination. Such notice must be
given at least thirty days prior to termination, and the Executive shall have
the opportunity during such notification period to cure or correct any failure
or breach upon which the Executive's termination is based.
(d) Good Reason. The Executive may terminate his employment
-----------
hereunder for "Good Reason." For purposes of this Agreement, the Executive
shall have "Good Reason" to terminate his employment if such termination shall
be the result of:
(i) a material diminution by the Company in the Executive's duties
and responsibilities as contemplated by Section 3 hereof;
(ii) a material breach by the Company of its compensation and benefit
obligations under Section 4 hereof; or
(iii) an involuntary relocation by more than 50 miles of the
Executive's principal place of business as of the Effective Date.
Any termination of the Executive's employment for Good Reason by the Executive
shall be communicated by a written notice of termination, indicating the
specific termination provision in the Agreement relied upon and setting forth
the facts that provide the basis for the Executive's termination. Such notice
must be given at least thirty days prior to termination, and the Company shall
have the opportunity during such notification period to cure or correct any
failure or breach upon which the Executive's termination is based.
6. Compensation Upon Termination.
-----------------------------
(a) Death. If the Executive's employment is terminated by his
-----
death, the Company shall pay to the Executive's legal representative (in
accordance with Section
4
<PAGE>
18 hereof) (i) any unpaid base salary through the date of death and for sixty
days thereafter and (ii) a pro rata annual bonus as calculated in accordance
with Section 6(f) hereof. Except as provided in Section 6(g) hereof, the Company
shall have no further obligation to the Executive hereunder.
(b) Disability. During any period that the Executive fails to
----------
perform his duties hereunder as a result of incapacity due to disability as
described in Section 5(b) above, the Executive shall continue to receive his
full salary at the rate then in effect for such period until his employment is
terminated pursuant to Section 5(b) hereof, provided that payments so made to
the Executive during the disability period shall be reduced by the sum of the
amounts, if any, paid to the Executive at or prior to the time of any such
payment under any disability benefit plans of the Company or under the Social
Security disability insurance program. The Executive shall also receive a pro
rata annual bonus for the year of termination as calculated in accordance with
Section 6(f) hereof.
(c) For Cause; Voluntary Termination, Etc. If the Executive's
-------------------------------------
employment shall be terminated (i) by the Company for Cause, (ii) by the
Executive other than for Good Reason or (iii) by either party by providing
written notice of termination pursuant to Section 2 of this Agreement, the
Company shall pay the Executive his base salary through the final date of
employment and, except as provided in Section 6(g) hereof, the Company shall
have no further obligation to the Executive hereunder.
(d) Without Cause; Good Reason. In the event of termination of the
--------------------------
Executive's employment hereunder by the Company without Cause (other than upon
death or disability) or by the Executive for Good Reason, the Executive shall be
entitled to the following severance pay and benefits:
(i) severance payments in the form of continuation of the
Executive's base salary as in effect immediately prior to such termination
over the then-remaining current term hereof (the "Severance Period");
(ii) continuation during the Severance Period of coverage under the
group medical benefits plan in which the Executive is participating at the
time of termination; provided, however, that the Company's obligation to
-------- -------
provide such coverage shall be terminated if the Executive obtains
comparable substitute coverage from another employer at any time during the
Severance Period; and
(iii) a pro rata bonus as calculated in accordance with Section 6(f)
hereof.
(e) Sole Remedy. The parties agree that the foregoing shall
-----------
constitute the Executive's sole and exclusive rights and remedies by reason of
termination pursuant to this Section 6, and that with respect to Section 6(d)
above, such amounts shall constitute an agreement between the parties of
liquidated damages for the Executive by
5
<PAGE>
reason of any such termination. It is further understood that neither party
hereto shall be entitled to punitive, consequential or special damages with
respect to any claim hereunder, and each party waives all such rights and
remedies if any.
(f) Pro Rata Bonus. If the Executive's employment is terminated
--------------
under Section 5 hereof as a result of death, disability, by the Company without
Cause or by the Executive for Good Reason, the Executive shall receive a pro
rata portion of the annual bonus for the year in which the termination occurs
(based on the period of service prior to such termination), with such amount
calculated and paid following the completion of the year based on the Company's
performance applicable under the terms of the bonus plan, to be applied on a
basis consistent with the methodology used for other plan participants.
(g) Other Benefits. The benefits payable to the Executive under this
--------------
Agreement are not in lieu of any benefits payable under any employee benefit
plan, program or arrangement of the Company, and upon termination the Executive
will receive such benefits or payments, if any, as he may be entitled to receive
pursuant to the terms of such plans, programs and arrangements.
7. Restrictive Covenants.
---------------------
(a) Covenant Not to Compete.
-----------------------
(i) During the Employment Period and until (A) the expiration of the
then-current remaining term of this Agreement, in the event the Executive
is terminated by the Company for Cause or the Executive voluntarily resigns
other than for Good Reason or (B) the expiration of the Severance Period,
if the Executive is terminated by the Company without Cause or resigns for
Good Reason (the "Restricted Period"), the Executive will not, within any
geographical area in which the Company or any of its subsidiaries,
affiliates or owner-operators conducts business, directly or indirectly
own, manage, operate, control, be employed by or participate in the
ownership, management, operation or control of, or be connected in any
manner with, any entity that engages in the bulk transportation services
business or any related service in the bulk transportation services
industry in which the Company or any of its subsidiaries is engaged on the
date of the Executive's termination of employment (the "BTS Business"),
except that the Executive shall be allowed to invest his assets in the
securities of public companies engaged in the BTS Business if such holdings
are passive investments which do not involve the Executive's holding with
respect to any such entity the position of officer, director, employee,
consultant or general partner, or owning directly or indirectly two percent
(2%) or more of the stock, whether voting or not, of any such entity, and
which do not involve the Executive becoming a secured or unsecured creditor
of any such entity.
6
<PAGE>
(ii) At its sole option, the Company may extend by a period of up to
one year the Restricted Period applicable under Sections 7(a)(i) and (iii)
hereof by providing to the Executive the severance payments and benefits
referred to in Section 6(d)(i)-(ii) hereof for the duration of any such
extended period. The Company shall notify the Executive if it wishes to
exercise this option not later than 90 days prior to the expiration of the
then-current Restricted Period.
(iii) During the Restricted Period, the Executive agrees to refrain
from interfering with the employment relationship between the Company, its
subsidiaries and its affiliates and their respective employees, members of
the Company's "Affiliate Program" (as defined in the Merger Agreement) or
other independent owner/operators by soliciting any of such individuals to
participate in independent business ventures, and the Executive agrees to
refrain from soliciting business from any client or prospective client of
the Company or any of its subsidiaries or affiliates for the Executive's
benefit or for any entity in which the Executive has an interest or is
employed.
(iv) In the event of a knowing, willful and material breach of the
restrictive covenants set forth in this Section 7(a), the Company shall
have the right, in its sole discretion, and in addition to its right of
enforcement under Section 8 hereof and any other right of enforcement or
recovery available to the Company at law or equity or under this Agreement,
to (a) suspend or cancel the Executive's right to exercise the New Options
(whether or not then otherwise exercisable), (b) suspend or cancel the
Executive's pending right to receive an issuance of shares in settlement of
any New Option exercise, and/or (c) either (1) cancel the shares issued
upon exercise of the New Options (with repayment to the Executive of the
full purchase price paid for such shares) or (2) require the Executive to
pay to the Company in cash an amount equal to the gain realized by the
Executive upon exercise of any New Option; provided, however, that the
foregoing shall not apply to any New Options exercised more than six months
prior to the date of termination of employment. The Company shall provide
at least five days advance notice and opportunity to cure before exercising
this right.
(b) Intellectual Property. During the Employment Period, the
---------------------
Executive will disclose to the Company all ideas, inventions, creations,
business plans and other intellectual property developed by the Executive during
such period which relate directly or indirectly to the BTS Business, including,
without limitation, any process, operation, product or improvement which may be
patentable or copyrightable. The Executive agrees that such will be the
property of the Company and that the Executive will, at the Company's request
and cost, do whatever is necessary to secure the rights thereto by patent,
copyright or otherwise to the Company. The Executive shall be prohibited from
making use of or implementing any such ideas, inventions or business plans in
connection with his employment with a business that is considered a competitor
7
<PAGE>
under Section 7(a)(i) hereof.
(c) Confidentiality. During the Employment Period and at all times
---------------
thereafter, the Executive agrees that he will not divulge to anyone (other than
the Company or any persons employed or designated by the Company) any knowledge
or information of any type whatsoever of a confidential nature relating to the
business of the Company or any of its subsidiaries or affiliates, including,
without limitation, all types of trade secrets (unless readily ascertainable
from public or published information or trade sources), product design and
customer and supplier information. The Executive further agrees not to
disclose, publish or make use of any such knowledge or information for personal
purposes or for the benefit of any person, firm, corporation or other entity
(other than the Company or any persons employed or designated by the Company)
without the prior written consent of the Company.
(d) Remedy for Breach. In addition to any remedies available to the
-----------------
Company at law or under this Agreement, the Executive hereby consents and agrees
that the Company shall be entitled to seek a restraining order or injunction in
any court of competent jurisdiction to prevent any continuation of any violation
of the provisions of this Section 7 and the Executive hereby consents that such
restraining order or injunction may be granted.
8. Enforcement. It is the desire and intent of the parties hereto
-----------
that the provisions of this Agreement be enforceable by a court of competent
jurisdiction to the fullest extent permissible under the laws and public
policies applied in each jurisdiction in which enforcement is sought.
Accordingly, to the extent that a restriction contained in this Agreement is
more restrictive than permitted by the laws of any jurisdiction where this
Agreement may be subject to review and interpretation, the terms of such
restriction, for the purpose only of the operation of such restriction in such
jurisdiction, will be the maximum restriction allowed by the laws of such
jurisdiction and such restriction will be deemed to have been revised
accordingly herein.
9. Survival. Notwithstanding anything contained in this Agreement
--------
to the contrary, the provisions of Sections 6, 7 and 8 hereof will survive the
expiration or other termination of this Agreement until, by their terms, such
provisions are no longer operative.
10. Effectiveness. This Agreement shall become effective upon
-------------
consummation of the transactions contemplated by the Merger Agreement and prior
thereto shall be of no force and effect. If the Merger Agreement shall be
terminated in accordance with its terms, this Agreement shall automatically be
deemed to have been terminated and shall thereafter be of no force or effect.
11. Notices. Notices and other communications hereunder will be in
-------
writing and will be delivered personally or sent by air courier or first class
certified or registered mail, return receipt requested and postage prepaid,
addressed as follows:
8
<PAGE>
if to the Executive: Charles O'Brien, Jr.
1040 Royal Pass
Tampa, Florida 33602
and if to the Company: Montgomery Tank Lines, Inc.
3108 Central Drive
Plant City, Florida 33566
Attention:
with a copy to: Joshua Harris
c/o Apollo Management, L.P.
1301 Avenue of the Americas, 38th Floor
New York, NY 10019
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement will be deemed to have been given on the
date of delivery, if personally delivered; on the business day after the date
when sent, if sent by air courier; and on the third business day after the date
when sent, if sent by mail, in each case addressed to such party as provided in
this Section 11 or in accordance with the latest unrevoked direction from such
party.
12. Arbitration. Except as specifically provided in Section 8
-----------
hereof, any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a single
arbitrator in accordance with the rules of the American Arbitration Association
then in effect. Judgment may be entered on the arbitrator's award in any court
having jurisdiction. The attorney's fees and expenses of the prevailing party
shall be paid by the non-prevailing party, based on a determination made by the
arbitrator for this purpose as to which party is the prevailing party hereunder.
Arbitrators will be selected from the American Arbitration Association's panel
of arbitrators in the New York region and the location of the arbitration
proceeding shall be in Hillsborough County, Florida.
13. Governing Law. This Agreement will be governed by, and construed
-------------
and enforced in accordance with, the laws of the State of Florida, without
reference to conflict of law principles.
14. Waiver of Breach. The waiver by either party of a breach of any
----------------
provision of this Agreement by the other party must be in writing and will not
operate or be construed as a waiver of any subsequent breach by such other
party.
15. Entire Agreement; Amendments. This Agreement contains the entire
----------------------------
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements or understandings among the parties with respect
thereof,
9
<PAGE>
including, without limitation, the employment agreement entered into by and
between the parties on February 23, 1989. This Agreement may be amended only by
an agreement in writing signed by the parties hereto.
16. Headings. The section headings contained in this Agreement are
---------
for reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement.
17. Severability. Any provision of this Agreement that is prohibited
------------
or unenforceable in any jurisdiction will, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction will not invalidate or render unenforceable
such provision in any other jurisdiction.
18. Assignment; Successors. This Agreement is personal in its nature
----------------------
and the parties hereto shall not, without the consent of the other, assign or
transfer this Agreement or any rights or obligations hereunder; provided, that
--------
(i) the provisions hereof will inure to the benefit of, and be binding upon,
each successor of the Company, whether by merger, consolidation, transfer of all
or substantially all of its assets or otherwise and (ii) all of the Executive's
rights to compensation following his death shall inure to the benefit of his
heirs, estate, personal representatives or designees or other legal
representatives as the case may be.
19. Shareholders Agreement. The parties hereto shall use reasonable
----------------------
efforts to enter into a Shareholders Agreement effective as of the Effective
Date hereof substantially in accordance with the terms attached hereto as
Attachment B.
10
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
MONTGOMERY TANK LINES, INC.
/s/ Richard Brandewie
----------------------------
Richard Brandewie
Senior Vice President
EXECUTIVE
/s/ Charles J. O'Brien, Jr.
----------------------------
Charles J. O'Brien, Jr.
11
<PAGE>
EXHIBIT 10.3
February 10, 1998
Mr. Charles J. O'Brien, Jr.
1040 Royal Pass
Tampa, Florida 33602
Dear Sir:
This letter will supplement and amend the employment agreement dated
February 10, 1998 between you and Montgomery Tank Lines, Inc. (the "Employment
Agreement").
1. Section 1 of the Employment Agreement is supplemented by adding the
following sentence: "During the Employment Period (as defined below) and until
such time as the Company shall be a Public Corporation (as defined in the
Shareholders' Agreement), if so requested by the Executive, the Company shall
take such action necessary to cause the continued appointment of the Executive
as a director to the Board (as defined below)."
2. Section 4(d) of the Employment Agreement is amended by deleting the
number "26,351" in the third line thereof and inserting in its place the
following: "25,500".
To evidence your agreement with the foregoing, please execute in the space
provided below and return said executed counterpart to us whereupon the
Employment Agreement shall be supplemented and amended as provided above and
this letter shall be a binding agreement between us effective as of the date of
this letter.
Very truly yours,
MONTGOMERY TANK LINES, INC.
By: /s/ Richard Brandewie
------------------------------
Richard Brandewie
Senior Vice President
AGREED AND ACCEPTED:
EXECUTIVE
By: /s/ Charles J. O'Brien, Jr.
-------------------------------
Charles J. O'Brien, Jr.
<PAGE>
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement"), dated as of February 10, 1998, by
and between Richard Brandewie (the "Executive") and Montgomery Tank Lines, Inc.,
an Illinois corporation (the "Company").
WHEREAS, the Executive is currently an employee of the Company;
WHEREAS, concurrently with the execution and delivery of this
Agreement, MTL Inc. and Sombrero Acquisition Corp. are entering into an
Agreement and Plan of Merger (the "Merger Agreement"), dated as of the date
hereof; and
WHEREAS, MTL Inc. and Sombrero Acquisition Corp. intend that the
Company continue the employment of the Executive pursuant to the terms and
conditions hereof.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, the Company and the Executive hereby agree as follows:
1. Employment. The Company hereby employs the Executive, and the
----------
Executive hereby accepts employment by the Company, upon the terms and
conditions hereinafter set forth. The Executive's employment hereunder shall
commence, and shall be effective only upon, the occurrence of the "Effective
Time" of the Merger Agreement (the "Effective Date").
2. Term. Subject to the provisions for earlier termination as herein
----
provided, the employment of the Executive hereunder will be for the period
commencing on the Effective Date and ending on the second anniversary of such
date. On the first anniversary of the Effective Date, and on each anniversary
thereafter, the term of this Agreement shall automatically be extended by an
additional one year unless, no later than 90 days prior to any such renewal
date, either the Company or the Executive gives written notice to the other that
the term will not be extended, in which case the Executive's employment
hereunder shall terminate upon the expiration of the then-current term. The
period of the Executive's employment under this Agreement, as it may be
terminated or extended from time to time as provided herein, is referred to
hereafter as the "Employment Period."
3. Duties and Responsibilities. The Executive will be employed by
---------------------------
the Company in the same capacity as such Executive is currently employed by the
Company. The Executive will faithfully perform the duties and responsibilities
of such office, as they may be assigned from time to time by the Board of
Directors of the Company (the "Board")
<PAGE>
or the Board's designee. The Executive shall devote full-time attention and
energy during all business hours during the Employment Period (subject to sick
leave and vacation time taken in accordance with Company policy) to the business
of the Company, and at all times the Executive shall use his best efforts to
serve and advance the business of the Company. During the Employment Period, the
Executive will not be engaged in any other business activity which, in the
reasonable judgment of the Board or its designee, conflicts with the duties of
the Executive hereunder, whether or not such activity is pursued for gain,
profit or other pecuniary advantage, except for such passive investments
permitted under Section 7(a)(i) hereof.
4. Compensation and Benefits.
-------------------------
(a) Base Salary. The Company will pay to the Executive an annual base
-----------
salary of not less than $192,238.80, payable in accordance with the Company's
normal payroll policy. The Executive's base salary shall be reviewed annually
by the Board and shall be subject to increase at the option and sole discretion
of the Board.
(b) Bonus. The Executive shall be eligible to receive, at the sole
-----
discretion of the Board, an annual cash bonus based on pre-determined
performance standards established pursuant to the Company's Goal-Oriented
Compensation Achievement Plan on the date hereof, or such other annual bonus
plan as may be in effect from time to time. The Executive shall have a target
bonus of 42% of his base salary under such plan. The bonus target under such
plan for 1998 shall be based on the annual bonus targets that have been set
prior to the Effective Date hereof, but adjusted by the Compensation Committee
of the Board (in consultation with management) to reflect the effect on the
Company of the transactions contemplated by the Merger Agreement. In addition,
the Company will reserve an additional bonus amount equal to 18% of base salary,
payable in whole or in part based on guidelines established and evaluated by the
Compensation Committee of the Board (in consultation with management) relating
to extraordinary performance by the Company and Executive.
(c) Benefits. In addition to the salary and cash bonus referred to
--------
above, the Executive shall be entitled during the Employment Period to
participate in such employee benefit plans or programs of the Company, and shall
be entitled to such other fringe benefits, as are from time to time made
available by the Company generally to employees of the Executive's position,
tenure, salary, and other qualifications, on terms and conditions at least as
favorable as those provided to such similarly situated employees. The employee
benefits plans available to the Executive during the Employment Period shall be
comparable, in the aggregate, to those made available to the Executive by the
Company immediately prior to the Effective Date. The Executive acknowledges and
agrees that the Company does not guarantee the adoption of any particular
employee benefit plan or program or other fringe benefit during the Employment
Period, and participation by the Executive in any such plan or program shall be
subject to the rules and regulations applicable thereto.
2
<PAGE>
(d) Stock Options. Upon consummation of the transactions contemplated
-------------
under the Merger Agreement, the Executive shall be granted options to purchase
25,500 shares of common stock of the Company under the terms of the Option Plan
described in Attachment A hereto (the "New Options"). In addition, the Executive
shall be eligible for such other awards, if any, under the Option Plan or any
other stock option or other equity-based incentive plan as shall be granted to
the Executive from time to time by the Board or its designee, in its sole
discretion.
(e) Expenses. The Company will reimburse the Executive, in accordance
--------
with the practices in effect from time to time for other officers or staff
personnel of the Company, for all reasonable and necessary business expenses
incurred by the Executive for or on behalf of the Company in the performance of
the Executive's duties hereunder, upon presentation by the Executive to the
Company of appropriate vouchers or documentation.
5. Termination. The Company reserves the right to terminate the
-----------
Executive's employment hereunder at any time with or without Cause (as defined
herein), subject to the provisions of section 6(d) hereof. In addition, the
Executive's employment hereunder may be terminated by the Company under the
following circumstances:
(a) Death. The Executive's employment hereunder shall terminate upon
-----
his death.
(b) Disability. If, as a result of the Executive's incapacity due to
----------
physical or mental illness, the Executive shall have been absent from his duties
on a full-time basis for three consecutive months or for a period in excess of
six months within any twelve month period (whether or not consecutive), and
within thirty days after written notice of termination is given (which may occur
before or after the end of such absence period) shall not have returned to the
performance of his duties hereunder on a full-time basis, the Company may
terminate the Executive's employment hereunder on the basis of disability.
(c) For Cause. The Company may terminate the Executive's employment
---------
hereunder for Cause. For purposes of this Agreement, the Company shall have
"Cause" to terminate the Executive's employment hereunder if such termination
shall be the result of:
(i) the willful failure by the Executive to substantially perform
his duties hereunder (which shall be deemed to include, without limitation,
habitual absenteeism or dereliction of duty), which failure continues
following written notice to the Executive by the Company;
(ii) disobeying in a material respect any written and legally
appropriate directives of the Board that are specific in nature;
3
<PAGE>
(iii) a material breach of the Executive's fiduciary duty to the
Company or fraud, willful misconduct or material dishonesty in connection
with the Executive's performance hereunder;
(iv) the material breach of any of the covenants set forth in Section
7 hereof; or
(v) indictment or conviction for, or plea of guilty or nolo
----
contendere to a charge of commission of a felony.
----------
Any termination of the Executive's employment for Cause by the Company shall be
communicated by a written notice of termination, indicating the specific
termination provision in the Agreement relied upon and setting forth the facts
that provide the basis for the Executive's termination. Such notice must be
given at least thirty days prior to termination, and the Executive shall have
the opportunity during such notification period to cure or correct any failure
or breach upon which the Executive's termination is based.
(d) Good Reason. The Executive may terminate his employment
-----------
hereunder for "Good Reason." For purposes of this Agreement, the Executive shall
have "Good Reason" to terminate his employment if such termination shall be the
result of:
(i) a material diminution by the Company in the Executive's duties
and responsibilities as contemplated by Section 3 hereof;
(ii) a material breach by the Company of its compensation and benefit
obligations under Section 4 hereof; or
(iii) an involuntary relocation by more than 50 miles of the
Executive's principal place of business as of the Effective Date.
Any termination of the Executive's employment for Good Reason by the Executive
shall be communicated by a written notice of termination, indicating the
specific termination provision in the Agreement relied upon and setting forth
the facts that provide the basis for the Executive's termination. Such notice
must be given at least thirty days prior to termination, and the Company shall
have the opportunity during such notification period to cure or correct any
failure or breach upon which the Executive's termination is based.
6. Compensation Upon Termination.
-----------------------------
(a) Death. If the Executive's employment is terminated by his death,
-----
the Company shall pay to the Executive's legal representative (in accordance
with Section 18 hereof) (i) any unpaid base salary through the date of death and
for sixty days thereafter and (ii) a pro rata annual bonus as calculated in
accordance with Section 6(f) hereof. Except as provided in Section 6(g) hereof,
the Company shall have no further obligation to the Executive hereunder.
4
<PAGE>
(b) Disability. During any period that the Executive fails to perform
----------
his duties hereunder as a result of incapacity due to disability as described
in Section 5(b) above, the Executive shall continue to receive his full salary
at the rate then in effect for such period until his employment is terminated
pursuant to Section 5(b) hereof, provided that payments so made to the
Executive during the disability period shall be reduced by the sum of the
amounts, if any, paid to the Executive at or prior to the time of any such
payment under any disability benefit plans of the Company or under the Social
Security disability insurance program. The Executive shall also receive a pro
rata annual bonus for the year of termination as calculated in accordance with
Section 6(f) hereof.
(c) For Cause; Voluntary Termination, Etc. If the Executive's
-------------------------------------
employment shall be terminated (i) by the Company for Cause, (ii) by the
Executive other than for Good Reason or (iii) by either party by providing
written notice of termination pursuant to Section 2 of this Agreement, the
Company shall pay the Executive his base salary through the final date of
employment and, except as provided in Section 6(g) hereof, the Company shall
have no further obligation to the Executive hereunder.
(d) Without Cause; Good Reason. In the event of termination of the
--------------------------
Executive's employment hereunder by the Company without Cause (other than upon
death or disability) or by the Executive for Good Reason, the Executive shall be
entitled to the following severance pay and benefits:
(i) severance payments in the form of continuation of the
Executive's base salary as in effect immediately prior to such termination
over the then-remaining current term hereof (the "Severance Period");
(ii) continuation during the Severance Period of coverage under the
group medical benefits plan in which the Executive is participating at the
time of termination; provided, however, that the Company's obligation to
-------- -------
provide such coverage shall be terminated if the Executive obtains
comparable substitute coverage from another employer at any time during the
Severance Period; and
(iii) a pro rata bonus as calculated in accordance with Section 6(f)
hereof.
(e) Sole Remedy. The parties agree that the foregoing shall
-----------
constitute the Executive's sole and exclusive rights and remedies by reason of
termination pursuant to this Section 6, and that with respect to Section 6(d)
above, such amounts shall constitute an agreement between the parties of
liquidated damages for the Executive by reason of any such termination. It is
further understood that neither party hereto shall be entitled to punitive,
consequential or special damages with respect to any claim hereunder, and each
party waives all such rights and remedies if any.
(f) Pro Rata Bonus. If the Executive's employment is terminated under
--------------
Section 5 hereof as a result of death, disability, by the Company without Cause
or by the Executive for Good Reason, the Executive shall receive a pro rata
portion of the
5
<PAGE>
annual bonus for the year in which the termination occurs (based on the period
of service prior to such termination), with such amount calculated and paid
following the completion of the year based on the Company's performance
applicable under the terms of the bonus plan, to be applied on a basis
consistent with the methodology used for other plan participants.
(g) Other Benefits. The benefits payable to the Executive under this
--------------
Agreement are not in lieu of any benefits payable under any employee benefit
plan, program or arrangement of the Company, and upon termination the Executive
will receive such benefits or payments, if any, as he may be entitled to receive
pursuant to the terms of such plans, programs and arrangements.
7. Restrictive Covenants.
---------------------
(a) Covenant Not to Compete.
-----------------------
(i) During the Employment Period and until (A) the expiration of the
then-current remaining term of this Agreement, in the event the Executive
is terminated by the Company for Cause or the Executive voluntarily resigns
other than for Good Reason or (B) the expiration of the Severance Period,
if the Executive is terminated by the Company without Cause or resigns for
Good Reason (the "Restricted Period"), the Executive will not, within any
geographical area in which the Company or any of its subsidiaries,
affiliates or owner-operators conducts business, directly or indirectly
own, manage, operate, control, be employed by or participate in the
ownership, management, operation or control of, or be connected in any
manner with, any entity that engages in the bulk transportation services
business or any related service in the bulk transportation services
industry in which the Company or any of its subsidiaries is engaged on the
date of the Executive's termination of employment (the "BTS Business"),
except that the Executive shall be allowed to invest his assets in the
securities of public companies engaged in the BTS Business if such holdings
are passive investments which do not involve the Executive's holding with
respect to any such entity the position of officer, director, employee,
consultant or general partner, or owning directly or indirectly two percent
(2%) or more of the stock, whether voting or not, of any such entity, and
which do not involve the Executive becoming a secured or unsecured creditor
of any such entity.
(ii) At its sole option, the Company may extend by a period of up to
one year the Restricted Period applicable under Sections 7(a)(i) and (iii)
hereof by providing to the Executive the severance payments and benefits
referred to in Section 6(d)(i)-(ii) hereof for the duration of any such
extended period. The Company shall notify the Executive if it wishes to
exercise this option not later than 90 days prior to the expiration of the
then-current Restricted Period.
(iii) During the Restricted Period, the Executive agrees to refrain
from interfering with the employment relationship between the Company, its
6
<PAGE>
subsidiaries and its affiliates and their respective employees, members of
the Company's "Affiliate Program" (as defined in the Merger Agreement) or
other independent owner/operators by soliciting any of such individuals to
participate in independent business ventures, and the Executive agrees to
refrain from soliciting business from any client or prospective client of
the Company or any of its subsidiaries or affiliates for the Executive's
benefit or for any entity in which the Executive has an interest or is
employed.
(iv) In the event of a knowing, willful and material breach of the
restrictive covenants set forth in this Section 7(a), the Company shall
have the right, in its sole discretion, and in addition to its right of
enforcement under Section 8 hereof and any other right of enforcement or
recovery available to the Company at law or equity or under this Agreement,
to (a) suspend or cancel the Executive's right to exercise the New Options
(whether or not then otherwise exercisable), (b) suspend or cancel the
Executive's pending right to receive an issuance of shares in settlement of
any New Option exercise, and/or (c) either (1) cancel the shares issued
upon exercise of the New Options (with repayment to the Executive of the
full purchase price paid for such shares) or (2) require the Executive to
pay to the Company in cash an amount equal to the gain realized by the
Executive upon exercise of any New Option; provided, however, that the
foregoing shall not apply to any New Options exercised more than six months
prior to the date of termination of employment. The Company shall provide
at least five days advance notice and opportunity to cure before exercising
this right.
(b) Intellectual Property. During the Employment Period, the
---------------------
Executive will disclose to the Company all ideas, inventions, creations,
business plans and other intellectual property developed by the Executive during
such period which relate directly or indirectly to the BTS Business, including,
without limitation, any process, operation, product or improvement which may be
patentable or copyrightable. The Executive agrees that such will be the property
of the Company and that the Executive will, at the Company's request and cost,
do whatever is necessary to secure the rights thereto by patent, copyright or
otherwise to the Company. The Executive shall be prohibited from making use of
or implementing any such ideas, inventions or business plans in connection with
his employment with a business that is considered a competitor under Section
7(a)(i) hereof.
(c) Confidentiality. During the Employment Period and at all times
---------------
thereafter, the Executive agrees that he will not divulge to anyone (other than
the Company or any persons employed or designated by the Company) any knowledge
or information of any type whatsoever of a confidential nature relating to the
business of the Company or any of its subsidiaries or affiliates, including,
without limitation, all types of trade secrets (unless readily ascertainable
from public or published information or trade sources), product design and
customer and supplier information. The Executive further agrees not to disclose,
publish or make use of any such knowledge or information for personal purposes
or for the benefit of any person, firm, corporation or other entity (other
7
<PAGE>
than the Company or any persons employed or designated by the Company) without
the prior written consent of the Company.
(d) Remedy for Breach. In addition to any remedies available to the
-----------------
Company at law or under this Agreement, the Executive hereby consents and agrees
that the Company shall be entitled to seek a restraining order or injunction in
any court of competent jurisdiction to prevent any continuation of any violation
of the provisions of this Section 7 and the Executive hereby consents that such
restraining order or injunction may be granted.
8. Enforcement. It is the desire and intent of the parties hereto
-----------
that the provisions of this Agreement be enforceable by a court of competent
jurisdiction to the fullest extent permissible under the laws and public
policies applied in each jurisdiction in which enforcement is sought.
Accordingly, to the extent that a restriction contained in this Agreement is
more restrictive than permitted by the laws of any jurisdiction where this
Agreement may be subject to review and interpretation, the terms of such
restriction, for the purpose only of the operation of such restriction in such
jurisdiction, will be the maximum restriction allowed by the laws of such
jurisdiction and such restriction will be deemed to have been revised
accordingly herein.
9. Survival. Notwithstanding anything contained in this Agreement to
--------
the contrary, the provisions of Sections 6, 7 and 8 hereof will survive the
expiration or other termination of this Agreement until, by their terms, such
provisions are no longer operative.
10. Effectiveness. This Agreement shall become effective upon
-------------
consummation of the transactions contemplated by the Merger Agreement and prior
thereto shall be of no force and effect. If the Merger Agreement shall be
terminated in accordance with its terms, this Agreement shall automatically be
deemed to have been terminated and shall thereafter be of no force or effect.
11. Notices. Notices and other communications hereunder will be in
-------
writing and will be delivered personally or sent by air courier or first class
certified or registered mail, return receipt requested and postage prepaid,
addressed as follows:
if to the Executive: Richard Brandewie
3309 W. Lykes
Tampa, Florida 33609
and if to the Company: Montgomery Tank Lines, Inc.
3108 Central Drive
Plant City, Florida 33566
Attention:
8
<PAGE>
with a copy to: Joshua Harris
c/o Apollo Management, L.P.
1301 Avenue of the Americas, 38th Floor
New York, NY 10019
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement will be deemed to have been given on the
date of delivery, if personally delivered; on the business day after the date
when sent, if sent by air courier; and on the third business day after the date
when sent, if sent by mail, in each case addressed to such party as provided in
this Section 11 or in accordance with the latest unrevoked direction from such
party.
12. Arbitration. Except as specifically provided in Section 8 hereof,
-----------
any dispute or controversy arising under or in connection with this Agreement
shall be settled exclusively by arbitration, conducted before a single
arbitrator in accordance with the rules of the American Arbitration Association
then in effect. Judgment may be entered on the arbitrator's award in any court
having jurisdiction. The attorney's fees and expenses of the prevailing party
shall be paid by the non-prevailing party, based on a determination made by the
arbitrator for this purpose as to which party is the prevailing party hereunder.
Arbitrators will be selected from the American Arbitration Association's panel
of arbitrators in the New York region and the location of the arbitration
proceeding shall be in Hillsborough County, Florida.
13. Governing Law. This Agreement will be governed by, and construed
-------------
and enforced in accordance with, the laws of the State of Florida, without
reference to conflict of law principles.
14. Waiver of Breach. The waiver by either party of a breach of any
----------------
provision of this Agreement by the other party must be in writing and will not
operate or be construed as a waiver of any subsequent breach by such other
party.
15. Entire Agreement; Amendments. This Agreement contains the entire
----------------------------
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements or understandings among the parties with respect
thereof. This Agreement may be amended only by an agreement in writing signed by
the parties hereto.
16. Headings. The section headings contained in this Agreement are
--------
for reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement.
17. Severability. Any provision of this Agreement that is prohibited
------------
or unenforceable in any jurisdiction will, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction will not invalidate or render unenforceable
such provision in any other jurisdiction.
9
<PAGE>
18. Assignment; Successors. This Agreement is personal in its nature
----------------------
and the parties hereto shall not, without the consent of the other, assign or
transfer this Agreement or any rights or obligations hereunder; provided, that
--------
(i) the provisions hereof will inure to the benefit of, and be binding upon,
each successor of the Company, whether by merger, consolidation, transfer of all
or substantially all of its assets or otherwise and (ii) all of the Executive's
rights to compensation following his death shall inure to the benefit of his
heirs, estate, personal representatives or designees or other legal
representatives as the case may be.
19. Shareholders Agreement. The parties hereto shall use reasonable
----------------------
efforts to enter into a Shareholders Agreement effective as of the Effective
Date hereof substantially in accordance with the terms attached hereto as
Attachment B.
10
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
MONTGOMERY TANK LINES, INC.
/s/ Charles J. O'Brien, Jr.
---------------------------
Charles J. O'Brien, Jr.
Vice President
EXECUTIVE
/s/ Richard Brandewie
---------------------
Richard Brandewie
11
<PAGE>
EXHIBIT 10.5
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement"), dated as of February 10, 1998, by
and between Marvin Sexton (the "Executive") and Montgomery Tank Lines, Inc., an
Illinois corporation (the "Company").
WHEREAS, the Executive is currently an employee of the Company;
WHEREAS, concurrently with the execution and delivery of this
Agreement, MTL Inc. and Sombrero Acquisition Corp. are entering into an
Agreement and Plan of Merger (the "Merger Agreement"), dated as of the date
hereof; and
WHEREAS, MTL Inc. and Sombrero Acquisition Corp. intend that the
Company continue the employment of the Executive pursuant to the terms and
conditions hereof.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, the Company and the Executive hereby agree as follows:
1. Employment. The Company hereby employs the Executive, and the
----------
Executive hereby accepts employment by the Company, upon the terms and
conditions hereinafter set forth. The Executive's employment hereunder shall
commence, and shall be effective only upon, the occurrence of the "Effective
Time" of the Merger Agreement (the "Effective Date").
2. Term. Subject to the provisions for earlier termination as
----
herein provided, the employment of the Executive hereunder will be for the
period commencing on the Effective Date and ending on the second anniversary of
such date. On the first anniversary of the Effective Date, and on each
anniversary thereafter, the term of this Agreement shall automatically be
extended by an additional one year unless, no later than 90 days prior to any
such renewal date, either the Company or the Executive gives written notice to
the other that the term will not be extended, in which case the Executive?s
employment hereunder shall terminate upon the expiration of the then-current
term. The period of the Executive?s employment under this Agreement, as it may
be terminated or extended from time to time as provided herein, is referred to
hereafter as the "Employment Period."
3. Duties and Responsibilities. The Executive will be employed by
---------------------------
the Company in the same capacity as such Executive is currently employed by the
Company. The Executive will faithfully perform the duties and responsibilities
of such office, as they may be assigned from time to time by the Board of
Directors of the Company (the "Board")
<PAGE>
or the Board's designee. The Executive shall devote full-time attention and
energy during all business hours during the Employment Period (subject to sick
leave and vacation time taken in accordance with Company policy) to the business
of the Company, and at all times the Executive shall use his best efforts to
serve and advance the business of the Company. During the Employment Period, the
Executive will not be engaged in any other business activity which, in the
reasonable judgment of the Board or its designee, conflicts with the duties of
the Executive hereunder, whether or not such activity is pursued for gain,
profit or other pecuniary advantage, except for such passive investments
permitted under Section 7(a)(i) hereof.
4. Compensation and Benefits.
-------------------------
(a) Base Salary. The Company will pay to the Executive an annual base
-----------
salary of not less than $192,238.80, payable in accordance with the Company's
normal payroll policy. The Executive?s base salary shall be reviewed annually
by the Board and shall be subject to increase at the option and sole discretion
of the Board.
(b) Bonus. The Executive shall be eligible to receive, at the sole
-----
discretion of the Board, an annual cash bonus based on pre-determined
performance standards established pursuant to the Company's Goal-Oriented
Compensation Achievement Plan on the date hereof, or such other annual bonus
plan as may be in effect from time to time. The Executive shall have a target
bonus of 42% of his base salary under such plan. The bonus target under such
plan for 1998 shall be based on the annual bonus targets that have been set
prior to the Effective Date hereof, but adjusted by the Compensation Committee
of the Board (in consultation with management) to reflect the effect on the
Company of the transactions contemplated by the Merger Agreement. In addition,
the Company will reserve an additional bonus amount equal to 18% of base salary,
payable in whole or in part based on guidelines established and evaluated by the
Compensation Committee of the Board (in consultation with management) relating
to extraordinary performance by the Company and Executive.
(c) Benefits. In addition to the salary and cash bonus referred to
--------
above, the Executive shall be entitled during the Employment Period to
participate in such employee benefit plans or programs of the Company, and shall
be entitled to such other fringe benefits, as are from time to time made
available by the Company generally to employees of the Executive's position,
tenure, salary, and other qualifications, on terms and conditions at least as
favorable as those provided to such similarly situated employees. The employee
benefits plans available to the Executive during the Employment Period shall be
comparable, in the aggregate, to those made available to the Executive by the
Company immediately prior to the Effective Date. The Executive acknowledges and
agrees that the Company does not guarantee the adoption of any particular
employee benefit plan or program or other fringe benefit during the Employment
Period, and participation by the Executive in any such plan or program shall be
subject to the rules and regulations applicable thereto.
2
<PAGE>
(d) Stock Options. Upon consummation of the transactions contemplated
-------------
under the Merger Agreement, the Executive shall be granted options to purchase
25,500 shares of common stock of the Company under the terms of the Option Plan
described in Attachment A hereto (the "New Options"). In addition, the
Executive shall be eligible for such other awards, if any, under the Option Plan
or any other stock option or other equity-based incentive plan as shall be
granted to the Executive from time to time by the Board or its designee, in its
sole discretion.
(e) Expenses. The Company will reimburse the Executive, in accordance
--------
with the practices in effect from time to time for other officers or staff
personnel of the Company, for all reasonable and necessary business expenses
incurred by the Executive for or on behalf of the Company in the performance of
the Executive's duties hereunder, upon presentation by the Executive to the
Company of appropriate vouchers or documentation.
5. Termination. The Company reserves the right to terminate the
-----------
Executive's employment hereunder at any time with or without Cause (as defined
herein), subject to the provisions of section 6(d) hereof. In addition, the
Executive's employment hereunder may be terminated by the Company under the
following circumstances:
(a) Death. The Executive's employment hereunder shall terminate upon
-----
his death.
(b) Disability. If, as a result of the Executive's incapacity due to
----------
physical or mental illness, the Executive shall have been absent from his duties
hereunder on a full-time basis for three consecutive months or for a period in
excess of six months within any twelve month period (whether or not
consecutive), and within thirty days after written notice of termination is
given (which may occur before or after the end of such absence period) shall not
have returned to the performance of his duties hereunder on a full-time basis,
the Company may terminate the Executive's employment hereunder on the basis of
disability.
(c) For Cause. The Company may terminate the Executive's employment
---------
hereunder for Cause. For purposes of this Agreement, the Company shall have
"Cause" to terminate the Executive's employment hereunder if such termination
shall be the result of:
(i) the willful failure by the Executive to substantially perform his
duties hereunder (which shall be deemed to include, without limitation,
habitual absenteeism or dereliction of duty), which failure continues
following written notice to the Executive by the Company;
(ii) disobeying in a material respect any written and legally
appropriate directives of the Board that are specific in nature;
3
<PAGE>
(iii) a material breach of the Executive's fiduciary duty to the
Company or fraud, willful misconduct or material dishonesty in connection
with the Executive's performance hereunder;
(iv) the material breach of any of the covenants set forth in
Section 7 hereof; or
(v) indictment or conviction for, or plea of guilty or nolo
----
contendere to a charge of commission of a felony.
----------
Any termination of the Executive's employment for Cause by the Company shall be
communicated by a written notice of termination, indicating the specific
termination provision in the Agreement relied upon and setting forth the facts
that provide the basis for the Executive's termination. Such notice must be
given at least thirty days prior to termination, and the Executive shall have
the opportunity during such notification period to cure or correct any failure
or breach upon which the Executive's termination is based.
(d) Good Reason. The Executive may terminate his employment
-----------
hereunder for "Good Reason." For purposes of this Agreement, the Executive
shall have "Good Reason" to terminate his employment if such termination shall
be the result of:
(i) a material diminution by the Company in the Executive's duties
and responsibilities as contemplated by Section 3 hereof;
(ii) a material breach by the Company of its compensation and
benefit obligations under Section 4 hereof; or
(iii) an involuntary relocation by more than 50 miles of the
Executive's principal place of business as of the Effective Date.
Any termination of the Executive's employment for Good Reason by the Executive
shall be communicated by a written notice of termination, indicating the
specific termination provision in the Agreement relied upon and setting forth
the facts that provide the basis for the Executive's termination. Such notice
must be given at least thirty days prior to termination, and the Company shall
have the opportunity during such notification period to cure or correct any
failure or breach upon which the Executive's termination is based.
(e) Stock Purchase. Executive agrees to purchase 31,135 shares of
--------------
Surviving Corporation Common Stock for the Cash Merger Price per share at the
Effective Time of the Merger (as such capitalized terms are defined in the
Merger Agreement).
6. Compensation Upon Termination.
-----------------------------
(a) Death. If the Executive's employment is terminated by his
-----
death, the Company shall pay to the Executive's legal representative (in
accordance with Section
4
<PAGE>
18 hereof) (i) any unpaid base salary through the date of death and for sixty
days thereafter and (ii) a pro rata annual bonus as calculated in accordance
with Section 6(f) hereof. Except as provided in Section 6(g) hereof, the Company
shall have no further obligation to the Executive hereunder.
(b) Disability. During any period that the Executive fails to
----------
perform his duties hereunder as a result of incapacity due to disability as
described in Section 5(b) above, the Executive shall continue to receive his
full salary at the rate then in effect for such period until his employment is
terminated pursuant to Section 5(b) hereof, provided that payments so made to
the Executive during the disability period shall be reduced by the sum of the
amounts, if any, paid to the Executive at or prior to the time of any such
payment under any disability benefit plans of the Company or under the Social
Security disability insurance program. The Executive shall also receive a pro
rata annual bonus for the year of termination as calculated in accordance with
Section 6(f) hereof.
(c) For Cause; Voluntary Termination, Etc. If the Executive's
-------------------------------------
employment shall be terminated (i) by the Company for Cause, (ii) by the
Executive other than for Good Reason or (iii) by either party by providing
written notice of termination pursuant to Section 2 of this Agreement, the
Company shall pay the Executive his base salary through the final date of
employment and, except as provided in Section 6(g) hereof, the Company shall
have no further obligation to the Executive hereunder.
(d) Without Cause; Good Reason. In the event of termination of the
--------------------------
Executive's employment hereunder by the Company without Cause (other than upon
death or disability) or by the Executive for Good Reason, the Executive shall be
entitled to the following severance pay and benefits:
(i) severance payments in the form of continuation of the
Executive's base salary as in effect immediately prior to such termination
over the then-remaining current term hereof (the "Severance Period");
(ii) continuation during the Severance Period of coverage under the
group medical benefits plan in which the Executive is participating at the
time of termination; provided, however, that the Company's obligation to
-------- -------
provide such coverage shall be terminated if the Executive obtains comparable
substitute coverage from another employer at any time during the Severance
Period; and
(iii) a pro rata bonus as calculated in accordance with Section 6(f)
hereof.
(e) Sole Remedy. The parties agree that the foregoing shall
-----------
constitute the Executive's sole and exclusive rights and remedies by reason of
termination pursuant to this Section 6, and that with respect to Section 6(d)
above, such amounts shall constitute an agreement between the parties of
liquidated damages for the Executive by reason of any such termination. It is
further understood that neither party hereto shall be entitled to punitive,
consequential or special damages with respect to any claim
5
<PAGE>
hereunder, and each party waives all such rights and remedies if any.
(f) Pro Rata Bonus. If the Executive's employment is terminated
--------------
under Section 5 hereof as a result of death, disability, by the Company without
Cause or by the Executive for Good Reason, the Executive shall receive a pro
rata portion of the annual bonus for the year in which the termination occurs
(based on the period of service prior to such termination), with such amount
calculated and paid following the completion of the year based on the Company's
performance applicable under the terms of the bonus plan, to be applied on a
basis consistent with the methodology used for other plan participants.
(g) Other Benefits. The benefits payable to the Executive under
--------------
this Agreement are not in lieu of any benefits payable under any employee
benefit plan, program or arrangement of the Company, and upon termination the
Executive will receive such benefits or payments, if any, as he may be entitled
to receive pursuant to the terms of such plans, programs and arrangements.
7. Restrictive Covenants.
---------------------
(a) Covenant Not to Compete.
-----------------------
(i) During the Employment Period and until (A) the expiration of the
then-current remaining term of this Agreement, in the event the Executive is
terminated by the Company for Cause or the Executive voluntarily resigns other
than for Good Reason or (B) the expiration of the Severance Period, if the
Executive is terminated by the Company without Cause or resigns for Good
Reason (the ?Restricted Period?), the Executive will not, within any
geographical area in which the Company or any of its subsidiaries, affiliates
or owner-operators conducts business, directly or indirectly own, manage,
operate, control, be employed by or participate in the ownership, management,
operation or control of, or be connected in any manner with, any entity that
engages in the bulk transportation services business or any related service in
the bulk transportation services industry in which the Company or any of its
subsidiaries is engaged on the date of the Executive's termination of
employment (the "BTS Business"), except that the Executive shall be allowed to
invest his assets in the securities of public companies engaged in the BTS
Business if such holdings are passive investments which do not involve the
Executive's holding with respect to any such entity the position of officer,
director, employee, consultant or general partner, or owning directly or
indirectly two percent (2%) or more of the stock, whether voting or not, of
any such entity, and which do not involve the Executive becoming a secured or
unsecured creditor of any such entity.
(ii) At its sole option, the Company may extend by a period of up to
one year the Restricted Period applicable under Sections 7(a)(i) and (iii)
hereof by providing to the Executive the severance payments and benefits
referred to in Section 6(d)(i)-(ii) hereof for the duration of any such
extended period. The
6
<PAGE>
Company shall notify the Executive if it wishes to exercise this option not
later than 90 days prior to the expiration of the then-current Restricted
Period.
(iii) During the Restricted Period, the Executive agrees to refrain
from interfering with the employment relationship between the Company, its
subsidiaries and its affiliates and their respective employees, members of the
Company's "Affiliate Program" (as defined in the Merger Agreement) or other
independent owner/operators by soliciting any of such individuals to
participate in independent business ventures, and the Executive agrees to
refrain from soliciting business from any client or prospective client of the
Company or any of its subsidiaries or affiliates for the Executive's benefit
or for any entity in which the Executive has an interest or is employed.
(iv) In the event of a knowing, willful and material breach of the
restrictive covenants set forth in this Section 7(a), the Company shall have
the right, in its sole discretion, and in addition to its right of enforcement
under Section 8 hereof and any other right of enforcement or recovery
available to the Company at law or equity or under this Agreement, to (a)
suspend or cancel the Executive's right to exercise the New Options (whether
or not then otherwise exercisable), (b) suspend or cancel the Executive's
pending right to receive an issuance of shares in settlement of any New Option
exercise, and/or (c) either (1) cancel the shares issued upon exercise of the
New Options (with repayment to the Executive of the full purchase price paid
for such shares) or (2) require the Executive to pay to the Company in cash an
amount equal to the gain realized by the Executive upon exercise of any New
Option; provided, however, that the foregoing shall not apply to any New
Options exercised more than six months prior to the date of termination of
employment. The Company shall provide at least five days advance notice and
opportunity to cure before exercising this right.
(b) Intellectual Property. During the Employment Period, the
---------------------
Executive will disclose to the Company all ideas, inventions, creations,
business plans and other intellectual property developed by the Executive during
such period which relate directly or indirectly to the BTS Business, including,
without limitation, any process, operation, product or improvement which may be
patentable or copyrightable. The Executive agrees that such will be the
property of the Company and that the Executive will, at the Company's request
and cost, do whatever is necessary to secure the rights thereto by patent,
copyright or otherwise to the Company. The Executive shall be prohibited from
making use of or implementing any such ideas, inventions or business plans in
connection with his employment with a business that is considered a competitor
under Section 7(a)(i) hereof.
(c) Confidentiality. During the Employment Period and at all times
---------------
thereafter, the Executive agrees that he will not divulge to anyone (other than
the Company or any persons employed or designated by the Company) any knowledge
or information of any type whatsoever of a confidential nature relating to the
business of the
7
<PAGE>
Company or any of its subsidiaries or affiliates, including, without limitation,
all types of trade secrets (unless readily ascertainable from public or
published information or trade sources), product design and customer and
supplier information. The Executive further agrees not to disclose, publish or
make use of any such knowledge or information for personal purposes or for the
benefit of any person, firm, corporation or other entity (other than the Company
or any persons employed or designated by the Company) without the prior written
consent of the Company.
(d) Remedy for Breach. In addition to any remedies available to the
-----------------
Company at law or under this Agreement, the Executive hereby consents and agrees
that the Company shall be entitled to seek a restraining order or injunction in
any court of competent jurisdiction to prevent any continuation of any violation
of the provisions of this Section 7 and the Executive hereby consents that such
restraining order or injunction may be granted.
8. Enforcement. It is the desire and intent of the parties hereto
-----------
that the provisions of this Agreement be enforceable by a court of competent
jurisdiction to the fullest extent permissible under the laws and public
policies applied in each jurisdiction in which enforcement is sought.
Accordingly, to the extent that a restriction contained in this Agreement is
more restrictive than permitted by the laws of any jurisdiction where this
Agreement may be subject to review and interpretation, the terms of such
restriction, for the purpose only of the operation of such restriction in such
jurisdiction, will be the maximum restriction allowed by the laws of such
jurisdiction and such restriction will be deemed to have been revised
accordingly herein.
9. Survival. Notwithstanding anything contained in this Agreement
--------
to the contrary, the provisions of Sections 6, 7 and 8 hereof will survive the
expiration or other termination of this Agreement until, by their terms, such
provisions are no longer operative.
10. Effectiveness. This Agreement shall become effective upon
-------------
consummation of the transactions contemplated by the Merger Agreement and prior
thereto shall be of no force and effect. If the Merger Agreement shall be
terminated in accordance with its terms, this Agreement shall automatically be
deemed to have been terminated and shall thereafter be of no force or effect.
11. Notices. Notices and other communications hereunder will be in
-------
writing and will be delivered personally or sent by air courier or first class
certified or registered mail, return receipt requested and postage prepaid,
addressed as follows:
if to the Executive: Marvin Sexton
1002 S. Harbour Island Blvd., Unit #1605
Tampa, Florida 33602
and if to the Company: Montgomery Tank Lines, Inc.
3108 Central Drive
Plant City, Florida 33566
8
<PAGE>
Attention:
with a copy to: Joshua Harris
c/o Apollo Management, L.P.
1301 Avenue of the Americas, 38th Floor
New York, NY 10019
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement will be deemed to have been given on the
date of delivery, if personally delivered; on the business day after the date
when sent, if sent by air courier; and on the third business day after the date
when sent, if sent by mail, in each case addressed to such party as provided in
this Section 11 or in accordance with the latest unrevoked direction from such
party.
12. Arbitration. Except as specifically provided in Section 8
-----------
hereof, any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a single
arbitrator in accordance with the rules of the American Arbitration Association
then in effect. Judgment may be entered on the arbitrator's award in any court
having jurisdiction. The attorney's fees and expenses of the prevailing party
shall be paid by the non-prevailing party, based on a determination made by the
arbitrator for this purpose as to which party is the prevailing party hereunder.
Arbitrators will be selected from the American Arbitration Association's panel
of arbitrators in the New York region and the location of the arbitration
proceeding shall be in Hillsborough County, Florida.
13. Governing Law. This Agreement will be governed by, and construed
-------------
and enforced in accordance with, the laws of the State of Florida, without
reference to conflict of law principles.
14. Waiver of Breach. The waiver by either party of a breach of any
----------------
provision of this Agreement by the other party must be in writing and will not
operate or be construed as a waiver of any subsequent breach by such other
party.
15. Entire Agreement; Amendments. This Agreement contains the entire
----------------------------
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements or understandings among the parties with respect
thereof. This Agreement may be amended only by an agreement in writing signed
by the parties hereto.
16. Headings. The section headings contained in this Agreement are
---------
for
reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement.
17. Severability. Any provision of this Agreement that is prohibited
------------
or unenforceable in any jurisdiction will, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof,
9
<PAGE>
and any such prohibition or unenforceability in any jurisdiction will not
invalidate or render unenforceable such provision in any other jurisdiction.
18. Assignment; Successors. This Agreement is personal in its nature
----------------------
and the parties hereto shall not, without the consent of the other, assign or
transfer this Agreement or any rights or obligations hereunder; provided, that
--------
(i) the provisions hereof will inure to the benefit of, and be binding upon,
each successor of the Company, whether by merger, consolidation, transfer of all
or substantially all of its assets or otherwise and (ii) all of the Executive's
rights to compensation following his death shall inure to the benefit of his
heirs, estate, personal representatives or designees or other legal
representatives as the case may be.
19. Shareholders Agreement. The parties hereto shall use reasonable
----------------------
efforts to enter into a Shareholders Agreement effective as of the Effective
Date hereof substantially in accordance with the terms attached hereto as
Attachment B.
10
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
MONTGOMERY TANK LINES, INC.
/s/ Charles J. O'Brien, Jr.
---------------------------
Charles J. O'Brien, Jr.
Vice President
EXECUTIVE
/s/ Marvin Sexton
---------------------------
Marvin Sexton
11
<PAGE>
Exhibit 10.6
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement"), dated as of February 10,
1998, is entered into by and between MONTGOMERY TANK LINES, INC., an Illinois
corporation (the "Company"), and ELTON E. BABBITT (the "Consultant").
WHEREAS, The Company desires to obtain a commitment from the
Consultant to refrain from competing with the Company and to provide consulting
services on the terms and conditions set forth in this Agreement and a Non-
Competition Agreement (as defined herein), each of which will become effective
(the "Effective Date") upon the consummation of the transactions contemplated by
an Agreement and Plan of Merger dated of the date hereof by and between MTL Inc.
and Sombrero Acquisition Corp. (the "Merger Agreement"); and
WHEREAS, MTL Inc. and Sombrero Acquisition Corp. intend that the
Company continue to engage the Consultant to assist in the Company's business
operations in a senior advisory capacity, and the Consultant desires to continue
to provide his personal services to the Company in connection with its business
operations.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, the parties hereby covenant and agree
as follows:
1. Engagement.
----------
The Company hereby confirms the engagement of the Consultant to serve
as an advisor and consultant to the Company as provided herein, and the
Consultant hereby confirms acceptance of such engagement. During the time that
the Consultant is performing services for the Company pursuant to this
Agreement, and for all purposes hereunder, the Consultant's status shall be that
of an independent contractor of the Company and he shall not have the benefits,
rights and privileges ordinarily accorded to an employee of the Company.
2. Term.
----
The period of engagement of the Consultant shall be the period from
the Effective Date through December 31, 1999, unless earlier terminated as
provided in Section 6 hereof (the "Consulting Period"). During the Consulting
Period, the Consultant may engage in any business and perform any service for
his own account, provided that such business or service shall not prevent the
Consultant from performing his duties to the Company hereunder or violate the
restrictive covenants set forth in the non-competition agreement between MTL
Inc. and the Consultant dated as of the date hereof (the "Non-Competition
Agreement").
<PAGE>
3. Consulting Services.
-------------------
The Consultant shall be available to advise and counsel the Company
and consult with its Board of Directors, employees, representatives, agents or
contractors as to such matters and to perform such other services as the Company
and the Consultant may reasonably agree. A listing of the services that the
parties initially anticipate will be provided by the Consultant is set forth in
Exhibit A hereto, which Exhibit may be amended or supplemented from time to time
by mutual agreement of the parties. The Consultant shall make himself available
to provide such services for at least 30 hours per week until September 30, 1998
and thereafter during the Consulting Period for at least 10 hours per week, and
for such additional number of hours as may be mutually agreed by the parties
hereto. As used in this Agreement, a "year" shall refer to the 12-month periods
commencing on the date hereof and on each anniversary thereof during the
Consulting Period. The Consultant agrees to make all reasonable efforts to be
available to the Company at such time or times as the Company shall request for
the performance of the services contemplated hereby. The Consultant agrees to
make himself available at the Company's offices or at such other locations as
the Company may reasonably request for the Consultant to perform such services.
4. Consulting Fees.
---------------
(a) For the services of the Consultant rendered hereunder, the
Consultant shall receive from the Company a base consulting fee at the rate of
$20,000.00 per month until September 30, 1998. From October 1, 1998, through
December 31, 1999, the Consultant shall receive from the Company a base
consulting fee at the rate of $5,000.00 per month. The fees shall be paid by
the Company to such bank account and to such entity as the Consultant shall
designate in writing.
(b) The parties hereby acknowledge and agree that all amounts paid to
the Consultant during the Consulting Period shall represent fees for his
consulting services as an independent contractor, and shall therefore be paid
without any deductions or withholdings taken therefrom for taxes or any other
purpose. The Consultant further acknowledges that the Company makes no
warranties as to any tax consequences of such payments, and specifically agrees
that the determination of any tax liability or other consequences of the payment
set forth above is his sole and complete responsibility and that he will pay all
federal, state and local taxes, if any, assessed on such payments.
5. Business Expenses.
-----------------
During the Consulting Period, the Consultant may be required to incur
out-of-pocket business expenses in connection with the performance of his duties
hereunder. The Company shall reimburse the Consultant for all such expenses that
are reasonable and are appropriately documented in accordance with the Company's
policies.
6. Termination of Consulting Engagement.
------------------------------------
(a) The engagement of the Consultant under this Agreement may be
2
<PAGE>
terminated in the event of any of the following events:
(i) the death or disability of Consultant; for purposes hereof, disability
shall exist if Consultant shall be rendered incapable of performing his duties
hereunder by reason of any medically determined physical or mental impairment
that can be expected to result in death or that can be expected to last for a
period that exceeds one month;
(ii) the Consultant's willful failure or refusal to perform the consulting
services contemplated hereby (which shall be deemed to include, without
limitation, disobeying directives of the Board of Directors of the Company),
upon 5-days' notice from the Company;
(iii) the Consultant's willful fraud or material dishonesty in connection
with the performance of the Consultant's obligations thereunder, upon written
notice from the Company;
(iv) the Consultant's indictment or conviction for, or plea of guilty or
nolo contendere to, a charge of commission of a felony or a misdemeanor
- ---- ----------
involving moral turpitude; or
(v) any violation by the Consultant of the provisions of this Agreement
or the Non-Competition Agreement, upon written notice from the Company.
Any termination of the engagement of the Consultant other than as provided above
shall be considered a breach of this Agreement by the terminating party.
(b) Upon the termination of the Consultant's engagement hereunder for
any of the reasons listed in clauses (i) through (v) above, the Consultant shall
be entitled to receive, within 30 days of the date of such termination, payment
of all accrued but unpaid consulting fees pursuant to Section 4 hereof through
the effective date of such termination.
7. Company Right to Inventions.
---------------------------
The Consultant will promptly disclose, grant and assign to the
Company, for its sole use and benefit, any and all inventions, improvements,
technical information and suggestions relating in any way to the business of the
Company which the Consultant may develop or acquire during the Consulting Period
in connection with the performance of the services contemplated hereby.
8. Business Goodwill.
-----------------
During the Consulting Period and at all times thereafter, the
Consultant will make only positive comments about the Company, its subsidiaries,
its affiliates, directors, officers, employees and agents, and shall make no
comments or take any other actions, direct or indirect, that will reflect
adversely on any of the foregoing or adversely affect their business reputation
or good will
3
<PAGE>
9. Enforcement.
-----------
It is the desire and intent of the parties hereto that the provisions
of this Agreement be enforceable to the fullest extent permissible under the
laws and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, to the extent that a restriction contained in this
Agreement is more restrictive than permitted by the laws of any jurisdiction
where this Agreement may be subject to review and interpretation, the terms of
such restriction, for the purpose only of the operation of such restriction in
such jurisdiction, will be the maximum restriction allowed by the laws of such
jurisdiction and such restriction will be deemed to have been revised
accordingly herein.
10. Remedies; Survival.
------------------
(a) In the event of a breach or threatened breach by the Consultant
of the provisions of Section 8 hereof, the Company will be entitled to an
injunction restraining the Consultant from such breach. Nothing herein contained
will be construed as prohibiting the Company from pursuing any other remedies
available for any breach or threatened breach of this Agreement.
(b) Notwithstanding anything contained in this Agreement to the
contrary, the provisions of Section 8 hereof will survive the expiration or
other termination of this Agreement until, by its terms, such provisions are no
longer operative.
11. Effectiveness. This Agreement shall become effective upon the
-------------
Effective Date and prior thereto shall be of no force and effect. If the Merger
Agreement shall be terminated in accordance with its terms, this Agreement shall
automatically be deemed to have been terminated and shall thereafter be of no
force or effect.
12. Notices.
-------
Notices and other communications hereunder will be in writing and will
be delivered personally or sent by air courier or first class certified or
registered mail, return receipt requested and postage prepaid, addressed as
follows:
4
<PAGE>
if to the Consultant: Elton E. Babbitt
3108 Central Drive
Plant City, Florida 33566
and if to the Company: Montgomery Tank Lines, Inc.
3108 Central Drive
Plant City, Florida 33566
Attention: Chief Executive Officer
with a copy to: Joshua Harris
Apollo Management, L.P.
1301 Avenue of the Americas, 38/th/ Floor
New York, NY 10019
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement will be deemed to have been given on the
date of delivery, if personally delivered; on the business day after the date
when sent, if sent by air courier; and on the third business day after the date
when sent, if sent by mail; in each case addressed to such party as provided in
this Section 12 or in accordance with the latest unrevoked direction from such
party.
13. General.
-------
(a) Binding Agreement; Benefit. The provisions of this Agreement will
--------------------------
be binding upon, and will inure to the benefit of, the respective heirs, legal
representatives and successors of the parties hereto.
(b) Governing Law. This Agreement will be governed by, and construed
-------------
and enforced in accordance with, the laws of the State of Florida.
(c) Waiver of Breach. The waiver by either party of a breach of any
----------------
provision of this Agreement by the other party must be in writing and will not
operate or be construed as a waiver of any subsequent breach by such other
party.
(d) Entire Agreement; Amendments. This Agreement (including Exhibit A
----------------------------
hereto) contains the entire agreement between the parties with respect to the
subject matter hereof and supersedes all prior agreements or understandings
among the parties with respect thereof. This Agreement may be amended only by an
agreement in writing signed by the parties hereto.
(e) Headings. The section headings contained in this Agreement are
---------
for reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement.
(f) Severability. Any provision of this Agreement that is prohibited
------------
or unenforceable in any jurisdiction will, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction will not invalidate or render
5
<PAGE>
unenforceable such provision in any other jurisdiction.
(g) Assignment. This Agreement is personal in its nature and the
----------
parties hereto shall not, without the consent of the other, assign or transfer
this Agreement or any rights or obligations hereunder; provided, that the
provisions hereof (including, without limitation, Section 8) will inure to the
benefit of, and be binding upon, each successor of the Company, whether by
merger, consolidation, transfer of all or substantially all of its assets or
otherwise.
6
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
MONTGOMERY TANK LINES, INC.
By:_______________________________________
Name: Charlie O'Brien, Jr.
Title: Vice President
CONSULTANT
_______________________________________
ELTON E. BABBITT
7
<PAGE>
EXHIBIT A
---------
CONSULTING SERVICES
-------------------
. Serving as non-executive Chairman of the Board of Directors of the
Company
. Serving on the Board of Directors of the Company
. Consulting on special projects for the Company, such as strategic
planning and evaluation of potential acquisitions
. Referring new business opportunities to the Company and building new
business relationships
. Assisting in maintaining relations with affiliates of the Company
8
<PAGE>
EXHIBIT 10.7
[EXECUTION FORM]
- --------------------------------------------------------------------------------
SHAREHOLDERS' AGREEMENT
among
MTL INC.,
APOLLO INVESTMENT FUND III, L.P.,
APOLLO OVERSEAS PARTNERS III, L.P.,
APOLLO U.K. FUND III, L.P.,
and
Certain Shareholders
of MTL Inc.
Dated as of February 10, 1998
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Paragraph Page No.
<S> <C>
1. Restrictions on Transfer; Permitted Transferees; Pledges........................... 1
2. Notice by Shareholder of Proposed Transfers........................................ 2
3. Offer to Sell Shares............................................................... 3
4. Elections to Purchase Shares....................................................... 3
5. Procedures Upon Elections for Less than All of Shares Offered...................... 3
6. Closing of Purchase of Shares...................................................... 4
7. Disposition by Shareholder of Shares not Purchased by the Apollo Entities.......... 4
8. Purchase and Sale Options.......................................................... 5
9. Participation Rights; Bring-Along Rights........................................... 7
10. Representations and Warranties..................................................... 9
11. Incidental Registration............................................................ 10
12. Expenses........................................................................... 11
13. Holdback Agreements................................................................ 12
14. Indemnification and Contribution................................................... 12
15. Rule 144 Reporting................................................................. 15
16. Preemptive Rights.................................................................. 15
17. Certain Agreements................................................................. 16
18. Confidentiality.................................................................... 17
19. Financial Statements............................................................... 17
20. General Restriction................................................................ 17
21. Legends............................................................................ 17
22. Further Assurances................................................................. 18
23. Notices............................................................................ 18
24. Amendment; Termination............................................................. 18
25. General............................................................................ 19
</TABLE>
i
<PAGE>
THIS SHAREHOLDERS' AGREEMENT, dated as of February 10, 1998, is among
APOLLO INVESTMENT FUND III, L.P. (the "Apollo Representative"), APOLLO OVERSEAS
PARTNERS III, L.P. and APOLLO (U.K.) PARTNERS III, L.P., (the foregoing and
their transferees and assignees, each, an "Apollo Entity," and, collectively,
the "Apollo Entities"), Charles J. O'Brien, Jr., an individual, Marvin Sexton,
an individual, Richard Brandewie, an individual (the foregoing individuals,
herein sometimes individually referred to as a "Management Shareholder" and
collectively as the "Management Shareholders") and Elton Babbitt, an individual
("Babbitt") (the Management Shareholders and Babbitt, herein sometimes
individually referred to as a "Shareholder" and collectively as the
"Shareholders") all of the foregoing, shareholders of MTL Inc., a Florida
corporation (the "Corporation"), and the Corporation.
WHEREAS, Sombrero Acquisition Corp., a Florida corporation
("Sombrero"), and the Corporation have entered into an Agreement and Plan of
Merger of even date herewith (as the same may be amended or supplemented, the
"Merger Agreement") providing for the merger of Sombrero with and into the
Corporation (the "Merger");
WHEREAS, upon consummation of the transaction contemplated by the
Merger Agreement (the "Effective Time"), the Apollo Entities will be the record
and beneficial owners of the number of shares of Common Shares, par value $.01
per share, of the Corporation (the "Common Shares") as provided in the Merger
Agreement and the Management Shareholders will be the record and beneficial
owner of the Common Shares and Options (as defined in the Merger Agreement) (the
Common Shares and Options, collectively, the "MTL Securities") as set forth on
Exhibit A hereto (the "Shares"). The term "Shares" shall include any MTL
Securities now owned or hereinafter acquired by any Shareholder, any securities
that may be issued by the Corporation as a result of any Shares dividend, Shares
split or other distribution, reconstruction, reclassification, reorganization or
the like and any warrants or options to acquire MTL Securities or securities
convertible into shares of MTL Securities now owned or hereafter acquired by any
Shareholder;
WHEREAS, it is desired that the Management Shareholders have an
opportunity to participate in the success of the Corporation, but it is
recognized that the success of the Corporation might be diminished if the Shares
owned by the Management Shareholders were transferred to persons who might
impair the continuation of harmonious relations among Shareholders; and
WHEREAS, the Shareholders and the Apollo Entities desire to impose
certain restrictions on the disposition and transfer of the Shares, to create
certain purchase and sale rights, to create certain registration rights and to
agree with respect to certain matters relating to the voting of the Stock;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, the parties agree as follows:
1. Restrictions on Transfer; Permitted Transferees; Pledges. (a) No
--------------------------------------------------------
Shareholder shall make, or suffer to be made, any transfer, sale, assignment,
gift, pledge, mortgage, or other disposition or encumbrance (all of which are
comprised within the word
<PAGE>
"transfer" as used hereinafter) of all or any portion of the Shares now owned or
hereafter acquired by such Shareholder, except that, subject to the further
provisions of Paragraph 1(c) below, each of the following transfers are
expressly permitted:
(i) after thirty months from the date of the closing of the Merger, by
any Shareholder to a bona fide purchaser, after the Shareholder shall have
first offered the Shares to the Apollo Entities in accordance with the
procedures hereinafter set forth in Paragraphs 2 through 7 below; provided
that in no event may such purchaser be a person or entity which, directly
or indirectly, engages in the bulk transportation services business, in any
related business or in any other business competitive with the Corporation
at the time of sale;
(ii) by any Shareholder to a Permitted Transferee (as hereinafter
defined);
(iii) as expressly approved by the Apollo Entities (but subject to any
terms or conditions provided by the Apollo Entities in granting any such
approval); or
(iv) as otherwise expressly provided herein, including pursuant to the
participation rights specified in Section 9 or the incidental registration
rights specified in Section 11.
(b) For the purposes of the foregoing, a "Permitted Transferee" shall
mean:
(i) the heirs, executor, administrator or personal representative of
any Shareholder, upon the death of any such Shareholder;
(ii) the spouse, sibling, parent, child or grandchild of a Shareholder
who is a natural person;
(iii) a trust for the exclusive benefit of a Shareholder and any of the
family members listed in clause (ii) above;
(iv) any entity in which a Shareholder holds a controlling equity
interest; and
(v) an Apollo Entity or the Corporation.
(c) In the event of any transfer of any Shares to a Permitted
Transferee, (i) the transferee of Shares shall be bound by and benefit from the
terms and provisions of this Agreement as if he were a Shareholder hereunder and
shall enter into a joinder to this Agreement (in the form attached hereto as
Exhibit B) to such extent and (ii) the Apollo Entities shall receive such
assurances as they may reasonably require to the effect that such transfer does
not violate the Securities Act of 1933, as amended (the "Act"), or applicable
state securities laws (including, without limitation, representations and
warranties as to investment intention and an opinion of counsel).
2. Notice by Shareholder of Proposed Transfers. Subject to Paragraph
-------------------------------------------
1(a)(i) above, if at any time a Shareholder proposes to transfer any Shares,
such Shareholder shall, prior to making any transfer of Shares, give written
notice (the "Notice") to the Apollo Representative, specifying (i) the Shares to
be so transferred, (ii) the method of transfer, (iii) the identity of the
2
<PAGE>
prospective transferee and (iv) in the case of a proposed bona fide sale, the
terms of the offer made by the prospective purchaser or to the prospective
purchaser and accepted by such prospective purchaser.
3. Offer to Sell Shares. In the case of a proposed bona fide sale,
--------------------
the Notice provided in Paragraph 2 shall, except as provided in Paragraph 7 or
in the case of a proposed transfer permitted by clauses (ii) through (iv) of the
first sentence of Paragraph 1(a), constitute an irrevocable offer to sell such
Shares to the Apollo Entities on the terms and at the price specified in this
Paragraph 3 (such offer is hereinafter referred to as the "Offer to Sell," and a
Shareholder making an Offer to Sell is hereinafter referred to as the "Offeror-
Shareholder"). The Offer to Sell shall be at the price and on the other terms
(including any deferral of payment in whole or in part) offered by the
prospective purchaser specified in the Offeror-Shareholder's Notice, except that
------
if the proposed sale is to be wholly or partly for consideration other than
money (the term "money" being used in this Paragraph 3 to include deferred
obligations to pay money), the Offer to Sell shall be at a price equal to the
amount of the monetary consideration plus the fair market value (as determined
in good faith by the Apollo Entities within 10 days after receipt of the Notice
by the Apollo Representative), at the date of the Offeror-Shareholder's Notice
to the Corporation of the consideration other than money offered by the
prospective purchaser.
4. Elections to Purchase Shares. (a) The Apollo Representative will
----------------------------
promptly, and in any event within 5 days, notify the Apollo Entities of its
receipt of an Offer to Sell and the terms thereof upon receipt of such Offer to
Sell (or, if later, as soon as the determination of the fair market value of
non-monetary consideration is made pursuant to Paragraph 3). The Apollo Entities
will then have 30 days after the giving of such notice by the Apollo
Representative of the Offer to Sell (the "Exercise Period"), within which to
notify the Offeror-Shareholder in writing of their election to purchase all, but
not less than all, of the Shares offered.
(b) Within the Exercise Period, the Apollo Entities may elect to
accept the Offer to Sell as to all of the Shares offered by providing the
Offeror-Shareholder with written notice specifying the number of Shares of
offered Shares each of the Apollo Entities elects to purchase. Each election to
purchase Shares shall be irrevocable, regardless of whether the number of shares
deliverable upon the exercise of such election shall be reduced in accordance
with the provisions of Paragraph 4(c) below, and shall be deemed to constitute
an election to purchase such lesser number of shares as shall be determined in
accordance with such Paragraph 4(c). Except as provided in Paragraph 5 below,
all elections shall be binding on the Offeror-Shareholder.
(c) If the aggregate number of Shares accepted by the Apollo Entities
exceeds the number of shares of offered Shares, then the right to purchase the
offered Shares shall be allocated to the electing Apollo Entities pro rata (to
--- ----
the extent of the Shares elected to be purchased) on the basis of their
respective Common Shares ownership on the date of the initial Offer to Sell.
5. Procedures Upon Elections for Less than All of Shares Offered. If
-------------------------------------------------------------
elections have been made by the Apollo Entities in the aggregate for all of the
Shares offered, the Apollo Representative shall in such notice designate a
place, time and date (not more than 20
3
<PAGE>
days nor less than 10 days after the expiration of the Exercise Period) for a
closing of such purchase and sale.
Notwithstanding the provisions of Paragraph 4, in the case of a
proposed bona fide sale by the Offeror-Shareholder, elections to purchase made
by the Apollo Entities shall not be binding on the Offeror-Shareholder if the
Apollo Entities do not in the aggregate elect to purchase all of the Shares
offered. In such event, no sales pursuant to such elections need be made by the
Offeror-Shareholder and the Offeror-Shareholder may then sell the Shares to the
proposed bona fide purchaser, subject to the provisions of Paragraph 7.
Notwithstanding the foregoing, the Offeror-Shareholder may, by written notice to
the Apollo Representative within 10 days after the Apollo Entities give notice
under this Paragraph 5, waive his right not to sell that part of the Shares for
which elections have been made, and accept and confirm all such elections so
made. Upon receipt by the Apollo Representative from the Offeror-Shareholder of
such notice of waiver and acceptance, the Apollo Representative shall promptly
by separate notice designate a place, time and date (not more than 20 days nor
less than 10 days after receipt by the Apollo Representative of such notice of
the Offeror- Shareholder) for a closing of the purchase and sale.
6. Closing of Purchase of Shares. At the closing designated pursuant
-----------------------------
to Paragraph 5, the Offeror-Shareholder shall (i) deliver against receipt of the
purchase price therefor by cash or certified or bank cashier's check, the
certificate or certificates representing the Shares each Apollo Entity that has
elected to purchase, properly endorsed for transfer, with all necessary transfer
and documentary stamps affixed, and in a form such that upon presentation to the
Corporation the Shares represented thereby may be registered in the names of the
respective purchasers and (ii) be deemed to have represented and warranted to
such purchaser that (a) the Shares to be sold are beneficially and of record
owned by such Offeror-Shareholder free and clear of all liens, claims,
privileges, options, security interests, rights of first refusal, agreements,
limitations or voting rights, preemptive rights, charges or other encumbrances
of any nature (except as expressly provided by this Agreement) (an
"Encumbrance") and (b) the sale and delivery of the Shares by such Offeror-
Shareholder as contemplated hereby shall vest in the purchaser on such date good
and marketable title to such Shares free and clear of all Encumbrances (clauses
(a) and (b), the "Sale Representations").
7. Disposition by Shareholder of Shares not Purchased by the Apollo
----------------------------------------------------------------
Entities. Any Shares not purchased by the Apollo Entities pursuant to Paragraphs
4 through 6 may be disposed of by the Offeror-Shareholder to the prospective
transferee named in his notice under Paragraph 2, at a price and on terms not
more favorable to the transferee than those specified in such notice, but only
within 90 days after the expiration of the Exercise Period; provided, that a
--------
transferee shall, prior to the transfer, execute and deliver to the Apollo
Representative a written agreement that (i) the Shares so transferred shall
continue to be subject to all the restrictions and other provisions of this
Agreement, and (ii) the transferee shall be bound by such restrictions and other
provisions as if he were an original party to this Agreement. Notwithstanding
the foregoing, no such transferee shall be entitled to the rights of an Offeree-
Shareholder under this Agreement, unless such Offeree-Shareholder was a
Shareholder prior to such transfer.
4
<PAGE>
8. Purchase and Sale Options. (a) Within 180 days after the
-------------------------
determination of Fair Market Value as contemplated hereby following either (i)
termination by the Corporation of the employment of any Management Shareholder
(without duplication to any other provision below) without (A) Cause (as defined
in the Employment and Compensation Agreement, dated as of the date hereof, to
which the Management Shareholder is a party (the "Employment Agreement")) or (B)
Special Cause (as defined below) or (ii) termination by a Management Shareholder
of his employment for Good Reason (as defined in the Employment Agreement), such
Management Shareholder may elect to cause the Corporation to purchase up to a
number of Common Shares owned by the Management Shareholder (or his Permitted
Transferee) on the date of termination of employment equal to the Recoupment
Number (as defined in subparagraph (d) below) at a purchase price equal to Fair
Market Value. Upon exercise of any such election, the Corporation shall be
required to purchase such Shares within 60 days thereafter, unless suspended on
account of Legal Impediment. The Shares shall be sold and purchased, and the
purchase price for such Shares shall be payable at closing, against receipt of
the certificate or certificates representing such Shares, properly endorsed for
transfer, with all necessary transfer and documentary stamps affixed, which
shall be free and clear of all liens, encumbrances and rights of third parties
("Properly Endorsed").
(b) Within 180 days after the determination of Fair Market Value as
contemplated hereby following either (i) voluntary termination by the Management
Shareholder (which shall include a Management Shareholder's election not to
renew his Employment Agreement as contemplated thereby) or (ii) termination for
Cause of a Management Shareholder, the Corporation or an Apollo Entity may elect
to purchase all, but not less than all, of the Shares (including Options) then
owned by such Management Shareholder (or his Permitted Transferee) on the date
of termination of employment at a purchase price equal to Fair Market Value.
Upon exercise of any such election, the Corporation shall be required to
purchase such Shares within ten business days thereafter against receipt of the
certificate or certificates representing such Shares, Properly Endorsed.
(c) Within 180 days after the termination of a Management Shareholder
for Special Cause, the Corporation or an Apollo Entity may elect to purchase
all, but not less than all, of the Shares (including Options) then owned by such
Management Shareholder (or his Permitted Transferee) on the date of termination
of employment at a purchase price equal to Cost (as defined below). Upon
exercise of any such election, the Corporation shall be required to purchase
such Shares within ten business days thereafter against receipt of the
certificate or certificates representing such Shares, Properly Endorsed.
(d) Any Management Shareholder (i) who remains employed by the
Corporation for a period of four years from the date of the closing of the
Merger (the "Merger Date") or (ii) whose Employment Agreement is not renewed by
the Corporation in accordance with such agreement's terms and does not remain
employed by the Corporation for a period of four years from the Merger Date may,
within 180 days after the determination of Fair Market Value as contemplated
hereby, following such fourth anniversary, elect to cause the Corporation to
purchase such number of Common Shares (but not Options or Shares acquired after
the Effective Time or upon the exercise of any Option) owned by the Management
Shareholder on the date of such election that will allow such Management
Shareholder to recoup his original
5
<PAGE>
investment in the Common Shares in accordance with the following formula (such
number of Common Shares is herein referred to as the "Recoupment Number"):
Number of (Number of Common Shares (and only
Common Common Shares) owned by the
Shares to be = Management Shareholder at the x ($40) - Proceeds of all
sold (the Effective Time of this Agreement) sales of Shares or
Recoupment Options prior to the
Number) date of exercise
- ------------- ---------------------------------------------------------------
Fair Market Value of a Common Share
Upon exercise of such election, the Corporation shall be required to purchase
from the relevant Management Shareholder a number of Common Shares equal to the
Recoupment Number for a purchase price equal to Fair Market Value within 60 days
thereafter, unless suspended on account of Legal Impediment, against receipt of
the certificate of certificates representing such Shares, Properly Endorsed. In
addition, such Management Shareholder shall be deemed to have made the Sale
Representations to the purchaser of the Common Shares upon the closing of such
purchase and sale.
(e) Notwithstanding the foregoing, Apollo may, in its sole
discretion, exercise the Corporation's rights or fulfill its obligation under
this Paragraph 8 and shall be entitled to arrange for all or a part of such
Shares to be purchased by a third party for cash; provided, that such transferee
--------
shall be bound by the terms and provisions of this Agreement as if such
transferee were an Apollo Entity hereunder and shall be entitled to the rights
of an Apollo Entity under this Agreement. If such third party does not purchase
all of such Shares, the remainder of the purchase price shall be paid by the
Corporation or the Apollo Entities in cash at closing to the extent the cash
payment by the third party purchaser is less than the cash amount the
Corporation or the Apollo Entities would have been required to pay at closing as
contemplated above.
(f) For the purposes of the foregoing provisions:
(i) "Fair Market Value" shall be calculated on the same basis as
"Per Share Equity" as set forth in the Option Plan. The Fair Market Value of an
Option shall equal the spread between its exercise price and the Fair Market
Value of each Common Share for which such Option may be exercised.
(ii) The term "Cost" shall mean, for each Common Share, forty U.S.
dollars ($40). The Cost for options, warrants or securities convertible into
Common Shares shall be calculated by taking into account any exercise prices
with respect to such securities and any amounts owing to the Corporation with
respect to such Common Shares. The Cost of all other Shares, if any, shall be
determined in good faith by the Board of Directors.
(iii) The term "Legal Impediment" shall include, without limiting the
generality of the following, (i) restrictions on account of applicable corporate
or creditors' rights laws or contractual commitments and covenant obligations to
lending institutions or other third parties and (ii) a good faith determination
by the Board of Directors of the Corporation that
6
<PAGE>
sufficient funds are not available to the Corporation to purchase the Shares.
The Corporation covenants and agree to use commercially reasonable efforts to
obtain any consents or waivers from third parties that may be necessary in order
to eliminate or waive any Legal Impediment which could otherwise prevent the
Corporation from purchasing the Shares; provided, that the Corporation shall not
--------
be required in order to obtain any such consent or waiver to incur any third
party expense or enter into any unfavorable modification of any existing
agreement. The Corporation's obligation to acquire the Shares (if not already
purchased pursuant to the provisions of this Paragraph 8) shall resume upon the
cessation of a Legal Impediment.
(iv) The term "Special Cause" shall mean a Cause event which results
in damage to the business, reputation or financial condition of the Corporation.
(g) In the event the Corporation elects not to renew a Management
Shareholder's Employment Agreement as contemplated thereby, the Shares held by
such Management Shareholder shall not be subject to the provisions of this
Paragraph 8 other than the provisions of clause (ii) of Paragraph 8(d) above if
the conditions of such clause are met.
(h) Any Shares not purchased pursuant to the foregoing provisions of
this Paragraph 8 may continue to be held by such Management Shareholder. The
treatment of a Management Shareholder's Option upon the termination of his
employment for any reason shall be as provided in the Corporation's Option Plan,
dated the date hereof (the "Option Plan").
-----------
(i) It is expressly understood and agreed the provisions of this
Paragraph 8 shall not apply to Babbitt.
9. Participation Rights; Bring-Along Rights. (a) Subject to the
----------------------------------------
further provisions of Paragraph 9(h) and Paragraph 11 below, no Apollo Entity or
group of Apollo Entities (the "Transferring Holders") shall transfer, directly
or indirectly, in a single public offering (as provided in Paragraph 11 below)
or in a transaction or series of related transactions, Shares which result in a
transfer to an unrelated party of greater than ten percent (10%) of the
aggregate value of the MTL Securities outstanding on the date of transfer (a
"10% Transfer") unless the terms and conditions of such sale shall include an
offer to the Management Shareholders to include in the transfer, at the option
of each Management Shareholder, a pro rata portion (on the basis of such
Management Shareholder's ownership on the date of the Participation Notice (as
defined below) and the total number of Shares to be transferred pursuant to the
10% Transfer) of Shares of each Management Shareholder at the same price and on
the same terms and conditions applicable to the Shares being transferred by the
Transferring Holders.
(b) In the event that the Transferring Holders receive a bona fide
offer or offers from a third party to purchase or otherwise determines to
transfer Shares which purchase or transfer would trigger a 10% Transfer (the
"Participation Offer"), the Transferring Holders shall then cause the
Participation Offer to be reduced to writing and shall give each Shareholder
written notice thereof (a "Participation Notice"). Each Participation Notice
shall contain a true and correct copy of the Participation Offer and shall
identify the number of Shares with respect to which the Transferring Holders
have a bona fide offer or other agreement to sell (the "Designated Shares"), the
total number of Shares which the Transferring Holders own
7
<PAGE>
beneficially, the price per share of Shares at which the sale is proposed to be
made and any other material term or condition of the Participation Offer. The
Shareholders shall have the right and option, within 15 days after the
Participation Notice is given to the Shareholders (the "Participation Period")
to accept the Participation Offer for the number of Shares as determined
pursuant to Paragraph 9(c) below. Each Shareholder who desires to exercise such
option shall provide the Transferring Holders with written notice which shall
constitute an irrevocable acceptance of the Participation Offer by such
Shareholder (each such Shareholder a "Participating Shareholder").
(c) Each Participating Shareholder shall have the right to sell on
the terms and conditions of the Participation Offer (and for like
consideration), a pro rata portion of the Shares then beneficially owned by such
other Shareholder. If the aggregate number of Shares to be offered by the
Participating Shareholder and the Transferring Holders (the "Offered Stock")
under the Participation Offer exceeds the number of Designated Shares, then the
right to sell the Offered Stock shall be allocated among the Participating
Shareholders and the Transferring Holders pro rata, on the basis of their
respective Share ownership on the date of the Participation Notice.
(d) The Transferring Holders shall notify the Participating
Shareholders who have elected to sell their Shares 15 days prior to the date
upon which the transfer of Shares pursuant to this Paragraph 9 shall be
consummated, which notice shall contain the date, time and location of the
closing. The Participating Shareholders shall deliver at the closing to the
Transferring Holders the certificate or certificates representing the pro rata
portion of their Shares (the "Other Shares") together with a power-of-attorney
authorizing the Transferring Holders to sell such Shares pursuant to the terms
of the Participation Offer. At the closing of the transfer of the Designated
Shares and the Other Shares to the third party pursuant to the Participation
Offer, the Transferring Holders shall remit to each of the Participating
Shareholders the total sales price of the Shares of such Participating
Shareholder sold or otherwise disposed of pursuant thereto.
(e) If at the termination of the Participation Period any
Participating Shareholder shall not have accepted the offer contained in the
Participation Notice, such Participating Shareholder will be deemed to have
waived any and all of his or her rights under this Paragraph 9 with respect to
the transfer of his or her Shares to such third party. The Transferring Holders
shall have 180 days in which to sell the Designated Shares and the Other Shares,
not otherwise excluded pursuant to the previous sentence, to the third party, at
a price equal to that contained in the Participation Notice and on the terms set
forth in the Participation Notice in the same manner as set forth in Paragraph
9(b) above.
(f) Notwithstanding any other provision contained in this Paragraph
9, there shall not be any liability on the part of the Transferring Holders in
the event that the transfer of Shares pursuant to this Paragraph 9 is not
consummated for any reason whatsoever. The decision whether to effect a transfer
of Shares pursuant to this Paragraph 9 shall be in the sole and absolute
discretion of the Transferring Holders.
(g) In the event that Transferring Holders, shall transfer, directly
or indirectly, in a single transaction or series of related transactions, Shares
which result in a transfer to an
8
<PAGE>
unrelated party of greater, than (i) fifty percent (50%) of the aggregate value
of the MTL Securities outstanding on the date of transfer or (ii) 50% or more of
the MTL Securities held by Transferring Holders immediately following the
closing of Merger (a "50% Transfer"), then the Transferring Holders may require,
by written notice to each Shareholder (the "Bring-Along Notice") that each
Shareholder transfer a pro rata portion (on the basis of such Shareholders'
Share ownership on the date of the Bring-Along Notice and the total number of
Shares to be transferred pursuant to the 50% Transfer) of his or her Shares in
the 50% Transfer on the same terms and conditions contained in the Bring-Along
Notice. The Bring-Along Notice shall contain a true and correct copy of the
terms of the 50% Transfer and shall identify the third party, the number of
Shares with respect to which the Apollo Entities have a bona fide offer, the
price per share of Shares at which the sale is proposed to be made and all other
material terms and conditions of the 50% Transfer, including the date, time and
location of the closing. The Bring-Along Notice shall be delivered not less than
five business days prior to the closing of the purchase and sale contemplated by
this Paragraph 9(g). In such event, each of the Shareholders shall deliver at
the closing to the Transferring Holders the certificate or certificates
representing his Shares together with a power-of-attorney authorizing the
Transferring Holders to sell such Shareholder's pro rata portion of the Shares
pursuant to the terms of the Bring-Along Notice. At the closing of the transfer
of such Shares, the Transferring Holders shall remit to each of the Shareholders
the total sales price (net of pro rata expenses) of the Shares of such
Shareholder sold or otherwise disposed of pursuant thereto.
(h) Notwithstanding any provision of this Agreement to the contrary,
in the event the terms on which a sale is proposed to be made under Paragraph
9(g) above (such sale, a "Bring-Along Sale") shall include a provision which
materially and adversely affects the ability of any Shareholder to compete in
any line of business or geographic area, such Shareholder shall not be required
to participate in the Bring-Along Sale on the terms and conditions set forth in
the Bring-Along Notice, as applicable. In the event any Shareholder shall
elect, pursuant to the preceding sentence, not to participate in the Bring-Along
Sale, the Transferring Holders shall have the right to purchase, and such
Shareholder shall be obligated to sell to the Transferring Holders, such
Shareholder's Shares which are subject to the Bring-Along Sale, at the price
(net of pro rata expenses) and on substantially the same terms (other than any
such non-compete provision), as those contained in the relevant Bring-Along
Notice, not later than two business days prior to the consummation of the Bring-
Along Sale.
10. Representations and Warranties. (a) Each Shareholder hereby
------------------------------
represents and warrants to the Corporation and the Apollo Entities that (i) such
Shareholder is acquiring the Shares for investment purposes, without any present
intention of selling or distributing the Shares, (ii) such Shareholder is an
"accredited investor" (as such term is defined in Regulation D, promulgated
under the Act) and/or either alone or together with any persons the Shareholder
has retained to advise him with respect to the transactions contemplated hereby,
has knowledge and experience in financial and business matters in general, and
investments in particular, and the Shareholder is capable of evaluating the
merits and risks of acquiring the Shares, (iii) such Shareholder does not
anticipate any change in circumstances, financial or otherwise, which would
cause the sale or distribution of the Shares, (iv) such Shareholder acknowledges
that the Shares consists of "restricted securities" (as such term is defined in
Rule 144 of the Act) and that such Shareholder may not effect a distribution of
the Shares without registration under the Securities Act or pursuant to an
exemption thereunder and without compliance with any
9
<PAGE>
applicable state securities laws and (v) this Agreement has been duly executed
and delivered by such Shareholder and constitutes the legal, valid and binding
obligation of such Shareholder, enforceable against such Shareholder in
accordance with its terms. Each Shareholder acknowledges that he has received
from the Corporation the opportunity to ask such questions and receive such
information concerning the Corporation and the Shares as such Shareholder has
deemed necessary or desirable.
(b) The Corporation represents and warrants to each Shareholder that
(i) the Corporation is duly organized, validly existing and in good standing
under the laws of Florida, and has all requisite corporate power to carry on its
business as it is now being conducted, (ii) the execution, delivery and
performance of this Agreement by the Corporation have been duly authorized by
the Corporation's Board of Directors and (iii) this Agreement has been duly
executed and delivered by the Corporation and constitutes the legal, valid and
binding obligation of the Corporation, enforceable against the Corporation in
accordance with its terms.
(c) The Apollo Entities hereby severally, and not jointly, represent
and warrant to each Shareholder that (i) such Apollo Entity has the power,
capacity and authority to enter into this Agreement and to perform fully such
Apollo Entity's obligations hereunder and (ii) this Agreement has been duly
executed and delivered by such Apollo Entity and constitutes the legal, valid
and binding obligation of such Apollo Entity, enforceable against such Apollo
Entity in accordance with its terms.
11. Incidental Registration.
-----------------------
(a) If the Corporation at any time (other than pursuant to an initial
public offering of the Corporation's securities) proposes to register any of its
Common Stock under the Act for sale to the public, (i) for its own account
(except with respect to registration statements on Forms S-4, S-8 or such other
form which is not available for registering Common Shares for sale to the
public) or (ii) from and after the time the Threshold (as defined below) has
been reached and to the extent in excess thereof, for the account of the Apollo
Entities, each such time it will give at least 10 days prior written notice to
all Shareholders of its intention so to do. Upon the written request of any
such Shareholder, received by the Corporation within five days after the giving
of any such notice by the Corporation, to register any of its shares of Common
Stock (which request shall state the intended method of disposition thereof),
the Corporation will use all commercially reasonable efforts to cause the shares
of Common Stock as to which registration shall have been so requested to be
included in the securities to be covered by the registration statement proposed
to be filed by the Corporation, all to the extent requisite to permit the sale
by the Shareholder (in accordance with its written request) of such shares of
Common Stock so registered. Alternatively, the Corporation may in its sole
discretion include such shares of Common Stock in a separate registration
statement to be filed concurrently with the registration statement for the
securities to be filed by the Corporation for its own account or for the account
of the Apollo Entities. In the event that any registration pursuant to this
Paragraph 11 shall be, in whole or in part, an underwritten public offering of
shares of Common Stock, the number of shares of Common Stock to be included in
such an underwriting may be reduced (pro rata among the requesting Shareholders
based upon the number of shares of Common Stock owned by such Shareholders) due
to underwriter market limitations if, and to the extent, that the managing
underwriter advises the Corporation that in its opinion such inclusion would
adversely
10
<PAGE>
affect the marketing of the securities to be sold by the Corporation therein. In
addition, if the managing underwriter so advises, for any reason, against the
inclusion of all or any portion of shares or Common Stock owned by Shareholders
in the public offering, then the Shareholders shall only have the right to
register shares of Common Stock therein as so advised by the managing
underwriter. It is acknowledged by the parties hereto, that the rights of any
selling Shareholder to include shares of Common Stock in a registration shall be
subordinate to those of the Corporation and, subject to the foregoing provisions
hereto, on a parity with any Apollo Entity or other person (including BT
Investment Partners, Inc. and MTL Equity Investors, L.L.C. (collectively, the
"Purchasers") pursuant to that certain common stock purchase and shareholders'
agreement, dated as of June 9, 1998, by and among the Corporation, the Apollo
Entities and the Purchasers (the "Purchasers Shareholders' Agreement")) selling
shares of Common Stock for its own account so that, except as may be provided
pursuant to the two immediately preceding sentences, cut backs shall be made on
a pro rata basis based on the number of shares of Common Stock held by each such
person. Except as set forth above, there shall be no limit to the number of
registrations that may be requested pursuant to this Paragraph 11.
(b) For the purposes of this Paragraph 11, the "Threshold" shall mean
the public sale of Common Stock by Apollo pursuant to one or more public
offerings of ten percent (10%), in the aggregate, of the total number of shares
of Common Stock outstanding at the Effective Time. If such an offering causes
the Threshold to be reached, the Shareholders may participate, pro rata as
provided above, in shares of Common Stock offered in excess of the Threshold.
(c) In connection with each registration pursuant to Paragraph 11(a)
covering an underwritten public offering, each Shareholder selling Shares
pursuant thereto agrees to (i) enter into a written agreement with the managing
underwriter under the same terms and conditions as apply to the Corporation or
the selling shareholders, as applicable and (ii) furnish to the Corporation in
writing such information with respect to themselves and the proposed
distribution by them as reasonably shall be necessary and shall be requested by
the Corporation in order to comply with federal and applicable state securities
laws.
(d) If, at any time after giving notice of its intention to register
any stock pursuant to this Paragraph 11 and prior to the effective date of the
registration statement filed in connection with such registration, the
Corporation shall determine for any reason not to register such stock, the
Corporation shall give written notice to all Shareholders and, thereupon, shall
be relieved of its obligation to register any Shares in connection with such
registration.
(e) The Shares shall cease to be registrable pursuant to this
Paragraph 11 on the date which is the earlier of (i) the date upon which it is
effectively registered under the Act and disposed of in accordance with any
registration statement covering it, (ii) the date upon which it may be
distributed to the public without limitation pursuant to Rule 144 (or any
similar provision then in force) promulgated under the Act and (iii) the date
four years and nine months from the date of the closing of the Merger.
12. Expenses. All expenses incurred by the Corporation in complying
--------
with Paragraph 11, including, without limitation, all registration and filing
fees, printing expenses,
11
<PAGE>
fees and disbursements of counsel and independent public accountants for the
Corporation, fees and expenses (including counsel fees) incurred in connection
with complying with state securities or "blue sky" laws, fees of the National
Association of Securities Dealers, Inc., transfer taxes, fees of transfer agents
and registrars, costs of insurance and reasonable fees and disbursements of one
counsel for the sellers of Shares, but excluding any Selling Expenses, are
herein referred to as "Registration Expenses." "Selling Expenses" as used herein
mean all underwriting discounts and selling commissions applicable to the sale
of Shares.
The Corporation will pay all Registration Expenses in connection with
each registration statement under Paragraph 11. All Selling Expenses in
connection with each registration statement under Paragraph 11 shall be borne by
the participating sellers of Shares in proportion to the number of shares sold
by each, or by such participating sellers of Shares other than the Corporation
(except to the extent the Corporation shall be a seller of Shares) as they may
agree.
13. Holdback Agreements. Notwithstanding any other provision hereof,
-------------------
with respect to each and every public offering, each Shareholder agrees not to
offer, sell or otherwise transfer any Shares (except for Shares sold (a) in such
public offering or (b) to a Permitted Transferee) during the black-out period
prior to the effective date of the applicable registration statement or other
offering document as advised by counsel for the Company and during the period
after such effective date equal to (i) 15 months in the case of an initial
public offering and (ii) 6 months in the case of any other public offering or,
in the case of clause (ii), such shorter period as the managing underwriter for
such offering may advise.
14. Indemnification and Contribution. (a) In the event of a
--------------------------------
registration of any Shares under the Act pursuant to Paragraph 11, the
Corporation will indemnify and hold harmless, to the full extent permitted by
law, each Shareholder selling Shares thereunder, each underwriter of such Shares
thereunder and each other person, if any, who controls such selling Shareholder
or underwriter within the meaning of the Act or the Securities Exchange Act of
1934, as amended (the "Exchange Act"), against any losses, claims, damages,
liabilities and expenses, joint or several, to which such selling Shareholder,
underwriter or controlling person may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any registration statement under
which such Shares were registered under the Act pursuant to Paragraph 11, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will pay or
reimburse each such selling Shareholder, each such underwriter and each such
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Corporation (i) will not be
liable in any such case if and to the extent that untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
information pertaining to such selling Shareholder and furnished by any such
selling Shareholder, any such underwriter or any such controlling person, as the
case may be, in writing specifically for use in such registration statement,
prospectus, amendment or supplement and (ii) will not be liable for amounts paid
in
12
<PAGE>
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Corporation, such consent not
to be unreasonably withheld or delayed.
(b) In the event of a registration of any Common Shares under the Act
pursuant to Paragraph 11, each Shareholder selling Shares thereunder, severally
and not jointly, will indemnify and hold harmless the Corporation, each person,
if any, who controls the Corporation within the meaning of the Act, each officer
of the Corporation who signs the registration statement, each director of the
Corporation, each underwriter and each person who controls any underwriter
within the meaning of the Act, against all losses, claims, damages or
liabilities, joint or several, to which the Corporation or such officer,
director, underwriter or controlling person may become subject under the Act or
otherwise, but only insofar as such losses, claims, damages or liabilities (or
actions in respect thereof), arise out of or are based upon an untrue statement
or alleged untrue statement or omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, made in reliance upon and in conformity with information
pertaining to such selling Shareholder, as such, furnished in writing to the
Corporation by such selling Shareholder specifically for use in such
registration statement under which such Shares was registered under the Act
pursuant to Paragraph 11, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereof, and will pay or
reimburse the Corporation and each such officer, director, underwriter and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that (i) the liability of each selling
-------- -------
Shareholder hereunder shall be limited to the proportion of any such loss,
claim, damage, liability or expense which is equal to the proportion that the
public offering price of the Shares sold by such selling Shareholder under such
registration statement bears to the total public offering price of all
securities sold thereunder, but not in any event to exceed the net proceeds
received by such selling Shareholder from the sale of Shares covered by such
registration statements and (ii) no selling Shareholder shall be liable for
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of such selling Shareholder,
such consent not to be unreasonably withheld or delayed.
(c) Promptly after receipt by an indemnified party hereunder of
written notice of any claim or the commencement of any action or proceeding,
such indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party hereunder, notify the indemnifying party in
writing thereof, but the omission so to notify the indemnifying party shall not
relieve it from any liability which it may have to such indemnified party other
than under this Paragraph 14 and shall only relieve it from any liability which
it may have to such indemnified party under this Paragraph 14 if and to the
extent the indemnifying party is materially prejudiced by such omission. In
case any such action shall be brought against any indemnified party and the
indemnified party shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate in and, to the
extent it shall wish, to assume and undertake the defense thereof with counsel
reasonably satisfactory to such indemnified party, and, after notice from the
indemnifying party to such indemnified party of its election so to assume and
undertake the defense thereof, the indemnifying party shall not be liable to
such indemnified party under this Paragraph 14 for any legal or other
professional expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of investigation
and of liaison with counsel so selected; provided, however,
-------- -------
13
<PAGE>
that if the defendants in any such action include both the indemnified party and
the indemnifying party, and the indemnified party shall have reasonably
concluded that there may be reasonable defenses available to it which are
different from or additional to those available to the indemnifying party or if
the interests of the indemnified party reasonably may be deemed to conflict with
the interests of the indemnifying party, the indemnified party shall have the
right to select a separate counsel and to assume such legal defenses and
otherwise to participate in the defense of such action, with the reasonable fees
and expenses of such separate counsel and other expenses related to such
participation to be reimbursed by the indemnifying party as incurred. No
indemnifying party, in the defense of any such claim or litigation against an
indemnified party, shall consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation, unless such indemnified party
shall otherwise consent in writing. An indemnifying party who is not entitled
to, or elects not to, assume the defense of a claim shall not be obligated to
pay the fees and expenses of more than one counsel for all parties indemnified
by such indemnifying party with respect to such claim, unless any indemnified
party reasonably concludes that there may be legal defenses available to such
indemnified party with respect to such claim which are different from or
additional to those available to any other of such indemnified parties or that a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the reasonable fees and expenses of
such additional counsel or counsels.
(d) In order to provide for just and equitable contribution in any
case in which either (i) any Shareholder exercising registration rights under
Paragraph 11 of this Agreement, or any controlling person of any such
Shareholder, makes a claim for indemnification pursuant to this Paragraph 14 but
it is judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and following the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case, notwithstanding the fact that this Paragraph 14 provides
for indemnification in such case, or (ii) contribution under the Act may be
required on the part of any such Shareholder or any such controlling person in
circumstances for which indemnification is provided under this Paragraph 14;
then, and in each such case, the Corporation and such Shareholder shall
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (after contribution from others) in such proportion as is
appropriate to reflect both the relative benefit received by such Shareholder
and the relative fault of the Corporation and such Shareholder; provided,
--------
however, that, in any such case, (A) no such Shareholder will be required to
- -------
contribute any amount in excess of the public offering price of all such Shares
offered by it pursuant to such registration statement; and (B) no person or
entity guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) will be entitled to contribution from any person or entity who
was not guilty of such fraudulent misrepresentation. For purposes of the
preceding sentence, the relative benefit received by such Shareholder shall be
deemed to be in the same proportion as the public offering price of its Shares
offered by the registration statement bears to the public offering price of all
securities offered by such registration statement; and the relative fault of the
Corporation and such Shareholder shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or omission of a material fact relates to information supplied by the
Corporation or by such Shareholder and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
14
<PAGE>
15. Rule 144 Reporting. With a view to making available the benefits
------------------
of certain rules and regulations of the Securities and Exchange Commission (the
"Commission") which may at any time permit the sale of the Common Shares to the
public without registration, at all times after any registration statement
covering a public offering of securities of the Corporation under the Act shall
have become effective, the Corporation agrees to use all reasonable efforts to:
(a) make and keep public information available, as those terms are understood
and defined in Rule 144 under the Act; (b) use all reasonable efforts to file
with the Commission in a timely manner all reports and other documents required
of the Corporation under the Act and the Exchange Act; and (c) furnish to each
Shareholder forthwith upon request a written statement by the Corporation as to
its compliance with the reporting requirements of such Rule 144 and of the Act
and the Exchange Act, a copy of the most recent annual or quarterly report of
the Corporation, and such other reports and documents so filed by the
Corporation as such Shareholder may reasonably request in availing itself of any
rule or regulation of the Commission allowing such Shareholder to sell any
Shares without registration.
16. Preemptive Rights. (a) In the event that the Corporation proposes
-----------------
to issue (a "Proposed Issuance") any Common Stock or any securities containing
options or rights to acquire any Common Stock or any securities convertible into
or exchangeable for Common Stock ("New Securities") to any Apollo Entity or any
Affiliate (as defined below) thereof (collectively, "Apollo") (a "Purchasing
Party"), other than pursuant to the exceptions specified below, and the
Participation Conditions (as defined hereinafter) are met, the Corporation shall
deliver a notice, with respect to such Proposed Issuance (the "Preemptive
Notice"), to each Shareholder (excluding Babbitt, who shall have no Preemptive
Rights (as defined hereinafter) under this paragraph 16) setting forth the
identity of the Purchasing Party, the period of time within which the Preemptive
Right must be exercised (the "Acceptance Period") and the price, terms and
conditions of the Proposed Issuance. Each Shareholder (other than Babbitt) shall
have the right (the "Preemptive Right"), exercisable as hereinafter provided, to
participate in such issuance of New Securities ("Offered Securities") on a pro
---
rata basis in accordance with the respective aggregate number of shares of
- ----
Common Stock held by such Shareholders on the date of such notice from the
Corporation by purchasing an amount of such New Securities proposed to be issued
to Apollo multiplied by a fraction, the numerator of which shall be the
aggregate number of shares of Common Stock owned by such Shareholder on the date
of such notice from the Corporation and the denominator of which shall be the
total number of shares of Common Stock outstanding on such date, such purchase
to be at the same price and on the same terms and conditions as the Proposed
Issuance. The number of shares of Common Stock to be sold to Apollo pursuant to
the Proposed Issuance shall be calculated after first taking into account the
effect of the preemptive rights granted by the Company to the Purchasers
pursuant to the Purchasers Shareholders' Agreement. The "Participation
Conditions" with respect to a Shareholder shall be as follows: (i) the
Shareholder at the time of exercise of the Preemptive Right must be an employee
of or consultant to the Corporation pursuant to a binding written agreement and
(ii) the Shareholder at the time of exercise of the Preemptive Right continues
to hold shares of Common Stock. An "Affiliate," for the purposes of this
Agreement, shall mean, as to any person, any other person that directly or
indirectly, through one or more intermediaries, controls, is controlled by or is
under common control with, such person.
(b) Anything to the contrary notwithstanding, the Preemptive Rights
provided for herein shall not be applicable to: (i) any Proposed Issuance of
New Securities, in an amount
15
<PAGE>
(assuming exercise of all options, warrants and rights and conversion and
exchange of all convertible and exchangeable securities included in the New
Securities) not to exceed twenty (20%) percent of the fully diluted Common Stock
of the Corporation outstanding on the date of this Agreement; provided, however,
-------- -------
that each Management Shareholder may, at its option, elect, to the extent Apollo
is a Purchasing Party and the Management Shareholders are not offered the
opportunity to exercise their Preemptive Rights pursuant to this clause (i), to
purchase from Apollo at the same purchase price per share paid by Apollo for the
New Securities such number of New Securities such Management Shareholder would
have been entitled to purchase in the event such Management Shareholder had
exercised its Preemptive Right with respect to such Proposal Issuance (each
Management Shareholder must exercise its right under this clause (i) within
fifteen business days of receiving written notice of the consummation of such
Proposed Issuance and the closing of the purchase and sale between such
Management Shareholder and Apollo shall take place as they may reasonably
agree), (ii) any Proposed Issuance of Common Stock to Apollo, in an amount equal
to (A) the number of shares of Common Stock previously sold or otherwise
transferred by Apollo to employees or members of management of the Corporation
less (B) the number of shares of Common Stock previously purchased by Apollo
pursuant to the provision of this clause (ii) and (iii) any stock split or
Proposed Issuance of New Securities as a dividend.
(c) The Preemptive Rights shall be exercisable by delivery of notice
(the "Purchaser Notice") to the Corporation given within the Acceptance Period
set forth in the Preemptive Notice. If a Shareholder shall fail to respond to
the Corporation within the Acceptance Period, such failure shall be regarded as
a rejection of such Shareholder's right to exercise such Stockholder's
Preemptive Right. The closing of any purchase by the Shareholders under this
Paragraph 16 shall be held at such other time and place upon which the parties
to the transaction may agree. At such closing, the Shareholders participating
in the purchase shall deliver by certified bank check, payment in full for such
New Securities and all parties to the transaction shall execute such additional
documents as are otherwise deemed necessary or appropriate by the Corporation.
At such closing, the Corporation may issue and sell to a Purchasing Party such
portion of the Offered Securities as have not been purchased by the Shareholders
pursuant to the exercise of their Preemptive Rights at the same price and on the
same terms and conditions as the Offered Securities sold to Shareholders.
Unless otherwise determined by the Apollo Entities, the Purchasing Party shall
be bound by the terms and conditions of this Agreement as though it were a
Shareholder hereunder.
(d) In the event of a Proposed Issuance of New Securities, which
Proposed Issuance is subject to the Preemptive Rights under this Paragraph and
which is offered only in combination with the purchase of debt or debt
securities, then the Preemptive Rights shall apply to the combination and a
Shareholder exercising his Preemptive Right shall be entitled and required to
purchase his pro rata share of both the debt and equity components of such
--- ----
combination on the basis set forth in Paragraph 16(a).
17. Certain Agreements. (a) Each party agrees as of the date hereof
------------------
that each of the following persons shall be a director of the Corporation: Elton
Babbitt, Richard J. Brandewie, Marvin Sexton, Charles J. O'Brien, Jr. and such
number of persons designated by Apollo Entities.
16
<PAGE>
(b) The Corporation agrees that any transactions between itself and
any Affiliate (including an Apollo Entity) shall be on an arm's-length basis as
determined in good faith by the board of directors of the Corporation in their
reasonable business judgment. The parties agree and acknowledge that the
Corporation will pay the management fees to Apollo, as set forth in the
Management Agreement between Apollo Management, L.P. and the Corporation, dated
as of the date hereof. The parties further agree that Apollo shall be entitled
to a transaction fee of up to one point (1% of value) per transaction as
determined in the sole discretion of Apollo. Except as set forth herein, no
other fees shall be payable to Apollo, except as approved by a majority of the
disinterested directors of the Corporation.
(c) The Corporation agrees to use commercially reasonable efforts to
cause the covenants in its debt agreements to allow the exercise of the put/call
options contained in Paragraph 8. This agreement does not affect the right of
the Corporation to exercise its call options, which right shall remain at the
sole discretion of the Corporation, under such Paragraph 8.
18. Confidentiality. During the term of this Agreement and at all
---------------
times thereafter, each Shareholder agrees that, except to the extent required in
the course of his employment, he will not divulge to anyone (other than the
Corporation or any persons employed or designated by the Corporation) any
confidential knowledge or information relating to the business of the
Corporation or any of its subsidiaries or affiliates, including, without
limitation, all types of trade secrets (unless readily ascertainable from public
or published information or trade sources), product design and customer and
supplier information. Each Shareholder further agrees not to disclose, publish
or make use of any such knowledge or information for personal purposes or for
the benefit of any person, firm, corporation or other entity (other than the
Corporation or any persons employed or designated by the Corporation) without
the prior written consent of the Corporation.
19. Financial Statements. The Corporation will provide each
--------------------
Shareholder with copies of its quarterly (unaudited) and annual audited
financial statements promptly upon completion of such financial statements
during any period in which a Shareholder remains a shareholder, but is not an
officer of or consultant to the Corporation.
20. General Restriction. Each Shareholder understands and agrees
-------------------
that (a) the MTL Securities received pursuant to the Merger Agreement have not
been registered under the Securities Act and are restricted securities; (b) it
will not, directly or indirectly, sell, assign, transfer, grant a participation
in, pledge or otherwise dispose of any MTL Securities (or solicit any offers to
buy or otherwise acquire, or take a pledge of any MTL Securities) except in
compliance with the Securities Act and the terms and conditions of this
Agreement; and (c) any attempt to transfer any MTL Securities not in compliance
with this Agreement shall be null and void and the Corporation shall not, and
shall cause any transfer agent not to, give any effect in the Corporation's
records to such attempted transfer.
21. Legends. (a) In addition to any other legend that may be
-------
required, each certificate for shares of MTL Securities that is issued to any
Shareholder shall bear a legend in substantially the following form:
17
<PAGE>
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY
NOT BE OFFERED OR SOLD EXCEPT IN COMPLIANCE THEREWITH. THIS
SECURITY IS ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER AS SET FORTH IN THE SHAREHOLDER AGREEMENT DATED AS OF
FEBRUARY 10, 1998, COPIES OF WHICH MAY BE OBTAINED UPON
REQUEST FROM MTL INC. OR ANY SUCCESSOR THERETO."
(b) If any MTL Securities shall become registered under the
Securities Act, the Corporation shall, upon the written request of the holder
thereof, issue to such holder a new certificate evidencing such shares without
the first sentence of the legend required by Paragraph 21(a) endorsed thereon.
If any MTL Securities cease to be subject to any and all restrictions on
transfer set forth in this Agreement, the Corporation shall, upon the written
request of the holder thereof, issue to such holder a new certificate evidencing
such MTL Security without the second sentence of the legend required by
Paragraph 21(a) endorsed thereon.
22. Further Assurances. The parties hereto agree to execute and
------------------
deliver all such further instruments as may be necessary from time to time to
carry out the provisions of this Agreement.
23. Notices. All offers, acceptance, notices, certificates and other
-------
communications provided for in this Agreement shall be in writing and (except as
otherwise provided in this Agreement) shall be deemed to have been given when
(a) sent by facsimile transmission, (b) sent by a nationally known overnight
delivery service, (c) delivered by hand or (d) mailed by first-class registered
or certified mail in a post-paid envelope, in each case addressed to the
respective persons to be notified as follows: in the case of the Apollo
Representative, c/o Apollo Management, L.P., 1301 Avenue of the Americas, 38th
Floor, New York, NY 10019; Attention: Joshua J. Harris/Michael Weiner, Esq. with
a copy to, Morton A. Pierce, Esq./Douglas L. Getter, Esq., Dewey Ballantine LLP,
1301 Avenue of the Americas, New York, New York 10019; in the case of the
Shareholders, at their respective addresses appearing on the signature pages of
this Agreement or at such other address as the party to be notified shall from
time to time have furnished to the other parties in writing.
24. Amendment Termination. No provision of this Agreement may be
---------------------
waived except by an instrument in writing executed by the party against whom the
waiver is to be effective. This Agreement may be amended only by an instrument
executed by the parties hereto holding 80% of all of the Common Shares held by
the parties hereto on a fully diluted basis or by their successors and assigns;
provided, however, that in the event any amendment materially and adversely
- -------- -------
affects any party to this Agreement, this Agreement may not be amended without
such party?s approval. Except with respect to Paragraphs 9 through 15, Paragraph
18 and Paragraphs 21 through 25, this Agreement shall terminate automatically
upon the earlier of (i) the tenth anniversary of the date hereof and (ii) at
such time as the Corporation shall be a Public Corporation (as defined below).
For the purposes of the foregoing provision, the term "Public Corporation" means
a corporation with one or more classes of equity securities listed on a national
securities exchange or publicly traded in the over-the-counter market.
18
<PAGE>
25. General. (a) This Agreement (i) shall be construed and enforced
-------
in accordance with the laws of the State of New York, (ii) except as set forth
in Paragraph 25(c) below, constitutes the entire agreement, and supersedes any
and all prior agreements and understandings between the parties in respect to
the subject matter hereof, (iii) shall bind and inure to the benefit of the
parties hereto and their respective heirs, executors, administrators, personal
representatives, successors and assigns and (iv) may be executed in two or more
counterparts each of which shall be deemed an original but all of which together
shall constitute one and the same instrument. The parties hereto hereby consent
and agree that they shall commence any action with respect to any claims or
disputes between the parties hereto pertaining to this Agreement or to any
matter arising out of or related to this Agreement in the United States District
Court for the Southern District of New York, so long as the action falls within
the subject matter jurisdiction of such court; in the event any such action
shall be determined by the court to be outside its subject matter jurisdiction,
then the parties agree to commence any such action in the Supreme Court of New
York County, New York and to take such action as may be necessary to effect
assignment of such action to the Commercial Part of that court. The parties
hereto expressly submit and consent in advance to such jurisdiction in any
action or suit commenced in any such court, and hereby waive any objection which
it may have based upon lack of personal jurisdiction, improper venue or forum
non conveniens and hereby consent to the granting for such legal or equitable
relief as is deemed appropriate by such court. Each party hereto irrevocably
consents to the service of process by registered or certified mail, postage
prepaid, to it at its address given in accordance herewith.
(b) The parties hereto acknowledge that irreparable damage would
result if this Agreement is not specifically enforced and that, therefore, the
rights and obligations of the parties under this Agreement may be enforced by a
decree of specific performance issued by a court of competent jurisdiction, and
appropriate injunctive relief may be applied for and granted in connection
therewith. Such remedies shall, however, be cumulative and not exclusive and
shall be in addition to any other remedies which any party may have under this
Agreement or otherwise. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(c) The restrictions with respect to Shares set forth herein shall be
in addition to and shall in no way limit any other restrictions on the Shares
set forth in any other agreement.
(d) The section and other headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(e) To the extent that any provision of this Agreement shall be
invalid or unenforceable, it shall be considered deleted herefrom and the
remainder of such provision and of this Agreement shall be unaffected and shall
continue in full force and effect. In furtherance and not in limitation of the
foregoing, if any provision, term, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid,
void, unenforceable or against its regulatory policy, then such provision, term,
covenant or restriction shall be construed to cover only that duration, extent
or activities which may be validly and enforceably covered and the remainder of
the provisions, terms covenants and restrictions
19
<PAGE>
contained herein shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
20
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day and the year first above written.
MTL INC.
By:_____________________________________
Name:
Title:
APOLLO INVESTMENT FUND III, L.P.
By: Apollo Advisors II, L.P.,
Its General Partner
By: Apollo Capital Management II, Inc.
Its General Partner
By:_____________________________________
Name: Joshua J. Harris
Title: Vice President
APOLLO OVERSEAS PARTNERS III, L.P.
By: Apollo Advisors II, L.P.,
Its General Partner
By: Apollo Capital Management II, Inc.
Its General Partner
By:_____________________________________
Name: Joshua J. Harris
Title: Vice President
<PAGE>
APOLLO U.K. FUND III, L.P.
By: Apollo Advisors II, L.P.,
Its General Partner
By: Apollo Capital Management II, Inc.
Its General Partner
By:________________________________
Name: Joshua J. Harris
Title: Vice President
<PAGE>
SHAREHOLDERS:
________________________________________
Elton E. Babbitt
________________________________________
Richard J. Brandewie
________________________________________
Marvin Sexton
________________________________________
Charles J. O'Brien, Jr.
<PAGE>
Exhibit A
---------
# of Shares
Shareholder of Common Shares
- ----------- ----------------
Elton Babbitt 66,892
Charles J. O'Brien, Jr. 30,239
Marvin Sexton 35,135
Richard Brandewie 40,541
<PAGE>
Exhibit B
---------
JOINDER IN
----------
SHAREHOLDERS' AGREEMENT
-----------------------
In consideration of the transfer to (him) (her) of _____ shares of
Common Stock, par value $.01 per share, of MTL Inc. (the "Corporation") and the
registration of such transfers on the books of Corporation, ____________
("Additional Shareholder"), and the Corporation agree that, as of the date
written below, Additional Shareholder shall become a party as a Shareholder to
MTL Inc. Shareholders' Agreement dated as of February __, 1998 (the
"Shareholders' Agreement"), and shall be bound by all of the terms and
provisions of the Shareholders' Agreement, as though he was an original party
thereto and was included in the definition of "Shareholder" as used therein.
Executed as of the _____ day of ________________, ____.
[ ]
By:
_______________________________________
Title:
_______________________________________
Shareholder
<PAGE>
EXHIBIT 10.8
NON-COMPETITION AGREEMENT
NON-COMPETITION AGREEMENT, dated as of February 10, 1998, by and between
MTL Inc. (the "Company") and Elton E. Babbitt (the ?Shareholder?);
WHEREAS, the Shareholder is a principal shareholder of the Company;
WHEREAS, concurrently with the execution and delivery of this Agreement,
the Company and Sombrero Acquisition Corp. (?Sub?) are entering into an
Agreement and Plan of Merger (the "Merger Agreement"), dated as of the date
hereof, providing for the merger (the ?Merger?) of Sub with and into the
Company;
WHEREAS, upon the date (the ?Effective Date?) of the closing of the Merger,
the Shareholder will receive in exchange for his shares of common stock, par
value $.01 per share, of the Company, a certain number of shares in the
surviving corporation in the Merger and a certain amount of cash, which
represents part of the consideration for the Shareholder's obligations under
this Agreement;
WHEREAS, the Shareholder has substantial experience and significant
business relationships in the bulk transportation services business;
WHEREAS, the Company would suffer damages, including the loss of profits,
if the Shareholder disclosed any confidential information of the Company or its
subsidiaries, engaged in any business that is competitive with the Company or
its subsidiaries or solicited the termination of the Company's or its
subsidiaries' relationships with their suppliers, customers or employees;
WHEREAS, the Company would not have entered into the Merger Agreement
absent the execution by the Shareholder of this Agreement;
WHEREAS, it is the interest of the Shareholder that the transactions
contemplated by the Merger Agreement be consummated; and
WHEREAS, this Agreement has been reached in good faith in arms-length
negotiations.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
<PAGE>
1. Confidential Information. The Shareholder recognizes and acknowledges
------------------------
that he has had access to certain information of members of the Company Group
(as defined below) and that such information is confidential and constitutes
valuable, special and unique property of such members of the Company Group. The
Shareholder shall not at any time after the date hereof, disclose, divulge,
publish or otherwise communicate to anyone, nor retain, copy or permit to be
copied, or make use of for personal purposes or for the benefit of any person,
firm, corporation or other entity (other than the Company Group) any
Confidential Information (as defined below) of any member of the Company Group
(regardless of whether developed by the Shareholder) without the prior written
consent of the Company.
As used herein, "Company Group" means the Company (including its
subsidiaries), and any entity that directly or indirectly controls, is
controlled by, or is under common control with, the Company and its
subsidiaries. For purposes of this definition, "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such entity, whether through the ownership of voting
securities, by contract or otherwise. In addition, "Company Group" shall mean
any entity that is part of the Company's "Affiliate Program" (as defined in the
Merger Agreement) and any other independent owner/operator with whom the Company
has a contractual relationship.
The term "Confidential Information" with respect to any person means any
trade secrets and any other secret or confidential information or knowledge and
shall include, but shall not be limited to, the plans, customers, suppliers,
costs, prices, uses and applications of products and services, results of
investigations, studies or experiments known to or used by such person,
information relating to employees, customers and suppliers, and all apparatus,
products, processes, compositions, samples, formulas, computer programs, and
servicing, marketing or business methods and techniques at any time used,
developed, investigated or otherwise known to such person, all financial matters
and all information relating to mergers and acquisitions, in all such cases
before or during the term of this Agreement, that are not readily available to
the public or that are maintained as confidential by such person.
2. No Competition. Commencing upon the consummation of the transactions
--------------
contemplated by the Merger Agreement and continuing until the fifth anniversary
thereof, the Shareholder shall not, without the express written consent of the
Company, directly or indirectly, within any geographic area in which any member
of the Company Group conducts its business, engage in the bulk transportation
services business or in any related business (the "BTS Business"). For purposes
of this Section 2, the Shareholder shall be deemed to engage in a business if
he, directly or indirectly, engages or invests in, owns, manages, operates,
controls or participates in the ownership, management, operation or control of,
is employed by, associated or in any manner connected with, or renders services
or advice to, any business engaged in the BTS Business; provided, however, that
-------- -------
the Shareholder may invest in the securities of any enterprise (but without
otherwise participating in the activities of such enterprise) if (x) such
securities are listed on any national or regional securities exchange or have
been registered under Section 12(g) of the Securities Exchange Act of 1934 and
(y) the Shareholder does not beneficially own (as
<PAGE>
defined Rule 13d-3 promulgated under the Securities Exchange Act of 1934) in
excess of 2% of the outstanding equity of such enterprise.
3. No Solicitation. During the same period as the restrictions of Section 2
---------------
hereof shall apply, the Shareholder shall not (a) request, induce, attempt to
influence or have any other business contact with any distributor or supplier of
goods or services to any member of the Company Group to curtail or cancel any
business they may transact with any member of the Company Group; (b) request,
induce, attempt to influence or have any other business contact with any
customers of any member of the Company Group that have done business with or
potential customers which have been in contact with any member of the Company
Group to curtail or cancel any business they may transact with any member of the
Company Group, (c) request, induce, attempt to influence or have any other
business contact with any employee of any member of the Company Group to
terminate his or her employment with such member of the Company Group or (d)
request, induce, attempt to influence or have any other business contact with
any governmental entity or regulatory authority to terminate, revoke or
materially and adversely alter or impair any license, authority or permit held,
owned, used or reserved for the Company Group.
4. Business Goodwill. During the same period as the restrictions of Section
-----------------
2 hereof shall apply, the Shareholder will make only positive comments about the
Company Group and its directors, officers, employees and agents, and shall make
no comments or take any other actions, direct or indirect, that will reflect
adversely on any of the foregoing or adversely affect their business reputation
or good will.
5. Enforceability. The Shareholder agrees that if a court of competent
--------------
jurisdiction determines that the length of time or any other restriction, or
portion thereof, set forth in this Agreement is overly restrictive and
unenforceable, the court may reduce or modify such restrictions to those which
it deems reasonable and enforceable under the circumstances, and as so reduced
or modified, the parties hereto agree that the restrictions of this Agreement
shall remain in full force and effect. The Shareholder further agrees that if a
court of competent jurisdiction determines that any provision of this Agreement
is invalid or against public policy, the remaining provisions of this Agreement
and the remainder of this Agreement shall not be affected thereby, and shall
remain in full force and effect.
The Shareholder acknowledges that the restrictions imposed by the
Agreement are legitimate, reasonable and necessary to protect the Company
Group's investment in its businesses and the goodwill thereof. The Shareholder
acknowledges that the scope and duration of the restrictions contained herein
are reasonable in light of the time that the Shareholder has been engaged in the
BTS Business, the Shareholder's reputation in the markets for the BTS Business
and the Shareholder's relationship with the suppliers, customers and clients of
the Company Group. The Shareholder further acknowledges that the restrictions
contained herein are not burdensome to the Shareholder in light of the
consideration paid therefor and the other opportunities that remain open to the
Shareholder. Moreover, the Shareholder acknowledges that he has other means
available to him for the pursuit of his livelihood.
<PAGE>
6. Remedies. The Shareholder acknowledges that money damages or other
--------
remedy at law would not be sufficient or adequate remedy for any breach or
violation of, or default under, this Agreement, but the Shareholder agrees that
in addition to all other remedies available to the Company, the Company shall be
entitled to the fullest extent permitted by law to an injunction restraining
such breach, violation or default or threatened breach, violation or default and
to any other equitable relief, including, without limitation, restraining
orders, injunctive relief and specific performance, without the posting of a
bond or other security interest being required.
7. Shareholder Agreement. The parties hereto shall use good reasonable
---------------------
efforts to enter into a Shareholders Agreement effective as of the Effective
Date hereof substantially in accordance with the terms attached hereto as
Exhibit A.
- ---------
8. Intent of Parties. Each of the parties hereto recognizes and agrees
-----------------
that this Agreement is necessary and essential to enable the Company to realize
and derive all of the benefits, rights and expectation of the Merger Agreement;
that the area and duration of the covenants herein are in all things, under the
circumstances of the Merger Agreement, reasonable; and that good and valuable
consideration exists for Shareholder's agreeing to be bound by such covenants.
9. Successors and Assigns. This Agreement shall inure to the benefit of
----------------------
and the successors and assigns of the Company. The Company may assign its rights
under this Agreement in connection with any sale, transfer of other disposition
of all or a substantial portion of the stock or assets of the Company. The
Shareholder may not assign his duties or obligations hereunder, but this
Agreement shall be enforceable against the Shareholder's heirs and estate to the
extent of any violation hereof by the Shareholder.
10. Effectiveness. This Agreement shall become effective upon consummation
-------------
of the transactions contemplated by the Merger Agreement and prior thereto shall
be of no force and effect. If the Merger Agreement shall be terminated in
accordance with its terms, this Agreement shall automatically be deemed to have
been terminated and shall thereafter be of no force or effect.
11. Governing Law. This Agreement and the rights and obligations of the
-------------
parties hereto shall be governed, construed and enforced in accordance with the
laws of the State of Florida.
12. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same instrument, but only one of which need be produced.
13. Headings. The headings of this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning of this
Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
MTL INC.
By: ____________________________________
Charles J. O'Brien, Jr.
President
SHAREHOLDER
___________________________________________
Elton E. Babbitt
<PAGE>
EXHIBIT 10.9
NON-COMPETITION AGREEMENT
NON-COMPETITION AGREEMENT, dated as of February 10, 1998, by and between
MTL Inc. (the "Company") and Gordon Babbitt (the "Shareholder");
WHEREAS, the Shareholder is a shareholder of the Company;
WHEREAS, concurrently with the execution and delivery of this Agreement,
the Company and Sombrero Acquisition Corp. ("Sub") are entering into an
Agreement and Plan of Merger (the "Merger Agreement"), dated the date hereof,
providing for the merger ("Merger") of Sub with and into the Company;
WHEREAS, upon the date ("Effective Date") of the closing of the Merger, the
Shareholder shall receive, in exchange for approximately 375,380 shares of
common stock, $.01 par value per share ("Common Stock"), of the Company held by
him, approximately $15,015,200, which represents part of the consideration for
the Shareholder's obligations under this Agreement;
WHEREAS, the Shareholder has substantial experience and significant
business relationships in the bulk transportation services business;
WHEREAS, the Company would suffer damages, including the loss of profits,
if the Shareholder disclosed any confidential information of the Company or its
subsidiaries, engaged in any business that is competitive with the core
businesses of the Company or its subsidiaries or solicited the termination of
the Company's or its subsidiaries' relationships with their suppliers, customers
or employees;
WHEREAS, the Company would not have entered into the Merger Agreement
absent the execution by the Shareholder of this Agreement;
WHEREAS, it is the interest of the Shareholder that the transactions
contemplated by the Merger Agreement be consummated; and
WHEREAS, this Agreement has been reached in good faith in arms-length
negotiations.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, and intending to be legally bound hereby, the
parties hereto agree as follows:
<PAGE>
1. Confidential Information. The Shareholder recognizes and acknowledges
------------------------
that he has had access to certain information of members of the Company Group
(as defined below) and that such information is confidential and constitutes
valuable, special and unique property of such members of the Company Group. The
Shareholder shall not at any time after the date hereof, disclose, divulge,
publish or otherwise communicate to anyone, nor retain, copy or permit to be
copied, or make use of for personal purposes or for the benefit of any person,
firm, corporation or other entity (other than the Company Group) any
Confidential Information (as defined below) of any member of the Company Group
(regardless of whether developed by the Shareholder) without the prior written
consent of the Company, provided that any inadvertent disclosure of non-material
Confidential Information in the ordinary course of Shareholder's continuing
business will not violate this agreement, except to the extent such inadvertent
disclosure results in harm to the Company.
As used herein, "Company Group" means the Company (including its
subsidiaries), and any entity that directly or indirectly controls, is
controlled by, or is under common control with, the Company and its
subsidiaries. For purposes of this definition, "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such entity, whether through the ownership of voting
securities, by contract or otherwise. In addition, "Company Group" shall mean
any entity that is part of the Company's "Affiliate Program" (as defined in the
Merger Agreement) and any other independent owner/operator with whom the Company
has a contractual relationship.
The term "Confidential Information" with respect to any person means any
trade secrets and any other secret or confidential information or knowledge and
shall include, but shall not be limited to, the plans, customers, suppliers,
costs, prices, uses and applications of products and services, results of
investigations, studies or experiments known to or used by such person,
information relating to employees, customers and suppliers, and all apparatus,
products, processes, compositions, samples, formulas, computer programs, and
servicing, marketing or business methods and techniques at any time used,
developed, investigated or otherwise known to such person, all financial matters
and all information relating to mergers and acquisitions, in all such cases
before or during the term of this Agreement, that are not readily available to
the public or that are maintained as confidential by such person.
2. No Competition. Commencing upon the Effective Date and continuing
--------------
until the third anniversary thereof (the "Restricted Period"), the Shareholder
shall not, without the express written consent of the Company, directly or
indirectly, within the United States and Canada (the "Territory"), engage in the
for-hire, common carrier tank truck transportation business (the " Business").
For purposes of this Section 2, the Shareholder shall be deemed to engage in the
Business if he, directly or indirectly, engages or invests in, owns, manages,
operates, controls or participates in the ownership, management, operation or
control of, is employed by, associated or in any manner connected with, or
renders services or advice to, any business engaged in the Business; provided,
--------
however, that the Shareholder may invest in the securities of any enterprise
- -------
(but without otherwise participating in the activities of such enterprise) if
(x) such securities are listed on any national or regional securities exchange
or have been registered under Section 12(g) of the Securities Exchange Act of
1934 and (y) the Shareholder does not beneficially own (as defined Rule 13d-3
promulgated under the Securities Exchange Act of 1934) in excess of 2% of the
outstanding equity of such enterprise.
<PAGE>
3. No Solicitation. During the Restricted Period, the Shareholder shall
---------------
not (a) request, induce, attempt to influence or have any other business contact
with any distributor or supplier of goods or services to any member of the
Company Group to curtail or cancel any business they may transact with any
member of the Company Group; (b) request, induce, attempt to influence or have
any other business contact with any customers of any member of the Company Group
that have done business with or potential customers which have been in contact
with any member of the Company Group to curtail or cancel any business they may
transact with any member of the Company Group, (c) request, induce, attempt to
influence or have any other business contact with any employee of any member of
the Company Group to terminate his or her employment with such member of the
Company Group or (d) request, induce, attempt to influence or have any other
business contact with any governmental entity or regulatory authority to
terminate, revoke or materially and adversely alter or impair any license,
authority or permit held, owned, used or reserved for the Company Group.
4. Business Goodwill. During the Restricted Period, the Shareholder will
-----------------
make only positive comments about the Company Group and its directors, officers,
employees and agents, and shall make no comments or take any other actions,
direct or indirect, that will reflect adversely on any of the foregoing or
adversely affect their business reputation or good will.
5. Enforceability. The Shareholder agrees that if a court of competent
--------------
jurisdiction determines that the length of time or any other restriction, or
portion thereof, set forth in this Agreement is overly restrictive and
unenforceable, the court may reduce or modify such restrictions to those which
it deems reasonable and enforceable under the circumstances, and as so reduced
or modified, the parties hereto agree that the restrictions of this Agreement
shall remain in full force and effect. The Shareholder further agrees that if a
court of competent jurisdiction determines that any provision of this Agreement
is invalid or against public policy, the remaining provisions of this Agreement
and the remainder of this Agreement shall not be affected thereby, and shall
remain in full force and effect.
The Shareholder acknowledges that the restrictions imposed by the Agreement
are legitimate, reasonable and necessary to protect the Company Group's
investment in its businesses and the goodwill thereof. The Shareholder
acknowledges that the scope and duration of the restrictions contained herein
are reasonable in light of the time that the Shareholder has been engaged in the
Business, the Shareholder's reputation in the markets for the Business and the
Shareholder's relationship with the suppliers, customers and clients of the
Company Group. The Shareholder further acknowledges that the restrictions
contained herein are not burdensome to the Shareholder in light of the
consideration paid therefor and the other opportunities that remain open to the
Shareholder. Moreover, the Shareholder acknowledges that he has other means
available to him for the pursuit of his livelihood.
6. Remedies. The Shareholder acknowledges that money damages or other
--------
remedy at law would not be sufficient or adequate remedy for any breach or
violation of, or default under, this Agreement, but the Shareholder agrees that
in addition to all other remedies available to the Company, the Company shall be
entitled to the fullest extent permitted by law to an injunction restraining
such breach,
<PAGE>
violation or default or threatened breach, violation or default and to any other
equitable relief, including, without limitation, restraining orders, injunctive
relief and specific performance, without the posting of a bond or other security
interest being required.
7. Intent of Parties. Each of the parties hereto recognizes and agrees
-----------------
that this Agreement is necessary and essential to enable the Company to realize
and derive all of the benefits, rights and expectation of the Merger Agreement;
that the area and duration of the covenants herein are in all things, under the
circumstances of the Merger Agreement, reasonable; and that good and valuable
consideration exists for Shareholder's agreeing to be bound by such covenants.
8. Successors and Assigns. This Agreement shall inure to the benefit of
----------------------
and the successors and assigns of the Company. The Company may assign its rights
under this Agreement in connection with any sale, transfer of other disposition
of all or a substantial portion of the stock or assets of the Company. The
Shareholder may not assign his duties or obligations hereunder, but this
Agreement shall be enforceable against the Shareholder's heirs and estate to the
extent of any violation hereof by the Shareholder.
9. Effectiveness. This Agreement shall become effective upon the
-------------
Effective Date and prior thereto shall be of no force and effect. If the Merger
Agreement shall be terminated in accordance with its terms, this Agreement shall
automatically be deemed to have been terminated and shall thereafter be of no
force or effect.
10. Governing Law. This Agreement and the rights and obligations of the
-------------
parties hereto shall be governed, construed and enforced in accordance with the
laws of the State of Florida.
11. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same instrument, but only one of which need be produced.
12. Headings. The headings of this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning of this
Agreement.
13. The Bulk Companies Inc. Nothing in this agreement shall preclude the
-----------------------
Shareholder from conducting the activities heretofore conducted by The Bulk
Companies Inc.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
MTL INC.
By:_____________________________
Charles J. O'Brien, Jr.
President
SHAREHOLDER
________________________________
GORDON BABBITT
<PAGE>
EXHIBIT 10.10
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (this "Agreement") made as of this 10 day of
February 1998, by and between MTL Inc., a Florida corporation, having an address
at 3108 Central Drive, Plant City, Florida 33567 (the "Company") and Apollo
Management L.P., having an address at 1301 Avenue of the Americas, New York, NY
10019 (the "Apollo").
WHEREAS, the Company and Sombrero Acquisition Corp., a Florida
corporation ("Sub"), have entered into an Agreement and Plan of Merger (the
"Merger Agreement") dated the date hereof providing for the merger (the
"Merger") of Sub with and into the Company; and
WHEREAS, upon the consummation of the Merger (the "Effective Time"),
the Company desires to retain the ongoing services of Apollo for financial and
strategic advice;
NOW, THEREFORE, in consideration of the mutual promises contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Appointment. The Company appoints Apollo, following the
-----------
Effective Time, to provide financial and strategic advice, subject to the
direction of the Board of Directors of the Company and the terms and conditions
of this Agreement, and Apollo hereby accepts the aforesaid appointment.
2. Duties. Apollo shall perform and provide all such financial and
------
strategic services to the Company as shall be reasonably requested by the Board
of Directors of the Company.
3. Term. The term of this Agreement shall commence at the Effective
----
Time and be continuous until terminated as hereinafter provided.
4. Compensation. The Company shall pay Apollo, for services to be
------------
rendered hereunder, an initial fee of $750,000 upon the Effective Time ("Initial
Payment"), and, thereafter, a fee of $500,000 per annum ("Annual Fee"), payable
by the Company in equal quarterly installments of $125,000 due on the last day
of September, December, March and June of each, subject to appropriate proration
for the first payment after the Effective Date.
5. Termination. Notwithstanding anything to the contrary contained
-----------
herein, each party hereto may terminate this Agreement without cause upon thirty
(30) calendar days? written notice (the ?Termination Notice?) to the other, said
notice to set forth the date of such termination, which date shall not be less
than thirty (30) days, nor more than sixty (60) days from the date of such
Termination Notice. Compensation owed to Apollo under this Agreement shall be
paid pro rata through the date of the Termination Notice.
<PAGE>
6. Independent Contractor. Apollo is retained and employed as an
----------------------
advisor by the Company under this Agreement only for the purposes and to the
extent set forth herein, and the relation of Apollo to the Company is and shall
remain, during the term or terms hereof, that of an independent contractor.
7. Confidentiality. In furtherance of this Agreement, the Company
---------------
shall provide Apollo with all financial, business and other relevant information
about the Company reasonably requested by Apollo for the purpose of rendering
the services contemplated herein. All such information of a non-public or
confidential nature furnished to Apollo by the Company shall be treated as
confidential by Apollo. Apollo may rely, without independent verification, on
the accuracy and completeness of the information furnished to it by the Company
in furtherance of this Agreement.
8. Losses. None Apollo, any of its employees, officers and
------
directors, any person controlling Apollo, or any of their respective agents or
affiliates shall be liable to the Company for any losses, claims, damages,
liabilities or expenses arising from, related to or in connection with this
Agreement or the Company's business or affairs.
9. Indemnification. The Company will indemnify and hold harmless
---------------
Apollo, its employees, officers and directors, any person controlling Apollo and
its respective agents and affiliates, as such , from any liabilities, claims,
suits, judgments, damages or expenses arising out of, or in connection with, any
action taken under this Agreement by Apollo or any of its agents, employees,
officers or directs, except to the extent that any such liabilities, claims,
suits, judgments, damages or expenses are substantially attributable to the
gross negligence or willful misconduct of Apollo or any such employee, officer,
director , controlling person, agent or affiliate, as such.
10. Binding Effect; Assignment. This Agreement shall be binding upon
--------------------------
and shall inure to the benefit of the parties hereto, and their respective
successors and assigns. Notwithstanding the foregoing, this Agreement may not
be assigned without the prior written consent of the parties hereto, except that
Apollo shall have the right to assign its rights, interests and obligations
hereunder to any of its affiliates at its sole option and without the prior
consent (written or otherwise) of MTL. This Agreement may be modified by the
parties hereto only by written supplemental agreement.
11. Construction. This Agreement shall be construed in accordance
------------
with and governed by the laws of the State of New York without regard to any
choice of law provisions.
12. Notices. All notices and other communications required or
-------
permitted to be given pursuant to this Agreement shall be in writing and shall
be considered as properly given or made if delivered personally or if mailed,
postage prepaid, addressed to the respective address of such party set forth at
the beginning of this Agreement with a copy, in the case of notices to Apollo,
to Morton A. Pierce, Esq., Dewey Ballantine, 1301 Avenue of the Americas, New
York, NY 10019. All notices will
<PAGE>
be deemed effective on the earlier of the date when delivered personally or
three (3) calendar days after the same are mailed. Any party hereto may change
its address for giving of notices by like notice stating the new address to the
other parties hereto.
13. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
MTL INC.
By:_____________________________
Charles J. O'Brien, Jr.
President
APOLLO MANAGEMENT L.P.
By:_____________________________
Joshua Harris
Partner
<PAGE>
EXHIBIT 10.11
[Execution Form]
LIMITED RECOURSE SECURED PROMISSORY NOTE (THE "NOTE")
$400,000 June 9, 1998
FOR VALUE RECEIVED, the undersigned, Marvin Sexton ("Promissor"), hereby
promises to pay MTL, Inc, (the "Company") or its assigns ("Promissee"), the
principal sum of Four Hundred Thousand Dollars ($400,000) (the "Original
Principal Amount") plus addition principal, as provided below, on June 9, 2006
(the "Maturity Date"), with any accrued interest thereon. Interest on the Note
shall be computed (on the basis of a 360 day year of twelve 30 day months) on
the unpaid principal balance thereof at the Contract Rate (as defined below),
compounded semi-annually, commencing on the date hereof and continuing until the
amounts owing hereunder are paid in full. The "Contract Rate" shall be set on a
semi-annual basis commencing on the date hereof and shall be an interest rate
per annum equal to LIBOR (as defined in Annex I hereto), plus 1.50%, but in no
event shall the Contract Rate be higher than the maximum rate permitted by New
York law as the same may be modified by United States law of general
application. On the last day of each Interest Period (as defined in Annex I
hereto) interest accrued for such period shall be added to the then outstanding
principal balance of the Note and shall thereafter bear interest at the Contract
Rate until paid. All principal in addition to the Original Principal Amount and
any accrued interest thereon is herein referred to as the "Additional Amount."
Payments of principal of and interest on this Note shall be made in immediately
available funds in lawful money of the United States of America ("U.S.
dollars").
The obligations of Promissor under this Note are secured as set forth in
the Pledge Agreement, dated the date hereof, between Promissee and Promissor, a
copy of which is attached hereto and incorporated herein as Exhibit A (the
"Pledge Agreement"). This Note and the Pledge Agreement are limited recourse to
the Promissor and Promissor shall not have any personal liability for repayment
of this Note or under the Pledge Agreement other than the Additional Amount.
Promissee's recourse on a default under this Note will be to first fully
exercise its remedies under the Pledge Agreement with respect to the Pledged
Collateral, before Promissor will be liable for any deficiency remaining after
such a foreclosure and application of the proceeds.
This Note may be prepaid in whole or in part at any time and from time to
time, without premium or penalty. Principal on the Note shall be mandatorily
pre-payable upon, and to the extent of, the receipt of any Net After-Tax
Proceeds (as defined on Annex I hereto) from the sale of Pledged Collateral (as
defined in the Pledge Agreement (as defined below)) within 30 days of the
consummation of any such sale. All prepayments made on this Note shall be
applied first to the payment of the Additional Amount and then to the Original
Principal Amount.
<PAGE>
If Promissor shall fail to make payment in full of any amount of interest
or principal hereunder when due and payable, then, without limiting Promissee's
rights and remedies with respect to such failure, Promissor shall pay default
interest on any overdue interest or principal payment at a rate equal to two
percent (2%) per annum over the Contract Rate, accruing from the date of failure
to make payment until the date payment is made.
If an Event of Default (as defined in the Pledge Agreement) shall occur,
the unpaid balance of the principal and interest of this Note shall
automatically and immediately become due and payable, without the need the give
notice to any person, and the Promissee shall have such rights and remedies as
provided in the Pledge Agreement with respect to the Pledged Collateral.
Promissor may not assign this Note without the prior written consent of
Promissee, which may be granted or withheld for any reason or no reason.
Promissee may assign this Note upon notice to Promissor. Subject to the
foregoing, this Note shall be binding upon and inure to the benefit of
Promissor, Promissee and their respective successors, heirs, legal
representatives and permitted assigns.
All parties to this Note, whether maker, principal, surety, guarantor or
endorser, hereby waive presentment for payment, demand, protest, notice of
protest and notice of dishonor.
This Note shall be governed by and in accordance with the laws of the State
of New York.
THIS NOTE IS SUBJECT TO CERTAIN PROVISIONS OF THE PLEDGE AGREEMENT AND ANNEX I
ATTACHED HERETO.
By:______________________________
Marvin Sexton
2
<PAGE>
ANNEX I
to
Note dated June 9, 1998
"Calculation Agent" means the Company's Board of Directors.
"Determination Date," with respect to an Interest Period, will be the
second London Banking Day preceding the first day of the Interest Period.
"Interest Period" means each of the periods commencing (i) on and
including June 15 and ending on and including the day immediately preceding the
next succeeding December 15, and (ii) on and including December 15 and ending on
and including the day immediately preceding the next succeeding June 15, with
the exception that the first Interest Period shall commence on and include June
9, 1998 and end on December 14, 1998.
"LIBOR," with respect to an Interest Period (as defined), will be the
rate (expressed as a percentage per annum) for deposits in United States dollars
for a six-month period beginning on the second London Banking Day (as defined)
after the Determination Date (as defined) that appears on Telerate Page 3750 (as
defined) as of 11:00 a.m., London time, on the Determination Date. If Telerate
Page 3750 does not include such a rate or is unavailable on a Determination
Date, LIBOR for the Interest Period shall be arithmetic mean of the rates
(expressed as a percentage per annum) for deposits in a Representative Amount
(as defined) in United States dollars for a six-month period beginning on the
second London Banking Day after the Determination Date that appears on Reuters
Screen LIBO Page (as defined) as of 11:00 a.m. London time, on Determination
Date. If Reuters Screen LIBO Page does not include two or more rates or is
unavailable on a Determination Date, the Calculation Agent will request the
principal London Office of each of four major banks in the London interbank
market, as selected by the Calculation Agent, to provide such bank's offered
quotation (expressed as a percentage per annum), as of approximately 11:00 a.m.,
London time, on such Determination Date, to prime banks in the London interbank
market for deposits in a Representative Amount in United States dollars for a
six-month period beginning on the second London Banking Day after the
Determination Date. If at least two such offered quotations are so provided,
the Calculation Agent will request each of six major banks in New York City, as
selected by the Calculation Agent, to provide such bank's rate (expressed as a
percentage per annum), as of approximately 11:00 a.m., New York City time, on
such Determination Date, for loans in a Representative Amount in United States
dollars to leading European banks for a six-month period beginning on the second
London Banking Day after the Determination Date. If at least two such rates are
so provided, LIBOR for the Interest Period will be the arithmetic mean of such
rates. If fewer than two such rates are so provided, then LIBOR for the
Interest Period will be LIBOR in effect with respect to the immediately
preceding Interest Period.
"London Banking Day" is any day in which dealings in United States
dollars are transacted or, with respect to any future date, are expected to be
transacted in the London interbank market.
3
<PAGE>
"Net After-Tax Proceeds" means (i) the gross proceeds (expressed in
U.S. dollars) received by the Promissor from the sale of the Pledged Collateral
less the Promissor's tax basis in such Pledged Collateral for federal income tax
purposes multiplied by (ii) one minus the then current effective consolidated
-------------
federal, state and local tax rate of the Promissor with respect to such sale,
expressed as a decimal.
"Representative Amount" means a principal amount of not less than U.S.
$1.0 million for a single transaction in the relevant market at the relevant
time.
"Reuters Screen LIBO Page" means the display designated as page "LIBO"
on The Reuters Monitor Money Rates Service (or such other page as may replace
the LIBO page on that service).
"Telerate Page 3750" means the display designated as "Page 3750" on
the Dow Jones Telerate Service ( or such other page as may replace Page 3750 on
that service).
The amount of interest for each day that the Note is outstanding (the
"Daily Interest Amount") will be calculated by dividing the interest rate in
effect for such day by 360 and multiplying the result by the then unpaid
principal amount of the Note. The amount of interest to be accrued on the Note
for each Interest Period will be calculated by adding the Daily Interest Amounts
for each day in the Interest Period.
4
<PAGE>
EXHIBIT A
PLEDGE AGREEMENT dated June 9, 1998 ("Pledge Agreement"), made by Marvin
Sexton ("Pledgor") to MTL, Inc. (the "Pledgee").
WHEREAS, Pledgor is an officer of Pledgee, a Florida corporation, and owns or
is purchasing on the date hereof an aggregate of 35,135 issued and outstanding
shares of common stock, $.01 par value per share, of Pledgee (the "MTL Common
Stock");
WHEREAS, by Limited Recourse Secured Promissory Note (a copy of which is
attached hereto and incorporated herein as Exhibit A) dated of even date
herewith, the Pledgor has agreed on a limited recourse basis to repay to the
Pledgee the amount of $400,000, together with interest, in the manner set forth
therein (the "Note").
WHEREAS, it is a requirement of the Note that the Pledgor shall have granted
the security interests contemplated by this Pledge Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Pledgee to provide the loan the subject of the Note, the Pledgor and the Pledgee
hereby agree as follows:
SECTION 1. Pledge. Pledgor hereby pledges and grants a security interest to
------
the Pledgee in the following (the "Pledged Collateral"):
(i) every share of MTL Common Stock or option to purchase shares of
MTL Common Stock now held, or hereafter acquired, by Pledgor (the "Pledged
Securities") and the certificate(s) representing the Pledged Securities,
and all dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange
for any or all of the Pledged Securities;
(ii) all proceeds of the sale of any and all of the Pledged
Securities.
SECTION 2. Security for Obligations. The Pledged Collateral secures the
------------------------
prompt and complete payment and performance when due of all of the obligations
of the Pledgor under the Note (the "Secured Obligations").
SECTION 3. Delivery of Pledged Collateral. All certificates or instruments
------------------------------
representing or evidencing the Pledged Collateral shall be delivered to and held
by the Pledgee pursuant hereto and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to the Pledgee. In
addition, the Pledgee shall have
<PAGE>
the right at any time to exchange certificates or instruments representing or
evidencing Pledged Collateral for certificates or instruments of smaller or
larger denominations.
SECTION 4. Representations and Warranties. The Pledgor represents and warrants
------------------------------
to the Pledgee as follows:
(i) The Pledgor is the sole legal and beneficial owner of the Pledged
Securities, which Pledgor has not previously sold, assigned or transferred
and which is free and clear of any lien, option, right, right of preemption
or other charge or encumbrance, except for the security interest created by
this Pledge Agreement.
(ii) The pledge of the Pledged Collateral pursuant to this Pledge
Agreement, upon delivery of the stock certificate as provided in Section 3
hereof, creates a valid and perfected first priority security interest in
the Pledged Securities securing the payment of the Secured Obligations.
(iii) No authorization, approval or other action by, and no notice to
or filing with, any governmental or regulatory authority or any person is
required either (i) for the pledge by the Pledgor of the Pledged Collateral
pursuant to this Pledge Agreement or for the execution, delivery or
performance of the Pledge Agreement by the Pledgor, or (ii) for the
exercise by the Pledgee of the voting or other rights provided for in this
Pledge Agreement or the remedies in respect of the Pledged Collateral
pursuant to this Pledge Agreement.
(iv) The Note and this Pledge Agreement is a legal, valid and binding
obligation of the Pledgor, enforceable against the Pledgor in accordance
with its respective terms (but subject to the limitation on personal
liability stated in the Note).
SECTION 5. Further Assurances. The Pledgor agrees that at any time and from
------------------
time to time, at the expense of the Pledgor, it will promptly execute and
deliver all reasonable further instruments and documents, and take all
reasonable further action, that may be necessary or desirable, or that the
Pledgee may request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Pledgee to exercise
and enforce its rights and remedies hereunder with respect to any Pledged
Collateral.
SECTION 6. Voting Rights; Dividends; Etc. (a) So long as no Event of Default
-----------------------------
(as defined below) shall have occurred:
(i) The Pledgor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Pledged Collateral or any part
thereof for any purpose not inconsistent with the terms of this Pledge
Agreement; provided, however, that the Pledgor shall not exercise or
-------- -------
refrain from exercising any such right if, in the Pledgee's sole judgment,
such action would modify or in any way
2
<PAGE>
adversely change Pledgor's or Pledgee's rights under the Pledged Securities
or any part thereof.
(ii) Notwithstanding the foregoing, any and all
(A) dividends paid or payable and instruments and other property
received, receivable or otherwise distributed in respect of, or in
exchange for, any Pledged Collateral,
(B) dividends and other distributions paid or payable in cash in
respect of any Pledged Collateral in connection with a total
liquidation or dissolution, and
(C) cash paid, payable or otherwise distributed in respect of
principal of, or in redemption of, or in exchange for, any Pledged
Collateral,
shall be, and shall be forthwith delivered to the Pledgee to hold as,
Pledged Collateral and shall, if received by Pledgor, be received in trust
for the benefit of the Pledgee, be segregated from the other property or
funds of Pledgor, and be forthwith delivered to the Pledgee as Pledged
Collateral in the same form as so received (with any necessary
endorsement).
(b) Upon the occurrence of an "Event of Default" which shall mean any one of
the following events:
(1) Any representation or warranty made by the Pledgor in the Note or
this Pledge Agreement shall prove to be incorrect in any material respect
as of the time when made;
(2) The Pledgor shall be in material breach of any covenant or
agreement set forth in the Note or this Pledge Agreement and the breach is
not cured within 10 days after notice to Pledgor;
(3) The Pledged Collateral or any interest therein shall be sold,
assigned, transferred or otherwise disposed of, or any option or right
shall be granted with respect to the Pledged Collateral or any interest
therein, or the Pledged Collateral or any interest therein shall be
pledged, mortgaged or otherwise encumbered in any manner other than in
favor of the Pledgee as contemplated in this Pledge Agreement;
(4) The Pledgor shall fail to make payment when due of any principal
or interest with respect to the Note and the payment failure is not cured
within 10 days after notice to Pledgor; or
3
<PAGE>
(5) The Pledgor shall become insolvent or bankrupt, make an
assignment for the benefit of its creditors or admit in writing its
inability to, or be generally unable to, pay its debts as they become due,
or the Pledgor shall have a trustee, receiver or custodian appointed in
respect of it or all or a substantial portion of its property or to take
advantage of any law relating to bankruptcy, insolvency, reorganization,
liquidation or winding up with respect to it.
(i) Upon the request of the Pledgee, all rights of Pledgor to
exercise the voting and other consensual rights which it would otherwise be
entitled to exercise pursuant to Section 6(a)(i) and to receive the
dividends, principal or interest payments which it would otherwise be
authorized to receive and retain pursuant to Section 6(a)(ii) shall cease,
and all such rights shall thereupon become vested in the Pledgee, and the
Pledgee shall thereupon have the sole right to exercise such voting and
other consensual rights and to receive and hold as Pledged Collateral such
dividends, principal or interest payments.
(ii) All dividends, principal or interest payments which are received
by Pledgor contrary to the provisions of paragraph (i) of this Section 6(b)
shall be received in trust for the benefit of the Pledgee, shall be
segregated from other funds of Pledgor and shall be forthwith paid over to
the Pledgee as Pledged Collateral in the same form as so received (with any
necessary endorsement).
SECTION 7. Transfers and Other Liens; Additional Shares. Pledgor agrees that
--------------------------------------------
it will neither (i) sell or otherwise dispose of, or grant any option with
respect to, any of the Pledged Collateral, nor (ii) create or permit to exist
any security interest, or other charge or encumbrance upon or with respect to
any of the Pledged Collateral, except for the security interest under this
Pledge Agreement.
SECTION 8. Pledgee Appointed Attorney-in-Fact. Pledgor hereby appoints the
----------------------------------
Pledgee, Pledgor's attorney-in-fact, with full authority in the place and stead
of Pledgor and in the name of Pledgor or otherwise, to take any action and to
execute any instrument which the Pledgee may deem necessary or advisable to
accomplish the purposes of this Pledge Agreement, including, without limitation,
to receive, endorse and collect all instruments made payable to Pledgor
representing any dividend, interest payment or other distribution or payment in
respect of the Pledged Collateral or any part thereof and to give full discharge
for the same.
SECTION 9. Pledgee May Perform. If Pledgor fails to perform any agreement
-------------------
contained herein, the Pledgee may itself perform or cause performance of, such
agreement, and the expenses of the Pledgee incurred in connection therewith
shall be payable by Pledgor under Section 12.
SECTION 10. The Pledgee's Duties and Reasonable Care. The powers conferred
----------------------------------------
on the Pledgee hereunder are solely to protect its interests in the Pledged
Collateral and shall not impose any duty upon it to exercise any such powers.
The Pledgee shall be deemed to have exercised reasonable care in the custody and
4
<PAGE>
preservation of the Pledged Collateral in its possession if the Pledged
Collateral is accorded treatment substantially equal to that which the Pledgee
accords its own property, it being understood that the Pledgee shall have no
responsibility for (a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Pledged Collateral, whether or not the Pledgee has or is deemed to have
knowledge of such matters, or (b) taking any necessary steps to preserve rights
against any parties with respect to any Pledged Collateral.
SECTION 11. Remedies. If any Event of Default shall have occurred:
--------
(a) The Pledgee may exercise in respect of the Pledged Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party on default under the
Uniform Commercial Code (the "Code") in effect in the State of New York at that
time, and the Pledgee may also, without notice, except as specified below, sell
the Pledged Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange, broker's board or at any of the Pledgee's offices
or elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Pledgee may deem commercially reasonable. Pledgor agrees that, to
the extent notice of sale shall be required by law, at least fifteen (15)
calendar days' notice to the Pledgor of the time and place of any public sale or
the time after which any private sale is to be made shall constitute reasonable
notification. The Pledgee shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given. The Pledgee may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
(b) Any cash held by the Pledgee as Pledged Collateral and all cash
proceeds received by the Pledgee in respect of any sale of, collection from, or
other realization upon all or any part of the Pledged Collateral may, in the
discretion of the Pledgee, be held by the Pledgee as collateral for, and/or then
or at any time thereafter applied (after payment of any amounts payable to the
Pledgee pursuant to Section 12) in whole or in part by the Pledgee against, all
or any part of the Secured Obligations in such order as the Pledgee shall elect.
Any surplus of such cash or cash proceeds held by the Pledgee and remaining
after payment in full of all the Secured Obligations shall be paid over to the
Pledgor or to whosoever may be lawfully entitled to receive such surplus.
SECTION 12. Indemnity and Expenses. Pledgor hereby agrees to indemnify the
----------------------
Pledgee from and against any and all claims, losses, damages and liabilities
growing out of or resulting from this Pledge Agreement or the Note (including,
without limitation, enforcement of this Pledge Agreement or the Note), except to
the extent such claims, losses, damages, or liabilities result from Pledgee's
gross negligence or willful misconduct; provided that the Pledgor's personal
liability will be limited to the Additional Amount (as defined in the Note).
SECTION 13. Amendments, Etc. No amendment or waiver of any provision of this
----------------
Pledge Agreement or the Note, nor consent to any departure by the
5
<PAGE>
Pledgor herefrom or therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Pledgor and the Pledgee, and then such
amendment, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
SECTION 14. Addresses for Notices. All notices and other communications
---------------------
provided for hereunder or under the Note shall be in writing and mailed or
delivered by messenger or sent by facsimile, addressed to it at the following
address:
if to the Pledgor:
Marvin Sexton
1002 S. Harbour Island Blvd.
Unit #1605
Tampa, Florida 33602
with a copy to
David S. Felman, Esq.
Glenn Rasmussen & Fogarty
100 South Ashley Drive
Suite 1300
Tampa, Florida 33601-3333
if to the Pledgee:
MTL Inc.
3108 Central Drive
Plant City, Florida 33567
Attn: Charles J. O'Brien, Jr.
President and Chief Executive Officer
with a copy to
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019-6092
Attn: Morton A. Pierce, Esq. / Douglas L. Getter, Esq.
or at such other address as shall be designated by such party in a written
notice to each other party complying as to delivery with the terms of this
Section. All such notices and other communications shall, when mailed or
delivered by messenger or sent by facsimile, respectively, be effective when
received in the mails or delivered to the messenger or sent by facsimile,
respectively, addressed as aforesaid.
6
<PAGE>
Continuing Security Interest; Transfer of Notes. This Pledge Agreement shall
- -----------------------------------------------
create a continuing security interest in the Pledged Collateral and shall (i)
remain in full force and effect until performance and payment in full of the
Secured Obligations, (ii) be binding upon the Pledgor, its successors and
assigns, and (iii) inure to the Pledgee and its respective successors,
transferees and assigns. Without limiting the generality of the foregoing
clause (iii), the Pledgee may assign or otherwise transfer all or a portion of
its rights or obligations under this Pledge Agreement or the Note, upon notice
to the LLC, the Company and the Pledgor, to any transferee (each an "Assignee"),
and such other Assignee shall thereupon become vested with all the benefits in
respect of this Pledge Agreement and the Note granted to the Pledgee herein,
therein or otherwise. Upon the payment and performance in full of the Secured
Obligations, Pledgor shall be entitled to the return, upon its request and at
its expense, of such of the Pledged Collateral as shall not have been sold or
otherwise applied pursuant to the terms hereof.
Governing Law; Terms. This Pledge Agreement and the Note shall be governed by
- --------------------
and construed in accordance with the laws of the State of New York.
Miscellaneous. (a) This Pledge Agreement is in addition to and not in
- -------------
limitation of any other rights and remedies the Pledgee may have by virtue of
any other instrument or agreement heretofore, contemporaneously herewith or
hereafter executed by the Pledgor or any other person or Assignee or by law or
otherwise. If any provision of this Pledge Agreement or the Note is contrary to
applicable law, such provision shall be deemed ineffective without invalidating
the remaining provisions hereof. The Pledgee shall not, by any act, delay,
omission or otherwise, be deemed to have waived any of its rights or remedies
hereunder.
(b) The Pledgee agrees it will not proceed against the Pledgor personally
until it has fully exercised its rights under this Pledge Agreement.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to be
duly executed and delivered as of the date first set forth above.
PLEDGOR:
_________________________________
Marvin Sexton
PLEDGEE:
MTL, INC.
By_______________________________
Name:
Title:
8
<PAGE>
EXHIBIT 12.1
MTL Inc.
Computation of the Ratio of Earnings to Fixed Charges
<TABLE>
1993 1994 1995 1996
<S> <C> <C> <C> <C>
Earnings:
Pre-tax income (loss) $ 7,037,000 $ 10,545,000 $ 13,209,788 $ 14,940,309
Add:
Total Fixed charges (as calculated below) 6,587,305 4,744,174 3,881,969 4,758,072
Amortization expense of previously capitalized interest - - - -
Less:
Interest capitalized during the period - - - -
--------------------------------------------------------------
Earnings 13,624,305 15,289,174 17,091,757 19,698,381
Fixed Charges:
Rent expense under operating leases 1,970,427 1,332,306 958,162 2,209,532
x 1/3 of Rent expenses
Interest portion of rent expense: 656,809 444,102 319,387 736,511
Interest cost (expensed and capitalized) 5,760,500 4,222,912 3,543,867 3,959,669
Proforma interest cost:
Interest cost (on new debt)
Fee for unused portion of Revolving Credit Facility
Debt amortization expense 169,996 77,160 18,715 61,892
--------------------------------------------------------------
Total Fixed Charges 6,587,305 4,744,174 3,881,969 4,758,072
Ratio of Earnings to Fixed Charges (1) (2) 2.07 3.22 4.40 4.14
<CAPTION>
Proforma
-----------------------------
6 months 6 months 12 months 6 months
Ending Ending Ending Ending
1997 6/30/98 6/30/97 1997 6/30/98
<S> <C> <C> <C> <C> <C>
Earnings:
Pre-tax income (loss) $ 17,879,586 $ (5,343,000) $ 8,667,000 $ (6,700,000) $ 3,100,000
Add:
Total Fixed charges (as calculated below) 4,726,553 3,430,097 2,343,608 40,440,393 20,419,066
Amortization expense of previously
capitalized interest - - - - -
Less:
Interest capitalized during the period - - - - -
----------------------------------------- -----------------------------
Earnings 22,606,139 (1,912,903) 11,010,608 33,740,393 23,519,066
Fixed Charges:
Rent expense under operating leases 2,821,179 697,197 1,410,590 2,821,179 1,557,197
x 1/3 of Rent expenses
Interest portion of rent expense: 940,393 232,399 470,197 940,393 519,066
Interest cost (expensed and capitalized) 3,706,137 2,953,268 1,826,824
Proforma interest cost:
Interest cost (on new debt) 37,700,000 18,900,000
Fee for unused portion of Revolving
Credit Facility 300,000 200,000
Debt amortization expense 80,023 244,430 46,587 1,500,000 800,000
----------------------------------------- -----------------------------
Total Fixed Charges 4,726,553 3,430,097 2,343,608 40,440,393 20,419,066
Ratio of Earnings to Fixed Charges (1) (2) 4.78 -- 4.70 -- 1.15
</TABLE>
(1) Earnings were insufficient to cover fixed charges by $5.3 million for the
six months ended June 30, 1998 and $6.7 million for the pro forma year ended
December 31, 1997.
(2) During the six months ended June 30, 1998, the Company incurred a non-
recurring expense of $13.4 million related to the exercise of options of
MTL stock in connection with the MTL Transactions. Excluding this expense,
the ratio of earnings to fixed charges would have been 3.36x. Adjusting for
certain nonrecurring costs of $13.4 million and $.6 million for the pro
forma year ended December 31, 1997 and six months ended June 30, 1998 (as
discussed in the Unaudited Pro Forma Condensed Consolidated Financial
Information) would have resulted in a ratio of 1.17x for the pro forma year
ended December 31, 1997 and 1.18x for the pro forma six months ended June
30, 1998.
<PAGE>
EXHIBIT 16.1
November 3, 1998
Office of the Chief Accountant
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sir/Madam:
We have read the disclosure relating to Item 304 of Regulation S-K included in
the Form S-4 dated November 3, 1998 of MTL Inc. to be filed with the Securities
and Exchange Commission and are in agreement with the statements contained
therein.
Very truly yours,
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
LJG
Copy to:
Mr. Dick Brandewie, Chief Financial Officer
MTL Inc.
<PAGE>
Exhibit 21.1
------------
LIST OF SIGNIFICANT SUBSIDIARIES
--------------------------------
Name of Subsidiary State of Incorporation
------------------ ----------------------
1. Montgomery Tank Lines, Inc. Illinois
2. Quality Carriers, Inc. Virginia
3. Lakeshore Leasing, Inc. Indiana
4. Mexico Investments, Inc. Florida
5. MTL of Nevada Nevada
6. Chemical Leaman Corporation Pennsylvania
7. Chemical Properties, Inc. Pennsylvania
8. Capacity Management Systems, Inc. Pennsylvania
9. Core Logistics Management, Inc. Delaware
10. EnviroPower, Inc. Delaware
11. Pickering Way Funding Corp. Delaware
12. Power Purchasing, Inc. Delaware
13. American Transinsurance Group, Inc. Delaware
14. Chemical Leaman Tank Lines, Inc. Delaware
15. Fleet Transport Company, Inc. Delaware
16. Quala Systems, Inc. Delaware
17. CLT Services, Inc. Delaware
18. Leaman Logistics, Inc. Delaware
19. Transplastics, Inc. Delaware
20. QSI Services, Inc. Delaware
21. Levy Transport Ltd. Quebec, Canada
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the use of
our report dated February 27, 1998 and to all references to our firm included
in or made a part of MTL Inc.'s registration statement on Form S-4.
ARTHUR ANDERSEN LLP
Tampa, Florida
October 30, 1998
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated March 20, 1998 on the consolidated financial statements of Chemical
Leaman Corporation and subsidiaries as of December 31, 1996 and 1997 and for
each of the three years in the period ended December 31, 1997 and to all
references to our Firm included in or made a part of this registration
statement.
ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
October 30, 1998
<PAGE>
EXHIBIT 25.1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
_________________________
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OFA CORPORATION
DESIGNATED TO ACT AS TRUSTEE
=====================
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) _______
=====================
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I.R.S. Employer
if not a U.S. national bank) Identification No.)
114 West 47th Street
New York, New York 10036-1532
(Address of principal (Zip Code)
executive offices)
None
(Name, address and telephone number of agent for service)
========================
MTL, INC.
(Exact name of obligor as specified in its charter)
DELAWARE
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
3108 Central Drive
Plant City, California 95112
(Address of principal executive offices) (Zip Code)
10% Senior Subordinated Notes due 2006
<PAGE>
-2-
Floating Interest Rate Subordinated Term Securities due 2006
(Title of the indenture securities)
GENERAL
1. GENERAL INFORMATION
-------------------
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Washington, D.C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH THE OBLIGOR
-----------------------------
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15:
The obligor is currently not in default under any of its outstanding
securities for which United States Trust Company of New York is Trustee.
Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and
15 of Form T-1 are not required under General Instruction B.
16. LIST OF EXHIBITS
----------------
T-1.1 -- Organization Certificate, as amended, issued by the State of
New York Banking Department to transact business as a Trust
Company, is
<PAGE>
incorporated by reference to Exhibit T-1.1 to Form T-1 filed
on September 15, 1995 with the Commission pursuant to the
Trust Indenture Act of 1939, as amended by the Trust Indenture
Reform Act of 1990 (Registration No. 33-97056).
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
<PAGE>
-3-
16. List of Exhibits
----------------
(cont'd)
T-1.4 -- The By-Laws of United States Trust Company of New York, as
amended, is incorporated by reference to Exhibit T-1.4 to
Form T-1 filed on September 15, 1995 with the Commission
pursuant to the Trust Indenture Act of 1939, as amended by
the Trust Indenture Reform Act of 1990 (Registration No. 33-
97056).
T-1.6 -- The consent of the trustee required by Section 321(b) of the
Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the trustee
pursuant to law or the requirements of its supervising or
examining authority.
NOTE
====
As of October 16, 1998, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U.S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States
Trust Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
__________________
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
United States Trust Company of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 16th of
October 1998.
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By: /s/ Gerard F. Ganey
---------------------------
Gerard F. Ganey
Senior Vice President
<PAGE>
Exhibit T-1.6
-------------
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
December 19, 1997
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
By: /s/ Gerard F. Ganey
--------------------------
Gerard F. Ganey
Senior Vice President
<PAGE>
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
JUNE 30, 1998
-------------
($ IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
- ------
<S> <C>
Cash and Due from Banks $ 99,322
Short-Term Investments 171,315
Securities, Available for Sale 626,426
Loans 1,857,795
Less: Allowance for Credit Losses 16,708
----------
Net Loans 1,841,087
Premises and Equipment 59,304
Other Assets 122,476
----------
Total Assets $2,919,930
==========
LIABILITIES
- -----------
Deposits:
Non-Interest Bearing $ 648,072
Interest Bearing 1,646,049
----------
Total Deposits 2,294,121
Short-Term Credit Facilities 306,807
Accounts Payable and Accrued Liabilities 144,419
----------
Total Liabilities $2,745,347
==========
STOCKHOLDER'S EQUITY
- --------------------
Common Stock 14,995
Capital Surplus 49,541
Retained Earnings 107,703
Unrealized Gains on Securities
Available for Sale (Net of Taxes) 2,344
----------
Total Stockholder's Equity 174,583
----------
Total Liabilities and
Stockholder's Equity $2,919,930
==========
</TABLE>
I, Richard E. Brinkmann, Senior Vice President & Comptroller of the named bank
do hereby declare that this Statement of Condition has been prepared in
conformance with the instructions issued by the appropriate regulatory authority
and is true to the best of my knowledge and belief.
Richard E. Brinkmann, SVP & Controller
July 31, 1998
EXHIBIT T-1.7
<PAGE>
EXHIBIT 99.1
MTL INC.
LETTER OF TRANSMITTAL
FOR TENDER OF ALL OUTSTANDING
10% SENIOR SUBORDINATED NOTES DUE 2006
AND
FLOATING INTEREST RATE SUBORDINATED TERM SECURITIES DUE 2006
IN EXCHANGE FOR
10% SERIES B SENIOR SUBORDINATED NOTES DUE 2006
AND
SERIES B FLOATING INTEREST RATE SUBORDINATED TERM SECURITIES DUE 2006
THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
PURSUANT TO THE PROSPECTUS DATED , 1998
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1999, UNLESS THE EXCHANGE OFFER IS EXTENDED.
TO: UNITED STATES TRUST COMPANY OF NEW YORK (THE "EXCHANGE AGENT")
By Facsimile: By Hand before 4:30 p.m.: By Mail or Overnight
Delivery:
United States Trust United States Trust United States Trust
Company Company Company
of New York of New York of New York
Attention: Customer 111 Broadway P.O. Box 843 Cooper
Service Station
(212) 780-0592 New York, NY 10006 New York, NY 10276
Attention: Lower Level Attention: Corporate
Trust Services
Corporate Trust Window
For Information or Confirmation
by Telephone:
(800) 548-6565
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OR TRANSMISSION TO A FACSIMILE
NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. THE
METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES, IS AT THE RISK OF
THE HOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. THE INSTRUCTIONS ACCOMPANYING
THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF
TRANSMITTAL IS COMPLETED.
The undersigned acknowledges that he or she has received the Prospectus,
dated , 1998 (the "Prospectus") of MTL Inc., a Florida corporation (the
"Company") and this Letter of Transmittal and the instructions hereto (the
"Letter of Transmittal"), which together constitute the Company's offer (the
"Exchange Offer") to exchange $1,000 principal amount of each of its 10%
Series B Senior Subordinated Notes due 2006 and Series B Floating Interest
Rate Subordinated Term Securities due 2006 (together, the "Exchange Notes")
that have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to a Registration Statement of which the
Prospectus is a part, for each $1,000 principal amount of each of its
outstanding 10% Senior Subordinated Notes due 2006 and Floating Interest Rate
Subordinated Term Securities due 2006 (together, the "Old Notes"), of which
$140,00,000 aggregate principal amount is outstanding, upon the terms and
subject to the conditions set forth in the Prospectus. The term "Expiration
Date" shall mean 5:00 p.m.,
<PAGE>
New York City time, on , 1999, unless the Company, in its sole
discretion, extends the Exchange Offer, in which case the term shall mean the
latest date and time to which the Exchange Offer is extended by the Company.
Capitalized terms used but not defined herein have the meaning given to them
in the Prospectus.
This Letter of Transmittal is to be used either if (i) certificates
representing Old Notes are to be physically delivered to the Exchange Agent
herewith by Holders, (ii) tender of Old Notes is to be made by book-entry
transfer to an account maintained by the Exchange Agent at The Depository
Trust Company ("DTC"), pursuant to the procedures set forth in "The Exchange
Offer --Procedures for Tendering" in the Prospectus by any financial
institution that is a participant in DTC and whose name appears on a security
position listing as the owner of Old Notes or (iii) tender of Old Notes is to
be made according to the guaranteed delivery procedures set forth in the
Prospectus under "The Exchange Offer--Guaranteed Delivery Procedures."
Delivery of this Letter of Transmittal and any other required documents must
be made to the Exchange Agent. DELIVERY OF DOCUMENTS TO DTC DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
The term "Holder" as used herein means any person in whose name Old Notes
are registered on the books of the Company or any other person who has
obtained a properly completed bond power from the registered holder.
All Holders of Old Notes who wish to tender their Old Notes must, prior to
the Expiration Date: (1) complete, sign, and deliver this Letter of
Transmittal, or a facsimile thereof, to the Exchange Agent, in person or to
the address set forth above; and (2) tender (and not withdraw) his or her Old
Notes or, if a tender of Old Notes is to be made by book-entry transfer to the
account maintained by the Exchange Agent at DTC, confirm such book-entry
transfer (a "Book-Entry Confirmation"), in each case in accordance with the
procedures for tendering described in the Instructions to this Letter of
Transmittal. Holders of Old Notes whose certificates are not immediately
available, or who are unable to deliver their certificates or Book-Entry
Confirmation and all other documents required by this Letter of Transmittal to
be delivered to the Exchange Agent on or prior to the Expiration Date, must
tender their Old Notes according to the guaranteed delivery procedures set
forth under the caption "The Exchange Offer--Guaranteed Delivery Procedures"
in the Prospectus. (See Instruction 2.)
Upon the terms and subject to the conditions of the Exchange Offer, the
acceptance for exchange of the Old Notes validly tendered and not withdrawn
and the issuance of the Exchange Notes will be made promptly following the
Expiration Date. For the purposes of the Exchange Offer, the Company shall be
deemed to have accepted for exchange validly tendered Old Notes when, as and
if the Company has given written notice thereof to the Exchange Agent.
The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with
respect to the Exchange Offer. Holders who wish to tender their Old Notes must
complete this Letter of Transmittal in its entirety.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS CAREFULLY
BEFORE CHECKING ANY BOX BELOW. THE INSTRUCTIONS INCLUDED IN THIS LETTER OF
TRANSMITTAL MUST BE FOLLOWED. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR
ADDITIONAL COPIES OF THE PROSPECTUS, THIS LETTER OF TRANSMITTAL AND THE NOTICE
OF GUARANTEED DELIVERY MAY BE DIRECTED TO THE EXCHANGE AGENT. SEE INSTRUCTION
12 HEREIN.
HOLDERS WHO WISH TO ACCEPT THE EXCHANGE OFFER AND TENDER THEIR OLD NOTES
MUST COMPLETE THIS LETTER OF TRANSMITTAL IN ITS ENTIRETY AND COMPLY WITH ALL
OF ITS TERMS.
List below the Old Notes to which this Letter of Transmittal relates. If the
space provided below is inadequate, the Certificate Numbers and Principal
Amounts should be listed on a separate signed schedule, attached hereto. The
minimum permitted tender is $1,000 in principal amount of each of the 10%
Senior Subordinated Notes due 2006 and Floating Interest Rate Subordinated
Term Securities due 2006. All other tenders must be in integral multiples of
$1,000.
<PAGE>
DESCRIPTION OF 10% SENIOR SUBORDINATED NOTES DUE 2006
AND
FLOATING INTEREST RATE SUBORDINATED TERM SECURITIES DUE 2006
BOX I
<TABLE>
<CAPTION>
NAME(S) AND
ADDRESS(ES)
OF
REGISTERED
HOLDER(S)*
(PLEASE
FILL IN, IF
BLANK)
- -----------------------------------------------------
(A) (B)
AGGREGATE PRINCIPAL
CERTIFICATE AMOUNT TENDERED
NUMBER(S)* (IF LESS THAN ALL)**
---------
---------
---------
---------
---------
<S> <C> <C>
TOTAL PRINCIPAL
AMOUNT OF OLD NOTES
TENDERED
</TABLE>
- --------------------------------------------------------------------------------
*Need not be completed by book-entry holders.
**Need not be completed by Holders who wish to tender with respect to all
Old Notes listed.
<PAGE>
PLEASE READ CAREFULLY THE ACCOMPANYING INSTRUCTIONS
BOX II BOX III
SPECIAL REGISTRATION INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 4, 5 AND 6) (SEE INSTRUCTIONS 4, 5 AND 6)
To be completed ONLY if To be completed ONLY if
certificates for Old Notes in a certificates for Old Notes in a
principal amount not tendered, or principal amount not tendered, or
Exchange Notes issued in exchange Exchange Notes issued in exchange
for Old Notes accepted for for Old Notes accepted for
exchange, are to be issued in the exchange, are to be delivered to
name of someone other than the someone other than the
undersigned. undersigned.
Issue certificate(s) to: Deliver certificate(s) to:
Name ______________________________ Name ______________________________
(PLEASE PRINT) (PLEASE PRINT)
___________________________________ ___________________________________
(PLEASE PRINT) (PLEASE PRINT)
Address ___________________________ Address ___________________________
___________________________________ ___________________________________
(INCLUDING ZIP CODE) (INCLUDING ZIP CODE)
___________________________________ ___________________________________
(TAX IDENTIFICATION OR SOCIAL (TAX IDENTIFICATION OR SOCIAL
SECURITY NUMBER) SECURITY NUMBER)
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE HEREOF (TOGETHER WITH
THE CERTIFICATE(S) FOR OLD NOTES OR A CONFIRMATION OF BOOK-ENTRY TRANSFER OF
SUCH OLD NOTES AND ALL OTHER REQUIRED DOCUMENTS) OR, IF GUARANTEED DELIVERY
PROCEDURES ARE TO BE COMPLIED WITH, A NOTICE OF GUARANTEED DELIVERY, MUST BE
RECEIVED BY THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
[_]CHECK HERE IF OLD NOTES ARE BEING DELIVERED BY DTC TO AN ACCOUNT MAINTAINED
BY THE EXCHANGE AGENT WITH DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution ____________________
[_] The Depository Trust Company
Account Number _____________________________________________________________
Transaction Code Number ____________________________________________________
Holders whose Old Notes are not immediately available or who cannot deliver
their Old Notes and all other documents required hereby to the Exchange Agent
on or prior to the Expiration Date may tender their Old Notes according to the
guaranteed delivery procedures set forth in the Prospectus under the caption
"The Exchange Offer--Guaranteed Delivery Procedures." (See Instruction 2.)
<PAGE>
[_]CHECK HERE IF OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING:
Name(s) of tendering Holder(s) _____________________________________________
Date of Execution of Notice of Guaranteed Delivery _________________________
Name of Institution which Guaranteed Delivery ______________________________
Transaction Code Number ____________________________________________________
[_]CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name: ______________________________________________________________________
Address: ___________________________________________________________________
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of
Exchange Notes. If the undersigned is a broker-dealer that will receive
Exchange Notes for its own account in exchange for Old Notes that were
acquired as a result of market-making activities or other trading activities,
it acknowledges that it will deliver a prospectus in connection with any
resale of such Exchange Notes; however, by so acknowledging and by delivering
a prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the undersigned
hereby tenders to MTL Inc. (the "Company") the principal amount of Old Notes
indicated above.
Subject to and effective upon the acceptance for exchange of the principal
amount of Old Notes tendered hereby in accordance with this Letter of
Transmittal, the undersigned sells, assigns and transfers to, or upon the
order of, the Company all right, title and interest in and to the Old Notes
tendered hereby. The undersigned hereby irrevocably constitutes and appoints
the Exchange Agent as its agent and attorney-in-fact (with full knowledge that
the Exchange Agent also acts as the agent of the Company and as Trustee and
Registrar under the Indenture for the Old Notes and the Exchange Notes) with
respect to the tendered Old Notes with full power of substitution (such power
of attorney being deemed an irrevocable power coupled with an interest),
subject only to the right of withdrawal described in the Prospectus, to (i)
deliver certificates for such Old Notes to the Company or transfer ownership
of such Old Notes on the account books maintained by DTC, together, in either
such case, with all accompanying evidences of transfer and authenticity to, or
upon the order of, the Company and (ii) present such Old Notes for transfer on
the books of the Company and receive all benefits and otherwise exercise all
rights of beneficial ownership of such Old Notes, all in accordance with the
terms of the Exchange Offer.
The undersigned acknowledges that the Exchange Offer is being made in
reliance upon interpretative advice given by the staff of the Securities and
Exchange Commission to third parties in connection with transactions similar
to the Exchange Offer, so that the Exchange Notes issued pursuant to the
Exchange Offer in exchange for the Old Notes may be offered for resale, resold
and otherwise transferred by holders thereof (other than a
<PAGE>
broker-dealer who purchased such Old Notes directly from the Company for
resale pursuant to Rule 144A or any other available exemption under the
Securities Act or a person that is an "affiliate" of the Company or any
Guarantor within the meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such Exchange Notes are acquired in the ordinary
course of such holders' business and such holders have no arrangement with any
person to participate in the distribution of such Exchange Notes.
The undersigned agrees that acceptance of any tendered Old Notes by the
Company and the issuance of Exchange Notes in exchange therefor shall
constitute performance in full by the Company of its obligations under the
Registration Rights Agreement, (as defined in the Prospectus) and that, upon
the issuance of the Exchange Notes, the Company will have no further
obligations or liabilities thereunder (except in certain limited
circumstances).
The undersigned represents and warrants that (i) the Exchange Notes acquired
pursuant to the Exchange Offer are being acquired in the ordinary course of
business of the person receiving Exchange Notes (which shall be the
undersigned unless otherwise indicated in the box entitled "Special Delivery
Instructions" above) (the "Recipient"), (ii) neither the undersigned nor the
Recipient (if different) is engaged in, intends to engage in or has any
arrangement or understanding with any person to participate in the
distribution of such Exchange Notes, and (iii) neither the undersigned nor the
Recipient (if different) is an "affiliate" of the Company or any Guarantor as
defined in Rule 405 under the Securities Act. If the undersigned is not a
broker-dealer, the undersigned further represents that it is not engaged in,
and does not intend to engage in, a distribution of the Exchange Notes. If the
undersigned is a broker-dealer, the undersigned further (x) represents that it
acquired Old Notes for the undersigned's own account as a result of market-
making activities or other trading activities, (y) represents that it has not
entered into any arrangement or understanding with the Company or any
"affiliate" of the Company (within the meaning of Rule 405 under the
Securities Act) to distribute the Exchange Notes to be received in the
Exchange Offer and (z) acknowledges that it will deliver a prospectus meeting
the requirements of the Securities Act (for which purposes delivery of the
Prospectus, as the same may be hereafter supplemented or amended, shall be
sufficient) in connection with any resale of Exchange Notes received in the
Exchange Offer. Such a broker-dealer will not be deemed, solely by reason of
such acknowledgment and prospectus delivery, to admit that it is an
"underwriter" within the meaning of the Securities Act.
The undersigned understands and agrees that the Company reserves the right
not to accept tendered Old Notes from any tendering holder if the Company
determines, in its sole and absolute discretion, that such acceptance could
result in a violation of applicable securities laws.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, exchange, assign and transfer the Old Notes
tendered hereby and to acquire Exchange Notes issuable upon the exchange of
such tendered Old Notes, and that, when the same are accepted for exchange,
the Company will acquire good and unencumbered title thereto, free and clear
of all liens, restrictions, charges and encumbrances and not subject to any
adverse claim. The undersigned also warrants that it will, upon request,
execute and deliver any additional documents deemed to be necessary or
desirable by the Exchange Agent or the Company in order to complete the
exchange, assignment and transfer of tendered Old Notes or transfer of
ownership of such Old Notes on the account books maintained by a book-entry
transfer facility.
The undersigned understands and acknowledges that the Company reserves the
right in its sole discretion to purchase or make offers for any Old Notes that
remain outstanding subsequent to the Expiration Date or, as set forth in the
Prospectus under the caption "The Exchange Offer--Procedures for Tendering,"
to terminate the Exchange Offer and, to the extent permitted by applicable
law, purchase Old Notes in the open market, in privately negotiated
transactions or otherwise. The terms of any such purchases or offers could
differ from the terms of the Exchange Offer.
The undersigned understands that the Company may accept the undersigned's
tender by delivering written notice of acceptance to the Exchange Agent, at
which time the undersigned's right to withdraw such tender will
<PAGE>
terminate. For purposes of the Exchange Offer, the Company shall be deemed to
have accepted validly tendered Old Notes when, as and if the Company has given
oral (which shall be confirmed in writing) or written notice thereof to the
Exchange Agent.
The undersigned understands that the first interest payment following the
Expiration Date will include unpaid interest on the Old Notes accrued through
the date of issuance of the Exchange Notes.
The undersigned understands that tenders of Old Notes pursuant to the
procedures described under the caption "The Exchange Offer--Procedures for
Tendering" in the Prospectus and in the instructions hereto will constitute a
binding agreement between the undersigned and the Company upon the terms and
subject to the conditions of the Exchange Offer.
The undersigned acknowledges that the Exchange Offer is subject to the more
detailed terms set forth in the Prospectus and, in case of any conflict
between the terms of the Prospectus and this Letter of Transmittal, the
Prospectus shall prevail.
If any tendered Old Notes are not accepted for exchange pursuant to the
Exchange Offer for any reason, certificates for any such unaccepted Old Notes
will be returned (except as noted below with respect to tenders through DTC),
at the Company's cost and expense, to the undersigned at the address shown
below or at a different address as may be indicated herein under "Special
Delivery Instructions" as promptly as practicable after the Expiration Date.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned, and every obligation of the undersigned under this Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representatives, successors and assigns. This tender may be withdrawn only in
accordance with the procedures set forth in this Letter of Transmittal.
By acceptance of the Exchange Offer, each broker-dealer that receives
Exchange Notes pursuant to the Exchange Offer hereby acknowledges and agrees
that upon the receipt of notice by the Company of the happening of any event
which makes any statement in the Prospectus untrue in any material respect or
which requires the making of any changes in the Prospectus in order to make
the statements therein not misleading (which notice the Company agrees to
deliver promptly to such broker-dealer), such broker-dealer will suspend use
of the Prospectus until the Company has amended or supplemented the Prospectus
to correct such misstatement or omission and has furnished copies of the
amended or supplemented prospectus to such broker-dealer.
Unless otherwise indicated under "Special Registration Instructions," please
issue the certificates representing the Exchange Notes issued in exchange for
the Old Notes accepted for exchange and return any certificates for Old Notes
not tendered or not exchanged, in the name(s) of the undersigned (or, in
either such event in the case of Old Notes tendered by DTC, by credit to the
account at DTC). Similarly, unless otherwise indicated under "Special Delivery
Instructions," please send the certificates representing the Exchange Notes
issued in exchange for the Old Notes accepted for exchange and any
certificates for Old Notes not tendered or not exchanged (and accompanying
documents, as appropriate) to the undersigned at the address shown below the
undersigned's signature(s), unless, in either event, tender is being made
through DTC. In the event that both "Special Registration Instructions" and
"Special Delivery Instructions" are completed, please issue the certificates
representing the Exchange Notes issued in exchange for the Old Notes accepted
for exchange in the name(s) of, and return any certificates for Old Notes not
tendered or not exchanged to, the person(s) so indicated. The undersigned
understands that the Company has no obligations pursuant to the "Special
Registration Instructions" or "Special Delivery Instructions" to transfer any
Old Notes from the name of the registered Holder(s) thereof if the Company
does not accept for exchange any of the Old Notes so tendered.
Holders who wish to tender the Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, this Letter
of Transmittal or any other documents required hereby to the
<PAGE>
Exchange Agent prior to the Expiration Date, may tender their Old Notes
according to the guaranteed delivery procedures set forth in the Prospectus
under the caption "The Exchange Offer--Guaranteed Delivery Procedures." See
Instruction 1 regarding the completion of the Letter of Transmittal.
PLEASE SIGN HERE WHETHER OR NOT
OLD NOTES ARE BEING PHYSICALLY TENDERED HEREBY
AND WHETHER OR NOT TENDER IS TO BE MADE
PURSUANT TO THE GUARANTEED DELIVERY PROCEDURES
This Letter of Transmittal must be signed by the registered holder(s) as
their name(s) appear on the Old Notes or, if tendered by a participant in DTC,
exactly as such participant's name appears on a security listing as the owner
of Old Notes, or by person(s) authorized to become registered holder(s) by a
properly completed bond power from the registered holder(s), a copy of which
must be transmitted with this Letter of Transmittal. If Old Notes to which
this Letter of Transmittal relate are held of record by two or more joint
holders, then all such holders must sign this Letter of Transmittal. If
signature is by a trustee, executor, administrator, guardian, attorney-in-
fact, officer of a corporation or other person acting in a fiduciary or
representative capacity, then such person must (i) set forth his or her full
title below and (ii) unless waived by the Company, submit evidence
satisfactory to the Company of such person's authority so to act. (See
Instruction 4.)
X ____________________________________________ _____________________________
DATE
X ____________________________________________ _____________________________
DATE
Signature(s) of Holder(s) or
Authorized Signatory
Name(s): ____________________________ Address: ____________________________
Name(s): ____________________________ Address: ____________________________
(PLEASE PRINT) (INCLUDING ZIP CODE)
Capacity: ___________________________ Area Code and Telephone Number: _____
Social Security No.: ________________
PLEASE COMPLETE SUBSTITUTE FORM W-9 HEREIN
<PAGE>
BOX IV
SIGNATURE GUARANTEE (SEE INSTRUCTION 1)
CERTAIN SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION
___________________________________________________________________________
(NAME OF ELIGIBLE INSTITUTION GUARANTEEING SIGNATURES)
___________________________________________________________________________
(ADDRESS (INCLUDING ZIP CODE) AND TELEPHONE NUMBER (INCLUDING AREA CODE) OF
FIRM)
___________________________________________________________________________
(AUTHORIZED SIGNATURE)
___________________________________________________________________________
(PRINTED NAME)
___________________________________________________________________________
(TITLE)
Date: _________________________
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. Guarantee of Signatures. Signatures on this Letter of Transmittal need
not be guaranteed if (a) this Letter of Transmittal is signed by the
registered holder(s) of the Old Notes tendered herewith and such holder(s)
have not completed the box set forth herein entitled "Special Registration
Instructions" or the box entitled "Special Delivery Instructions" or (b) such
Old Notes are tendered for the account of an Eligible Institution. (See
Instruction 6.) Otherwise, all signatures on this Letter of Transmittal or a
notice of withdrawal, as the case may be, must be guaranteed by a member firm
of a registered national securities exchange or of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company having an
office or correspondent in the United States (an "Eligible Institution"). All
signatures on bond powers and endorsements on certificates must also be
guaranteed by an Eligible Institution.
2. Delivery of this Letter of Transmittal and Old Notes. Certificates for
all physically delivered Old Notes or confirmation of any book-entry transfer
to the Exchange Agent at DTC of Old Notes tendered by book-entry transfer, as
well as, in each case (including cases where tender is affected by book-entry
transfer), a properly completed and duly executed copy of this Letter of
Transmittal or facsimile hereof and any other documents required by this
Letter of Transmittal must be received by the Exchange Agent at its address
set forth herein prior to 5:00 p.m., New York City time, on the Expiration
Date. The method of delivery of the tendered Old Notes, this Letter of
Transmittal and all other required documents to the Exchange Agent is at the
election and risk of the Holder and the delivery will be deemed made only when
actually received by the Exchange Agent. If Old Notes are sent by mail,
registered mail with return receipt requested, properly insured, is
recommended. In all cases, sufficient time should be allowed to ensure timely
delivery. No Letter of Transmittal or Old Notes should be sent to the Company.
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the Depositary for purposes of the Exchange Offer within
two business days after receipt of this Prospectus, and any financial
institution that is a participant in the Depositary may make book-entry
delivery of Old Notes by causing the Depositary to transfer such Old Notes
into the Exchange Agent's account at the Depositary in accordance with the
Depositary's procedures for transfer. However, although delivery of Old Notes
may be effected through book-entry transfer at the Depositary, the Letter of
Transmittal, with any required signature guarantees or an Agent's Message (as
defined below) in connection with a book-entry transfer and any other required
documents, must, in any case, be transmitted to and received by the Exchange
Agent at the address specified on the cover page of the Letter of Transmittal
on or prior to the Expiration Date or the guaranteed delivery procedures
described below must be complied with.
A Holder may tender Old Notes that are held through the Depositary by
transmitting its acceptance through the Depositary's Automatic Tender Offer
Program, for which the transaction will be eligible, and the Depositary will
then edit and verify the acceptance and send an Agent's Message to the
Exchange Agent for its acceptance. The term "Agent's Message" means a message
transmitted by the Depositary to, and received by, the Exchange Agent and
forming part of the Book-Entry Confirmation, which states that the Depositary
has received an express acknowledgment from each participant in the Depositary
tendering the Old Notes and that such participant has received the Letter of
Transmittal and agrees to be bound by the terms of the Letter of Transmittal
and the Company may enforce such agreement against such participant.
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, or (ii) who cannot deliver their Old Notes, this Letter
of Transmittal or any other documents required hereby to the Exchange Agent
prior to the Expiration Date or comply with book-entry transfer procedures on
a timely basis must tender their Old Notes according to the guaranteed
delivery procedures set forth in the Prospectus. See "Exchange Offer--
Guaranteed Delivery Procedures." Pursuant to such procedure: (i) such tender
must be made by or through an Eligible Institution; (ii) prior to the
Expiration Date, the Exchange Agent must have received from the Eligible
Institution a properly completed and duly executed Notice of Guaranteed
Delivery (by facsimile
<PAGE>
transmission, overnight courier, mail or hand delivery) setting forth the name
and address of the Holder of the Old Notes, the certificate number or numbers
of such Old Notes and the principal amount of Old Notes tendered, stating that
the tender is being made thereby and guaranteeing that, within three New York
Stock Exchange trading days after the Expiration Date, this Letter of
Transmittal (or facsimile hereof) together with the certificate(s)
representing the Old Notes and any other required documents will be deposited
by the Eligible Institution with the Exchange Agent; and (iii) such properly
completed and executed Letter of Transmittal (or facsimile hereof), as well as
all other documents required by this Letter of Transmittal and the
certificate(s) representing all tendered Old Notes in proper form for transfer
(or a confirmation of book-entry transfer of such Old Notes into the Exchange
Agent's account at DTC), must be received by the Exchange Agent within three
New York Stock Exchange trading days after the Expiration Date, all in the
manner provided in the Prospectus under the caption "The Exchange Offer
Guaranteed Delivery Procedures." Any Holder who wishes to tender his Old Notes
pursuant to the guaranteed delivery procedures described above must ensure
that the Exchange Agent receives the Notice of Guaranteed Delivery prior to
5:00 p.m., New York City time, on the Expiration Date. Upon request to the
Exchange Agent, a Notice of Guaranteed Delivery will be sent to Holders who
wish to tender their Old Notes according to the guaranteed delivery procedures
set forth above.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Old Notes, and withdrawal of tendered Old
Notes will be determined by the Company in its sole discretion, which
determination will be final and binding. All tendering holders, by execution
of this Letter of Transmittal (or facsimile thereof), shall waive any right to
receive notice of the acceptance of the Old Notes for exchange. The Company
reserves the absolute right to reject any and all Old Notes not properly
tendered or any Old Notes the Company's acceptance of which would, in the
opinion of counsel for the Company, be unlawful. The Company also reserves the
right to waive any irregularities or conditions of tender as to particular Old
Notes, The Company's interpretation of the terms and conditions of the
Exchange Offer (including the instructions in this Letter of Transmittal)
shall be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Old Notes must be cured within
such time as the Company shall determine. Neither the Company, the Exchange
Agent nor any other person shall be under any duty to give notification of
defects or irregularities with respect to tenders of Old Notes, nor shall any
of them incur any liability for failure to give such notification. Tenders of
Old Notes will not be deemed to have been made until such defects or
irregularities have been cured to the Company's satisfaction or waived. Any
Old Notes received by the Exchange Agent that are not properly tendered and as
to which the defects or irregularities have not been cured or waived will be
returned by the Exchange Agent to the tendering Holders pursuant to the
Company's determination, unless otherwise provided in this Letter of
Transmittal as soon as practicable following the Expiration Date. The Exchange
Agent has no fiduciary duties to the Holders with respect to the Exchange
Offer and is acting solely on the basis of directions of the Company.
3. Inadequate Space. If the space provided is inadequate, the certificate
numbers and/or the number of Old Notes should be listed on a separate signed
schedule attached hereto.
4. Tender by Holder. Only a Holder of Old Notes may tender such Old Notes in
the Exchange Offer. Any beneficial owner of Old Notes who is not the
registered Holder and who wishes to tender should arrange with such registered
holder to execute and deliver this Letter of Transmittal on such beneficial
owner's behalf or must, prior to completing and executing this Letter of
Transmittal and delivering his Old Notes, either make appropriate arrangements
to register ownership of the Old Notes in such beneficial owner's name or
obtain a properly completed bond power from the registered holder or properly
endorsed certificates representing such Old Notes.
5. Partial Tenders; Withdrawals. Tenders of Old Notes will be accepted only
in integral multiples of $1,000. If less than the entire principal amount of
any Old Notes is tendered, the tendering Holder should fill in the principal
amount tendered in the third column of the box entitled "Description of 10%
Senior Subordinated Notes due 2006 and Floating Interest Subordinated Term
Securities due 2006" above. The entire principal amount of any Old Notes
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated. If the entire principal amount of all Old Notes is not
tendered, then Old Notes for the
<PAGE>
principal amount of Old Notes not tendered and a certificate or certificates
representing Exchange Notes issued in exchange for any Old Notes accepted will
be sent to the Holder at his or her registered address, unless a different
address is provided in the "Special Delivery Instructions" box above on this
Letter of Transmittal or unless tender is made through DTC, promptly after the
Old Notes are accepted for exchange.
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date. To
withdraw a tender of Old Notes in the Exchange Offer, a written or facsimile
transmission notice of withdrawal must be received by the Exchange Agent at
its address set forth herein prior to 5:00 p.m., New York City time, on the
Expiration Date. Any such notice of withdrawal must (i) specify the name of
the person having deposited the Old Notes to be withdrawn (the "Depositor"),
(ii) identify the Old Notes to be withdrawn (including the certificate number
or numbers and principal amount of such Old Notes, or, in the case of Old
Notes transferred by book-entry transfer the name and number of the account at
DTC to be credited), (iii) be signed by the Depositor in the same manner as
the original signature on the Letter of Transmittal by which such Old Notes
were tendered (including any required signature guarantees) or be accompanied
by documents of transfer sufficient to have the Registrar with respect to the
Old Notes register the transfer of such Old Notes into the name of the person
withdrawing the tender and (iv) specify the name in which any such Old Notes
are to be registered, if different from that of the Depositor. All questions
as to the validity, form and eligibility (including time of receipt) of such
notices will be determined by the Company, whose determination shall be final
and binding on all parties. Any Old Notes so withdrawn will be deemed not to
have been validly tendered for purposes of the Exchange Offer and no Exchange
Notes will be issued with respect thereto unless the Old Notes so withdrawn
are validly retendered. Any Old Notes which have been tendered but which are
not accepted for exchange by the Company will be returned to the Holder
thereof without cost to such Holder as soon as practicable after withdrawal,
rejection of tender or termination of the Exchange Offer. Properly withdrawn
Old Notes may be retendered by following one of the procedures described in
the Prospectus under "The Exchange Offer--Procedures for Tendering" at any
time prior to the Expiration Date.
6. Signatures on the Letter of Transmittal; Bond Powers and Endorsements. If
this Letter of Transmittal (or facsimile hereof) is signed by the registered
holder(s) of the Old Notes tendered hereby, the signature must correspond with
the name(s) as written on the face of the Old Note without alteration,
enlargement or any change whatsoever.
If any of the Old Notes tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If a number of Old Notes registered in different names are tendered, it will
be necessary to complete, sign and submit as many copies of this Letter of
Transmittal as there are different registrations of Old Notes.
If this Letter of Transmittal (or facsimile hereof) is signed by the
registered Holder or Holders (which term, for the purposes described herein,
shall include a book-entry transfer facility whose name appears on a security
listing as the owner of the Old Notes) of Old Notes tendered and the
certificate or certificates for Exchange Notes issued in exchange therefor is
to be issued (or any untendered principal amount of Old Notes to be reissued)
to the registered Holder, then such Holder need not and should not endorse any
tendered Old Notes, nor provide a separate bond power. In any other case, such
Holder must either properly endorse the Old Notes tendered or transmit a
properly completed separate bond power with this Letter of Transmittal with
the signatures on the endorsement or bond power guaranteed by an Eligible
Institution.
If this Letter of Transmittal (or facsimile hereof) is signed by a person
other than the registered Holder or Holders of any Old Notes listed, such Old
Notes must be endorsed or accompanied by appropriate bond powers in each case
signed as the name of the registered Holder or Holders appears on the Old
Notes.
If this Letter of Transmittal (or facsimile hereof) or any Old Notes or bond
powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, or officers of corporations or others acting in a fiduciary
or representative capacity, such persons should so indicate when signing, and
unless waived by the Company,
<PAGE>
evidence satisfactory to the Company of their authority so to act must be
submitted with this Letter of Transmittal.
Endorsements on Old Notes or signatures on bond powers required by this
Instruction 6 must be guaranteed by an Eligible Institution.
7. Special Registration and Delivery Instructions. Tendering Holders should
indicate, in the applicable box or boxes, the name and address to which
Exchange Notes or substitute Old Notes for principal amounts not tendered or
not accepted for exchange are to be issued or sent, if different from the name
and address of the person signing this Letter of Transmittal. In the case of
issuance in a different name, the taxpayer identification or social security
number of the person named must also be indicated.
8. Backup Federal Income Tax Withholding and Substitute Form W-9. Under the
federal income tax laws, payments that may be made by the Company on account
of Exchange Notes issued pursuant to the Exchange Offer may be subject to
backup withholding at the rate of 31%. In order to avoid such backup
withholding, each tendering holder should complete and sign the Substitute
Form W-9 included in this Letter of Transmittal and either (a) provide the
correct taxpayer identification number ("TIN") and certify, under penalties of
perjury, that the TIN provided is correct and that (i) the holder has not been
notified by the Internal Revenue Service (the "IRS") that the holder is
subject to backup withholding as a result of failure to report all interest or
dividends or (ii) the IRS has notified the holder that the holder is no longer
subject to backup withholding; or (b) provide an adequate basis for exemption.
If the tendering holder has not been issued a TIN and has applied for one, or
intends to apply for one in the near future, such holder should write "Applied
For" in the space provided for the TIN in Part I of the Substitute Form W-9,
sign and date the Substitute Form W-9 and sign the Certificate of Payee
Awaiting Taxpayer Identification Number. If "Applied For" is written in Part
I, the Company (or the Paying Agent under the Indenture governing the Exchange
Notes) shall retain 31% of payments made to the tendering holder during the
sixty-day period following the date of the Substitute Form W-9. If the Holder
finishes the Exchange Agent or the Company with its TIN within sixty days
after the date of the Substitute Form W-9, the Company (or the Paying Agent)
shall remit such amounts retained during the sixty-day period to the Holder
and no further amounts shall be retained or withheld from payments made to the
Holder thereafter. If, however, the Holder has not provided the Exchange Agent
or the Company with its TIN within such sixty-day period, the Company (or the
Paying Agent) shall remit such previously retained amounts to the IRS as
backup withholding. In general, if a Holder is an individual, the TIN is the
Social Security number of such individual. If the Exchange Agent or the
Company are not provided with the correct TIN, the Holder may be subject to a
$50 penalty imposed by the Internal Revenue Service. Certain Holders
(including, among others, all corporations and certain foreign individuals)
are not subject to these backup withholding and reporting requirements. In
order for a foreign individual to qualify as an exempt recipient, such Holder
must submit a statement (generally, IRS Form W-8), signed under penalties of
perjury, attesting to that individual's exempt status. Such statements can be
obtained from the Exchange Agent. For further information concerning backup
withholding and instructions for completing the Substitute Form W-9 (including
how to obtain a taxpayer identification number if you do not have one and how
to complete the Substitute Form W-9 if Old Notes are registered in more than
one name), consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9. Failure to complete the
Substitute Form W-9 will not, by itself, cause Old Notes to be deemed
invalidly tendered, but may require the Company (or the Paying Agent) to
withhold 31% of the amount of any payments made on account of the Exchange
Notes. Backup withholding is not an additional federal income tax. Rather, the
federal income tax liability of a person subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained from the IRS.
9. Transfer Taxes. The Company will pay all transfer taxes, if any,
applicable to the exchange of Old Notes pursuant to the Exchange Offer. If,
however, certificates representing Exchange Notes or Old Notes for principal
amounts not tendered or accepted for exchange are to be delivered to, or are
to be registered in the name of, any person other than the registered holder
of the Old Notes tendered hereby, or if tendered Old Notes are registered in
the name of a person other than the person signing this Letter of Transmittal,
or if a transfer tax is imposed for any reason other than the exchange of Old
Notes pursuant to the Exchange Offer, then the amount
<PAGE>
of any such transfer taxes (whether imposed on the registered holder or on any
other persons) will be payable by the tendering Holder. If satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted with
this Letter of Transmittal, the amount of such transfer taxes will be billed
directly to such tendering Holder. See the Prospectus under "The Exchange
Offer Solicitation of Tenders; Fees and Expenses."
Except as provided in this Instruction 9, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes listed in this Letter of
Transmittal.
10. Waiver of Conditions. The Company reserves the right, in their sole
discretion, to amend, waive or modify specified conditions in the Exchange
Offer in the case of any Old Notes tendered.
11. Mutilated, Lost, Stolen or Destroyed Old Notes. Any tendering Holder
whose Old Notes have been mutilated, lost, stolen or destroyed should contact
the Exchange Agent at the address indicated herein for further instructions.
12. Requests for Assistance or Additional Copies. Requests for assistance
and requests for additional copies of the Prospectus or this Letter of
Transmittal may be directed to the Exchange Agent at the address specified in
the Prospectus. Holder may also contact their broker, dealer, commercial bank,
trust company or other nominee for assistance concerning the Exchange Offer.
(DO NOT WRITE IN SPACE BELOW)
CERTIFICATE SURRENDERED OLD NOTES TENDERED OLD NOTES ACCEPTED
- ------------------------- ------------------------- -------------------------
- ------------------------- ------------------------- -------------------------
Date Received ___________ Accepted by _____________ Checked by ______________
Delivery Prepared by ____ Checked by ______________ Date ____________________
IMPORTANT TAX INFORMATION
Under federal income tax laws, a Holder whose tendered Old Notes are
accepted for payment is required to provide the Exchange Agent (as payer) with
such Holder's correct TIN on Substitute Form W-9 below or otherwise establish
a basis for exemption from backup withholding. If such Holder is an
individual, the TIN is his social security number. If the Exchange Agent is
not provided with the correct TIN, a $50 penalty may be imposed by the
Internal Revenue Service, and payments made pursuant to the Exchange Offer may
be subject to backup withholding.
Certain Holders (including, among others, all corporations and certain
foreign persons) are not subject to these backup withholding and reporting
requirements. Exempt Holders should indicate their exempt status on Substitute
Form W-9. A foreign person may qualify as an exempt recipient by submitting to
the Exchange Agent a properly completed Internal Revenue Service Form W-8,
signed under penalties of perjury, attesting to that Holder's exempt status. A
Form W-8 can be obtained from the Exchange Agent. See the enclosed "Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9"
for additional instructions.
If backup withholding applies, the Exchange Agent is required to withhold
20% of any payments made to the Holder or other payee. Backup withholding is
not an additional federal income tax. Rather, the federal income tax liability
of persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the Internal Revenue Service.
<PAGE>
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments made with respect to the Exchange
Offer, the Holder is required to provide the Exchange Agent with either: (i)
the Holder's correct TIN by completing the form below, certifying that the TIN
provided on Substitute Form W-9 is correct (or that such Holder is awaiting a
TIN) and that (A) the Holder has been notified by the Internal Revenue Service
that the Holder is subject to backup withholding as a result of failure to
report all interest or dividends or (B) the Internal Revenue Service has
notified the Holder that the Holder is no longer subject to backup withholding
or (ii) an adequate basis for exemption.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The Holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered Holder of
the Old Notes. If the Old Notes are held in more than one name or are held not
in the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which number to report.
<PAGE>
CERTIFICATION OF PAYEE AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify, under penalties of perjury, that a Taxpayer Identification
Number has not been issued to me, and that I mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Security Administration Office
(or I intend to mail or deliver an application in the near future). I
understand that if I do not provide a Taxpayer Identification Number to
the payer, 31% of all payments made to me on account of the Exchange Notes
shall be retained until I provide a Taxpayer Identification Number to the
payer and that, if I do not provide my Taxpayer Identification Number
within sixty days, such retained amounts shall be remitted to the Internal
Revenue Service as backup withholding and 31% of all reportable payments
made to me thereafter will be withheld and remitted to the Internal
Revenue Service until I provide a Taxpayer Identification Number.
SIGNATURE ________________________________ DATE ________________________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU ON ACCOUNT OF THE
EXCHANGE NOTES. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM
W-9 FOR ADDITIONAL DETAILS.
<PAGE>
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 5)
PAYER'S NAME: MTL INC.
PART I--TAXPAYER SOCIAL SECURITY NUMBER
SUBSTITUTE IDENTIFICATION NUMBER -------------------------
FORM W-9 (TIN) OR
DEPARTMENT OF THE ENTER YOUR TIN IN THE EMPLOYEE IDENTIFICATION
TREASURY INTERNAL APPROPRIATE BOX. FOR NUMBER
REVENUE SERVICE INDIVIDUALS, THIS IS YOUR -------------------------
SOCIAL SECURITY NUMBER
(SSN). FOR SOLE
PROPRIETORS, SEE THE
INSTRUCTIONS IN THE
ENCLOSED GUIDELINES. FOR
OTHER ENTITIES, IT IS
YOUR EMPLOYER
IDENTIFICATION NUMBER
(EIN). IF YOU DO NOT HAVE
A NUMBER, SEE HOW TO GET
A TIN IN THE ENCLOSED
GUIDELINES.
REQUEST FOR
TAXPAYER
IDENTIFICATION
NUMBER AND
CERTIFICATION
NOTE: IF THE ACCOUNT IS
IN MORE THAT ONE NAME,
SEE THE CHART ON PAGE 2
OF THE ENCLOSED
GUIDELINES ON WHOSE
NUMBER TO ENTER.
----------------------------------------------------------
PART II--FOR PAYEES EXEMPT FOR BACKUP WITHHOLDING
(See Part II instructions in the enclosed
Guidelines.)
- -------------------------------------------------------------------------------
PART III--CERTIFICATION--UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding because: (a) I am exempt from
backup withholding, or (b) I have not been notified by the Internal
Revenue Service (IRS) that I am subject to backup withholding as a
result of a failure to report all interest or dividends, or (c) the
IRS has notified me that I am no longer subject to backup withholding.
Signature ______________________________________ Date ___________ , 1999
CERTIFICATION INSTRUCTIONS--You must cross out item 2 above if you have been
notified by the IRS that you are currently subject to backup withholding
because of underreporting interest or dividends on your tax return. For real
estate transactions, item 2 does not apply. For mortgage interest paid, the
acquisition or abandonment of secured property, cancellation of debt,
contributions to an individual retirement arrangement (IRA), and generally
payments other than interest and dividends, you are not required to sign the
Certification, but you must provide your correct TIN.
<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
FOR 10% SENIOR SUBORDINATED NOTES DUE 2006
AND
FLOATING INTEREST RATE SUBORDINATED TERM SECURITIES DUE 2006
OF MTL INC.
As set forth in the Prospectus dated , 1998 (the "Prospectus") of MTL
Inc. (the "Company") and in the Letter of Transmittal (the "Letter of
Transmittal"), this form or a form substantially equivalent to this form must
be used to accept the Exchange Offer (as defined below) if the certificates
for the outstanding 10% Senior Subordinated Notes due 2006 and Floating
Interest Rate subordinated Term Securities due 2006 (together, the "Old
Notes") of the Company and all other documents required by the Letter of
Transmittal cannot be delivered to the Exchange Agent by the expiration of the
Exchange Offer or compliance with book-entry transfer procedures cannot be
effected on a timely basis. Such form may be delivered by hand or transmitted
by facsimile transmission, telex or mail to the Exchange Agent no later than
the Expiration Date, and must include a signature guarantee by an Eligible
Institution as set forth below. Capitalized terms used herein but not defined
herein have the meanings ascribed thereto in the Prospectus.
TO:
United States Trust Company of New York
By Facsimile: By Hand before 4:30 By Mail or Overnight
p.m.: Delivery:
United States Trust Company
United States Trust of New York
Company United States Trust P.O. Box 843 Cooper Station
of New York Company New York, NY 10276
Attention: Customer of New York Attention: Corporate Trust
Service 111 Broadway Services
(212) 780-0592 New York, NY 10006
Attention: Lower Level
Corporate Trust Window
For Information or Confirmation
by Telephone:
(800) 548-6565
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE DOES
NOT CONSTITUTE A VALID DELIVERY. THE METHOD OF DELIVERY OF ALL DOCUMENTS,
INCLUDING CERTIFICATES, IS AT THE RISK OF THE HOLDER. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. THE INSTRUCTIONS ACCOMPANYING THE LETTER OF TRANSMITTAL SHOULD BE
READ CAREFULLY BEFORE THIS NOTICE OF GUARANTEED DELIVERY IS COMPLETED.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an Eligible Institution under the instruction thereto, such
signatures must appear in the applicable space provided on the Letter of
Transmittal for Guarantee of Signature(s).
<PAGE>
Ladies and Gentlemen:
The undersigned acknowledges receipt of the Prospectus and the related
Letter of Transmittal which describes the Company's offer (the "Exchange
Offer") to exchange $1,000 in principal amount of a new series of 10% Series B
Senior Subordinated Notes due 2006 and Series B Floating Interest Rate
Subordinated Term Securities due 2006 (together, the "Exchange Notes") for
each $1,000 in principal amount of the Old Notes.
The undersigned hereby tenders to the Company the aggregate principal amount
of Old Notes set forth below on the terms and conditions set forth in the
Prospectus and the related Letter of Transmittal pursuant to the guaranteed
delivery procedure set forth in the "The Exchange Offer-Guaranteed Delivery
Procedures" section in the Prospectus and the accompanying Letter of
Transmittal.
The undersigned understand that no withdrawal of a tender of Old Notes may
be made on or after the Expiration Date. The undersigned understands that for
a withdrawal of a tender of Old Notes to be effective, a written notice of
withdrawal that complies with the requirements of the Exchange Offer must be
timely received by the Exchange Agent at one of its addresses specified on the
cover of this Notice of Guaranteed Delivery prior to the Expiration Date.
The undersigned understands that the exchange of Old Notes for Exchange
Notes pursuant to the Exchange Offer will be made only after timely receipt by
the Exchange Agent of (i) such Old Notes (or Book-Entry Confirmation of the
transfer of such Old Notes into the Exchange Agent's account at The Depository
Trust Company (the "Depositary" or "DTC")) and (ii) a Letter of Transmittal
(or facsimile thereof) with respect to such Old Notes, properly completed and
duly executed, with any required signature guarantees, this Notice of
Guaranteed Delivery and any other documents required by the Letter of
Transmittal or a properly transmitted Agent's Message. The term "Agent's
Message" means a message transmitted by the Depositary to, and received by,
the Exchange Agent and forming part of the confirmation of a book-entry
transfer, which states that the Depositary has received an express
acknowledgment from each participant in the Depositary tendering the Old Notes
and that such participant has received the Letter of Transmittal and agrees to
be bound by the terms of the Letter of Transmittal and the Company may enforce
such agreement against such participant.
All authority conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall not be affected by, and shall survive, the death or
incapacity of the undersigned, and every obligation of the undersigned under
this Notice of Guaranteed Delivery shall be binding upon the heirs, executors,
administrators, trustees in bankruptcy, personal and legal representatives,
successors and assigns of the undersigned.
<PAGE>
PLEASE SIGN AND COMPLETE
Signature(s) or Registered Owner(s) Name(s) of Registered Holder(s)
or Authorized -------------------------------------
Signatory: __________________________ -------------------------------------
- ------------------------------------- -------------------------------------
- -------------------------------------
Address: ____________________________
Principal Amount of Old Notes -------------------------------------
Tendered:
- ------------------------------------- Area Code and Telephone No.:_________
Certificate No(s) of Old Notes (if If Old Notes will be delivered by
available): book-entry transfer at The
- ------------------------------------- Depository Trust Company, insert
- ------------------------------------- Depository Account No.: _____________
- -------------------------------------
Date: _______________________________
This Notice of Guaranteed Delivery must be signed by the registered
Holder(s) of Old Notes exactly as its (their) name(s) appear on certificates
for Old Notes or on a security position listing as the owner of Old Notes, or
by person(s) authorized to become registered Holder(s) by endorsements and
documents transmitted with this Notice of Guaranteed Delivery. If signature is
by a trustee, executor, administrator, guardian, attorney-in-fact, officer or
other person acting in a fiduciary or representative capacity, such person
must provide the following information.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s): ______________________________________________________________________
- -------------------------------------------------------------------------------
Capacity: _____________________________________________________________________
Address(es): __________________________________________________________________
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
DO NOT SEND OLD NOTES WITH THIS FORM. OLD NOTES SHOULD BE SENT TO THE
EXCHANGE AGENT TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF
TRANSMITTAL.
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities exchange
or of the National Association of Securities Dealers, Inc. or a commercial
bank or trust company having an office or a correspondent in the United
States, or otherwise an "eligible guarantor institution" within the meaning of
Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, hereby (a)
represents that each holder of Old Notes on whose behalf this tender is being
made "own(s)" the Old Notes covered hereby within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
(b) represents that such tender of Old Notes complies with Rule 14e-4 of the
Exchange Act and (c) guarantees that, within three New York Stock Exchange
trading days from the expiration date of the Exchange Offer, a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof),
together with certificates representing the Old Notes covered hereby in proper
form for transfer (or confirmation of the book-entry transfer of such Old
Notes into the Exchange Agent's account at The Depository Trust Company,
pursuant to the procedure for book-entry transfer set forth in the Prospectus)
and required documents will be deposited by the undersigned with the Exchange
Agent.
The undersigned acknowledges that it must deliver the Letter of Transmittal
and Old Notes tendered hereby to the Exchange Agent within the time period set
forth above and the failure to do so could result in financial loss to the
undersigned.
Name of Firm: _______________________ -------------------------------------
Address: ____________________________ Authorized Signature:
- ------------------------------------- Name: _______________________________
Area Code and Telephone No.: ________ Title: ______________________________
Date: _______________________________
